Mr Joshua Wright v IPG Calamvale Pty Ltd T/A Discount Drug Store Calamvale

[2014] FWC 1781

[2014] FWC 1781

FAIR WORK COMMISSION

DECISION

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

Mr Joshua Wright
v
IPG Calamvale Pty Ltd T/A Discount Drug Store Calamvale
(U2013/3355)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 21 MARCH 2014

Summary: unfair dismissal remedy - no valid reason etc - reinstatement not sought - compensation ordered.

[1] This matter concerns an application by Mr Joshua Wright (“the Applicant”) who is seeking an unfair dismissal remedy in relation to the decision by IPG Calamvale Pty Ltd T/A Discount Drug Store Calamvale (“the employer”) to dismiss him summarily from its employment on (what appears to be) 5 October 2013.

[2] The Applicant performed duties (on a part time basis) as a pharmacy assistant since from early 2010, until the time of his summary dismissal.

[3] By correspondence dated 4 October 2013 as directed to the Applicant, the employer contended relevantly as follows:

This letter is to advise that unfortunately we will be ceasing your employment as a pharmacy assistant with Discount Drug Store, Calamvale – effective immediately.

It has been reported that you have been discussing information with customers and also within the store about your related family members new employment location, which in turn is a conflict of interest with our store and we take such matters seriously in this case instant dismissal. As you may be aware, discussing such information with both customers and within our premises is a breach of our confidentiality agreement, which has been issued to all staff.

[4] The correspondence was signed by Ashleigh Skalski, Human Resources Manager for the Infinity Pharmacy Group (“IPG”).

[5] True it is that the Applicant had signed and dated (on 22nd of May 2013) a Confidentiality and Security Agreement as a policy requirement stipulated by his employer. The Confidentiality and Security Agreement goes to such matters, importantly, as retaining confidentiality about the business affairs of the pharmacy and the patients who are under its care.

[6] The Confidentiality and Security Agreement provides in part as follows:

As an employee [...] I will act to ensure confidentiality and security of information including intellectual property (IP), security of property, and maintain efficient and proper use of resources, whether they belong to Infinity Group of Pharmacies or other people or agencies, including patients and customers that are under the care of the pharmacy. I shall ensure this by:

1. Maintaining complete confidentiality of any information relating to (directly or indirectly) the business and affairs of the pharmacy, its patients, its employees or other people or organisations associated with Infinity Group of Pharmacies activities in accordance with the pharmacies policies and procedures, legislation, including the Privacy Act 1988 and the Privacy Amendment (Private Sector) Act 2000. This information refers to all information whether written, electronic or verbal that has been transmitted implicitly or explicitly.

2. Using confidential information solely for the purpose of performing my duties within the organisation.

3. Ensuring that any property owned or under the care of Infinity Group of Pharmacies (including fixtures, fittings, stationery, equipment and other supplies) shall not be removed from the premises without proper authorisation.

4. Not disclosing any information relating to Infinity Group of Pharmacies information technology (IT), including web, Internet and intranet development information. Any IT development performed by an employee will always remain the property of Infinity Group of Pharmacies. I understand this duty of non disclosure extends beyond my employment with Infinity Group of Pharmacies and I will not disclose any information with respect to IP or IT to any external party without proper authorisation from the Partners.

[7] The Confidentiality and Security Agreement subsequently refers to matters regarding patient confidentiality, which is not relevant to these particular proceedings.

[8] It appears that the issue about which the Applicant’s dismissal arose from related to circumstances wherein the Applicant and his mother both performed duties at the employer’s place of business at the same time, until the Applicant’s mother resigned her employment.

[9] It is to be noted in the context however that the Applicant’s mother resigned her employment only a short period before the Applicant himself was dismissed. The Applicant’s mother claimed to have had a number of issues with her employer in the months leading up to her resignation. One of the key reasons seems to have been concern about “a lack of support” from a supervisor by the name of “Manj”.

[10] At the time of the resignation it appears that Manj enquired as to whether or not the Applicant would also resign his employment as a consequence of his mother having resigned. It was said by the Applicant’s mother that Manj indicated relief when he found that the Applicant was not resigning, as he found the Applicant to be a productive worker.

[11] The Applicant’s mother claims that during the course of her notice period the employer indicated that the final week of her notice would be paid in lieu. This was because, so it was said, that the Applicant’s mother was informing people that she had resigned and where her new place of work would be (which was believed to be a competitor pharmacy).

[12] On Saturday, 5 October 2013 the Applicant received an e-mail that was entitled, “Employment Cessation”.

[13] The Applicant said that he was shocked at having received the e-mail, which indicated he was no longer an employee.

[14] The reason for the dismissal, as cited above in the dismissal letter of 5 October 2013, was that the employer reached a view that the Applicant had been discussing the location of his mother’s new place of work with customers.

Small Business Fair Dismissal Code

[15] Section 385 of the Act provides as follows:

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.

[16] Section 388 of the Act provides as follows:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

[17] Section 396 of the Act provides as follows:

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.

[18] The declared Small Business Fair Dismissal Code (“the Code”) provides as follows:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[19] The employer invoked the Small Business Fair Dismissal Code, and claimed that it employed fewer than 15 employees for purposes of s.23 of the Act and to its current state of knowledge had no related companies nor associated entities (even though it was part of a franchise arrangement).

[20] As they were unrepresented, the parties were not positioned to make submissions on the matter of the applicability of the Code for the purposes of s.50AAA of the Corporations Act 2001.

[21] In this instance the Applicant was summarily dismissed owing to what was described by the employer as “gross misconduct”.

[22] Even if the Code were to apply to the employer, the employer did not dismiss the Applicant in conformity with the summary dismissal provisions thereof.

[23] In Concut Pty Ltd v Worrell, Kirby J said of the common law:

“3. The ordinary relationship of employer and employee at common law is one importing implied duties of loyalty, honesty, confidentiality and mutual trust. [...]

4. It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment. Other exceptions may arise where the breaches are ancient in time and where they may have been waived in the past, although known to the employer. Some breaches may be judged irrelevant to the duties of the particular employee and an ongoing relationship with the employer. But these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee [...] will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal.” 103IR 160, at PNS173-174

[24] The misconduct here alluded to by the employer was not misconduct that warranted summary dismissal, even if it was made out, or even if the employer had a reasonable belief it was made out. The conduct referred to - and which is set out below - was conduct that might have (if it had occurred) caused the employer some discomfort, and would have rightly been subject to a measure of counselling (at most). But it was not conduct that warranted summary dismissal for reason of being destructive of the mutual trust between the Applicant and the employer. Indeed, there was no claim that the Applicant, even had he made any comments to staff or customers, did so to damage the employer, or to cause a mischief.

[25] Further, it was not conduct in respect of which the employer had carried out a reasonable investigation (which was disclosed in the evidence available to me at the time of the hearing) in order to establish the reasonable grounds for its belief (that the conduct occurred). I was provided no evidence at all in this regard.

[26] The Code, therefore, does not apply in respect of the summary dismissal of the Applicant.

FURTHER LEGISLATIVE PROVISIONS

[27] The relevant legislative provisions arise under s.387 of the Act which reads as follows:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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.

[28] I turn to the substantive requirements of s.387 of the Act and apply them only so far as they apply to the Applicant.

(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)

[29] It is not readily apparent that a circumstance in which the Applicant may or may not have divulged information about the location of his mother’s new place of work is subject to the Confidentiality and Security Agreement. The purpose of the Confidentiality and Security Agreement concerns conduct in relation to ensuring:

confidentiality and security of information including intellectual property (IP), security of property, and maintain efficient and proper use of resources, whether they belonged to Infinity Group of Pharmacies or other people or agencies, including patients and customers that are under the care of the pharmacy.

[30] The Confidentiality and Security Agreement seeks to guide employee conduct in relation to discrete matters and is not relevant to the reasons for the Applicants dismissal. It is difficult to discern how a breach of the Confidentiality and Security Agreement of the kind as alleged could constitute a “conflict of interest”, as the employer claimed.

[31] In any event, there was no evidence led by the employer that satisfies me that the Applicant had divulged such information in the first place (regardless as to whether or not such information, had it been disclosed, warranted the Applicant’s dismissal).

[32] It may be the case that the employer was sensitive about internal staffing issues being the subject of discussion with customers/patients. It is reasonable that an employer may seek to ensure that its internal issues and practices do not otherwise disturb its business profile, reputation amongst its customers, or its brand. But it is necessary to evaluate the scale of the risk posed by the Applicant’s conduct in this regard, and the reasonable manner in which it should have responded. In my view, the risk was particularly modest at the time of the dismissal (and no evidence was led to the contrary), and the conduct should have been addressed by counselling instead of dismissal.

[33] As I found above, there was no evidence that demonstrated that the Applicant had communicated to customers/patients any information about his mother’s new place of work. Nor did the employer bring any evidence about the identities of any employees to whom the Applicant had disclosed any information about his mother’s circumstances.

[34] From the evidence of the Applicant’s mother under cross examination, it would appear that she had disclosed certain details, about which she held an uncertain recollection, to an employee of IPG prior to the Applicant’s dismissal. There is a possibility this was the source of particular information that may have come to the employer’s attention. But I can take the matter no further than this.

[35] There can, therefore be no valid reason for the dismissal.

(b) whether the person was notified of that reason

[36] The Applicant was dismissed on a summary basis. He had no prior notification of the reasons for his dismissal.

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

[37] Because he was dismissed on a summary basis and was not given any advance notice of the reasons for his dismissal, the Applicant had no opportunity to respond to his employer’s decision. It may be the case that there was some discussion following the decision to terminate the Applicant’s employment, but that is not material for purposes of this provision.

(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

[38] The circumstances of the dismissal did not permit the Applicant any opportunity to seek the assistance of a support person.

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

[39] The dismissal related to the alleged misconduct of the Applicant and did not reflect on his performance as an employee.

(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

[40] The employer is a franchise and has access to the franchisees’ resources.

(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

[41] The employer employed a Human Resource Manager, who provides services to the franchise owners. That person was responsible for the summary dismissal of the Applicant. The employer did not lack therefore the relevant expertise.

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

[42] The Applicant is a student who performed duties on a part-time basis as a pharmacy assistant, and had done so for a period of almost 4 years. He claimed the dismissal had harsh effects on him for reason that he had a number of expenses including, “a phone bill, a TV bill, and student fees.”

[43] There are no other matters of the relevant kind.

Conclusion

[44] Having regard to the totality of the circumstances of this matter, it appears to me that the Applicant was harshly, unjustly and unreasonably dismissed from his employment. There was no valid reason for the dismissal and the Applicant was dismissed on a summary basis without due investigation. Indeed, the employer was unable to make out any elementary misconduct on the part of the Applicant. It appears that the employer held a suspicion that he might cause it some element of embarrassment amongst some of its client base. But that was not made out (as no evidence was led by the Respondent) and therefore was not sufficient to warrant the dismissal of the Applicant, let alone on a summary basis.

[45] The Applicant also was denied any opportunity to respond to the employer’s decision until after the event.

[46] I have set out the findings in relation of s.387 of the Act in so far as they also inform me for the “Other Dismissal” provisions of the Code, should it be taken to apply to the employer. Applying the “Other Dismissal” provisions of the Code I reach the same conclusion as I have in respect of s.387 of the Act.

Remedy

[47] The Applicant is a person protected from unfair dismissal for the Act’s purposes, and is a person who has been unfairly dismissed. Accordingly, I am empowered to exercise a discretion as to whether the Applicant can be reinstated.

[48] Section 391 of the Act provides as follows:

391 Remedy —reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

[49] I would neither reinstate (by re-appointing) the Applicant to his former position nor order that he be appointed to another equivalent position with the Respondent, or any associated entity of the Respondent, on the same or any other site.

[50] This is because the Applicant himself does not request reinstatement or otherwise. The fact that an applicant does not seek to be reinstated (or otherwise) is a significant reason for not exercising the discretion to reinstate etc. Where an employee is unwilling to return to the workplace a productive and cooperative relationship is unlikely to result.

[51] Because of my findings in this regard I now turn to consider compensation.

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.

[52] In respect of the above matters that I must take into account I find as follows:

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

[53] There is no evidence that any order I might make for compensation would in some manner affect the employer’s viability.

(b) the length of the person’s service with the employer

[54] The Applicant had been employed with the employer since 2010, as set out above. This is a length of service that lends support to the making of an order for compensation.

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

[55] On the evidence available to me, the Applicant would have been likely to have remained in employment for a period of at least a further 12 months. The Applicant’s mother gave evidence that his supervisor believed the Applicant to be a competent employee and there is no evidence that he had any disciplinary record with his employer (bar some low level, passing tensions relating to the process of requesting shift changes). Ms Skalski submitted to the same effect on behalf of the employer.

[56] The Applicant expressly seeks to be compensated for losses incurred in the eight-week period from the summary dismissal until he commenced his employment at his new place of work. The Applicant is of the view, and I have no reason to reject it, that this is the period over which he has incurred lost income as a result of the dismissal. The Applicant does not assert to have made losses beyond this eight-week period.

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

[57] The Applicant gave uncontested evidence that he had taken a range of steps to secure alternative employment and to mitigate his losses following the dismissal. The Applicant claimed that he had put out roughly 15 resumes seeking alternative employment. The Applicant was able to secure employment some two weeks after the dismissal. However, he was not able to be offered any shifts at his new place of employment until 1 December 2013.

[58] The Applicant had therefore made positive steps towards mitigating his losses.

(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.

[59] The Applicant did not earn any remuneration in the eight week period from his dismissal to the time of his commencement of his first shifts with his new employer.

(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

[60] This is not a matter that requires any further consideration for reason the matter is already comprehended in my approach (which is premised on the Applicant’s admission that his remuneration following re-employment eight weeks after his dismissal was and is commensurate with his former remuneration).

(g) any other matter that the FWC considers relevant

[61] I indicate that I make no deduction for contingencies as I do not see them as being relevant in these circumstances. There is no evidence that the Applicant was otherwise exposed to loss of income over the period of anticipated employment. Sickness, accident, unemployment and industrial disputes are the main contingencies. I see no reason to apply any discount arising from such contingencies. Some of these apparent contingencies do not necessarily result in lost income in the modern workplace.

[62] Section 392(3) of the Act provides as follows:

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.

[63] There is no evidence of misconduct on the part of the Applicant which I should take into consideration for the purposes of an order for compensation.

[64] Section 392(4) of the Act provides as follows:

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.

[65] My order for compensation makes no allowance for the above proscribed matters or considerations.

[66] Section 392(5) of the Act provides as follows:

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.

[67] Section 392(6) of the Act provides as follows:

(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.

[68] The order that I propose to make does not need to take into account the statutory cap.

[69] Section 393 of the Act provides as follows:

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.

[70] The Respondent has made no application in the course of these proceedings to pay any amount I may order to be paid as compensation in instalments.

CONCLUSION IN RELATION TO REMEDY

[71] I add for sake of clarity that I have found that an order for compensation by way of a remedy is appropriate in the circumstances I have set out above.

[72] That determined, it is apparent from my discussion above that the Applicant would have been employed for a lengthy period of time, and much more than the 8 weeks for which the Applicant is seeking what he refers to as compensation in lieu of reinstatement.

[73] The Applicant himself takes no issue that his remuneration in his new position has been commensurate with that in his former position.

[74] For the reasons I have given earlier, and on the basis of the calculations there completed, I order that the Respondent pay to the Applicant an amount equal to 8 weeks of his usual salary, subject to taxation. An effort has been made to quantify this amount (particularly as the Applicant worked part time across variable shifts) but I have not been assisted in this regard within the requested time frame.

[75] The amount ordered to be paid must be subject to ordinary taxation.

[76] The amount ordered to be paid must be paid to the Applicant’s usual bank account within 14 calendar days of the date of this decision.

[77] An order to the above effect will issue along with this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr J. Wright, Applicant

Ms A. Skalski, of the Respondent

Hearing details:

Brisbane

2014

13 March

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