Mr Chuan Wei Ji v Ferngrove Pharmaceuticals Pty Ltd

[2017] FWC 2999

[2017] FWC 2999 [Note: An appeal pursuant to s.604 (C2017/3519) was lodged against this decision - refer to Full Bench Decision dated 29 August 2017 [[2017] FWC 3901] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mr Chuan Wei Ji
v
Ferngrove Pharmaceuticals Pty Ltd
(U2016/15442)

DEPUTY PRESIDENT SAMS SYDNEY, 8 JUNE 2017

Application for an unfair dismissal remedy – dismissal for serious misconduct – allegation of theft of Company product – ‘tip off’ from disgruntled former wife – applicant given no details of theft or the informant – summarily dismissed – no investigation – applicant never given an opportunity to respond or explain – no valid reason for dismissal – dismissal substantively and procedurally unfair – reinstatement inappropriate – compensation ordered.

BACKGROUND

[1] Mr Chuan Wei Ji was summarily dismissed from his employment with Ferngrove Pharmaceuticals Pty Ltd (the ‘Company’) on 13 December 2016, after the Company’s Managing Director, Mr Wei (William) Tang resolved to dismiss Mr Ji, following a ‘tip off’ from Mr Ji’s estranged former wife, Ms Yijun Chen, that her former husband had stolen various vitamin capsules from the Company. The Company employs around 200 employees at its pharmaceutical production plant in Chester Hill, NSW. Mr Ji was employed as a Machine Operator having commenced employment on 2 July 2014. His salary was $46,000.00 pa ($20 per hour with $4 shift allowance). He worked the 3pm-11pm night shift.

[2] Mr Ji (hereinafter referred to as ‘Mr Ji’ or the ‘applicant’) filed an application, pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’), seeking reinstatement and/or compensatory relief in respect to his alleged unfair dismissal by the Company (hereinafter referred to as the ‘respondent’ or the ‘Company’). He also claimed around $4,500.00 as payment for unpaid overtime for work he regularly undertook on Saturdays.

[3] The applicant claimed that on 12 December 2016 he was told he was to be dismissed for theft, effective the next day. Although the applicant was provided with no details or evidence of the alleged theft and obviously given no opportunity to explain his position, he strongly denied ever taking anything from the Company. No letter of dismissal was provided by the respondent. The first time Mr Ji was made aware his ex-wife was the source of the allegation and what it was he was said to have taken, was three months later at the conciliation conference convened by the Commission on 17 March 2017 (the respondent was unavailable to attend an earlier Conciliator assisted conference on 2 February 2017 and had not provided an F3 by that date). The conference did not resolve the applicant’s claim and the Commission issued directions for the filing and service of evidence and outlines of submissions for an arbitration of the application on 12 April 2017. As both parties were unrepresented and had little understanding of the Commission’s processes and procedures, the Commission conducted the proceeding as if it was a determinative conference by asking questions of the witnesses to establish the factual context surrounding the applicant’s dismissal. I am indebted to Mr John Ma, a Mandarin Interpreter, for his skilful and accurate interpreting of the proceedings for both the applicant and the respondent.

THE EVIDENCE

[4] Sworn evidence was taken from:

● Mr Ji;

● Mr Tang; and

● Ms Chen

For the respondent

[5] Mr Tang relied on the respondent’s F3 as his statement evidence. The reasons for the applicant’s dismissal are set out at Q3.1 as follows:

‘Applicant’s conduct
● was wilful or deliberate behaviour that is inconsistent with the continuation of the contract of employment.
● caused a serious and imminent risk to the reputation, viability or profitability of the Employer's business.
● was conduct in the course of his employment engaging in theft, and in the circumstances his continued employment during a notice period would be unreasonable.
We consider that applicant actions constitute serious misconduct warranting summary dismissal.’

[6] In anwering Q 3.2, the respondent said:

● ‘Applicant’s wife contacted me on 9 December 2016, and reported to me that the applicant stole manufactured products time to time. She and her father came to the factory on 9 December 2016; they brought 3 boxes EPO products, and a container full of Krill Oil Capsules. All those products were manufactured in our factory. For the EPO products, they may be easily got from chemist, but for capsules, it is hard for anyone outside the factory to obtain them. Few of the capsules had flaws; it looks like coming from the production line before the sorting department. This conduct of theft is totally unacceptable. After the meeting, I informed the operation manager and production manager that this behaviour is unacceptable in the company.
● Our Production Manager contacted him over the phone on coming Monday, 12 December 2016, debriefed the situation and asked him if he had any evidence to approve he is innocent. Also informed him that the conduct of theft is severe misconduct, according to our Disciplinary Policy and policy of Code of Conduct, the employment is suspended, and if no further evidence is received within one business day, employee may be terminated. We reserve the right to take legal action.
● Till late 13 December 2016, no evidence is received; a letter of termination is issued.’

[7] Mr Tang included the respondent’s Code of Conduct in his materials. Relevantly, the Code of Conduct provides:

‘5.0 Procedure:

Company employees are bound by their contract to follow our Employee Code of Conduct while performing their duties.

5.1 All employees of Ferngrove Pharmaceuticals are expected to observe the highest standards of ethics, integrity and behaviour during the course of their employment with Ferngrove Pharmaceuticals.

5.2 The standards expected of employees include:

● compliance with all company policies, procedures, rules, regulations and contracts;

● compliance with all reasonable and legal instructions of managers;

● to be honest and fair in dealings with customers, clients, co-workers, company management and the general public.

5.3 Certain activities and practices are drawn to your attention. These activities and practices have proved to be a real or potential source of problems for companies in the past.

5.4 As a result the management of Ferngrove Pharmaceuticals draws your attention to the following rules that apply to employees of this company

● maintain punctuality – we operate to tight deadline and require your cooperation;

● observe health and safety rules especially Ferngrove’s OH&s SOP’s;

● respect the company’s ownership of all company funds, equipment, supplies, books, records and property;

● Maintain during employment with the company and after the termination of employment, the confidentiality of any confidential information, records or other materials acquired during the course of employment with Ferngrove Pharmaceuticals;

● while employed at Ferngrove Pharmaceuticals, to not accept any employment with another organization that is a supplier or competitor of Ferngrove Pharmaceuticals, or any other employment that is in conflict with your position at Ferngrove Pharmaceuticals;

● dress in an appropriate manner and ensure that your appearance is presentable, clean, neat and tidy;

● fulfil their job duties with integrity and respect toward customer, stakeholders and the community. Supervisors and managers must not abuse their authority. We expect them to delegate duties to their team members taking into account their competences and workload, likewise, we expect team members to follow team leaders’ instructions and complete their duties with skill and in a timely manner. We encourage mentoring throughout our company;

● do not make any un-authorized statements to the media about the company’s business (requests for media statements should be referred to your line manager);

● employees should be friendly and collaborative, they should try not to disrupt the workplace or present obstacles to their colleagues ‘work’;

● no fighting in the workplace;

● no swearing in the workplace;

● no sexual or other unlawful harassment and bullying in the workplace;

● no drugs or alcohol in the workplace;

● All employees should read and follow our company policies. If they have any question, they should ask their manager or HR department.

Breaches of the Code of Conduct will be dealt with in accordance with the Discipline and Termination Policy. We may take legal action in cases of corruption, theft, embezzlement or other unlawful behaviour.’

[8] A copy of the Company’s disciplinary action standard operating procedure was also provided:

‘5.0 Procedure:

The stages that may be followed when discipline is deemed necessary include the following:

1. Verbal warning

2. Corrective Actions/Counseling

3. Official written reprimand

4. Disciplinary meeting with appropriate supervisor or manager

5. Final written warning

6. Detraction of benefits

7. Indefinite suspension or demotion

8. Termination

The nature of the offence must be explained to the employee from the beginning of the procedure. The verbal warning may take the form of a simple oral reprimand but also a full discussion if that is necessary. The written reprimand must be read and signed by the employee. The final written warning must also be read and signed by the employee. It should always include the time limit in which an employee must correct their conduct and any further disciplinary actions that will be taken if they don’t.

The disciplinary stages may be followed at the indicated order. For example, an employee in charge of a disciplinary procedure is not allowed to detract benefits first and then issue an official reprimand. Repetition of procedure or stages, however, is allowed. It is also possible that stages may be omitted depending on the severity of the violation. The following indicate the beginning of the disciplinary procedure in regards to each infraction:

Performance issues. Disciplinary procedure starts at stage 1. It includes but is not limited to:

● Failure to meet performance objectives

● Attendance issues

● Failure to meet deadlines

Misdemeanors/One-time minor offence. Disciplinary procedure starts at stage 1. It includes but is not limited to:

● Rude behavior to customers or partners

● On-the-job minor mistakes

● Breach of dress code/open door policy etc.

● Involuntary Discrimination

Misconduct/Frequent offender. Disciplinary procedure starts at stage 5. It includes but is not limited to:

Frequent occurrences of performance issues and misdemeanors

● Lack of response to counselling and corrective actions

● Lost temper in front of customers or partners

● On-the-job major mistakes

● Unwillingness to follow health and safety standards

Severe offensive behavior/Felony. Disciplinary procedure starts at stage 6. It includes but is not limited to:

● Corruption/ Bribery

● Breach of employment agreement

● Harassment/ Voluntary discrimination

● Workplace Violence

● Embezzlement/Fraud

● Substance Abuse

The stages that may be involved and the time that may be spent in repeating certain actions are subject to the supervisor or manager’s judgement. It may depend on the employee’s reaction to the disciplinary procedure, whether they repent their behavior and the nature of the offence.

The disciplinary procedure may commence when there is sufficient evidence to justify it. When there is suspicion or hints of misconduct, the circumstance must be timely investigated. Every situation or complaint will be thoroughly researched especially in cases of severe offences. The accused employee will be given the opportunity to explain their position and will be listened to with respect.

Appeals are allowed and must be filed to the next line of management as soon as possible. Every stage of the procedure (except the verbal warning) will be documented and filed along with necessary information (evidence, testimonies, employee’s progress or improvement etc.). In the event, the procedure ends in termination, all appropriate guidelines will be followed according to company policy.

It is important to note that the company is obliged to refrain from disciplinary actions that may constitute retaliatory behavior. A no retaliation company policy will be effective at all times to ensure there is no misuse of the disciplinary procedure.

The company will reserve all rights to modify this policy or act in any other legal or reasonable way in cases of unforeseen offences. It is committed to enforce discipline in a fair and lawful manner.’

[9] In oral evidence, Mr Tang said that he recognised the product in three plastic take away food containers provided by Ms Chen as product from his factory, because it was not a ‘perfect product’ which the Company could not sell. Mr Tang said Ms Chen turned up unannounced with her father at the factory on Friday, 9 December 2016. He had not met her before. She gave him the plastic containers which she said contained product taken by her ex-husband, stored at home and on sold by him. She took photos of the containers. Mr Tang then spoke to the Production Manager, Mr Li Hai Ping. They both agreed the product was from the factory because it was unfinished and would not have been able to be obtained in the general market. Mr Ji was at work that Friday, but he directed Mr Ping to speak to him on Monday 12 December 2016. Mr Tang claimed he instructed Mr Ping to investigate the matter, but he did not know what Mr Ping had done in that respect.

[10] In answering questions from the applicant, Mr Tang said he had sufficient evidence to dismiss him. Mr Tang said he did not give the applicant an opportunity to respond to the allegation, because Ms Chen told him not to reveal to her ex-husband that she was the source of the ‘tip off’ as she was scared of him. She told Mr Tang they had been recently divorced. Mr Tang based his decision on the fact that the applicant was a machine operator with easy access to the product. While the Company has CCTV, these records are only kept for two weeks and he knew from the condition of the capsules, the product was very old.

Ms Yijun Chen

[11] Ms Chen’s entire statement reads:

‘This is Yijun Chen, ex-wife of Chuanwei Ji. This letter is to certify that Chuanwei Ji stolen (sic) capsules from the factory in South Granville occasionally. On 9^th December 2016, I came to the factory at 5 Ferngrove Place, South Granville NSW 2142, and reported this to the factory’s managing director William Tang and handed in the capsules that Chuanwei Ji stolen (sic), including Krill Oil, EPO, Squalene, and Grape Seed, etc.’

She also attached a photo of the containers.

[12] In oral evidence, Ms Chen explained that she had decided to report the applicant to Mr Tang because it was not fair her ex-husband stole from the factory and that as a ‘law abiding citizen’ she wanted to dob him in because of his ‘shameful conduct’.

[13] Ms Chen said her ex-husband had often brought supplements home soon after he had commenced employment with the Company. He put them away and she forgot about them. After he left on home on 24 December 2015, she was cleaning the house and found the containers in a cupboard. When she questioned him, he told her that his shift was 3pm-11pm and late in the evening. There were no supervisors, so he just put the product in a plastic glove and brought them home. She believed he may have taken other similar products on other occasions from late 2014.

[14] Ms Chen was asked by the applicant why she hated him. She said it has nothing to do with hate. Her focus was on the family - their relationship did not exist. Ms Chen claimed she did not know what the applicant did with the product. While she had found them around March/April 2016, she delayed informing the Company because she hoped they might have reconciled and she had wanted to maintain his ‘good name’, but by December 2016, she had ‘lost hope’.

Applicant’s evidence

[15] The applicant set out his evidence in a statement which I reproduce as follows:

● I started working with the respondent's business FPA, on 07/07/2014 as (a) machine operator;

● I worked full-time. My hours of work were Monday to Friday, 3pm to 11pm;

● My rate of pay was $20 per hour plus $4 per hour Afternoon shift allowance;

● On 13/12/2016, Mr Li who is our product manager told me that William Tang ask [sic] him to inform me I was fired because somebody else complain (about) me (that) I (had) stolen company products.

● I told Mr Li that this was wrong. I never (did) it and ask [sic] him to show me evidence;

● I then (sent) a message to William Tang at 14/12/2016 to explain I am Innocent but (I received) no reply;

● Since the dismissal I have registered at Seek (on) 17/01/2017 in order to find a new job but till now there is no interviews received until 17/03/2017 at FWC I heard that my wife and her father complain me My wife and me was separated from 24/12/2015 and now we are in process of divorce.

[16] While Mr Tang did not ask the applicant any questions, I decided to have him give further evidence on oath.

[17] The applicant described the conversation with Mr Ping on 12 December 2016. Mr Ping told him the Company had received a ‘tip off’ that he had stolen from the factory and he was about to be dismissed. Mr Ping refused to tell him who had informed on him or what he was accused of stealing. He first learnt of the alleged stolen products on 17 March 2017 and after he had read Mr Tang’s F3.

[18] Nevertheless, the applicant messaged Mr Tang on 14 December 2016, to state his innocence. He had never taken anything from the factory. He reaffirmed that he did not steal the capsules in the photo or anything else from the Company.

[19] The applicant explained that when they lived together, he and his wife had a small business buying vitamin supplements branded Swisse or Blackmores, and selling them to friends in China. These kind of products were always at home. The applicant said he had no documentation to prove these exchanges with him at the hearing, but could retrieve them. As to the products in the photo, he could not tell where they came from.

[20] The applicant said he had earned no remuneration since his dismissal and was living off his savings.

[21] The applicant subsequently provided to the Commission express mail receipts in 2015 for sales of Lecithan, odourless fish oil, grape seed oil, liver detox and cranberry to recipients in China. In reply, Mr Tang claimed that while he was aware of the applicant’s ‘business with healthcare products’, the stolen products returned by the applicant’s ex-wife, had not been finally processed.

CONSIDERATION

[22] Section 396 of the Act identifies a number of preliminary matters about which the Commission must be satisfied before turning to the question of whether the applicant’s dismissal was ‘harsh, unreasonable or unjust’ within the meaning of s 385(b). As both sections are to be read together, I set them out below:

‘SECT 396 - Initial matters to be considered before merits

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

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

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

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

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

“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.”

[23] In dealing with the preliminary matters under s 396 of the Act, I find that:

(a) Mr Ji’s application for an unfair dismissal remedy was filed within the requisite time period of 21 days (s 394(2)(a));
(b) Mr Ji was a person protected from unfair dismissal in that:

i. he was dismissed by Mr Tang on 13 December 2016 (s 385(a));
ii. he had completed the minimum employment period (s 383); and
iii. his employment was covered by the Pharmaceutical Industry Award 2010 [MA000069].

(c) as Ferngrove Pharmaceuticals is not a small business (200 employees) the Small Business Fair Dismissal Code is not relevant; and

(d) as Mr Ji’s dismissal was not a case of genuine redundancy, that consideration does not arise.

[24] I turn to the question of whether the applicant’s dismissal was ‘harsh, unjust or unreasonable’. This requires an assessment of each of the matters set out at s 387 of the Act as follows:

‘(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.’

[25] The meaning of the expression ‘harsh, unjust and unreasonable’, in the context of a dismissal, was explained in the oft-quoted extract from Byrne & Frew v Australian Airlines (1995) 185 CLR 410 (Byrne) by McHugh and Gummow JJ, as follows:

‘128. … It may be that the termination is harsh but not unjust or 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.’

Meaning of valid reason

[26] The onus is on the respondent to prove, to the Commission’s satisfaction and on the balance of probabilities (Briginshaw v Briginshaw (1938) 60 CLR 336), that the misconduct had taken place; see: Culpeper v Intercontinental Ship Management Pty Ltd[2004] AIRC 261and Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201.

[27] While decided in a different statutory context, the comments of Moore J in Edwards v Giudice [1999] FCA 1836 at paras [4] and [7] are apposite:

‘4 In the present case the Full Bench concluded that Commissioner Tolley had failed to determine whether Ms Edwards was guilty of misconduct in the way alleged by Telstra Corporation Ltd and that the Commissioner should have done so as part of ascertaining whether her termination had been harsh, unjust or unreasonable. The approach of the Full Bench was, in my opinion, unexceptionable. When the reason for a termination is based on the misconduct of the employee, the Commission must, if it is an issue in proceedings challenging the termination, determine whether the conduct occurred. The obligation to make such a determination flows from  s 170CG(3)(a). That is, the Commission must determine whether the alleged conduct took place and what it involved. Section 170CG(3) provides:

"In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was a valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and

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

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

(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and

(e) any other matters that the Commission considers relevant."

...

7 The reason would be valid because the conduct occurred and justified termination. The reason might not be valid because the conduct did not occur or it did occur but did not justify termination. An employee may concede in an arbitration that the conduct took place because, for example, it involved a trivial misdemeanour. In those circumstances the employee might elect to contest the termination in the arbitration on the basis that the conduct took place but the conduct did not provide a valid reason and perhaps also by relying on the other grounds in paras (b) to (e). However an employee may not concede or admit, for the purposes of the arbitration, that the conduct occurred or may not be prepared to accept that the Commission could assume the conduct occurred. In either situation the employee would be putting in issue whether the conduct occurred. In my opinion the Commission must, in these circumstances, determine whether the conduct occurred as a step in resolving whether there was a valid reason. I do not see how the Commission can move straight to a consideration of whether termination was justified by assuming the conduct did occur. First the Commission would have failed to resolve an issue raised by and relied on by the employee, namely whether the conduct occurred at all. Second the Commission would have failed to make findings by reference to which a Full Bench might have to determine an appeal where the Commission had concluded the termination was harsh unjust or unreasonable on assumed facts and not facts found [my emphasis].’

[28] In King v Freshmore (Vic) Pty Ltd, 17 March 2000, Print S4213 a Full Bench of the Australian Industrial Relations Commission (AIRC) said at paras [24], [26], [28] and [29]:

‘[24] The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.

...

[26] As we have noted above, s.170CG(3)(a) obliges the Commission to make a finding as to whether there was a valid reason for the termination of employment. In circumstances where a reason for termination is based on the conduct of the employee the Commission must also determine whether the alleged conduct took place and what it involved.

...

[28] It is apparent from the above extract that his Honour answered the question of whether the alleged misconduct took place on the basis of whether it was reasonably open to the employer to conclude that the employee was guilty of the misconduct which resulted in termination. This is not the correct approach. The Commission's obligation is to determine, for itself and on the basis of the evidence in the proceedings before it, whether the alleged misconduct took place and what it involved.

[29] In our view the Senior Deputy President failed to determine for himself whether Mr King was guilty of misconduct in the way alleged by Freshmore and he should have done so as part of determining whether the termination had been harsh, unjust or unreasonable. When the reason for a termination is based on the misconduct of the employee the Commission must, if it is an issue in the proceedings challenging the termination, determine whether the conduct occurred. The absence of such a finding leads us to conclude that the member below failed to properly determine whether there was a valid reason for the termination of Mr King's employment [my emphasis].’

[29] The meaning of ‘valid reason’ in s 387(a) is drawn from the judgment of Northrop Jin Selvachandran  v Peterson Plastics Pty Ltd (1995) 62 IR 371 (‘Selvachandran’). This meaning has been applied by members of the Commission and its predecessors for many years:

‘In its context in s 170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly.’

[30] An appeal Bench of FWA in Parmalat Australia v Wililo [2011] FWAFB 1166 (‘Parmalat’),found at para [24] and [26]:

‘[24] We do not consider that the decision discloses a clear line of reasoning leading to the decision reached. The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open. We do not believe that any of the circumstances involved in this matter amount to such factors.

...

[26] Mr Wililo’s conduct was found to be serious misconduct. It involved deliberate acts. We consider that characterising the actions as carelessness does not derogate from the seriousness of his action or the possible consequences. Further we do not believe that there was a sufficient basis to find that the employer could not apply its safety standards because of alleged actions in relation to other safety breaches. If it was entitled to take the action in this case the need to enforce its safety rules suggests that the resultant termination is not harsh [my emphasis].’

[31] A finding of serious misconduct must not be confused with the statutory language. This still requires the Commission to determine whether there was a valid reason for dismissal (s 387(a)). In Royal Melbourne Institute of Technology v Asher[2010] FWAFB 1200, a Full Bench of Fair Work Australia (FWA, as the Commission then was) held at para [16]:

‘[16] In the circumstances of this matter the University purported to terminate Dr Asher’s employment for serious misconduct within the meaning of that term in the University’s enterprise agreement. If it successfully established that Dr Asher had engaged in serious misconduct it would necessarily follow that there was a valid reason for the dismissal. However, the converse is not true. As established by Annetta, the question that needed to be considered was whether there was a “valid reason” in the Selvachandran sense – whether the reason was sound, defensible or well founded. Whether it also amounted to serious misconduct may well be a factor relating to the overall characterisation of the termination but it was not an essential requirement in the determination of whether a valid reason exists.’

[32] Mr Tang’ evidence was that the sole reason for the dismissal of the applicant was the ‘tip off’ he received from Ms Chen that her ex-husband had stolen the product from the Company. It was evident to me, from observing Ms Chen in the witness box and from her evidence, that she harbours a deep resentment and dislike for her ex-husband. I do not accept that Ms Chen was motivated by a desire to ‘do the right thing’ or a sense of civic duty. After all, if her motives were so honourable, why did she wait 9 months after discovering the alleged stolen product before reporting her ex-husband to Mr Tang? She waited, as she claims, because she was hopeful of reconciliation with him. This begs the question of course, that if she was so conscious of her civic duty, why was she nevertheless prepared to waive it, if she reconciled with her husband who she believed to be a thief?

[33] In my view, Ms Chen’s evidence was implausible and tainted with mala fide intent. I believe she was motivated by revenge and ‘payback’ for her broken marriage. She is the classic disgruntled ex-partner. Accordingly, I find her evidence to be unreliable. It follows that Mr Tang’s reliance on her as a person of truth, impugned his decision to dismiss Mr Ji.

[34] The only evidence Mr Tang had from Ms Chen was three small, unmarked plastic take away food containers containing at least 9 month old vitamin capsules (EPO products). Mr Tang did not have them analysed to confirm that they had been produced at the factory. He acknowledged that they appeared to be ‘very old’. He relied on a visual assessment that they also appeared unfinished (not sorted) and therefore could not have been sourced from a retailer or another manufacturer. However, later Mr Tang agreed that the three containers of EPO products ‘could easily got [sic] from [a] Chemist’. In my view, the fact the products in the three containers were loose, could be bought from a chemist and could well have deteriorated because they were ‘very old’, does not prove they were sourced from the respondent’s factory. In my judgement, Mr Tang made a gigantic jump to unlikely conclusions for which other explanations, had they been sought (but were not), might have explained the innocent origin of the products.

[35] Towards the end of Mr Ji’s evidence and without realising the significance, he said that he and his wife had been involved in a home enterprise of selling small numbers of vitamin products to friends in China. What his wife found may have been residual supplies kept at their joint residence after he had left. While this sounded a curious explanation, particularly given it did not surface until the last minute, Mr Ji was later able to prove from invoice receipts, dating back to October 2015, that this was correct. I accept this explanation as consistent with my finding that Mr Ji was a witness of truth, whose evidence that he had never stolen anything from the Company, is to be believed.

[36] In my view, the respondent has failed the onus of proving the applicant’s misconduct and given the mala fide intent of Ms Chen, it was not safely open for Mr Tang to conclude that the applicant was guilty of theft of the Company’s product. Accordingly, I am satisfied that there was no valid reason for Mr Ji’s dismissal.

[37] In my assessment, this finding would be sufficient for the Commission to conclude that the applicant’s dismissal was ‘harsh, unjust and unreasonable’, within the meaning of s 387 of the Act. However, the unfairness of Mr Ji’s dismissal was magnified by many serious procedural deficiencies demonstrated in this case. I am satisfied that Mr Ji’s dismissal was at the worst end of the procedural unfairness scale.

[38] In Crozier v Palazzo (2000) 98 IR 137, a Full Bench of the Australian Industrial Relations Commission, said at paragraph [73]:

‘As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.’

Notification of valid reason: s 387(b)

[39] Although the applicant was aware he had been dismissed for the theft on 13 December 2016, he was not told:

● what he was alleged to have stolen;

● when he was alleged to have stolen the product;

● who had ‘tipped off’ Mr Tang; or

● what investigation had been conducted by the employer to prove the allegation.

[40] These circumstances demonstrate a gross denial of natural justice towards the applicant.

Opportunity to respond: s 387(c)

[41] Mr Tang instructed Mr Ping to inform the applicant he was to be dismissed. In other words, Mr Tang had decided to dismiss Mr Ji without ever giving him an opportunity to respond or give an explanation. It was claimed that Mr Ping invited the applicant to respond in a telephone call on 12 December 2016. However, given the applicant did not know the details of the allegation - let alone what he was alleged to have stolen - such an invocation was merely lip service. It was never intended to give the applicant a reasonable opportunity to respond. To suggest a phone call from Mr Ping was that opportunity, was not only inappropriate, it was offensive. I note Mr Tang did not even know what Mr Ping had said to the applicant or what he had asked him in the phone conversation. Nor do I - as Mr Ping was not called to give evidence.

[42] Moreover, it was Mr Tang’s decision to dismiss the applicant. If anyone was the appropriate person to consider the applicant’s request for an explanation (had it been sought) it was Mr Tang, not Mr Ping. The applicant actually messaged Mr Tang the day after his dismissal. Without knowing any of the details of the allegations, he denied stealing anything from the Company. Mr Tang dismissively chose to ignore this message.

[43] In addition, Mr Ji never received a letter terminating his employment, despite Mr Tang claiming to have done so. No such letter was produced. I am satisfied that s 387(c) was not met substantially, or at all. This finding very much weighs against the respondent’s case.

Unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal: s 378(d)

[44] As there were no meetings at all with Mr Ji to discuss the allegations, it is self-evident he could not have been refused a support person to attend any disciplinary meetings. This is a neutral factor in this case.

Warnings regarding unsatisfactory performance

[45] As this was not a dismissal based on poor performance, this factor does not arise in this case. I note however, that there was no submission, let alone evidence, of any unsatisfactory performance of the applicant.

The degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal (s 387(f)) and absence of dedicated human resource specialists or expertise s387(g)

[46] The employer is not a small business. With around 200 employees, it is a medium sized business. In my view, a business of this size might have been expected to apply at least a few basic principles of procedural fairness. It failed abysmally to afford the applicant any procedural fairness. Moreover, the respondent did not even comply with its own strangely worded ‘disciplinary action standard’; see: para [8] above. The Company would be well advised not to repeat a similar process when investigating an employee alleged to have engaged in misconduct.

[47] While it is not entirely apparent whether the respondent has any dedicated human relations management person/s, it may be safely assumed that if it has, or if it had sought proper advice, its reliance on Ms Chen’s ‘say so’ and its process of dismissing Mr Ji would have been very much wisely informed. It is extremely disappointing and regrettable that an employer of this size was not ‘live’ to the legislative requirements governing unfair dismissal and chose to adopt a process which was grossly antithetical to any notion of natural justice, or even common decency.

[48] This factor weighs firmly in the applicant’s favour.

Any other relevant matter: s 387(h)

[49] The applicant has had a seemingly unblemished record of 2.5 years of service. While not a long period of employment, it is a reasonable period.

[50] Mr Ji has lost his job because of the vindictive and vengeful ‘tip off’ of his ex-wife, which I have found, resulted in his unfair dismissal. Mr Tang gave no thought to any possibility that Ms Chen may have had an ‘axe to grind’ or had ulterior motives in accusing her ex-husband of theft. He relied entirely on her ‘say so’, without any probative or objective investigation of the allegation.

[51] In summary, I am satisfied the applicant’s dismissal was ‘harsh, unjust and unreasonable’ both substantively and procedurally and therefore unfair. Mr Ji’sdismissal was unjust, because he was not guilty of the misconduct alleged against him and given no opportunity to explain or give his version of events; unreasonable, because his dismissal was decided solely on the biased ‘say so’ of his disgruntled ex-wife and was not reasonably open on the material before the employer and it was harsh, because of the personal and economic circumstances that Mr Ji found himself as a consequence of his dismissal.

Appropriate remedy

[52] Section 390 of the Act sets out the circumstances in which the Commission may make an order for reinstatement or compensation. The section reads:

“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.”

[53] Given the conclusions I have come to concerning the applicant’s dismissal and as he understandably feels he could not work for Mr Tang again, I am satisfied that reinstatement in this case would be inappropriate. I find accordingly.

[54] Section 392 of the Act sets out the matters the Commission must have regard to when determining:

a) whether compensation should be ordered;

b) if so, what amount of compensation should be ordered;

c) the effect of any order as to any findings of misconduct by the applicant;

d) the upper limit of compensation; and

e) specific matters not to be taken into account.

[55] Section 392 reads as follows:

‘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.’

[56] The respondent has been well aware that the applicant sought 16 weeks compensation and not reinstatement. Mr Tang chose not to provide any evidence of the effect any order of compensation might have on the Company’s viability. Accordingly, I find there to be no detrimental effect on the respondent’s viability should the Commission make an order of compensation at the higher end of the scale.

[57] The length of service of the applicant is a neutral factor in this case. Mr Ji seeks 16 weeks compensation for his unfair dismissal. I am satisfied that this equates to the remuneration he would have received for a further four months had he not been dismissed on 13 December 2016. This is calculated as follows:

$24.00 × 38 hours × 16 weeks = $14,592.00 (gross)

[58] The applicant said he has made attempts to secure alternative employment, but at the date of hearing had been unsuccessful. There is no reason to doubt Mr Ji’s evidence in this respect.

[59] There was no evidence that Mr Ji has earned any remuneration since his dismissal.

Other matters: s 392(2)(g)

[60] Mr Ji claims unpaid overtime for working on Saturdays. While any outstanding entitlements, including a claim for unpaid overtime, can only pursued in a court of competent jurisdiction, I am satisfied Mr Ji appears likely to be entitled to these payments. Mr Tang would be well advised to consider his position in this respect.

Misconduct reduces amount: s 392(3)

[61] Given I have found that there was no misconduct and no valid reason to dismiss the applicant, no deduction in compensation is made on that score.

[62] The Order I intend to make contains no component by way of compensation for shock, distress, humiliation or other analogous hurt (s 392(4)).

Compensation cap

[63] The compensation cap under s 392(5) of the Act in relation to Mr Ji is $23,712.00. It is self-evident that my calculations, based on the Sprigg formula above; see: Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, result in a total amount of compensation which does not exceed the compensation cap. The amount of compensation I order is $14,592.00 gross, plus 9.5% superannuation, less applicable taxation.

[64] There was no evidence or submission put by the respondent to pay any amount of compensation in instalments, as may be permitted by s 393 of the Act. I decline to do so.

CONCLUSION

[65] For the aforementioned reasons, I am satisfied that the dismissal of the applicant by the respondent on 13 December 2016 was ‘harsh, unjust and unreasonable’, within the meaning of s 387 of the Act. Finally, s 318(2) is a significant and overarching object of Part 3-2 of the Act. It is expressed in these terms:

‘381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.

Note: The expression "fair go all round" was used by Sheldon J in in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95.’

[66] I am satisfied reinstatement is inappropriate and compensation in an amount of $14,592.00 gross, plus 9.5% superannuation, less applicable taxation according to law should be made to Mr Ji. I am satisfied that the remedy I have determined will ensure a ‘fair go all round’ is accorded to both the applicant and the respondent.

[67] Orders to give effect to my conclusions will accompany the publication of this decision, with a further order requiring payment of the above amounts within 21 days of today.

DEPUTY PRESIDENT

Appearances:

Mr Chuan Wei Ji, for himself.

Mr William Tang, for the respondent

Hearing details:

Sydney.

2017.

April.

12.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR593389>