Mr Michael Sutherland v WCH Services Pty Ltd T/A WCH Services

[2016] FWC 7003

[2016] FWC 7003

FAIR WORK COMMISSION

DECISION

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

Mr Michael Sutherland
v
WCH Services Pty Ltd T/A WCH Services
(U2016/163)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 29 SEPTEMBER 2016

Application for relief from unfair dismissal.

[1] On 11 January 2016, Mr Michael Sutherland made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy in respect of his dismissal by WCH Services Pty Ltd T/A WCH Services (WCH Services).

[2] Mr Sutherland was dismissed from his employment at the initiative of the employer on 21 December 2015. Mr Sutherland submits the dismissal took effect immediately and he was not paid any of his entitlements. Mr Sutherland submits his dismissal was unfair.

Background and case outline

[3] Mr Sutherland commenced employment with WCH services, a trolley services contractor, in October 2014 as a part time L1 Driver and trolley collector at the Coles and Kmart sites in Traralgon.

[4] During his employment and prior to his dismissal, Mr Sutherland submits he had not received any warnings for either his conduct or performance.

[5] WCH Services operates a trolley collection service at a number of venues including Traralgon, Morwell and Frankston. Mr William Hancock, Director of WCH Services, submits he entered into a contract with United Trolley Collectors (UTC) to provide the collection services at both the Traralgon shopping centre and Mid Valley Target (Morwell), Frankston shopping centre and a specific set of street runs on which he makes no financial profit.

[6] From the period of September 2015 through to December 2015 tensions arose between Mr Sutherland’s supervisor (Mr Shortland) and Mr Hancock over wages and entitlements.

[7] Mr Hancock submits he had informed Mr Shortland that due to the very small profit margins in the contract he was unable to pay employees overtime rates and instructed him to not permit employees to work shifts that incurred higher penalties. Mr Hancock submits Mr Shortland did not follow his instructions and allowed employees to work the after 6pm shifts which incurred penalty rates so he simply refused to pay them.

[8] Mr Hancock submits Mr Shortland took their complaints to Coles and UTC and that this was, in his view, undermining his business. He submits he discussed the matter with Sam Woodridge from UTC and told Mr Woodridge he was going to terminate the employment of Mr Shortland and Mr Sutherland for reporting the matter to Coles. Mr Hancock was advised by Mr Woodridge that this would not be advisable as the matter was currently being investigated by Coles.

[9] Mr Hancock submits Mr Shortland conspired against him to destroy his business by instructing the employees to work the shifts where penalty rates applied. Mr Hancock submits as a result of the conduct of Mr Shortland and Mr Sutherland, he lost the Traralgon contract which concluded in April 2016.

[10] Mr Sutherland submits Mr Hancock began a process of removing employees who requested to be paid their entitlements. Mr Sutherland also submits Mr Hancock requested employees to sign written statements in support of WCH Services in assisting them to build their defence against Mr Shortland’s application for unfair dismissal remedy and if employees didn’t sign they were threatened with having their employment dismissed.

[11] Mr Sutherland submits he pursued his entitlements and on 18 December 2016 refused to sign the letter requested by Mr Hancock and was subsequently dismissed by text message and without reason on 21 December 2015.

Procedural Background

[12] It is fair to say this matter had a somewhat unusual procedural history.

[13] The matter was listed for conciliation on 18 February 2016. Neither party attended the conciliation.

[14] The Commission wrote to the parties to inform them as the matter had not resolved at conciliation the matter would be listed for arbitration. Mr Hancock provided the following response to the Commission at 3:10am on 19 February 2016:

“I worked all day today pushing trolleys…… You’ll see why this man is gone never to return to any job him and Kim Shortland and the others new Coles was going in the house I demand for some time no one works past 6 pm. Kim Shortland is leading the group of crooks they recently claimed working after 6pm rights. I demanded nobody works past 6pm. According to Kim shortland Michael Sutherland was one who refused to follow instructions. I told these men I make no money from Traralgon at all if you go past 6pm. I’ll have to pay out of my own pocket pushing trollies in Frankston UTC United trolleys take all the profits with the blessing of Coles. ….”

[15] I make note of this as this becomes relevant to the matter late in proceedings

[16] On 19 February 2016 Mr Sutherland contacted the Commission requesting a relisting of the conciliation. He informed the Commission his phone was not in operation at the time he was scheduled to receive the call for conciliation on 18 February 2016. Mr Sutherland was advised the matter would only be relisted for conciliation if both parties agreed.

[17] There were a number of attempts to bring the parties together for conciliation. At varying times throughout the process either Mr Sutherland or Mr Hancock were available and then not available, or were willing and then not willing to participate in a conciliation. On 4 March 2016 the parties were advised the matter had been referred for arbitration.

[18] It is important to note at this time there were numerous delays in communications from the parties to the Commission in response to the various attempts to have the matter heard. Some of those delays were due to the personal circumstances of Mr Sutherland, including that he was unable to receive email and phone messages. Mr Sutherland later obtained a new phone number and made contact with the Commission to explain his circumstances. Similarly, Mr Hancock, for numerous reasons, was constrained in his ability to respond to the Commission. Those reasons included personal family circumstances, financial circumstances and literacy limitations.

[19] On 27 April 2016 an email was sent from the Commission to Mr Sutherland advising that he had failed to comply with the directions issued by the Commission and he would now be required to attend a hearing before Commissioner Bissett on 29 April 2016 to explain why he has not filed his submissions.

[20] On 2 May 2016 Mr Sutherland contacted the Commission by telephone to apologise for not being contactable and advised he was again successful in obtaining new contact details which he then provided. Shortly after that call, Mr Sutherland emailed the Commission requesting that the matter be relisted by telephone.

[21] Over the next few days Mr Hancock forwarded various emails to the Commission that he had previously relied on in another matter before the Commission. These emails outlined his reasons as to why he was unable to make submissions. There were several other matters in the Commission that involved WCH Services and Mr Hancock was frequently confused as to which matter he was responding to.

[22] The matter was then listed for jurisdiction and arbitration on 16 and 17 May 2016 although on 13 May 2016, both parties were advised that in the absence of their submissions, the matter would be adjourned and relisted. The matter was subsequently referred to me and listed for jurisdiction and arbitration on 6 and 7 June 2016.

[23] My Associate corresponded with the parties on numerous occasions. Submissions and witness statements were received from Mr Sutherland on 31 May 2016. There were no submissions made by Mr Hancock for WCH Services.

[24] Mr Hancock was contacted by phone and email in advance of the hearing informing him of the requirement that he attend the hearing in Morwell on 6 and 7 June 2016. The parties were also re-issued with the notice of listing on 24 May 2016 to remind them of the upcoming hearing.

[25] There was no appearance for WCH Services at the commencement of the hearing on 6 June 2016 and my Associate made several unsuccessful attempts to contact Mr Hancock to ascertain whether he would be attending.

[26] At around 11:14am my Associate advised me that she had received a voicemail message from Mr Hancock in which he stated he did not receive the listing and had no idea the matter was proceeding. I adjourned the proceedings to allow my Associate to return Mr Hancock’s call.

[27] At 11:35am my Associate contacted Mr Hancock by telephone. During the conversation Mr Hancock confirmed his email address and contact details to which the information he claims was not received, had been sent from the Commission. Mr Hancock stated he runs a business and the matter should be thrown out. Mr Hancock confirmed he could attend the hearing by telephone but declined to attend in person. Mr Hancock asked if he could also have his witness attend by phone.

[28] Mr Sutherland did not object to the matter being adjourned until 1:00pm that day in order for Mr Hancock to join the hearing by phone. I proceeded to hear the matter that afternoon.

[29] Mr Sutherland gave oral evidence in support of his application along with his witnesses, Mr Robert Maat and Mr Darius Whelan. Mr Hancock made submissions and gave evidence by telephone along with Mr Dennis Whitby on behalf of WCH Services.

[30] At around 3.30pm the matter was adjourned and the 7 June 2016 hearing date was vacated to afford Mr Hancock and Mr Sutherland time to prepare their responses to each other’s submissions and the witness evidence.

[31] On 7 June 2016, the parties were directed to file and serve written submissions in support of their positions and the matter was listed for jurisdiction and arbitration hearing on 8 July 2016. Due to the apparent literacy issues, both parties were sent a voice recording of the first half of the hearing held on 6 June 2016 to aid them in being able to respond.

[32] Mr Sutherland filed his submissions on 14 June 2016 which were forwarded to Mr Hancock by the Commission to the same email address previously provided. Mr Hancock confirmed receipt of Mr Sutherland’s submissions.

[33] Mr Hancock filed a large volume of materials in advance of the hearing, much of which was not relevant to the current matter or did not address the matters to be decided.

[34] At 9:30am and before the commencement of the hearing on 8 July 2016, Mr Hancock contacted my Associate requesting the matter be adjourned. Mr Hancock was advised the matter would proceed with or without him. Mr Hancock informed my Associate that he would be able to attend by 10:30am. The matter was adjourned to allow Mr Hancock to attend.

[35] Mr Sutherland and Mr Hancock, along with the witnesses of Mr Sutherland attended the hearing on 8 July 2016.

[36] Mr Sutherland gave evidence on his own behalf.

[37] Mr Hancock attended the hearing and gave evidence for WCH Services.

The cases presented

[38] During his employment with WCH Services Mr Sutherland reported to Mr Shortland. Mr Shortland was dismissed from his employment with WCH Services on 5 December 2015 and his dismissal was the subject of separate proceeding in this Commission.

[39] During the hearings Mr Hancock frequently referred to the dismissal of Mr Shortland and at times the information provided was not relevant to the dismissal of Mr Sutherland. It was evident to me that Mr Hancock on many occasions, whether consciously or subconsciously, was attempting to respond to the application against WCH Services made by Mr Shortland and not Mr Sutherland’s application. However, after a lengthy process Mr Hancock gave evidence relating to the matter at hand.

[40] Mr Sutherland’s evidence was he worked full time for Mr Hancock in Traralgon and Morwell collecting trollies. He worked at both the Stockland and Mid Valley sites and averaged 38 hours per week. However, prior to his dismissal his hours had been reduced to 20 hours per week. Mr Sutherland’s evidence was this was due to Mr Hancock not having enough money to pay for him and other employees to work their normal hours and the contract he was working on was winding up.

[41] Mr Sutherland’s evidence was after Mr Shortland had been dismissed he was pretty angry and on 8 December 2015 he sent the new supervisor an abusive text message:

“I was told by one of other workers that we had a new supervisor coming in and he was going to change a lot of things, so I sent him a message and three weeks after that, on the Monday, about 6 o’clock in the morning, I copped a text message saying I was sacked.” 1

[42] In his written submissions, Mr Hancock provided a copy of the text message which states verbatim as follows:

“Lisen here if u try take work of any 1 in tgon I will run u out of town and there will b no new changers in the way thing are running got it”

[43] Mr Sutherland confirmed it was the text message he had sent however said that he was told by a co-worker that Mr Hancock was bringing in a new workforce and was going to sack the existing workforce and replace them with cheaper labour.

[44] Mr Sutherland gave the following reason for sending the text message:

“Oh, I was fuming, yes, after hearing - all the hard work we've put into this place and to find out that we're all going to lose our jobs, yes, so I sent him the text message and, yes, three weeks after that, they responded to it and sacked me on the Monday before Christmas at 6 o'clock in the morning.” 2

[45] Mr Sutherland says he met with the new supervisor prior to being dismissed. His evidence is the new supervisor was present nearly every day and would provide Mr Sutherland with instruction on what was required to be done each day however there were no discussions regarding the text message he had sent.

[46] Mr Whitby’s evidence was that he commenced as the supervisor in Traralgon just before Christmas. Much of the evidence of Mr Whitby did not go to the reasons Mr Hancock relied on as the reasons for Mr Sutherland’s dismissal.

[47] Mr Sutherland’s evidence was on 18 December 2015, Mr Hancock had approached him at work and asked him to sign a form stating that Mr Shortland was a liar and a thief along with various other statements. 3 Mr Sutherland says Mr Hancock threatened to sack him if he didn’t sign. Mr Sutherland refused to sign the documents and his employment was terminated three days later.

[48] Mr Maat gave evidence that he was also approached on 18 December 2015 and asked to sign a document stating Mr Shortland had ordered him not to do Street Run and if he didn’t sign he would be sacked. Mr Maat refused to sign the document and he no longer works for WCH Services. 4

[49] Mr Whelan gave evidence that he previously worked for WCH Services at Traralgon and, although he no longer worked for or was paid by WCH Services, he remained at the Traralgon site assisting Mr Shortland to perform his duties. Mr Whelan’s evidence was Mr Sutherland had approached him on 19 December 2015 and told him he was being threatened by Mr Hancock that if he did not sign the form stating various lies about Mr Shortland he would be sacked.

[50] Mr Whelan’s evidence was he confronted Mr Hancock over the matter and told Mr Hancock he could not threaten his employees in such a way. Mr Whelan says Mr Hancock replied telling him as the boss he could do whatever he wanted. 5

[51] Mr Sutherland produced a copy of an email sent by Mr Hancock to Mr Shortland on 7 February 2016 at 2:52am in support of his argument that he was dismissed for not agreeing to Mr Hancock’s demand to sign the statement. The email states verbatim as follows:

“We see if you understand this Kim
United trolleys refuse to let me suck you I did anyway.
They also refused to let me sack Michael Sutherland I did anyway
I am now going to suck anybody who makes me any trouble
Deceitful liars and thieves don’t think I can I prove it
My senses were telling me that with Morty you know I want to believe
You’re surrounded yourself with thieves and liars testify against the truth
This is where you have come ig down Kim
I don’t care if it’s Coles or UTC That is it I have had enough” 6

[52] Mr Hancock’s evidence was he had provided Mr Whitby with a copy of the termination letter his sister had written for him to give to Mr Sutherland. Mr Whitby’s evidence was he sent the letter to Mr Sutherland on the day of his dismissal. 7

[53] Mr Hancock’s evidence was that his actual reason for dismissing Mr Sutherland was not those reasons that were provided in the letter. When I asked what was the reason for dismissing Mr Sutherland, Mr Hancock’s response was:

“We'll get straight to it, right, that nobody works after 6 pm because I made zero profit from Traralgon. They weren't even paying us overtime rates, public holidays, entitlement money, anything, they weren't paying us anything - United Trolleys - and I said ‘It's vital nobody works after 6 pm otherwise we've got to pay after 6 pm rate all day.’” 8

[54] Mr Hancock went on to explain Mr Sutherland had taken instruction from his supervisor, Mr Shortland, to work after 6pm even though he had informed all employees that they were not to do so. Mr Hancock provided evidence he had informed Mr Shortland of this however was unable to provide specific evidence on dates or times to support his submission that Mr Sutherland was informed.

[55] Mr Hancock’s evidence was he had told Mr Maat he had terminated Mr Shortland for not following his instructions and as a consequence he had to pay $5,500 in wages and that Mr Sutherland was one of the employees who benefited from the overtime due to not following his instruction. 9

[56] Mr Hancock’s evidence was he met with Mr Sutherland and said:

“…You've just told me, right, that I've told you not to work after 6 pm.  You've told me Kim told you to.  I need a statement saying that Kim told you to work after 6 pm.  And he said he would not do it.” 10

[57] Mr Hancock went on to explain Mr Sutherland had been following instruction from Mr Shortland when he made his complaint to UTC and Coles about not being paid correctly. He also says Mr Sutherland was following instruction from Mr Shortland when he had spoken with Coles about the vehicle running out of fuel, claiming that Mr Hancock had not provided them with money to buy more fuel. Mr Hancock says Mr Sutherland did this to “make trouble in my business” 11 and for those reasons he wanted to terminate his employment. Mr Hancock also says he told Mr Woodridge he wanted to dismiss Mr Sutherland for complaining about the fuel to Coles and Mr Woodridge advised him not to.

[58] Mr Hancock went on to say he had told Mr Sutherland “if you want to keep your job 12 …you need to give me that information that Kim Shortland”13 Mr Hancock then stated:

“I said, ‘If you want to keep your job’, right? I said, ‘Because I’ve just had to pay out five and half thousand dollars’, and I had no profit and it was coming straight of my – my tax money and things that I needed, right?” 14

[59] Mr Hancock explained he later received a call from Mr Woodridge informing him that Mr Sutherland had complained to him about Mr Hancock trying to force him to make a statement about Mr Shortland. Mr Hancock said he told Mr Woodridge “That’s it. He’s finished”. 15

[60] Mr Sutherland submits at the time of his dismissal he was not provided with a reason.

[61] Mr Hancock’s evidence was he had warned Mr Sutherland on a number of occasions if he didn’t sign the letter he was at risk of losing his job. Mr Hancock stated “You know, I told him, “If you don’t sign that you will be terminated”, right”  16

Consideration

Small Business

[62] Section 23 of the Act then provides the following definition of a small business employer:

“(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[63] Mr Sutherland made submissions in advance of and during the hearing on 8 July 2016 that WCH Services was not a small business. 17 Mr Hancock made submissions on 7 July 201618 and gave evidence during the hearing to the contrary. At the commencement of the hearing I provided the parties with a copy of the above definition of a small business from the Act along with the Small Business Fair Dismissal Code. Both parties received assistance in reading the documents.

[64] At the commencement of the hearing, Mr Sutherland was provided with a copy of Mr Hancock’s submission 19 on the number of employees employed at WCH Services at the time of Mr Sutherland’s dismissal. Mr Hancock’s evidence was that he employed 10 employees at the time Mr Sutherland was dismissed.20 Mr Sutherland provided a list of 15 employees he says were employed at the time of his dismissal.21

[65] During the hearing the two lists of persons said to be employed by WCH Services at the time of the dismissal were compared and a response to each person named on each list was sought from both parties. I have considered the evidence and I am satisfied at the time of Mr Sutherland’s dismissal WCH Services employed 10 employees and these employees were engaged as either casual or part time. I am satisfied Mr Chandler the mechanic was not an employee of WCH Services. Four of the persons on the list provided by Mr Sutherland were in contention. Even if I was to find the four persons who remain in contention were employees, WCH Services would still be a small business with less than 14 employees.

Protection from Unfair Dismissal

[66] An order for reinstatement or compensation may only be issued where I am satisfied Mr Sutherland was protected from unfair dismissal at the time of the dismissal.

[67] Section 382 of the Act sets out the circumstances that must exist for Mr Sutherland to be protected from unfair dismissal:

“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.”

[68] There is no dispute, and I am satisfied, that Mr Sutherland has completed the minimum employment period. Mr Sutherland’s annual rate of earnings was below the high income threshold and the Cleaning Services Award 2010 was the applicable award. I am therefore satisfied Mr Sutherland was protected from unfair dismissal.

[69] Section 396 of the Act requires me to decide four specified matters before the merits of the application may be considered.

s.396(a) Whether the application was made within the period required in sections 394(2)

[70] Mr Sutherland’s employment was terminated on 21 December 2015 and his unfair dismissal application was received by the Commission on 11 January 2016. As such, I am satisfied that Mr Sutherland made his application within the required 21 day period in s.394(2) of the Act.

s.396(b) Whether the person was protected from unfair dismissal

[71] As outlined in paragraph [68] above, I am satisfied Mr Sutherland was protected from unfair dismissal. This is not in dispute.

s.396(c) Whether the dismissal was consistent with the Small Business Fair Dismissal Code

[72] At the time of the dismissal, WCH Services employed less than 15 employees. Therefore, I am satisfied that the Small Business Fair Dismissal Code applies.

[73] As the termination of Mr Sutherland’s employment was not a summary dismissal, the following section of the code is applicable:

“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.”

[74] Mr Hancock’s submission is that Mr Sutherland’s dismissal was for reasons of conduct in that he had refused to sign a statement against Mr Shortland and had then complained to UTC about Mr Hancock’s request. Mr Hancock also submits Mr Sutherland was dismissed for approaching Coles and UTC over his wages and for working after 6pm to which he had no capacity to pay the penalty rates. It is not in contention Mr Sutherland was advised on the day he was dismissed that his employment was no longer required. Mr Sutherland had not received any appropriate warnings prior to being dismissed.

[75] Mr Hancock’s evidence was the reason for the dismissal of Mr Sutherland was related to his conduct. Mr Hancock’s evidence was after the dismissal of Mr Shortland he had requested a letter from Mr Sutherland stating that Mr Shortland had instructed him to work after 6pm which was causing Mr Hancock to lose money on his contract with UTC. Mr Sutherland had refused to sign the letter even after Mr Hancock had told him he would lose his job if he didn’t sign.

[76] Mr Sutherland saw this as an unreasonable threat however it was evident in the hearing Mr Hancock saw it as a direction to which Mr Sutherland had refused to comply with. Mr Hancock viewed Mr Sutherland’s refusal to sign the letter as a threat to his business.

[77] Mr Hancock also gave evidence he had made the decision to dismiss Mr Sutherland when he made the complaint to Mr Woodridge about being threatened with dismissal if he didn’t sign the letter.

[78] Another reason Mr Hancock provided for the dismissal of Mr Sutherland was that he had complained about his wages and entitlements to Coles and UTC and this had cost him financially. Mr Hancock’s evidence was he had not given permission for Mr Sutherland to work the hours that attracted penalty rates and even though he had been instructed by his supervisor to do so he shouldn’t have worked past 6pm. Although he gave evidence that he had instructed Mr Shortland about the overtime hours, he could provide no conclusive evidence that Mr Sutherland was instructed by him not to work those hours.

[79] When assessing whether or not a person has been dismissed for a valid reason, the Commission traditionally examines whether or not the reason advanced for the dismissal was sound, defensible, or well-founded. In this particular matter I am not able to find that that was the case.

[80] Mr Sutherland’s dismissal was not a case of poor performance and there were no warnings issued for performance. Mr Hancock submits he had previously advised Mr Sutherland that his job was at risk, however it is my view these were more akin to threats.  Mr Hancock’s evidence was that Mr Sutherland’s employment was terminated as a result of him making complaints about not being paid the correct wages and refusing to sign a letter against Mr Shortland. I am not satisfied that those reasons were valid reasons for dismissing Mr Sutherland.

s.396(d) Whether the dismissal was a case of genuine redundancy

[81] It is not disputed and I find that this is not a case of genuine redundancy.

[82] I will now consider if the dismissal of Mr Sutherland by WCH Services was unfair within the meaning of the Act.

Was the dismissal unfair?

[83] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 of the Act provides the following:

“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.”

Was the applicant dismissed?

[84] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for the purpose of Part 3-2 of the Act. Section 386 of the Act provides:

“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.

…”

[85] As outlined above, on 21 December 2015, WCH Services terminated Mr Sutherland’s employment (s.385(a) of the FW Act).

Harsh, Unjust Unreasonable

[86] Having been satisfied of each of the matters prescribed by s.385(a), (c) and (d) of the Act, I now must consider whether Mr Sutherland’s dismissal was harsh, unjust or unreasonable.

[87] Section 387 of the Act sets out the criteria for considering whether a dismissal was harsh, unjust or unreasonable:

“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.”

[88] The type of conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained by the High Court of Australia in Byrne v Australian Airlines Ltd. 22 McHugh and Gummow JJ explained as follows:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.” 23

[89] I will now consider each of the matters set out in s.387 of the Act.

Was there a Valid Reason for the dismissal- s.387(a)

[90] The reason Mr Hancock relies on for the dismissal of Mr Sutherland may well be capricious, fanciful, spiteful, or prejudiced, which are the things which are said by the Industrial Relations Court as never being a valid reason for the purposes of predecessor legislation.

[91] As outlined in paragraph [80] above I am not satisfied that there was a valid reason for the dismissal of Mr Sutherland.

Notification of the Valid Reason –s.387(b)

[92] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account whether the person was notified of the reason. 24 Procedural fairness requires that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment.25 The notification of the valid reason must be in explicit, plain and clear terms.26

[93] I find that Mr Sutherland was not notified of the reasons for his dismissal prior to receiving the text message from Mr Hancock. There was no evidence put before me to suggest otherwise.

Opportunity to Respond –s.387(c)

[94] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person. 27 An employee must be notified of the reason for termination and must also be given an opportunity to respond to that reason before the decision to terminate is made.28 This process does not require any formality and is to be applied in a common sense way to ensure the employee has been treated fairly.29 Where an employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of this section.30

[95] I find that Mr Sutherland was not provided with the opportunity to respond to the reasons for his dismissal.

Unreasonable Refusal of a Support Person – s.387(d)

[96] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal. 31 With respect to this consideration, the Explanatory Memorandum states:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them. 32

[97] Mr Sutherland’s dismissal took effect immediately and his dismissal was notified to him by text message. Mr Sutherland had no opportunity to request a support person even if he wanted one.

Warnings regarding Unsatisfactory Performance – s.387(e)

[98] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, if the dismissal related to unsatisfactory performance by the person, the Commission must take into account whether the person had been warned about that unsatisfactory performance before the dismissal. 33 Unsatisfactory performance is more likely to relate to the employee’s capacity to do the job, than their conduct.34 The Commission must take into account whether there was a period of time between an employee being warned about unsatisfactory performance, and a subsequent dismissal. This period of time gives the employee the opportunity to understand their employment is at risk and to try and improve their performance.35

[99] I do not consider the matter to involve unsatisfactory performance. Rather, the termination was on account of Mr Sutherland’s conduct and therefore s.387(e) is not relevant to the circumstances of this matter.

Impact of the Size of the Respondent on Procedures Followed and Absence of dedicated human resources management specialist/expertise on procedures followed – s.387(f)-(g)

[100] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal. 36 Further, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account 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.37

[101] WCH Services is a small business with no human resource function. I do not consider that the matters dealt with in s.387(f) and (g) of the Act affect the circumstances in this matter.

[102] I am satisfied that the size of the business and the absence of human resource expertise affected the procedures followed by Mr Hancock in dismissing Mr Sutherland from his employment. Mr Hancock’s circumstances including his financial and limited literacy skills contributed to his limitation in being able to seek advice in the absence of human resource expertise.

Other Relevant Matters – s.387(h)

[103] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account any other matters that the Commission considers relevant. 38

[104] There were no submissions to this effect and I am satisfied there are no other relevant matters to be considered.

[105] Having considered all of those matters, I consider that Mr Sutherland's dismissal was harsh, unjust, or unreasonable, and I therefore turn to considering what remedy should be awarded. In this particular circumstance I do not consider that reinstatement is either appropriate or possible. Mr Hancock's evidence to the Commission is that WCH Services’ contract with UTC has been terminated. If that is the case then it would not be possible to reinstate Mr Sutherland to that position. In any event, I accept that there probably would be insufficient capacity to re-establish the working relationship between the parties for there to be the possibility of reinstatement.

[106] For the purposes of section 390(3) of the Act, having found that I am satisfied the reinstatement of Mr Sutherland is inappropriate, I further consider that an order for payment of compensation is appropriate in all of the circumstances of the case, and I will now deal with that matter.

[107] The principles the Commission follows in assessing compensation are the criteria which are set out within section 392(2) of the Act. In addition, there are case authorities which must be taken into account when determining the amount of compensation to be awarded. In respect of section 392(2) of the Act, the first of the issues that need to be considered by me is the effect of the order that might be contemplated by me has on the viability of the employer's enterprise. Mr Hancock’s submission was that he is not making any profit on the existing contracts and has since lost further work.

[108] The second of the criteria is the length of the employee's service with the employer. In this particular case, it is not in contention Mr Sutherland was employed for a period of 14 months.

[109] That period of time, although itself not exceptional, is long enough to be a matter that should be taken into account, and particularly when it comes to assessing the expected period of employment that Mr Sutherland may have had with the company, had he not been dismissed.

[110] The third criterion is the remuneration that the person would have received, or would have been likely to receive, if they had not been dismissed. The fourth criterion is the efforts of the person, if any, to mitigate the loss suffered by them because of their dismissal. In that regard I take into account the evidence given by Mr Sutherland that he has made about ten unsuccessful job applications per week and as he hasn’t been able to obtain employment. Mr Sutherland is now attending Tafe to gain further qualifications to better his employment prospects.

[111] The fifth criteria that needs to be considered in section 392(2) of the Act is 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. Mr Sutherland's evidence is that he has not been employed since being dismissed in December.

[112] The next criterion I need to consider is the amount of any income reasonably likely to have been earned by the person during the period between the making of the order for compensation and the actual compensation.
.
[113] The last of the criteria is any other matter that the Commission considers relevant. I consider it relevant in this case that Mr Sutherland raised complaints about his employer with UTC and Coles, which appears to have led to his dismissal.

[114] In the matter of Ellawala v Australian Postal Corporation, 39 before the Full Bench in April 2000, the Full Bench made it clear that when assessing compensation under predecessor legislation it was necessary to consider the anticipated period of employment. In that regard the full bench said that the first step in this process, the assessment of remuneration lost, is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult but it must be done. As the Full Bench observed in Sprigg v Paul Licensed Festival Supermarket40 (Sprigg):

“We acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step, by virtue of the requirement of section 170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.” 41

[115] In the Full Bench decision of Haigh v Bradken Resources 42 (Haigh), the Bench reaffirmed the principles set out within Sprigg, and in particular the steps needed to be taken in assessing compensation. The first of those steps is to estimate the amount the employee would have received, or would have been likely to receive if the employment had not been terminated; the second step being to deduct moneys earned since termination; the third being to make deductions for contingencies; fourthly, to calculate any impact of taxation; and fifthly, to apply the legislative cap.43

[116] I refer to the evidence which has been put to me about the earnings received by Mr Sutherland. His evidence is that he worked approximately 20 hours per week, including Saturdays and Sundays, and that he usually worked about three hours per day. The wage records before me indicate immediately prior to his dismissal in December 2015, Mr Sutherland’s rate of pay was $21.23 per hour, which was the ordinary time rate for a level 1 worker under the Cleaning Services Award 2010 at the time of his dismissal. The calculation I am going to use is that his usual working week was 20 hours per week, structured as 17 hours at ordinary time ($21.23 per hour) and three hours for Saturday work ($30.46 per hour) which equate to the following:

● 17 hours x $21.23 = $360.91; and
● 3 hours x $30.46 = $91.38
● Total = $452.29 per week.

[117] In assessing the anticipated period of employment, the evidence, as I have indicated, includes that on or around 3 April 2016 the services of WCH Services were terminated by its contractor. The evidence therefore allows me to find that Mr Sutherland's employment would have continued for 14 weeks after the time in which he was dismissed.

[118] In respect of the findings within Haigh, which follows the formula in Sprigg, the task is to estimate the amount the employee would have received, or would have been likely to receive, if the employment had not been terminated. Clearly the 14 weeks employment is part of that, but if at the end of that period there had been a termination of the contract, at that point Mr Sutherland, as an employee, would have been entitled to a period of two weeks' notice, or payment in lieu thereof, arising under section 117 of the Act, as well as the relevant provisions of the modern award. In addition, he would have been entitled to a payment of six weeks’ redundancy pay in accordance with section 119 of the Act, and the relevant provisions of the award.

[119] On that basis my calculation of the amount that Mr Sutherland would have received, or would have been likely to receive if his employment had not been terminated, includes 14 weeks’ salary, two weeks’ notice, and six weeks redundancy pay, being a total of 22 weeks. At the rate I have expressed previously 22 weeks’ salary amounts to $7,940.02.

[120] In accordance with the Sprigg formula, I then need to deduct from that amount any moneys earned since termination. Because of the circumstances of this matter I make no such deduction. Firstly, there has been no new employment obtained by Mr Sutherland since his dismissal. Accordingly, I think there is no need to make a deduction for moneys earned since termination.

[121] There is a need, though, to make a deduction for contingencies. The purpose of contingencies is set out in the decision of the Industrial Relations Court in Slifka v J W Sanders Pty Ltd. 44 I consider in the circumstances that it is appropriate to make a deduction for contingencies, in particular being the possibility that there would have been an earlier termination of employment for the reasons that Mr Hancock and Mr Sutherland have referred to, and in particular, that the company had been reducing its hours. Accordingly, I make a deduction of 30 per cent for contingencies.

[122] The deduction of that amount ($2,382.01) leaves an amount of $5,558.01. 

[123] Misconduct reduces the amount if the Commission is satisfied that the person contributed to the employer’s decision to dismiss the employee. The Commission must reduce the amount it would otherwise order by an appropriate amount on account of the misconduct. The dismissal was not for reasons of misconduct and accordingly, I make no deductions under this criteria.

[124] In considering other matters, Mr Sutherland was honest in his evidence about the threatening text message he sent to Mr Hancock. Should he had been properly performance managed, the behaviour of Mr Sutherland would have likely resulted in some form of disciplinary outcome other than dismissal. I therefore deduct a further 20% from the total ($1,111.60) which leaves a balance of $4,446.41.

[125] In relation to the impact of taxation, I will require the amount to be ordered to be taxed according to law. As a result of that, I find that the amount of $4,446.41 should be awarded to Mr Sutherland, less taxation. I order that that amount be paid within 30 days of the date on which this decision and the consequential order 45 are published.

COMMISSIONER

Appearances:

M Sutherland on his own behalf

W Hancock for WCH Services

Hearing details:

2016.

Morwell:

June 6.

Melbourne:

July 8.

 1   Transcript of Proceedings PN52.

 2   Transcript PN62

 3   Exhibit A1.

 4   Exhibit A8.

 5   Exhibit A7.

 6   Exhibit A5.

 7   Transcript of Proceedings PN1037.

 8   Transcript of Proceedings PN1316.

 9   Transcript of Proceedings PN1323-PN1325.

 10   Transcript of Proceedings PN1326.

 11   Transcript of Proceedings PN1364.

 12   Transcript of Proceedings PN1368.

 13   Transcript of Proceedings PN 1369.

 14   Transcript of Proceedings PN1375.

 15   Transcript of Proceedings PN1382.

 16   Transcript of Proceedings PN1409.

 17   Exhibits A9 and A10.

 18   Exhibit R8.

 19   Exhibit R6.

 20   Transcript of Proceedings PN1204.

 21   Exhibit A9.

 22 (1995) 185 CLR 410.

 23   Ibid at 465.

 24   Fair Work Act 2009 (Cth) s.387(b).

 25   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151: Gooch v Proware Pty Ltd T/A TSM (The Service Manager)[2012] FWA 10626.

 26   Previsic v Australian Quarantine Inspection Services (unreported, AIRC, Holmes C, 6 October 1998) Print Q3730.

 27   Fair Work Act s.387(c).

 28   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

 29   Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1, 14 citing Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).

 30   Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1, 14-15 citing Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).

 31   Fair Work Act 2009 (Cth) s.387(d).

 32   Explanatory Memorandum, Fair Work Bill 2009 (Cth) [1542].

 33   Fair Work Act (Cth) s.387(e).

 34   Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

 35   Johnston v Woodpile Investments Pty Ltd T/A Hog’s Breath Café – Mindarie[2012] FWA 2 [58].

 36   Fair Work Act (Cth) s.387(f).

 37   Fair Work Act (Cth) s.387(g).

 38   Fair Work Act (Cth) s.387(h).

 39   Ellawala v Australian Postal Corporation (unreported, AIRC, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109.

 40 (1998) 88 IR 21.

 41   Ibid at 32.

 42   [2014] FWCFB 236.

 43 Ibid at [10].

 44 (1995) 67 IR 316.

 45   PR585997.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR585936>