Mr Kevin Fields v Moscou Holdings Pty Ltd ATF the Penguin Trust T/A Penguin International
[2015] FWC 6878
•16 OCTOBER 2015
| [2015] FWC 6878 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Kevin Fields
v
Moscou Holdings Pty Ltd ATF The Penguin Trust T/A Penguin International
(U2014/12755)
SENIOR DEPUTY PRESIDENT DRAKE | SYDNEY, 16 OCTOBER 2015 |
Application for relief from unfair dismissal.
[1] This is an application by Mr Kevin Fields (the applicant) for an unfair dismissal remedy against Moscou Holdings Pty Ltd ATF The Penguin Trust T/A Penguin International (the respondent) pursuant to s.394(1) of the Fair Work Act 2009 (the Act).
[2] I heard this application in Perth on 28 July 2015. The applicant represented himself via video link from the United Kingdom. The respondent was represented by Mr Mark Moscou, a director of the respondent. Following the hearing I received, at my request, further submissions in correspondence from the parties.
[3] The respondent, in it’s Employer’s Response, raised a jurisdictional objection. It submitted that the applicant was not dismissed but instead, that the applicant resigned from his employment. It is submitted that the applicant was not forced to do so as a result of the respondent’s actions.
The applicant’s case
[4] The applicant was employed by the respondent as a Project Administrator from 2 October 2013. From 3 May 2014 until 18 August 2015 the applicant was required to take an extended period of leave following a severe injury outside of work. His employment ceased on 17 September 2015.
[5] Following his recovery from his injury the applicant returned to work on 19 August 2015. At 11:13pm on Tuesday 19 August 2015 the applicant received an email from Mr Moscou which stated the following:
“Hi Kevin
Good to have you back. I hope you settle in well over the next few weeks. I need to have a candid meeting with you next week as things have changed here at Penguin.
It is no longer acceptable for you to give instructions to Keiran or Desiree in relation to your pay or any personal benefits. Your salary was negotiated on an escalating scale and I expect you to be back on top of all your work and more before you will be taking home your full package. I am not able to discuss this properly over email suffice to say that I will be back on Friday evening and we can meet over the weekend or Monday morning to complete this dialogue.
Hi Keiran
For this week Kevin’s salary will be based on 60k for the days that he worked I will update you on Monday if there is a change.”
[6] On Thursday 28 August 2014 the applicant met with Mr Moscou and advised him that he did not agree with the proposed decrease in salary from $75,000 to $60,000 per annum. Both parties have a different recollection of this meeting.
[7] The applicant submitted that Mr Moscou was dismissive and refused to discuss the matter further and that he advised the applicant to put his concerns in writing and send them to him via email.
[8] The respondent submitted that during this meeting it was agreed that, following the immediate reduction to $60,000, the applicant’s salary would be increased to $75,000 by increments of $5,000; the first increment coming into effect from Friday 5 September 2014, and a further two increments of $5,000 would be applied as the applicant’s output and level of performance improved. Mr Moscou agreed that he did encourage the applicant to respond in writing if he believed his salary should remain unchanged however, no written response was received.
[9] On 2 September 2014 the applicant met with Desiree Geldart who, in the applicant’s submission, confirmed that the applicant’s salary was going to stay at $60,000 under instruction from Mr Moscou until further notice. The applicant submitted that at this point he felt forced to either accept a 20% decrease in salary or resign from his position.
[10] The applicant then sent correspondence to the respondent dated 3 September 2014 stating the following:
“… [P]lease accept this notice of my resignation at Penguin International. I feel that I have been left with no choice but to resign in light of the breach of contract and breach of trust and confidence. I feel I can no longer work under such conditions and therefore have been forced to resign from my position. I hereby give the two weeks’ notice as detailed in my contract of employment.”
[11] In response to this, Mr Moscou made the following statement in a letter to the applicant dated 10 September 2014:
“We acknowledge receipt of your resignation letter dated 3rd September 2014 and advise we are disappointed with this outcome. As discussed in our meeting on Thursday 28th August you have been off work since 3 May 2014 following your accident, and we could not justify your current salary of $75,000 at a reduced output. We considered it necessary for you to bring yourself up to speed on the ECU project after having been away for so long, hence the reduction of salary to $60,000. On returning to work you were still provided with a company car and a mobile phone.
…
Reducing your salary was purely a business decision to level your income to your output following a prolonged period of absence from work.”
[12] The applicant submitted that this is a case of unfair dismissal and was a termination of his employment at the respondent’s initiative. The applicant submitted that he was forced to resign due to a significant reduction in his salary upon returning from leave. The applicant asserts that he had no other option but to leave the country and was therefore forced to resign as a result of the conduct of the respondent because he could not afford to live in Australia on the decreased salary.
[13] The applicant’s evidence was that there was no consultation, explanation or warning about the $15,000 decrease in salary, despite the frequent exchange of correspondence between the parties during the applicant’s absence. He was denied the opportunity to decide if he wanted to return to work on that basis or to negotiate an alternative with the respondent and subsequently return to Australia from the United Kingdom. Consequently, the applicant submitted that the respondent breached his employment contract and the applicant’s 457 visa terms and conditions without any valid reasoning.
The respondent’s case
[14] The respondent submitted that the reduction in salary was not harsh, unjust or unreasonable, nor was the applicant demoted. The respondent submitted that the applicant resigned from his employment and was not dismissed by the employer. The respondent confirms that it had formed the view that the applicant’s salary should be reduced to $60,000 on his return to work because the applicant had been on a substantial amount of leave and “had to get [back] into the swing of the job” 1. However, the respondent submitted that it was it’s intention, once Mr Moscou had his personal affairs organised, to negotiate further with the applicant to reach an amicable outcome regarding the terms of his employment. Unfortunately these discussions were not finalised due to Mr Moscou being unavoidably overseas on two separate occasions. The applicant resigned from his employment before Mr Moscou returned to Australia, despite Mr Moscou advising the applicant that he would sort this issue out on his return.
[15] Mr Moscou, in both his verbal and written submissions, addressed the respondent’s difficult financial position and urged the Commission to take this into account when determining the matter.
Legislative background
[16] Section 386 the Act is set out below:
386 Meaning of dismissed
(1) A person has been dismissed if:
- (a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
- (a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
- (i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
- (i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
Conclusion regarding jurisdictional objection
[17] Having considered the facts of this application I am satisfied that the demotion of Mr Fields involved a 20% reduction in his remuneration. I am satisfied that this was a significant reduction. I am satisfied that the respondent’s unilateral reduction of the applicant’s remuneration by 20% was a dismissal of the applicant from the respondent’s employment at the respondent’s initiative or, in the alternative, a cessation of employment by way of a resignation forced by the conduct of the respondent.
Conclusion regarding application
[18] Section 387 of the Act is set out below:
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.
[19] I have considered s.387(a) of the Act. I am not satisfied that there was a valid reason for the termination of Mr Fields’ employment. Mr Fields had been unwell following a serious injury. There was no issue as to the bona fides of his application for paid and unpaid sick leave. He returned to work as soon as he had recovered. There was no matter of alleged misconduct. He was not provided with an opportunity to return to his pre-injury duties and have his capacity assessed. An assumption was made about his capacity to return to pre-injury duties and his salary was reduced in anticipation of reduced performance before any trial could be attempted. I have resolved any difference between the evidence of the parties regarding the interview concerning Mr Fields’ reduction in remuneration in favour of Mr Fields. Mr Moscou’s personal assistant could have been, but was not, called to contradict the evidence of Mr Fields.
[20] I have considered s.387(b) of the Act. Mr Fields was notified of the reason for his reduction in remuneration.
[21] I have considered s.387(c) of the Act. I am not satisfied that Mr Fields was given an opportunity to respond to any reason related to any anticipated reduced performance and the reason for any reduction in remuneration.
[22] I have considered s.387(d) of the Act. There was no unreasonable refusal to allow a support person to be present.
[23] I have considered s.387(e) of the Act. There was no issue as to past unsatisfactory performance. A warning was not appropriate.
[24] I have considered s.387(f) and s.387(g) of the Act. The respondent made no submissions concerning the size of its enterprise or the absence of dedicated human resource management specialists or expertise. However, I think it is unlikely that the respondent has such resources. If it does, it did not use them. I have taken this into account.
[25] Pursuant to s.387(h) I have considered the circumstances surrounding the applicant’s visa. I have taken these circumstances into account.
[26] On balance, having considered those matters to which my attention is directed by the Act, I have concluded that the dismissal of the applicant by way of reduction in remuneration was harsh, unjust or unreasonable.
Conclusion as to remedy
[27] I am satisfied that the reinstatement of Mr Fields to his employment with the respondent is not appropriate. Mr Fields is now residing in the United Kingdom. It is not his present intention to return to Australia.
[28] I have considered the circumstances surrounding this application. I have applied that consideration to the issues to which my attention is directed by s.392(a) to (g) of the Act.
[29] Although Mr Moscou asked for special consideration because of the financial difficulties of the respondent, no evidence was provided as to those difficulties.
[30] The length of Mr Fields’ service was not of particular significance.
[31] I have considered the remuneration that Mr Fields would have been likely to receive if he had not been dismissed. I am satisfied that he would have been employed for at least one further year. There was no material before me to justify a conclusion that his employment would have ended any earlier.
[32] If Mr Fields had continued to be employed for 12 months after the date of termination of his employment he would have earned $75,000. I have taken into account the submissions of Mr Fields in relation to his earnings post termination of employment set out in Exhibit Fields 2.
[33] I have decided to order that the respondent pay Mr Fields $37,500 compensation taxed as an eligible termination payment. The respondent is ordered to pay that amount in instalments as set out in the Order issued concurrent with this decision. Mr Fields has claimed various expenses in relation to his transfer to the United Kingdom. Those expenses are not recoverable.
SENIOR DEPUTY PRESIDENT
1 Transcript 28 July 2015, PN147.
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