Mr. Darren Roche v Tunstall Plant Hire Pty Ltd T/A Tunstall Plant Hire

[2020] FWC 5417

[2020] FWC 5417

FAIR WORK COMMISSION

DECISION

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

Mr. Darren Roche
v
Tunstall Plant Hire Pty Ltd T/A Tunstall Plant Hire
(U2020/10682)

DEPUTY PRESIDENT MASSON MELBOURNE, 19 OCTOBER 2020

Application for an unfair dismissal remedy.

[1] On 6 August 2020, Mr. Darren Roche (Applicant) made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Tunstall Plant Hire Pty Ltd T/A Tunstall Plant Hire (the Respondent). The Applicant seeks compensation.

[2] Conciliation of the matter before the Commission failed to achieve a resolution and consequently the matter was listed for hearing/conference before me.

[3] The Applicant filed written submissions and a witness statement with the Fair Work Commission (the Commission) on 22 September 2020. The Respondent filed its written submissions and witness statements in reply on 7 October 2020.

[4] At a Mention/Directions Hearing conducted on 3 September 2020 submissions were sought from the parties as to whether the Commission should conduct either a conference (s.398) or a hearing (s.399) in relation to the matter. Considering the number of witnesses and the parties wishes it was decided to set the matter down for a Determinative Conference on 15 October 2020.

[5] At the conference the Applicant was self-represented and gave evidence himself while the Respondent was represented by Mr. J Tunstall who also gave evidence.

Background and evidence

[6] The Respondent at the time of the Applicant’s dismissal employed 3 staff and is engaged in the sourcing and supply of sub-contractors to perform bobcat, tip truck, excavator, earthworks and other earthmoving services to customers. In providing this ‘agency’ service, for which it receives a commission, the Respondent does not supply its own equipment or labour, but rather, acts to source and arrange for sub-contractors to perform required work. According to Mr. Tunstall, there are some associated entities to the Respondent but none of those associated entities employ staff.

[7] The Applicant commenced employment with the Respondent on 9 July 2018 and was engaged on a permanent full-time basis. The Applicant referred to his role as that of Operational Manager although Mr. Tunstall states that there was no title for the Applicant’s former role and that the Applicant’s business card had no such title on it. The Applicant’s remuneration included a salary of $76,440 which the Applicant says included $7,000.00 to compensate him for use of his private vehicle. Mr. Tunstall agreed that his salary was $76,440 but disagreed that the salary included a component to compensate for use of the Applicant’s private vehicle. Other elements of his remuneration, which were not in dispute, were that of a mobile phone, E Tag and fuel card, the latter being worth $8,000.00 over the past 12 months according to Mr. Tunstall. No written contract of employment was entered into by the parties when the Applicant commenced employment.

[8] The Applicant’s role required him to source and arrange suitable sub-contractors to perform work for customers. The role had the following key duties and responsibilities according to the Applicant.

•  The Applicant would receive phone calls from customers through which the nature of the required service would be established. On occasions it was necessary for the Applicant to visit the relevant client’s site at which the work was to be performed in order to properly understand the conditions that might impact on the type of service/equipment required.

•  On establishing the required service/equipment the Applicant would then review the list of available and suitable sub-contractors. This required an assessment by the Applicant of the client’s need, the equipment required and capability of the sub-contractors available to perform the work, before making the right ‘placement’.

•  The Applicant in arranging services for customers applied a standard pricing list maintained by Mr. Tunstall and was not responsible for invoicing or payment of sub-contractors. That latter responsibility fell to Mr. Tunstall and an Office/Administration officer employed by the Respondent.

•  While required to work out of the Respondent’s office, the Applicant’s work was conducted primarily over the telephone through which he acted as a ‘middleman’ between the customer and sub-contractors. He maintained records in his diary of available sub-contractors and the jobs undertaken.

•  Critical to the role according to the Applicant were communications skills, that is, an ability to communicate effectively both with customers and sub-contractors regarding required services.

•  Some afterhours work was required which necessitated the Applicant to divert the office phone to his mobile phone.

[9] The Applicant gave the following evidence 1 in relation to the events that led to his dismissal.

•  He spoke briefly to Mr. Tunstall on 23 July 2020 about working from home during the Covid pandemic, to which he says Mr. Tunstall replied that “didn’t work for him”.

•  On 24 July 2020 the Applicant took his daughter for a Covid test following which he isolated at home pending a negative test result which was received on 29 July 2020. During this period, he continued to perform his normal work from home, which he says was very busy in that period. He acknowledged however that the volume of business had declined during the pandemic.

•  On 29 July 2020 he advised Mr. Tunstall during a phone conversation that he did not feel comfortable working in the office during the pandemic, that his job was able to be performed from home and that Victorians were being told if they could work from home they should.

•  On 30 July 2020 the Applicant received a phone call from Mr. Tunstall during which he was asked by Mr. Tunstall why he was not in the office to which he replied that he had concerns about leaving the house and putting himself and his family at risk. According to the Applicant Mr. Tunstall replied, “ok well you better divert the phone to me then”.

•  On 1 August 2020, the Applicant says he received a text message from Mr. Tunstall in which Mr. Tunstall said he needed to catch up with the Applicant to get the work key. The Applicant says he replied and asked whether Mr. Tunstall had sacked him. No reply to the Applicant’s question was received according to the Applicant.

•  On 4 August 2020 the Applicant received a further text message from Mr. Tunstall advising him that the he was required to return his work key, phone and E Tag and that his final pay had been made up. The Applicant then called Mr. Tunstall to confirm whether he had been sacked to which Tunstall responded that there was no work. The Applicant then drove to the Respondent’s office to return the Respondent’s property but was unable to speak with Mr. Tunstall as he had already left the office.

[10] Mr. Tunstall gave the following evidence 2 in relation to the events that lead to the Applicant’s dismissal.

•  On 28 July 2020 Mr. Tunstall called the Applicant to check on how the Applicant’s daughter was. He was advised of the negative Covid test result and then said to the Applicant that he would see him at work tomorrow. He says no mention was made by the Applicant of his intention to work from home.

•  On 29 July 2020 Mr. Tunstall called the Applicant when he did not attend work. The Applicant advised him that he was not coming into work following which Mr. Tunstall said he needed to speak with the Applicant as there was very little work and no job for him. The Applicant was requested by Mr. Tunstall to divert his phone to Mr. Tunstall.

•  Mr. Tunstall says he sent text messages to the Applicant on 1 & 4 August 2020 requesting the Applicant to return the Company property, that being the keys, mobile phone and E Tag. Mr. Tunstall says he was unable to speak with the Applicant as his phone was diverted to message bank.

•  On 4 August 2020 the Applicant called the office requesting an Employment Separation Certificate 3 which was prepared for him to pick up later that day. Mr. Tunstall left for a medical appointment prior to the Applicant’s arrival at the office to drop off the Company property.

•  The Employment Separation certificate states that the Applicant’s employment ceased on 31 July 2020 but that he was paid in lieu of notice for the period up to 4 August 2020.

•  The Covid pandemic and resultant community and business restrictions had significantly impacted the Respondent resulting in a 37% reduction in revenue in the April-June 2020 quarter and a 70% reduction in the July-September 2020 quarter.

•  The work previously performed by the Applicant is now being performed by Mr. Tunstall.

Has the Applicant been dismissed?

[11] A threshold issue to determine is whether the Applicant has been dismissed from his employment. Section 386(1) of the Act provides that the Applicant has been dismissed if:

(a) the Applicant’s employment with the Respondent has been terminated on the Respondent’s initiative; or

(b) the Applicant has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by the Respondent.

[12] Section 386(2) of the Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant.

[13] There was no dispute and I find that the Applicant’s employment with the Respondent terminated at the initiative of the Respondent.

Initial matters

[14] Under section 396 of the Act, the Commission is obliged to decide the following matters 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; and

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

Was the application made within the period required?

[15] Section 394(2) requires an application to be made within 21 days after the dismissal took effect.

[16] There was a dispute between the parties as to the date of dismissal. The Applicant says he was unaware of his dismissal until the 4 August 2020 whereas the Respondent contends that the dismissal was communicated and took effect on 29 July 2020. The evidence of the parties on this point was unsupported by any written communication between the Applicant and Mr Tunstall with each party providing conflicting versions of what was said and when.

[17] The Applicant submits that in various telephone conversations with Mr Tunstall on 29 & 30 July 2020 during which he discussed his unwillingness to work in the office during the pandemic, at no stage did Mr Tunstall tell him his employment had been terminated. He did however agree that in the telephone conversation with Mr Tunstall on 30 July 2020 Mr Tunstall told him to divert his phone to Mr Tunstall. The Applicant also agreed that he had received text messages from Mr Tunstall on both 1 & 4 August 2020 requesting him to return the Respondent’s property he possessed, that being the keys, mobile phone, fuel card and E Tag.

[18] The request for the diversion of the phone and the text messages, to which I have referred above, supports Mr Tunstall’s view that he had communicated the Applicant’s dismissal to him on 29 July 2020. However, Mr Tunstall also gave evidence that he told the Applicant on 29 July 2020 that he needed to speak with him as there was very little work for him and no job for him. While that might have indicated an intention of Mr Tunstall to dismiss the Applicant, it falls short of explicitly advising the Applicant that his employment had been terminated. As previously stated, no formal written advice, email or text message was sent to the Applicant confirming the termination of his employment.

[19] I accept the Applicant’s evidence that he was not explicitly advised by Mr Tunstall prior to the 4 August 2020 that he had been dismissed. That is not to say that I find Mr Tunstall’s evidence unreliable. Rather, I regard it as likely that what he believes he stated to the Applicant on 29 July 2020 may not have been heard or understood as was intended. Any doubt as to the employment having come to an end was removed on the 4 August 2020 when the Applicant dropped off the Company property and picked up his Employment Separation Certificate.

[20] It follows from the above that I am satisfied that the Applicant was dismissed from his employment on 4 August 2020 and made the application on 6 August 2020. I am therefore satisfied that the application was made within the period required in subsection 394(2).

Was the Applicant protected from unfair dismissal at the time of dismissal?

[21] Section 382 of the Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

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

(b) one or more of the following apply:

(i) a modern award covers the person;

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

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

Minimum employment period

[22] It was not in dispute and I find that the Respondent is a small business employer, having fewer than 15 employees at the relevant time. Further, the Applicant was an employee, who commenced his employment with the Respondent on 9 July 2018 and was dismissed on 4 August 2020, a period in excess of 12 months.

[23] I am therefore satisfied that, at the time of dismissal, the Applicant was an employee who had completed a period of employment with the Respondent of at least the minimum employment period of 12 months which applies in the case of a small business employer.

Applicant’s annual rate of earnings

[24] There was a dispute as to the components of the Applicant’s salary in that the Applicant submits it included a $7,000.00 component to compensate him for the use of his private vehicle. The Respondent disputes that claim although neither party was able to provide documentary evidence to resolve that factual contest. Ultimately little turns on this point as the salary inclusive or exclusive of the claimed $7,000.00 component is well below the high income threshold.

[25] I find that, at the time of dismissal, the sum of the Applicant’s annual rate of earnings (being $76,440) together with such other amounts worked out in accordance with regulation 3.05 of the Fair Work Regulations 2009, was less than the high income threshold, which, for a dismissal taking effect on or after 1 July 2020, is $153,600.

[26] I am therefore satisfied that, at the time of dismissal, the Applicant was a person protected from unfair dismissal.

Did the Respondent comply with the Small Business Fair Dismissal Code in relation to the dismissal?

[27] The Small Business Fair Dismissal Code (the Code) applies to small business employers with less than 15 employees. A person is not unfairly dismissed if the dismissal is consistent with the Code and immediately before dismissal or at the time notice of the dismissal is given, whichever is earlier, the employer is a small business employer. I have already found that the Respondent was a small business employer at the relevant time.

[28] Mr Tunstall confirmed that the Applicant’s dismissal was not related to either his performance or conduct and that the Code was neither relevant nor applied in the circumstances of the Applicant’s dismissal. I consequently find that the dismissal was not consistent with the Code.

Was the dismissal a case of genuine redundancy?

[29] Section 389(1) of the Act sets out the meaning of genuine redundancy and relevantly states as follows:

“389 meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy”

[30] Section 389(2) of the Act provides for an exclusion to that which would otherwise fall within the definition of genuine redundancy and relevantly states as follows:

“(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

Was the Applicant’s job no longer required - s 389(1)(a)?

[31] I turn firstly to consider whether the Respondent no longer required the Applicant’s job to be performed by anyone because of the operational requirements of the Respondent.

[32] Mr Tunstall gave evidence that the dismissal of the Applicant was wholly related to the downturn in the Respondent’s business arising from impact of the pandemic. He cited the quarterly declines in business of 37% and 70% in the period from April to September 2020. Mr Tunstall also states that the Applicant has not been replaced and that he (Mr Tunstall) is now performing the duties previously carried out by the Applicant.

[33] While the Applicant did not cavil with Mr Tunstall’s evidence as to the decline in business in 2020, he says the dismissal was not motivated by the business decline but rather because Mr Tunstall was unwilling to accept the Applicant’s preference to work from home during the pandemic. The Applicant seeks that an inference be drawn from the timing of his dismissal with his conversation with Mr Tunstall on 29 July 2020 about wanting to work from home. Mr Tunstall for his part denies that such conversation occurred or that there was any reason for the dismissal other than the decline in business. Unhelpfully, neither party was able to produce any documentation or text messages that would assist resolve the conflict in their evidence.

[34] While the timing of the dismissal coincides with the alleged conversations between the Applicant and Mr Tunstall regarding the Applicant’s desire to work from home, it is also the case that the Respondent was confronting a significant reduction in its business, a point not challenged by the Applicant. As to the Applicant’s wish to work from home during the pandemic I accept that evidence based on his non-attendance at work following his daughter’s negative Covid test result. His attitude to working from home was also consistent with the Victorian state government’s work from home advice at the time.

[35] It is the link between his desire to work from home and his dismissal that the Applicant seeks be drawn. That proposition was put to Mr Tunstall and firmly rejected by him. On the material before me I am unable to reach a level of satisfaction that would allow me to conclude that the termination of the Applicant’s employment was initiated because of his wish to work from home during the pandemic. More persuasive in the circumstances is the dramatic reduction in business that confronted the Respondent at the time of the dismissal, and which continues to challenge it.

[36] A 37% reduction in the Respondent’s business activity in the April-June quarter followed by a 70% reduction in the July-September quarter provides a compelling backdrop to the decision by the Respondent to dismiss the Applicant. Also telling is the fact that the role has not been replaced and that Mr. Tunstall is performing the duties formerly undertaken by the Applicant. I am satisfied that the reason for the Applicant’s dismissal was the downturn in the Respondent’s business activity due to the Covid pandemic and consequent community and business restrictions.

[37] It follows from the above, and I am satisfied that, the role previously held by the Applicant is no longer required by the Respondent due to changes in the Respondent’s operational requirements. I now turn to consider whether the Respondent complied with its consultation obligations.

Did the Respondent comply with any consultation obligations - s 389(1)(b)?

[38] Whether the Respondent was required to comply with particular consultation obligations turns on whether the Applicant was covered in his employment by a modern award or an enterprise agreement and such applicable modern award and/or enterprise agreement contains consultation provisions. It is not in dispute that the Applicant was not covered by an enterprise agreement and nor did either the Applicant or the Respondent contend that the Applicant was covered by a modern award. However, the subjective opinion of the parties as to whether a modern award covered the Applicant is irrelevant as the application of a modern award is a matter of fact to be determined by the Commission.

[39] While the Applicant referred to his role as that of Operational Manager, with which title Mr Tunstall disagreed, it is necessary to look at the industry within which the Respondent operates before considering the duties of the Applicant in order to properly determine whether the Applicant falls within the coverage of a modern award. Those duties and responsibilities of the Applicant were set out above at [8].

[40] The Respondent provides a service to its customers by identifying and securing sub-contractors who are able to provide machinery/equipment (including bobcats, excavators and tip trucks) and labour to undertake earthworks and earthmoving activity. The Respondent does not itself directly or indirectly supply labour or equipment to its customers. While the work undertaken by the sub-contractors may in some circumstances fall within the coverage of the Building and Construction General On-Site Award 2010 4(the Construction Award), I am unable to conclude on the material before me that the Respondent is an employer in the “on-site building, engineering and civil construction industry”. Nor is there any other industry based modern award that appears relevant.

[41] In the absence of a relevant industry award I turn to consider the duties of the Applicant to ascertain whether an occupational based modern award may apply.

[42] As detailed in the Applicant’s evidence the Applicant was required in his role to take enquires and orders from customers in respect of service/equipment needs for earthworks and earthmoving activities. The Applicant used his knowledge and experience and a list of available sub-contractors to meet customer requirements and would then arrange for the engagement of the relevant sub-contractor to perform the work. In quoting for work he worked off a standard price list maintained by the Respondent and also kept a record of all jobs in his work diary. He was not responsible for invoicing. There was no evidence adduced that the role had a managerial or business development dimension.

[43] In assessing the duties of the Applicant, I have considered whether the Clerks - Private Sector Award 2020 5(the Clerks Award) may apply. Clause 4 Coverage in the Clerks Award provides as follows;

“4.1 This occupational award covers:

(a) private sector employers throughout Australia in relation to employees wholly or principally engaged in clerical work; and

(b) private sector employees who are wholly or principally engaged in clerical work and who are employed by employers mentioned in clause 4.1(a).”

[44] While the Respondent is a private sector employer, I am unable to conclude that the Applicant is engaged “wholly or principally” in clerical work. That is because while there is an element of clerical work involved in the duties of the Applicant, those clerical duties appear limited to referral to the Respondent’s price list, use of the list of sub-contractors and recording of the jobs in the Applicant’s work diary. More critical is the Applicant’s knowledge of earthmoving equipment and sub-contractors, application of that knowledge in meeting the customer requirements and communicating effectively with both customers and sub-contractors. I am not satisfied that the Applicant was covered in his employment by the Clerks Award.

[45] I turn now to consider whether the Applicant was covered in his employment by the Miscellaneous Award 2020 6 (the Miscellaneous Award) the scope clause of which provides as follows;

“4. Coverage

4.1 Subject to clauses 4.2, 4.3, 4.4 and 4.5 this award covers employers throughout Australia and their employees in the classifications listed in clause 15—Minimum rates who are not covered by any other modern award.

4.2 The award does not cover managerial employees and professional employees such as accountants and finance, marketing, legal, human resources, public relations and information technology specialists.

4.3 The award does not cover employees excluded from award coverage by the Act.

4.4 The award does not cover employees who are covered by a modern enterprise award, or an enterprise instrument (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

4.5 The award does not cover employees who are covered by a State reference public sector modern award, or a State reference public sector transitional award (within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth)), or employers in relation to those employees.

……………….”

[46] The Miscellaneous Award save for the exclusions detailed at sub-clauses 4.2 – 4.5, covers employees who fall within the classifications structure at clause 12. I am satisfied that the Applicant is not excluded from coverage by reason of falling into any of the above-referred exclusions at sub-clauses 4.2 - 4.5. I am further satisfied that having regard to the duties of the Applicant, he would fall within the classifications found at clause 12 of the award. It is not clear on the evidence whether the Applicant required trade or other formal qualifications such that he would be positioned at the Level 3 trade qualification level, although an understanding of earthmoving equipment and machinery appeared necessary. If not classified at Level 3 he would, in the role he was performing for the Respondent, certainly be classified at Level 2, which requires that he had been employed for 3 months and not be required to carry duties at or above the trade qualified Level 3.

[47] It follows from the above that I am satisfied that the Applicant was covered by the Miscellaneous Award in his employment with the Respondent. The Miscellaneous Award includes a standard clause dealing with consultation about major change in the workplace and relevantly provides as follows;

27. Consultation about major workplace change

27.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

27.2 For the purposes of the discussion under clause 27.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(d) any other matters likely to affect employees.

27.3 Clause 27.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

27.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 27.1(b).

27.5 In clause 27 significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

27.6 Where this award makes provision for alteration of any of the matters defined at clause 27.5, such alteration is taken not to have significant effect.

[48] The loss of the Applicant’s job was clearly a “significant effect” as defined at sub-clause 27.5 that enlivened the consultation obligations of the Miscellaneous Award. It is also plainly apparent from a review of the evidence that the Respondent failed to comply with the consultation requirements set out at sub-clauses 27.1 & 27.2. Mr Tunstall failed to discuss the proposed change, the likely effect on the Applicant and measures to avoid the loss of the Applicant’s job. Nor did Mr Tunstall provide any of the required information in writing.

[49] It follows from the above that while I am satisfied that the Applicant’s position was no longer required and was therefore redundant, it was not a genuine redundancy as the Respondent failed to comply with the consultation obligations under the Miscellaneous Award.

[50] In this case, having found that the Applicant’s dismissal was not a genuine redundancy, and having considered each of the other preliminary matters set out at s. 396 of the Act, I am now required to consider whether the dismissal of the Applicant was harsh, unjust or unreasonable.

Was the dismissal harsh, unjust or unreasonable?

[51] Section 387 of the Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account:

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

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

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

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

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

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

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

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

[52] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me. 7 I set out my consideration of each below.

Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct – s 387(a)?

[53] A valid reason for the dismissal of the Applicant need not be the reason given to the Applicant at the time of the dismissal. 8 The reasons should be “…sound, defensible and well founded”9 and should not be “…capricious, fanciful, spiteful or prejudiced.”10

[54] I am satisfied that the Applicant’s dismissal was due to redundancy, albeit as I have already found above it was not a “genuine redundancy”. The Applicant was not dismissed for a reason related to his capacity or conduct.

[55] In the circumstances of this case the absence of a valid reason related to his capacity or conduct is a neutral consideration.

Notification of the valid reason - s.38 7(b)

[56] While the Applicant was notified of the reason for his dismissal, that of redundancy, it was not a “valid reason” related to his capacity or conduct. It follows that he was not notified of a “valid reason”. In the circumstances of the present case, however, where the dismissal was due to redundancy, it is a neutral consideration.

Opportunity to respond to any reason related to capacity or conduct - s.387(c)

[57] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common-sense way to ensure the employee is treated fairly and should not be burdened with formality. 11

[58] The Applicant was self-evidently not given an opportunity to respond to the reasons for his dismissal relating to his conduct or capacity. In the circumstances of the present case, however, where the dismissal was due to redundancy, it is a neutral consideration.

Support person – s. 387(d)

[59] The unchallenged evidence of the Applicant as to the lack of prior notice and the poorly conducted manner of the dismissal would suggest a request by the Applicant for a support person would have been moot in the circumstances. It is difficult to envisage a request for a support person being refused in circumstances where Mr Tunstall did not even go to the trouble of meeting with the Applicant to discuss his dismissal. In the circumstances of this case I regard this factor as a neutral consideration in my decision.

Warnings regarding unsatisfactory performance - s.387(e)

[60] The Applicant was not dismissed for performance shortcomings as he was made redundant. Consequently, this factor is a neutral consideration in my decision.

Impact of the size of the Respondent on procedures followed - s.387(f)

[61] The Respondent’s Form F3 - Employer Response indicates that at the time of the Applicant’s dismissal it employed 3 employees. The Respondent submits, and I accept, that the organisation’s size did not impact on the procedures followed by it in dismissing the Applicant. This factor is therefore a neutral consideration in my decision.

Impact of absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[62] The Respondent agreed that the absence of human resources specialists/expertise did not impact on the procedures followed. In all the circumstances, I find that the absence of dedicated human resource management specialists in the Respondent’s enterprise did not impact on the procedures followed in effecting the dismissal.

Other relevant matters – s.387(h)

[63] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.

[64] The Applicant contends that the Commission should take into account the following additional matters when considering whether his dismissal was unfair;

•  The manner in which he was dismissed, that being the lack of clear communication, the use of text messages requesting him to return company property and the fact that Mr Tunstall did not meet directly with him;

•  The fact that he was dismissed in the middle of a pandemic and had requested to work from home, consistent with State government directions; and

•  The dismissal had left him struggling financially and his prospects for re-employment in the near term were poor because of the pandemic.

[65] Mr Tunstall responded by submitting that the business circumstances confronting the Respondent were such that there was simply not enough work to keep the Applicant employed and again referred to the collapse in business over the past 6 months.

[66] I accept that the rationale for the dismissal of the Applicant was soundly based on the downturn in the Respondent’s business, that downturn in business not challenged by the Applicant. However, the manner of the dismissal was an object lesson in how not to affect a termination of employment. There was an absence of clear communication or any formal documentation, the brief telephone communication that did occur was oblique as to the status of the Applicant’s employment, there was a reliance on text messages requiring the return of company property and there was failure to meet directly with the Applicant to communicate the dismissal when that would have been the appropriate course of action. The combination of these factors combines to weigh in favour of a finding that the manner of dismissal was unreasonable. Added to this is the impact of the dismissal on the Applicant in the midst of a pandemic which also weighs in favour of a finding that the dismissal was harsh.

Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?

[67] I have made findings in relation to each matter specified in section 387 as relevant.

[68] I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable. 12

[69] I accept that the position of the Applicant was no longer required because of the Covid pandemic related downturn of the Respondent’s business. However, the Respondent failed to consult the Applicant as it was required to in accordance with the Miscellaneous Award. It also carried out the dismissal in a manner entirely lacking in proper process or with regard to the impact of the manner of the dismissal on the Applicant.

[70] Due to the position of the Applicant being no longer required, and as I have found above, most of the s.387 criteria are neutral factors in my consideration. It is in respect of those other factors that I have considered at s.387(h) that weight in favour of a finding that the dismissal of the Applicant was unfair. Having considered each of the matters specified in section 387 of the Act, and in particular those factors under s. 387(h), I am satisfied that the dismissal of the Applicant was harsh and unreasonable.

Conclusion

[71] It follows from the above that I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of section 385 of the Act.

Remedy

[72] Being satisfied that the Applicant:

•  made an application for an order granting a remedy under section 394;

•  was a person protected from unfair dismissal; and

•  was unfairly dismissed within the meaning of section 385 of the Act,

I may, subject to the Act, order the Applicant’s reinstatement, or the payment of compensation to the Applicant.

[73] Under section 390(3) of the Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

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

Is reinstatement of the Applicant inappropriate?

[74] The Applicant did not seek reinstatement and also submits that the manner of his dismissal and the breakdown of his trust in Mr Tunstall means that it would be in the best interests of both parties that they do not work together again. Mr Tunstall did not disagree.

[75] Having regard to the size of the Respondent’s business and the matters referred to above, I consider that reinstatement is inappropriate. I will now consider whether a payment for compensation is appropriate in all the circumstances.

Is an order for payment of compensation appropriate in all the circumstances of the case?

[76] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…” 13

[77] Having found that the dismissal of the Applicant was unreasonable because of the manner of his dismissal and harsh because of the consequences I believe that compensation is appropriate.

Compensation – what must be taken into account in determining an amount?

[78] Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:

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

(b) the length of the Applicant’s service;

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

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

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

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

(g) any other matter that the Commission considers relevant.

[79] I consider all the circumstances of the case below.

Effect of the order on the viability of the Respondent’s enterprise

[80] The Respondent submits that an award of compensation to the Applicant would affect the viability of the Respondent’s business and sought an opportunity to file evidence on the impact on its viability in the event I was inclined to order a remedy of compensation. I will afford an opportunity to the Applicant to file additional material on this issue.

Length of the Applicant’s service

[81] The Applicant’s length of service was approximately 2 years. Neither party submit that the Applicant’s length of service was a factor that weighed in favour of a greater or lesser amount of compensation.

[82] I do not regard the Applicant’s length of service of 2 years as either supportive of reducing or increasing the amount of compensation ordered.

Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed

[83] As stated by a majority of the Full Court of the Federal Court, “[i]n determining the remuneration that the Applicant would have received, or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.” 14

[84] The Applicant submits that had he not been dismissed he would have remained in employment for a reasonable period given he enjoyed the role. This submission does not however withstand scrutiny when consideration is given to the unchallenged evidence of collapse in the Respondent’s business over the past 6 months. In these circumstances I regard it as unlikely that the Applicant would have remained in employment for much longer at all. On the assumption of the Respondent complying with the award consultation obligations set out at [47] above, and having regard to the business circumstances confronting it, I believe the Applicant’s employment would have continued for no more than a further 2 weeks. That period would have allowed the Respondent to fulfil its award consultation obligations in implementing a genuine redundancy of the Applicant.

[85] I have already found that the Applicant’s annual salary was $76,440 which results in a weekly amount of $1,470.00. On the basis of the Applicant’s employment continuing for a further 2 weeks I am satisfied that had the Applicant not been dismissed he would have received remuneration of $2,940.00.

Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal

[86] The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal. 15 What is reasonable depends on the circumstances of the case.16

[87] The Applicant gave evidence of his attempts to find employment since his dismissal. He says he had contacted a number of companies but there were currently no opportunities because of the ongoing pandemic. I accept that in the circumstances of the current pandemic that the Applicant has made reasonable efforts to mitigate his losses.

Amount of remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation

[88] The Applicant’s evidence is that he has not earned any remuneration from employment or other work since the dismissal. That evidence is not challenged by the Respondent.

[89] I am satisfied that the Applicant has not earned any remuneration from employment or other work during the period since her dismissal. No deduction will be made.

Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation

[90] The Applicant’s evidence is that he is unlikely to earn any remuneration in the period between the making of the order for compensation and the payment of compensation. That evidence is not challenged by the Respondent.

[91] I am satisfied that the Applicant is unlikely to earn any income between the making of the order for compensation and the payment of compensation. No deduction will be made.

Other relevant matters

[92] No other relevant matters were raised by the parties going to an order for compensation.

Compensation – how is the amount to be calculated?

[93] As noted by the Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg). 17 This approach was articulated in the context of the Act in Bowden v Ottrey Homes Cobram and District Retirement Villages18.”19

[94] The approach in Sprigg is as follows:

Step 1: Estimate the remuneration the Applicant 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 1

[95] I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated the employment to be $2,940.00 on the basis of my finding that the Applicant would likely have remained in employment for a further period of 2 weeks. This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”. 20

Step 2

[96] I have found that the Applicant has not earned any amount of remuneration since the date of his dismissal, and that he is unlikely to earn any remuneration between the making of the order for compensation and the payment of compensation.

[97] Only monies earned since termination for the anticipated period of employment are to be deducted. 21 Consequently, no deductions are to be made for earnings.

Step 3

[98] I now need to consider the impact of contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment. 22

[99] I do not consider it appropriate to deduct an amount for contingencies.

Step 4

[100] I have considered the impact of taxation but have elected to settle a gross amount of $2,940.00 which is to be subject to normal taxation.

[101] Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case,” 23

[102] I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the FW Act.

Compensation – is the amount to be reduced on account of misconduct?

[103] If I am satisfied that misconduct of the Applicant contributed to the employer’s decision to dismiss, I am obliged by section 392(3) of the FW Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct.

[104] The dismissal did not arise from any misconduct of the Applicant therefore the amount of the order for compensation is not to be reduced on account of misconduct.

Compensation cap

[105] The amount that I propose to award is less than the compensation cap set out at s.392(5) of the Act.

Conclusion

[106] In light of the above, I have concluded that an order of compensation of $2,940.00 gross less taxation as required by law to the Applicant in lieu of reinstatement is appropriate. However, as I have noted at [80] above, I will afford the Respondent an opportunity to file additional evidence and submissions as to the impact on the viability of the Respondent of such an order if made.

[107] To the above end, the Respondent and Applicant are invited to file submissions and material in accordance with the following timetable;

1. The Respondent is required to file any submissions, witness statements and material on which it seeks to rely in respect of s.392(2)(a) (viability of the employer) on or by close of business Monday 26 October 2020.

2. The Applicant is to file any submissions, witness statements and material on which he seeks to rely in reply in respect of s. 392(2)(a) (viability of the employer) on or by close of business close of business Monday 2 November 2020.

[108] Should a further hearing be required on the basis of materials filed by the parties in accordance with the above timetable, directions will be issued in due course.

DEPUTY PRESIDENT

Appearances:

D. Roche on his own behalf

J. Tunstall for the Respondent

Hearing details:

2020
Thursday
15 October

Printed by authority of the Commonwealth Government Printer

<PR723467>

 1   Exhibit A2, Witness Statement of Mr Darren Roche

 2   Exhibit A2, Witness Statement of Mr John Tunstall

 3   Exhibit R3, Employment Separation certificate

 4   MA000020

 5   MA000002

 6   MA000104

 7   Sayer v Melsteel Pty Ltd[2011] FWAFB 7498, [14]; Smith and others v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].

 8 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377–378.

 9 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.

 10   Ibid

 11 RMIT v Asher (2010) 194 IR 1, 14-15.

 12   ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]–[7].

 13   Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter[2014] FWCFB 7198, [9].

 14   He v Lewin [2004] FCAFC 161, [58].

 15   Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].

 16   Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.

 17 (1998) 88 IR 21.

 18   [2013] FWCFB 431.

 19   Double N Equipment Hire Pty Ltd t/a A1 Distributions v Allan Humphries[2016] FWCFB 7206, [16].

 20   Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].

 21   Ibid.

 22   Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39].

 23   Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [17].