Mr Lee Vickery v The trustee for Roderick Trust ABN 80385734491 T/A Encompass Books

[2013] FWC 6424

[2013] FWC 6424

FAIR WORK COMMISSION

DECISION

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

Mr Lee Vickery
v
The trustee for Roderick Trust ABN 80385734491 T/A Encompass Books
(U2013/937)

COMMISSIONER HAMPTON ADELAIDE, 11 SEPTEMBER 2013

Alleged unfair dismissal - whether unfair - matter heard in absence of respondent employer - reasonable opportunity to participate or seek an adjournment provided - dismissal harsh, unjust and unreasonable - compensation awarded.

1. Background

[1] Mr Lee Vickery has applied under the Fair Work Act 2009 for a remedy in relation to what he contends was his unfair dismissal by his former employer, The trustee for Roderick Trust ABN 80385734491 T/A Encompass Books. 1

[2] Mr Vickery was engaged as the Store Manager of the Adelaide store operated by Encompass Books from early November 2011 until his dismissal on 8 March 2013. The Adelaide store supplies text books and associated resources to University students. Encompass Books has its main office in Melbourne and it also conducts a store in that State.

[3] Following a phone conference, in which representatives of both parties participated, directions were issued for filing of outlines of submissions and evidence. The matter was also set down to be heard on Monday 2 September 2013. Mr Vickery filed and served comprehensive submissions and evidence. Nothing was filed by or on behalf of Encompass Books by the required date despite various reminders from the Commission. 2

[4] In due course, Mr Vlahos, the Company Director of Encompass Books, eventually responded to enquiries from the Commission and foreshadowed making an application to adjourn the proceedings or alternatively, attending the scheduled hearing. Despite being given an opportunity, no application was made for the matter to be adjourned and no representative of Encompass Books attended the hearing or further contacted the Commission in that regard.

[5] The hearing of this application proceeded as scheduled on Monday 2 September 2013, in the absence of Encompass Books. After Encompass Books was advised that the hearing had been conducted and that an application to amend the cited respondent had been made, Mr Vlahos contacted the Commission and sought an “adjournment”. In these circumstances, I provided an additional opportunity for Encompass Books to provide details of the basis of the “adjournment” and the reasons why it had not complied with the earlier directions for the filing of submissions or evidence, or made the adjournment request earlier.

[6] Despite that opportunity, nothing further has been provided to the Commission by Encompass Books.

[7] In the circumstances, I have dealt with the application on the basis of the materials and evidence that is properly before the Commission. This is appropriate given the history of the matter, the fact that Mr Vlahos knew that the hearing would be conducted in the absence of an application to the contrary, and the relevant statutory charter applying to this application.

[8] That statutory charter includes the relevant objects, 3 the general powers of and obligations upon the Commission,4 and s.600 of the Act, which provides as follows:

“600 Determining matters in the absence of a person

The FWC may determine a matter before it in the absence of a person who has been required to attend before it.”

[9] Notwithstanding the absence of Encompass Books from the hearing, it remains necessary for Mr Vickery to establish any jurisdictional and merit considerations arising from the Act.

2. Mr Vickery’s Case

[10] Mr Vickery provided a witness statement and also relied upon statements from the following persons who worked with him at Encompass Books:

• Mr Nicholas Blumer; and



• Mr Marselle Cuthbertson.

[11] Mr Vickery provided documentary evidence concerning his rate of pay and certain superannuation matters and he gave sworn evidence about the circumstances surrounding his employment and dismissal.

[12] Although the above is in effect unchallenged, I did raise with Mr Vickery the allegations made by Encompass Books in its original response material and certain other matters. I have accepted and rely upon the evidence that is before the Commission.

[13] I will deal with the facts and the relevant findings in relation to each of the jurisdictional, merit and remedy considerations established by the Act.

3. CONSIDERATION OF JURISDICTION AND MERIT

[14] There is no suggestion that Mr Vickery has not applied within the time period established by s.394(2) of the Act. On that basis the following issues arise.

3.1 Was Mr Vickery protected from unfair dismissal?

[15] Section 382 of the Act provides as follows:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(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.”

[16] The minimum period of employment is established by s.383 and varies according to the size of the employer. In any event, Mr Vickery’s service exceeds the greater 12 months period required in the case of a small business.

[17] Given the nature of the Mr Vickery’s service, it qualifies as continuous service for present purposes.

[18] Mr Vickery’s rate of earnings, $55,000 per annum, is below the high income threshold.

[19] Mr Vickery was therefore protected from unfair dismissal.

3.2 Was Mr Vickery dismissed?

[20] This issue arises because at one point in the pre-hearing exchange between the parties, Mr Vlahos appeared to suggest that Mr Vickery may have resigned.

[21] Section 386 of the Act provides as follows:

“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.

(2) However, a person has not been dismissed if:

(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

(c) the person was demoted in employment but:

(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.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[22] On 8 March 2013, during the conversion with Mr Vlahos in which the relationship concluded, Mr Vickery did raise the issue of resignation. However, this was in the context of Mr Vlahos indicating in effect that Mr Vickery’s employment could not continue. In fact, Mr Vickery informed Mr Vlahos that he would not resign.

[23] The communications on behalf of Encompass Books to Mr Vickery after that meeting, and subsequently to this Commission, make it clear that Encompass Books acted with the intention of bringing Mr Vickery’s employment to an end. The exceptions provided by s.386(2) of the Act do not apply.

[24] Mr Vickery was dismissed within the meaning of the Act.

3.3 Was Mr Vickery’s dismissal unfair?

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

“385 What is an unfair dismissal

(1) 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.”

[26] I have found that Mr Vickery was dismissed by Encompass Books. The employer may be a small business within the meaning of the Act. 5 Accordingly, it is appropriate to consider whether the dismissal was consistent with Small Business Fair Dismissal Code.6 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.”

[27] Mr Vickery’s dismissal would be considered to be a summary dismissal within the meaning of the Code. The written response given to Mr Vickery after his dismissal describes that event in those terms. 7 He was not given any notice and no pay in lieu of notice was provided. No reliable basis for such a dismissal has been provided to the Commission or is apparent from any of the material before me.

[28] Even if considered under the requirements relating to “other dismissal” cited in the Code, no valid basis for the dismissal has been provided and the applicant’s dismissal was not consistent with that Code in a number of other respects.

[29] This is not a matter involving a redundancy. As a result of the above, I must consider whether the dismissal was harsh, unjust or unreasonable.

[30] The Act relevantly provides 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.”

[31] It is clear that s.387 of the Act contemplates that an overall assessment as to the nature of the dismissal must be made by the Commission. In so doing, the Act sets out a number of considerations that must, where relevant, be weighed up in totality.

[32] It is convenient therefore to use the various provisions of s.387, with reference to the relevant circumstances, to outline my consideration of the matter.

Section 387(a) – whether there was a valid reason for the dismissal related to Mr Vickery’s capacity or conduct (including its effect on the safety and welfare of other employees).

[33] In the course of the dismissal meeting on 8 March 2013, Mr Vlahos advised Mr Vickery that he had no confidence in his ability to manage the shop. When clarification was sought, Mr Vlahos advised that Mr Vickery had not:

● Generated correct booklists;
● Sent flyers to certain classes; and
● Not increased sales.

[34] Mr Vlahos also advised that there was a pricing issue from the previous year.

[35] In subsequent correspondence to Mr Vickery, Mr Vlahos advised that the dismissal was due to serious breaches of the terms of the employment contract including neglect of duty and gross incompetence. 8

[36] In these matters, an employer is able to rely upon reasons not referred to at the time of the dismissal, including matters not know at the time. 9 The reasons must however be demonstrated to the Commission.10

[37] Mr Vickery gave evidence that in the lead up to the dismissal he had raised concerns about the non payment of his superannuation entitlements and certain allegedly suspect cash management activities undertaken by a relative of Mr Vlahos. I do not need to make findings in relation to these matters for present purposes.

[38] Importantly, there is no evidence before the Commission that demonstrates the existence of a valid reason for Mr Vickery’s dismissal.

Section 387(b) – whether Mr Vickery was notified of the reasons for dismissal.

[39] This consideration requires the Commission to assess whether the applicant concerned was relevantly advised of the reasons leading to the dismissal before that decision was taken. 11 Mr Vickery was advised of the concerns outlined in the meeting on 8 March 2013.

[40] It is not clear on the evidence when the decision to dismiss was taken. I will in the circumstances deal with this application on the basis that the decision was taken and communicated during the course of the dismissal meeting. On that basis, it is at least arguable that this consideration has not led to unfairness.

Section 387(c) – whether Mr Vickery was given an opportunity to respond to any reason related to his capacity or conduct.

[41] Mr Vickery was not aware of concerns with his conduct or capacity prior to the meeting on 8 March 2013 in which the dismissal occurred. That meeting did not represent a reasonable opportunity to respond to any such concerns.

Section 387(d) – any unreasonable refusal by the respondent to allow Mr Vickery to have a support person present to assist in any discussions relating to his dismissal.

[42] There was no request for a support person.

Section 387(e) – if the dismissal is related to unsatisfactory performance by Mr Vickery – whether he has been warned about that unsatisfactory performance before the dismissal.

[43] Mr Vickery was not warned about such matters prior to the dismissal.

Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.

Section 387(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.

[44] The manner in which Mr Vickery’s dismissal was handled by Encompass Books was not reasonable and for reasons outlined above, lacking in most elements of procedural fairness.

[45] I am prepared to assume that Encompass Books is a small business employer and had no access to dedicated human resource expertise for present purposes. This is a relevant consideration and must be taken into account to the degree that it would likely impact upon the procedures that were followed by the respondent.

3.4 Conclusion on jurisdiction and merit

[46] In all of the circumstances I find that the application is within the Commission’s present jurisdiction. Having regard to all of the statutory considerations I also find that Mr Vickery’s dismissal was harsh, unjust and unreasonable. It was accordingly unfair within the meaning of the Act.

4. CONSIDERATION OF THE REMEDY

[47] Mr Vickery seeks compensation as a remedy in this matter.

[48] Division 4 of Part 3-2 of the Act relevantly provides as follows:

Division 4—Remedies for unfair dismissal

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) the FWC may make the order only if the person has made an application under section 394.

(3) the FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

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

Note: Division 5 deals with procedural matters such as applications for remedies.

... ... ...

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

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

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

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

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

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

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

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

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. Disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal. 12

(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.

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.”

[49] The prerequisites of ss.390(1) and (2) have been met in this case.

[50] Section 390 makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all the circumstances. In this case, Mr Vickery does not seek reinstatement and given all of the prevailing circumstances I accept that that it would not be appropriate.

[51] As a result, I need to consider whether compensation is appropriate and if so, to what extent.

[52] Section 392(2) of the Act requires me to take into account all of the circumstances of the case including the factors that are listed in paras (a) to (g). Without detracting from the overall assessment required by the Act, 13 it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.

The effect of the order on the viability of Encompass Books

[53] I have nothing reliable from the respondent to form any view on this issue. I have however taken into account the relatively small size of the employer in terms of the other relevant considerations touching upon the issue of remedy.

The length of Mr Vickery’s service with Encompass Books

[54] The applicant was employed with the respondent for a period of about one and half years. This is a relatively short period and I have taken this into account in determining the compensation, including when making an assessment of the remuneration that would likely have been received if not for the termination.

The remuneration Mr Vickery would have received, or would have been likely to receive, if he had not been dismissed

[55] This involves in part a consideration of the likely duration of Mr Vickery’s employment in the absence of what I have found to be an unfair dismissal.

[56] This is not an easy assessment given the nature of the evidence before the Commission.

[57] Mr Vickery is seeking compensation for the period between his dismissal and his new employment, which commenced 16 weeks later.

[58] In all of the evident circumstances it is reasonable to assess the compensation in this matter on the basis that the applicant would, on the balance of probabilities, have remained in employment for a further period of at least sixteen weeks.

[59] The applicant was paid $1,057.69 per week gross.

The efforts of Mr Vickery to mitigate the loss suffered by him because of the dismissal

[60] Mr Vickery has undertaken extensive efforts to seek further employment and no reduction of the amount of compensation is appropriate on the basis of this consideration.

The amount of any remuneration earned by Mr Vickery from employment or other work during the period between the dismissal and the making of the order for compensation

The amount of any income reasonably likely to be so earned by Mr Vickery during the period between the making of the order for compensation and the actual compensation

[61] Mr Vickery received an additional weeks pay beyond the amount of weeks actually worked. There was no notice or pay in lieu of notice or similar payment, beyond that amount.

[62] The additional week’s pay may not fall within the present parameters as it was not earned between the dismissal and the making of the order. It is however relevant and I will take it into account under the “other relevant” matters consideration.

[63] The consideration of income around the period of the order does not arise in the case.

Any other matter that the FWC considers relevant and the remaining statutory parameters

[64] I have taken into account the projected nature of the anticipated loss of remuneration (s.392(2)(c)) and there is no alternative income outside of the projected period of employment (s.392(2)(e)). In that light, I do not need to make a further allowance for contingencies in this matter. 14

[65] There is no demonstrated misconduct that would need to be taken into account as provided by s.392(3) of the Act.

[66] In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

[67] I will for reasons outlined earlier, take into account the extra week’s wages paid to Mr Vickery.

[68] The amount of compensation that I have determined is less than the maximum prescribed by s.392(5) of the Act as applied in this matter. 15 The compensation amount confirmed below is also appropriate having regard to all of the circumstances of this matter.16

Conclusions on remedy

[69] After taking into account each of the relevant considerations, I find that compensation is appropriate in this matter. Further, I find that the compensation should be assessed having regard to the sixteen weeks of “lost” remuneration less the extra week’s wages paid following the dismissal.

6. CONCLUSIONS AND ORDERS

[70] I find that the dismissal of Mr Vickery by Encompass Books was unfair.

[71] I find that reinstatement is not an appropriate remedy in this case.

[72] I find that compensation to the value of $15,865.00 (with deduction for taxation) is appropriate and I have ordered 17 that it be paid by Encompass Books within 21 days of this decision.

Appearances:

A Jenshel of counsel, with permission with A Kelemen for Mr Vickery.

No appearance for The trustee for Roderick Trust ABN 80385734491 T/A Encompass Books at the hearing.

Hearing details:

2013

Adelaide

2 September

 1   The identity of the respondent employer was amended during the course of proceedings after the original respondent, cited only as Encompass Books, was given an opportunity to be heard on the issue. No objection was made.

 2   This included granting a request for an extension to Encompass Books to file materials in light of the late receipt of some of the applicant’s materials.

 3   S.3 and s.381 of the Act.

 4   Including Part 5-1, Division 3 of the Act.

 5   A small business employer was defined as having less than 15 employees at the relevant time.

 6   Established by s.388 of the Act.

 7   Attachment LV5 to exhibit A1.

 8   Attachment LV6 to exhibit A1.

 9   See MM Cables (A Division of Metal Manufacturers Limited) v Zammit AIRC Print S8106 and Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.

 10   Rode v Burwood Mitsubishi AIRC Print R4471 and Miller v University of New South Wales (2003) 132 FCR 147 at par [13].

 11   See Trimatic Management Services Pty Ltd v Daniel Bowley[2013] FWCFB 5160.

 12   Note: the subsection 392(5) amount was indexed to $61,650 from 1 July 2012 - as was relevant given the timing of this application.

 13   Smith and Others v Moore Paragon Australia Ltd (2004) AIRC Print PR942856.

 14   See the discussion of contingencies in Bowden v Ottrey Hones Cobram and Districts Retirement Villages Inc. T/A Ottrey Lodge[2013] FWCFB 431, 4 February 2013 per Acton SDP, Smith DP and Ryan C at par [52]; Ellawala v Australian Postal Corporation AIRC Print S5109, 17 April 2000 per Ross VP, Williams SDP and Gay C and in Enhance Systems Pty Ltd v James Cox AIRC Print PR910779, 31 October 2001 per Williams SDP, Acton SDP and Gay C.

 15   The maximum compensation limit in this case would be $27,500.

 16   Smith and Others v Moore Paragon Australia Ltd (2004) AIRC Print PR942856 at par [32].

 17   PR541595.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR541096>