Mr Nicolas Farmer v KDR Victoria Pty Ltd T/A Yarra Trams

[2015] FWC 3486

[2015] FWC 3486

FAIR WORK COMMISSION

DECISION

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

Mr Nicolas Farmer
v
KDR Victoria Pty Ltd T/A Yarra Trams
(U2014/5560)

COMMISSIONER WILSON ADELAIDE, 22 MAY 2015

Application for Unfair Dismissal Remedy - decision regarding an appropriate remedy

[1] Nicolas Farmer was employed by KDR Victoria Pty Ltd, trading as Yarra Trams (Yarra Trams), as a tram driver from 13 December 1999 until his dismissal on 21 February 2014.

[2] His application to the Fair Work Commission for an unfair dismissal remedy was the subject of a decision by me on 22 September 2014. 1 That decision went only to the merits of whether or not Mr Farmer was unfairly dismissed, with it being found that Mr Farmer was unfairly dismissed within the meaning of the Fair Work Act 2009 (the Act).2 For the sake of convenience, that decision is referred to from this point forward as the “Merits Decision”.

[3] Following publication of the Merits Decision, the matter was considered by the Full Bench of the Fair Work Commission, on appeal from Yarra Trams, with the Full Bench refusing permission to appeal on 4 February 2015. 3

[4] After publication of the Full Bench’s decision on the appeal by Yarra Trams, the matter returned to me for determination of an appropriate remedy under the Act, if any. The parties were provided with an opportunity to provide written submissions and further witness statements in respect of the question of an appropriate remedy and were afforded a hearing on the matter.

[5] By way of background, the circumstances that led to Mr Farmer’s dismissal include the following;

● While employed as a tram driver on Friday, 7 February 2014, Mr Farmer was driving the route 86 tram. At about 7 PM he was driving the tram away from the city towards Bundoora along Plenty road and was approaching the intersection of that road with Dunne Street/Kingsbury Drive; 4

● As the tram approached the intersection and travelled across it, Mr Farmer was seen by two witnesses travelling together, Dr Mary Noseda and Ms Bernadette Doyle, an off-duty manager working at the same depot as Mr Farmer. The witnesses identified Mr Farmer as the tram driver, with one of them giving evidence that as the tram progressed to cross the intersection “she clearly observed the driver looking at his mobile phone which he held in his right hand”. 5

[6] Having reviewed all of the evidence and the relevant criteria within the act, the Merits Decision found that Mr Farmer had been unfairly dismissed within the meaning of the Act. Critically, the decision found that, while not using a mobile phone at the time, Mr Farmer did have a charging device in his hand and was inspecting it, which led him to be distracted as the tram crossed the intersection. The Merits Decision recorded the following about Mr Farmer’s conduct;

● Mr Farmer had not operated a tram using a hand-held mobile device (which would be a breach of Yarra Trams’ Cardinal Rule 2);

● Mr Farmer had behaved in a way that could undermine public confidence (which is a breach of Yarra Trams Sub-rule 9 (3)), however he had not behaved in a way likely to put public safety in danger (which would be a breach of the same Sub-rule);

● Mr Farmer allowed himself to be distracted whilst his tram was in motion (which is a breach of Yarra Trams’ sub-rule 23 (3)). 6

[7] The Merits Decision also considered Mr Farmer’s past employment history. That history is recorded in an Agreed Statement of Facts between the parties to the effect that;

“The Applicant acknowledges that he was ‘advised and instructed’ in relation to driving with an earpiece on 30 August 2007 and 25 March 2008; and that he received a written warning on 1 September 2010 regarding the use of mobile phones; and written direction and reminder on 5 January 2012 regarding the use of mobile phones and other electronic devices.” 7

REMEDY

[8] The sections of the Act dealing with remedy once a finding of unfair dismissal has been made are as follows;

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.

391 Remedy—reinstatement etc.

Reinstatement

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

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

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer;
the order under subsection (1) may be an order to the associated entity to:
(c) appoint the person to the position in which the person was employed immediately before the dismissal; or
(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

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

(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection

(1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

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.

(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.

[9] A decision to award a remedy under the Act is discretionary, with no one consideration and no combination of considerations being necessarily determinative of the result. 8

Consideration of reinstatement

[10] The Full Bench has also observed the following about the primacy of reinstatement;

“[10] Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair dismissal as the discretion to order a remedy of compensation may only be exercised if the Commission is satisfied that reinstatement is ‘inappropriate’. Further, one of the objects of Part 3-2 of Chapter 3, in which the unfair dismissal provisions appear, is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement”. We would observe that to describe reinstatement as the ‘primary remedy’, is to simply recognise that reinstatement is the first, perhaps even the foremost, remedy under the Act. The relevant question in determining whether to grant the remedy of reinstatement of an employee in relation to a dismissal that is found to have been ‘unfair’ is whether reinstatement is appropriate in the particular case.” 9 (references omitted)

[11] While the Applicant argues for reinstatement, the Respondent argues that it would be inappropriate.

[12] The Applicant argues;

● The findings made in the Merits Decision included findings of fact, after which;

“the Commission held that Mr. Farmer had engaged in the following lesser misconduct:

(a) Mr. Farmer's inspection of his auxiliary charger while crossing the intersection could undermine public confidence and thus would amount to a breach of Rule 9.3, General Conduct. However, his retrieval of fallen items from the floor of the tram was no more likely to endanger public safety or undermine public confidence than the alternative of not retrieving them.

(b) Mr. Farmer allowed himself to be distracted while the tram was in motion, which would be a breach of Rule 23, Driver Distraction. However, the Commission also found that, 'even reasonable steps taken by a driver to secure their personal belongings in the course of the shift may be insufficient to prevent the occasional tipping over of a bag or other objects'. Despite this, the Commission found as Mr. Farmer had the bag with him, it was open and past experience ought to have alerted him to the danger.” 10

● Notwithstanding finding Mr Farmer had breached Yarra Trams’ Rule 9 and 23, “the misconduct arose from a single incident and would not be sufficient to undermine public confidence in Yarra Trams to an extent required to justify dismissal”. 11

● Such findings were insufficient to constitute a valid reason for dismissal, and “this lesser misconduct cannot be said to undermine the viability of an ongoing employment relationship”. 12

● Yarra Trams cannot “merely rely upon an allegation of breach of trust in its submissions. The Applicant submits that no evidence of such a fundamental breakdown in the relationship exists in this case based on the lesser misconduct noted above. It is of particular note that despite the allegations against him and subsequent investigation, Mr. Farmer was trusted to continue driving his route unsupervised until the date of his dismissal.” 13

● He has learned from what has happened, recording in his witness statement the following;

“... At the time of my dismissal meeting, I pleaded to keep my job under any condition and was very upset. This is because I knew losing my job would have a detrimental impact on both me and those I support. My job with Yarra Trams was a good one and if I'm reinstated, I am motivated to keep it in the future.

In particular, I've learned my lesson about keeping my bag in a safe place. If I'm reinstated to my position, I'll take the upmost care to ensure that my bag is zipped-up in the tram cabin. That was a mistake on my part and I take responsibility for it. With the bag kept zipped, I will be able to avoid items spilling over the cabin floor. While I picked the items off the floor to avoid them sliding under the pedal as I was concerned for passenger safety, it was definitely a mistake for me to inspect the auxiliary charger. I also take responsibility for that, regret this error and would not repeat it. I've been off work for over a year and have learned my lesson.” 14

● Because of the evidence given by the Respondent in the course of the merits hearing it would now be inconsistent for Yarra Trams to “assert that Mr. Farmer's past record of similar and/or unrelated misconduct is a basis for undermining its trust and confidence in him; 15

● Mr Farmer’s submissions also refer to his contrition and his experiences of hardship subsequent to the termination; see for example;

“In addition, the Applicant has suffered substantial stress as a result of his dismissal. The evidence of Mr. Foudoulis and Mr. Alteri at the arbitration confirmed that the Applicant pleaded to keep his job and to accept any form of alternative supervision or discipline. He noted his financial circumstances and his obligations to his daughter. His health has also been in a poor state since the accident. The Applicant submits that no additional punishment through a deduction is required in the circumstances, particularly given that it has been nearly a year since the Applicant worked in a job he valued and had done competently for 14 years. The Applicant's evidence is that he has clearly 'learned his lesson' and will avoid such misconduct in the future.” 16 (reference omitted)

[13] Yarra Trams submitted that its opposition to reinstatement of Mr Farmer to his former position was on the basis of its loss of trust and confidence in him, and further there would be impracticality with reinstatement to an alternative position as proposed by the Applicant. 17

[14] In relation to the prospect of Mr Farmer’s reinstatement to his former position, Yarra Trams further submitted that it would be inappropriate for the reason that there was no likelihood of trust and confidence in the Applicant being restored; and that “the unique nature of the Applicant’s previous employment dictates it is incapable of ‘withstanding some friction and doubts’”. 18 Its reasoning in this regard is founded on a number of matters including;

● the evidence of Ms Bayram and Mr Foudoulis to the effect that tram driving is an independent and autonomous task, with inherent dangers in the case of driver inattention; 19

● its evidence shows the applicant has not learned from his mistakes; 20 and

● that the findings of the Commission in the Merits Decision in respect of the breaches of Rules 9 and 23 are not seen by the Applicant with the importance the Respondent considers they require;

“The Decision found the Applicant had breached the Rules, however the Applicant attempts to ‘gloss over’ the Commission’s findings regarding two Rule breaches as “lesser misconduct”. With respect to the breach of Rule 9.3 (‘undermining public confidence’), the Applicant mischaracterises the Commission’s explanation of its non-satisfaction of a different limb of the Rule [why the Commission was not satisfied the Applicant was ‘likely to put public safety in danger’] as a finding of fact that “his retrieval of fallen items from the floor of the tram was no more likely to endanger public safety or undermine public confidence than the alternative of not retrieving them”.” 21 (references omitted)

[15] In respect of Mr Farmer’s past record as an employee, Yarra Trams submitted that;

“33) The Respondent submits the Applicant’s previous disciplinary record is a relevant factor regarding the appropriateness of reinstatement. Other examples of reinstatement being ordered have involved applicants with ‘unblemished records’, or without previous disciplinary indiscretions. This is not one of those examples.

34) As outlined in paragraph 3 of the Agreed Statement of Facts:

The Applicant acknowledges that he was ‘advised and instructed’ in relation to driving with an earpiece on 30 August 2007 and 25 March 2008; and that he received a written warning on 1 September 2010 regarding the use of mobile phones; and written direction and reminder on 5 January 2012 regarding the use of mobile phones and other electronic devices.

35) The Respondent submits the conduct found by the Commission to have occurred in the Decision was not a ‘one off’ incident, but a further example of misconduct previously dealt with on four occasions in a disciplinary sense by the Respondent due to breaches of their Rules.” 22 (references omitted)

And further;

“39) Due to the repeated disregard for the Respondent’s Rules and the highly safety-sensitive nature of tram driving, the Respondent submits the Commission should find reinstatement is not appropriate for an individual with repeated Rule breaches and in light of the evidence led of the potential consequences of even the briefest of distractions whilst driving a 30 tonne vehicle.” 23

[16] Yarra Trams submitted that the position of a tram driver is featured by a “safety imperative” and the “paramount importance of safety”, 24 noting the findings by Commissioner Johns in another unfair dismissal matter involving a tram driver with the same Respondent, Kingsley v KDR Victoria Pty Ltd, in which it was said;

“[91] The Commission, as presently constituted, has given consideration to each of the other relevant matters identified by the parties. In weighing up the relevance of each of them the Commission, has placed more weight on the Safety Imperative. It is proper to do so when the matter involves a service to the public at large, conducted on public roads.” 25

[17] In relation to Kinglsey, I note the Commission found the employee made a conscious breach of the Rules that amounted to misconduct when he travelled in the wrong direction across an intersection. 26 The whole of the circumstances reported in that decision lead me to the view that the matter is distinguishable from this. I accept that the purpose of the Respondent in referring to the matter is to place within context its submission about the importance of safety.

[18] The Respondent further notes that in respect of the nature of the position held by a tram driver, that it “is one with a very high level of autonomy and not subject to constant (or even routine) monitoring and supervision from management or supervisory staff”. 27

[19] Yarra Trams also addressed and opposed the question of whether Mr Farmer should be reinstated to an alternative position within the company, whether to another depot as a tram driver, or to an entirely different position. The context to this is the submission within Mr Farmer’s further witness statement to the effect that;

“Although I would be very pleased to return to Preston, if my employer wants to redeploy me to a depot such as Brunswick or Essendon, I would be agreeable to that as well. I would also be agreeable to being transferred to a customer service position, and associated duties, on terms and conditions that are no less favourable than a class 3 tram driver.” 28

[20] The Respondent opposes reinstatement to an alternative depot for the reasons referred to previously about the safety risks and its doubts about Mr Farmer’s ability to comply with the rules. 29 Yarra Trams’ opposition to the possibility of his reinstatement to a customer service position stems from its perception of complaints about his poor customer service and that in any event such position is not one which is an “…‘equivalent position’ or a ‘close substitute’”.30

[21] Further witness statements were provided by the Respondent in these proceedings on behalf of Ms Bel Bayram, a Team Manager at the East Preston depot; Mr Vic Foudoulis, the Yarra Trams Manager of Lines at the East Preston depot, and Ms Aline Frantzen, Yarra Trams’ Director of Lines, with accountability for operations on all tram lines. Their statements were not the subject of cross-examination.

[22] In Ms Bayram’s case her evidence about the possibility of reinstatement of Mr Farmer included the following;  31

“Because of Mr Farmer's conduct on 7 February 2014 (where it was found he was distracted whilst the tram was in motion by holding and checking the auxiliary charger) and his past record of counselling and warnings about mobile phone use and breaches of our Rules I have lost my trust and no longer have confidence in his ability to do the right thing and follow the correct rules and procedures. I highly doubt he is able to perform his role as a tram driver without being distracted and potentially causing a serious accident or potential fatality.”

“Due to the size of a tram, the weight of passenger loading and the fact that it is metal wheels on a metal track, braking distance is longer than in a car. I found from my experience driving trams that all tram vehicles vary with how they accelerate and brake. Driving a tram requires full concentration. There are many factors that can impact the way a tram operates and it is up to the driver to alter their driving and behaviour to control these elements. For example: the weather can change several times during a driver's shift. If there is a slight drizzle of rain or a gust of wind blowing debris on to a track, this can cause the tram to skid. The driver needs to be vigilant at all times and use their defensive driving techniques. All it takes is a split second of distraction that could lead to a disastrous consequence.”

“I do not believe Mr Farmer has learnt his lesson about the use of devices and/or being distracted whilst driving. From reviewing his file, he has been ~advised and instructed' regarding driving with an earpiece twice; and two warnings about the use of mobile phones and other devices whilst driving.”

“The incident that led to his termination was in my mind the fifth time he has been disciplined about mobile phone or mobile device use. I do not have trust or confidence that Mr Farmer has learnt from his mistakes in the past. I believe he is a habitual offender with the use of a mobile device whilst driving. Putting him back out on the road does not sit comfortably with me at all. Given the opportunity, I would expect sooner or later, he would do it again.”

“The introduction of the Cardinal rules in 2013 and this case, which has gained a lot of attention with drivers, I believe, has had a very positive effect of reinforcing the company's safety message. I have noticed now when drivers hand back mobile devices that are lost property on board their trams - they are often reluctant to be seen holding a phone because they know the importance of the Cardinal rules. When some drivers are handed a lost mobile device on their tram, the drivers are asking passengers to put them on silent or switch them off prior to giving it to them because it will be left in the driver's cabin until they return to the depot, and they don't want it making a noise or ringing and distracting them.”

[23] Mr Foudoulis’s witness statement echoed the views of Ms Bayram in substantial respects, however it also focussed on the hazards that may be experienced along the lines running from the East Preston depot. 32 Ms Frantzen’s witness statement referred to the availability of positions within Yarra Trams.33

[24] The issue of when reinstatement is inappropriate and the related question of the need for trust and confidence between the parties was recently considered at length by the Full Bench of the Commission in Nguyen & Le v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter 34 (Nguyen). In its decision, the Full Bench held that;

● ‘trust and confidence’ in this context is that which is essential to make an employment relationship workable, which is “not to be confused with an implied term in a contract of employment of mutual trust and confidence, the existence of which was recently eschewed by the High Court in Commonwealth Bank of Australia v Barker”; and

● while “trust and confidence is a necessary ingredient in any employment relationship, it would be wrong to assume that it is the sole criterion or even a necessary one to determine whether or not reinstatement is appropriate”. 35 (references omitted)

[25] The Full Bench in Nguyen summarised the relevant principles to be followed in assessments of trust and confidence as follows;

“[27] The following propositions concerning the impact of a loss of trust and confidence on the question of whether reinstatement is appropriate may be distilled from the decided cases:

• Whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate but while it will often be an important consideration it is not the sole criterion or even a necessary one in determining whether or not to order reinstatement.

• Each case must be decided on its own facts, including the nature of the employment concerned. There may be a limited number of circumstances in which any ripple on the surface of the employment relationship will destroy its viability but in most cases the employment relationship is capable of withstanding some friction and doubts.

• An allegation that there has been a loss of trust and confidence must be soundly and rationally based and it is important to carefully scrutinise a claim that reinstatement is inappropriate because of a loss of confidence in the employee. The onus of establishing a loss of trust and confidence rests on the party making the assertion.

• The reluctance of an employer to shift from a view, despite a tribunal’s assessment that the employee was not guilty of serious wrongdoing or misconduct, does not provide a sound basis to conclude that the relationship of trust and confidence is irreparably damaged or destroyed.

• The fact that it may be difficult or embarrassing for an employer to be required to re-employ an employee whom the employer believed to have been guilty of serious wrongdoing or misconduct are not necessarily indicative of a loss of trust and confidence so as to make restoring the employment relationship inappropriate.

[28] Ultimately, the question is whether there can be a sufficient level of trust and confidence restored to make the relationship viable and productive. In making this assessment, it is appropriate to consider the rationality of any attitude taken by a party.” 36 (references omitted)

[26] Consideration of the respective submissions and the evidence relevant to the subject of reinstatement and whether it is appropriate, reflects the strongly competing views and interests of the parties.

[27] Mr Farmer’s case for reinstatement surrounds the view that the findings of the Commission in the Merits Decision are for “lesser misconduct” that does not undermine the viability of the employment relationship and the misconduct was insufficient to undermine trust and confidence; 37; and there is no evidence there has been fundamental breakdown in the relationship exists because of this lesser misconduct.38 He infers on the part of Yarra Trams a reluctance for it to move from its position at the time of dismissal that he had breached the Cardinal Rule 2 by using a mobile phone while driving a tram.39

[28] On the other hand, Yarra Trams’ submissions develop concerns not only about the relationship it expects it might have with Mr Farmer in the event of reinstatement, but also amplify concerns about what consequences might flow from his reinstatement.

[29] The company argues it has lost trust and confidence in Mr Farmer and his capacity to work safely, because of his employment history, including the matters that led to his dismissal. The case put forward by Yarra Trams in this regard is firstly that it does not believe Mr Farmer when he says that he is contrite or that he has learned his lesson. 40 In effect it argues that it comes to this position because of the history of Mr Farmer’s employment which includes not only the breaches of rules 9 and 23 found in the Merits Decision, but also the prior events as well. Ms Bayram’s evidence is that she does not believe that Mr Farmer has learned his lesson and that he has been an habitual offender.41

[30] The Respondent’s other part of its argument against reinstatement is that because it does not have trust and confidence in him, it is concerned about the consequences for safety.

[31] It is well established that contentions for the loss of trust and confidence must be soundly and rationally based. 42 In this matter, and with regard to whether Yarra Trams’ views can be said to be based on reason, the merits of the second strand of argument put forward by Yarra Trams (the consequences for safety) depend to a certain extent on the first (whether Mr Farmer can be trusted).

[32] The Merits Decision made findings on the evidence from the perspective of whether the dismissal was unfair, and not from the perspective of remedy.

[33] Mr Farmer submits he is contrite about his mistakes, however his evidence in the form of his further witness statement refers merely to something less than what might be expected of a full insight as to the factors that led to his dismissal. Rather than referring to the paramountcy of passenger and public safety, which are the factors with which Rules 9 and 23 are concerned, and an acceptance that he may have compromised those matters, his evidence surrounds less significant matters of keeping his bag zipped;

“In particular, I've learned my lesson about keeping my bag in a safe place. If I'm reinstated to my position, I'll take the upmost care to ensure that my bag is zipped-up in the tram cabin. That was a mistake on my part and I take responsibility for it. With the bag kept zipped, I will be able to avoid items spilling over the cabin floor. While I picked the items off the floor to avoid them sliding under the pedal as I was concerned for passenger safety, it was definitely a mistake for me to inspect the auxiliary charger. I also take responsibility for that, regret this error and would not repeat it. I've been off work for over a year and have learned my lesson.” 43

[34] The findings made about his conduct, coupled with the matters about which Mr Farmer has previously been counselled, would suggest a heightened level of contrition be expected than that which he submits to have experienced in the muted statement above; that is, one to the effect that he realises now his behaviour compromised perceptions or the reality of safety; that this was unacceptable to the tram operator within the context of its safety obligations and public relations campaigns, and that he will ensure no further lapses, perhaps by permanently excluding from the cabin any and all devices that might cause a distraction. It could have been expected that he would seek to draw a line through his employment history, which contains related points of concern on the part of his employer. He did not take the opportunity to rebut or cross-examine the very pointed evidence of Ms Bayram in her witness statement that she believes he is an habitual offender who has not learned his lesson.

[35] After consideration of the respective submissions and the totality of the evidence, I consider Yarra Trams’ loss of trust and confidence in Mr Farmer to be soundly and rationally based. Mr Farmer’s employment history includes events prior to February 2014 in which he had been counselled about driver distractions or the use of a mobile phone. These matters include what is recorded in the Agreed Statement of Facts;

“The Applicant acknowledges that he was ‘advised and instructed’ in relation to driving with an earpiece on 30 August 2007 and 25 March 2008; and that he received a written warning on 1 September 2010 regarding the use of mobile phones; and written direction and reminder on 5 January 2012 regarding the use of mobile phones and other electronic devices.” 44

[36] The Merits Decision referred to those matters and found that in February 2014 he was again distracted as a driver, in breach of Yarra Trams rules; albeit not in breach of the company’s Cardinal Rules, and not sufficiently to rise to a valid reason for dismissal. 45 Other allegations, that were not conclusively determined in the Merits Decision, were the subject of submissions by Yarra Trams in the merits hearing, and included allegations from January and December 2012 that Mr Farmer had been observed with a phone in his hand, causing him to delay his tram.46

[37] Ms Bayram’s evidence is that because of this history, she highly doubts that “he is able to perform his role as a tram driver without being distracted and potentially causing a serious accident or potential fatality”. 47 I take into account that Ms Bayram’s evidence in this respect was not subject to cross examination. I therefore accept Ms Bayram’s evidence.

[38] The belief held by Yarra Trams about Mr Farmer’s likely behaviour in the event of reinstatement connects with the consequences of such belief being proven correct after returning to work as a tram driver. Mr Foudoulis cogently and persuasively puts these consequences in his witness statement;

“6) A tram driver is out on the road on his/her own and unsupervised. He or she has to drive a 30 tonne vehicle and be accountable for that responsibility and mixing with road users and pedestrians. We have to have complete trust in drivers to do the right thing and follow the Rules. I no longer trust Mr Farmer to do the right thing because of his previous warnings which go to 'distraction' because of mobile phone use and I do not have confidence he has learnt from his many misdemeanours.

7) The consequences of a tram driver being distracted - either because of looking at a mobile device or something else - is potentially a fatality of a pedestrian or motorist. Trams on the road almost always interact with other road users and pedestrians.” 48

[39] Mr Foudoulis’ evidence on this point was echoed by Ms Bayram. 49

[40] Mr Foudoulis’ evidence was also not the subject of cross examination, and I accept his evidence on these matters.

[41] Mr Farmer argues that if reinstatement could not be as a tram driver to the East Preston depot, it could instead be as a tram driver to the Essendon or Coburg depots, performing comparable duties. 50

[42] In the alternative, Mr Farmer also argues for reinstatement to a customer service position which would not involve tram driving. 51 There has been insufficient evidence provided on this matter for me to conclude that such position is available; whether Mr Farmer would be suitable for such position; or whether the risks as to distraction or public safety do not exist for the Yarra Trams objections in respect of trust and confidence to be operative.

[43] The Applicant argues that the decision of Deputy President Booth in Nasrieh v ComfortDelGro Cabcharge Pty Ltd T/A Hillsbus 52 (Nasrieh) to reinstate the employment of a bus driver found to have used a mobile phone while driving should be taken into account by me and is relevant to the question of reinstatement. I have considered the application of that decision and reiterate what I had to say in the Merits Decision, to the effect that the circumstances of this matter are distinguishable to those within Nasrieh.

[44] In particular the Applicant in that matter gave credible evidence that was accepted by the Commission regarding mitigating circumstances for the use of the mobile phone. Those circumstances included his concern for his wife’s mental condition and his concerns for her safety. 53 I consider those matters were an externality to the events within the bus at the time and which Her Honour took into account and found persuasive in her decision making. In addition, a further mitigating circumstance within Nasrieh was significant ambiguity about whether the company’s policy about the use of mobile phones, which had changed in recent time, was known to the Applicant.54 No such ambiguity has been highlighted in this matter. Finally, the Respondent in the matter did not argue that reinstatement would be impractical because the trust and working relationship between the parties had broken down, or for any other reason.55

[45] Taken together, these matters allow a finding that it is not appropriate to reinstate Mr Farmer as a tram driver at any of Yarra Trams depots, or to another position.

Consideration of compensation

[46] Pursuant to subsection 390(3) an order for the payment of compensation to a person must not be made unless the Fair Work Commission “is satisfied that reinstatement of a person is inappropriate” and also that the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case.”

[47] I am satisfied in all circumstances that it would be inappropriate to reinstate Mr Farmer and that instead I should give consideration to an order for the payment of compensation.

[48] In matters in which compensation is a consideration, the Commission ordinarily makes an assessment of remuneration the employee lost through dismissal, which in turn requires a finding in relation to the “anticipated period of employment”, and an estimation of how long the employee would have remained employed but for their termination. 56 This process starts with the assessment of actual loss, deducting any appropriate amounts and then applying the compensation cap provided for in s.392(5).57 The assessment of the amount the employee would have received if the employment had not been terminated is referable to the entire circumstances including the basis on which the termination was found to be unfair.58 Any deduction on account of misconduct, pursuant to s.392(3) is also applied before the application of the legislative cap.59

[49] In determining an appropriate amount of compensation, it is necessary to take into account all the circumstances of the case as required by s.392(2). 60

s.392(2)(a) the effect of the order on the viability of the employer’s enterprise

[50] There is nothing before me which would indicate that an order of compensation would negatively affect the viability of Yarra Trams’ enterprise.

s.392(2)(b) the length of the person’s service with the employer

[51] Mr Farmer’s employment with Yarra Trams was for a period of 14 years. 61 I accept Mr Farmer’s length of service is a factor that ought to be taken into account in assessing the remuneration he would have received had he not been dismissed.

s.392(2)(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[52] Mr Farmer submits that, had he not been dismissed, he “would have remained in his position for at very least ‘a number of years’ and most likely, until his retirement”, especially so in view of his 14 year employment history. 62 On the other hand, Yarra Trams submit that;

“Given the repeated disciplinary issues with the Applicant and the Respondent’s greatly increased focus on safety, the Applicant’s continued service with the Respondent is unlikely to have been “for several years”, and this ought to be taken into consideration in respect of s 392(c).” 63

[53] As things stood in February 2014, Mr Farmer was not subject to any final warning or other disciplinary process that might have led to his imminent dismissal. It is unlikely that a decision to warn Mr Farmer about his conduct on 7 February 2014, which has been found by this Commission to be a breach of Yarra Trams Rules 9 and 23, but not its Cardinal Rule No. 2, would have led to an imminent dismissal, or even within months. It is also the case that no evidence has been led that Mr Farmer’s position was otherwise at risk, such as for reason of redundancy.

[54] As someone who had worked for the company for 14 years, and aged 44 years at the time of dismissal, 64 Mr Farmer’s expectations about the continuity of employment in the future have some level of validity. Were there a need to hold him to account for future breaches of workplace obligations, it would seem appropriate that his length of service would be a factor in determining what penalty, if any, should be administered.

[55] On the other hand, I am unable to agree with Mr Farmer’s submission that his employment history is “relatively unblemished”. 65 Such submission is not consistent with the evidence of the blemishes for which he had been taken to account;

● on 6 September 2007 and again on 25 March 2008, he was ‘advised and instructed’ in relation to driving while using an earpiece;

● on 1 September 2010 he received a written warning regarding the use of mobile phones;

● on 5 January 2012 he received written direction and reminder regarding the use of mobile phones and other electronic devices; 66

[56] The investigation report conducted into Mr Farmer’s conduct in February 2014 referred to these matters, and that Mr Farmer had attended training in September 2013 about the introduction of the Cardinal Rules and the associated rule book. The report recommended that Yarra Trams “undergo disciplinary counselling” in relation to the reported February 2014 rule breaches. Had such disciplinary counselling been undertaken in relation to the rule breaches supported by the Merits Decision, it is likely that it would have been heeded for a time.

[57] While my doubts on these matters cause me to consider that his continued employment until retirement is unlikely, there is no cogent evidence that would suggest his employment was likely to end in the foreseeable future, even if he had been issued with a final warning instead of being dismissed.

[58] In forming my view about the anticipated period of employment, I note the findings by the Full Bench in the matter of Read v Gordon Square Child Care Centre Inc. 67 (Read) which concerned the director of a child care centre dismissed on allegations that she had “inadequately supervised a child within the centre and that [she] did not meet the supervision requirement that every child should always be supervised actively and diligently”.68 In that matter, the applicant had worked for the Centre for 21 years and had been its Director for the previous 12 years.69 On appeal, the Full Bench was not persuaded there was a valid reason for the Applicant’s dismissal related to her capacity or conduct (including its effect on the safety and welfare of other employees).70 The Full Bench found in relation to the anticipated period of employment;

“The period which Ms Read would have continued to work for Gordon Square but for her dismissal is speculative but given her age and, we accept, limited employment prospects elsewhere we think it is likely she would have continued to work for Gordon Square for around another six months.” 71

[59] As with that matter, I consider that the period which Mr Farmer would have continued to work for Yarra Trams is also speculative.

[60] On the one hand, Mr Farmer seeks a finding in relation to the “anticipated period of employment” that his employment would most likely have continued for several years, or even until his retirement. Yarra Trams submits that this period is unlikely to have been “for several years”, without submitting an alternative period. The context of all the material in this matter leads me to find that that the period would have been not less than 12 months. I will proceed to assess compensation on the basis of an anticipated period of employment of 12 months, which for the purposes of calculation, and subject to any applicable deductions, exceeds the amount that may be ordered by the Commission as compensation, for reason of the “compensation cap” within s.392(5).

s.392(2)(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[61] Mr Farmer submits the following about his efforts to mitigate his loss through dismissal from employment;

“I have actively looked for work since the point of my dismissal, other than during a period of several weeks following my stomach surgery in June 2014. I was physically incapacitated during this time. During the other periods of my unemployment, I have applied to Metro and Vline and other public transport companies. Unfortunately, I have been hampered in my job search by the circumstances of my dismissal. I am honest with prospective employers about the fact that I was dismissed from Yarra Trams. The fact that I have no reference letter following 14 years of employment with Yarra Trams also hampers my ability to find new work with prospective employers in the public transport sector.” 72

[62] His evidence in this regard connects with his submissions on the subject;

“Other than a period of recovery from surgery in June 2014, Mr. Farmer has made substantial efforts to mitigate his loss by applying for other positions, such as on Metro lines and Vline. His efforts to obtain alternative employment have been hampered by the confined nature of his work experience. He has been a tram driver since 13 December 1999. Prior to this, he worked in filling out tax returns for a period of a few years. He has the first year of a TAFE qualification in completing tax documents. The nature of his dismissal from Yarra Trams and his lack of a reference letter also hampered his ability to find work.” 73 (references omitted)

[63] The reference in the foregoing submission to “filling out tax returns for a period of a few years”, connects with the evidence given by Mr Farmer in the merits hearing about his prior work history as follows;

“You mention in your statement you've been driving a tram for 14 years. Before that, what did you do?---I hadn't had a lot of good secure work since I left Mildura to come back here in the end of 94 but I had done warehouse work and then I had done a H and R Block income tax preparer's course and worked sort of part time during 96, 97, 98 preparing tax returns.” 74

[64] Yarra Trams’ submission on the question of Mr Farmer’s efforts to gain alternative employment included;

“It is also apparent the Applicant’s attempt to mitigate can be best described as relatively modest, insofar as it appears he has applied to “Metro, Vline and other public transport companies” and otherwise has restricted his search to the “public transport sector”. This cannot be described as “substantial efforts to mitigate his loss”.” 75

[65] The importance of efforts of an Applicant to mitigate the loss they experience from their dismissal was emphasised in Read, in which the Full Bench observed;

“With respect to Ms Read’s efforts to mitigate the loss she has suffered because of her dismissal, Ms Read submitted she has been unable to source alternative employment. However, there was a paucity of evidence on her mitigation efforts. We conclude that Ms Read’s mitigation efforts militate against an order for the payment of compensation.” 76

[66] In this matter the evidence concerning Mr Farmer’s efforts to obtain employment after he was dismissed on 21 February 2014 is that which is set out above. At the time of the proceedings associated with the remedy hearing, on 23 March 2015, Mr Farmer had been unemployed for 13 months yet he was unable to point to any history of significance in his endeavours to obtain employment with other firms. The minimal history that is put forward appears inadequate in the context of the period of time since dismissal and the debts which he has, and which have increased significantly since the time of the original merits hearing. 77 I take into account that within the period referred to, Mr Farmer had surgery for which a period of recovery was required. However, in all, his mitigation efforts have not been substantial.

[67] Of course, given the time that has elapsed since Mr Farmer’s dismissal, the period of time for which Mr Farmer may be compensated will be shorter than the period of time for which he will not receive compensation. Even so, I note the presumption that an Applicant is expected to mitigate their loss and that the failure to do so may militate against an order for the payment of compensation. 78 The date of the Merits Hearing was 4 and 5 August 2014, within 6 months of the dismissal. With more than a year now gone since the termination, it should be expected that efforts of some substance to obtain alternative employment are reported to the Commission, and the absence of such efforts leans towards the exercise of a discretion against the Applicant.

[68] While that is the case, I consider it would be unfair to make more than a modest reduction in the amount of compensation that would otherwise be ordered.

[69] As a result, I will reduce the assessed amount of Mr Farmer’s loss by the amount of $5,000 to take account of Mr Farmer’s failure to mitigate his loss.

s.392(2)(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

[70] The earnings by Mr Farmer since dismissal are minimal, and his witness statement refers only to the amount of 4 weeks pay provided to him by Yarra Trams as termination pay following his dismissal, being approximately $6,832, together with unspecified Centrelink payments. 79 A deduction from the assessed amount of Mr Farmer’s loss will be made for the termination pay, however no deduction will be made for the Centrelink payments.

s.392(2)(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

[71] Mr Farmer’s evidence is that he has not been able to find alternative employment at the time of the hearing on the question of remedy. As such, an adjustment does not need to be made to the proposed order for compensation for income reasonably likely to be earned between the time of making the order of compensation and when it is paid.

s.392(2)(g) any other matter that the FWC considers relevant.

Contingencies

[72] Yarra Trams submits “a reduction of at least 25% is applicable regarding the uncertainty associated with the Applicant’s continuing employment with the Respondent”, however it then points to no evidence that would support that contention and gives no elaboration of why that may be appropriate. The case put by the Respondent, that a deduction for contingencies is warranted, goes to what it sees as the uncertainty of Mr Farmer’s continuing employment, including for the likelihood of further breaches of the company’s rules. 80 Mr Farmer puts forward that such contingencies as are assessed ought to be significantly lower than 25% as proposed by Yarra Trams.81

[73] The reasoning associated with an adjustment for contingencies was referred to in the matter of Slifka v J W Sanders Pty Ltd. 82 With reference to consideration of the calculation of compensation for the loss of wages and bonus and the loss of long service leave (paragraphs (d), (e) and (g) in the passage below), North J found;

“In relation to the items referred to in pars (d), (e) and (g), some allowance should be made for the contingency that the applicant may not have served the whole of the remaining 2½ years as an employee of the respondent, for reasons such as ill health, lawful termination by the respondent, voluntary resignation, or closure of the respondent’s business. None of these contingencies should attract a high allowance.

Finally, some allowance should be made for the fact that some part of the compensation will be received up to 2½ years earlier than if the applicant had completed his employment with the respondent.

In all the circumstances, it appears to me that an appropriate reduction for contingencies relating to the future is 25 per cent. As the total of the items referred to in pars (d), (e) and (g) is $30,000, a reduction of 25 per cent brings these items to a total of $22,500.” 83

[74] In Ellawala v Australia Post Corporation 84, the Full Bench considered the application of a factor for “contingencies”, and in particular the above passage from Slifka;

“[41] It is apparent from the above extract that his Honour was not seeking to lay down a discount for contingencies which would be generally appropriate. Rather he adopted a 25 per cent discount factor on the basis of the circumstances of the particular case before him.

[42] It would be open to the Commission to proceed on the basis that a certain percentage discount for contingencies was generally appropriate, subject to adjustment up or down to take account of an applicant's particular circumstances. But we are not necessarily convinced that a 25 per cent discount would be generally appropriate. We note that in Wynn v NSW Insurance Ministerial Council the High Court observed that the practice in New South Wales was to generally adopt a 15 per cent discount for contingencies.

[43] We note that in Slifka North J only applied the deduction for contingencies to prospective loss, that is loss occasioned after the date of the hearing. This approach has also been adopted in a number of first instance arbitrations by members of the Commission. As a matter of logic this approach has some appeal. A discount for contingencies is a means of taking account of the various probabilities that might otherwise affect earning capacity. At the time of hearing any such impact on an applicant's earning capacity between the date of termination and the hearing will be known. It will not be a matter of assessing prospective probabilities but of making a finding on the basis of whether the applicant's earning capacity has in fact been affected during the relevant period. But this matter was not raised before us and we were not directed to any evidence upon which we could make a finding as to whether Ms Ellawala's earning capacity was adversely effected by some event which took place in the period between her termination and the hearing of the matter at first instance.” 85 (original emphasis)

[75] After this analysis the Full Bench in Ellawala reduced its assessment of remuneration lost of 6 months by the amount of 15%, noting that the uncertainty surrounding ongoing employment, as a result of past performance, had already been taken account of in its assessment of lost remuneration. 86

[76] The Full Bench in Bowden v Ottrey Homes 87 (Bowden)assessed remuneration lost of “at least six months” and, in relation to contingencies and taxation of the compensation it ordered, stated;

“We accept that “any discount for contingencies depends upon the circumstances of each particular case”. No sound basis for making a deduction for contingencies has been made to us in this case.

In her first decision, the Commissioner said that in the final calculation of compensation she proposed to make “a small adjustment of 10%” for contingencies “on the basis that a substantial portion of the projected period of continued employment has passed”. In fact, all of the projected period of continued employment has passed.

We have considered the impact of taxation but we elect to settle a gross amount and leave taxation for determination. ...” 88 (reference omitted)

[77] The Full Bench in Bowden did not make a deduction for contingencies, noting that in the case it was dealing with, “all of the projected period of continued employment has passed”. 89

[78] In this matter, I am not persuaded a deduction for contingencies is warranted. The case put by the Respondent, that a deduction for contingencies is warranted since there was “uncertainty associated with the Applicant’s continuing employment with the Respondent” goes to what it sees as his likelihood of repeated breaches of the company’s rules. I consider that such uncertainties as may exist are dealt with through the totality of the order for compensation that I make and that any order for compensation will not recompense Mr Farmer for the whole of the period since his dismissal for reason of the operation of the “compensation cap”.

Taxation

[79] In relation to taxation, I follow the approach of the Full Bench in Bowden and will settle a gross amount and leave taxation for determination.

Other considerations

[80] In forming my views about an appropriate order for compensation, I have taken consideration of the fact Mr Farmer was aged 44 at the time of the merits hearing, which puts him at the point where his age will likely be a negative factor in obtaining further employment. I have also taken account the likelihood that the combination of his age and employment history will mean he has limited employment prospects elsewhere. I have taken these matters into account as one factor relevant to deciding not to make a deduction for contingencies, with the view that these factors could properly be said to be probabilities that might otherwise affect Mr Farmer’s earning capacity.

[81] I am not aware of any other considerations which might be relevant to the order of compensation, and have considered all of the circumstances of the case in determining an appropriate remedy.

s.392(3) - Reduction for misconduct

[82] Section 392 (3) requires that if the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person then the FWC must reduce the amount it would otherwise order by an appropriate amount on account of the misconduct.

[83] The matter of a deduction from compensation for misconduct was discussed at length in the matter of Read. In that matter, the Full Bench made a deduction for misconduct of $1,000 and a consequential adjustment for superannuation. Relevantly, the Full Bench considered application of the provision to the circumstance where it had been found there was no valid reason for termination, making the following findings;

“(vii) Misconduct (s.392(3))

[83] Section 392(3) of the FW Act requires the FWC to reduce the amount of compensation it would otherwise order by an appropriate amount on account of a person’s misconduct if satisfied the misconduct of the person contributed to the employer’s decision to dismiss the person. The section requires the FWC to consider, amongst other things, if the relevant person engaged in misconduct and, if so, if that misconduct contributed to the employer’s decision to dismiss the person. The section seems to require such consideration even if the FWC has found there was no valid reason for the person’s dismissal. Although, if there was no valid reason for the dismissal we think that may be relevant to the FWC’s decision as to the “appropriate” amount by which to reduce the amount of compensation the FWC would otherwise order.

[84] Section 392(3) of the FW Act had its origins in the amendments to the pre-reform WR Act arising from the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (Work Choices Act). The Work Choices Act amended the pre-reform WR Act to include a new s.654(8)(e) in respect of the matters to be taken into account by the AIRC in determining a compensation amount. Section 654(8)(e) was as follows:

“654(8) Subject to subsections (8), (9), (10) and (11), in determining an amount for the purposes of an order under subsection (7), the Commission must have regard to all the circumstances of the case including: …

(e) any misconduct of the employee that contributed to the employer's decision to terminate the employee's employment”.

[85] The Work Choices Act also amended the pre-form WR Act to include a new s.654(10), which is similar to s.392(3) of the FW Act. Section 654(10) was as follows:

“654(10) If the Commission is satisfied that misconduct of the employee contributed to the employer's decision to terminate the employee's employment, the Commission must reduce the amount it would otherwise fix under subsection (7) by an appropriate amount on account of the misconduct.”

[86] In the Workplace Relations Amendment (Work Choices) Bill 2005 (Cth) (Work Choices Bill), ss.654(8) and 654(10) of the WR Act were referred to as proposed paragraph 170CH(da) and subsection 170CH(7B) respectively. On the renumbering of the WR Act following the passage of the Work Choices Bill, proposed paragraph 170CH(7)(da) and subsection 170CH(7B) became s.654(8)(e) and s.654(10) respectively.

[87] The Explanatory Memorandum to the Work Choices Act said in respect of these sections:

“2184. Subsection 170CH(7) requires the AIRC to have regard to all the circumstances of a matter in assessing an appropriate amount to be paid to an employee in lieu of reinstatement (ie in cases where the AIRC determines that reinstatement is not appropriate).

2185. The provision sets out an inclusive list of factors to be considered, including the effect of any order on the employer’s viability, the amount of remuneration the employee would have earned but for the termination, and any efforts made by the employee to mitigate the loss suffered as a result of the termination of their employment.

2186. Proposed paragraph 170CH(7)(da) would add to that list by requiring the AIRC to also consider any misconduct of the employee that contributed to the employer’s decision to terminate the employee’s employment…

2191. Proposed 170CH(7B) would require the AIRC to reduce the amount paid to an employee in lieu of reinstatement by an appropriate amount where it finds that the employee’s misconduct contributed to the dismissal.

Illustrative Example

Shauna is employed by M Sparkles Pty Ltd. M Sparkles Pty Ltd has a written policy that allows employees to take home any of the company’s products that do not pass the company’s manufacturing standards. However, the policy creates procedures that must be followed when removing any of the products. In particular, employees must record in a designated book what, and how much product they have removed. The employee must then receive the supervisor’s endorsement that the record is true and correct.

Shauna decides to take home some inferior lollipops and fills out the record book accordingly but she fails to get her supervisor Peter’s signature in the book.

The following day her employer terminates her employment for failing to follow company procedures and policy.

The AIRC finds that the dismissal was harsh, unjust or unreasonable because Shauna was a model employee and other employees frequently failed to follow company policy and had not been dismissed. However in ordering the payment of an amount in lieu of reinstatement, the AIRC takes account of the fact that Shauna’s failure to follow company policy contributed to her dismissal. The AIRC accordingly reduces the amount of money that it would have ordered Shauna be paid but for her misconduct.”

[88] We are not satisfied Ms Read engaged in misconduct on 6 March 2012. However, we are satisfied she engaged in misconduct on 9 August 2011 and, having regard to the letter terminating Ms Read’s employment, that that misconduct contributed to the employer’s decision to dismiss her. We consider a reduction on account of that misconduct of $1,000 gross in the amount of compensation of $17,000 gross plus 9 per cent in superannuation that we would otherwise order is appropriate. We consider such a reduction is appropriate given the nature of that misconduct, the fact it occurred sometime before her dismissal, the manner in which that misconduct was regarded at the time and the consequences of that to our conclusion that that misconduct in itself did not constitute a valid reason for Ms Read’s dismissal by Gordon Square. The reduction results in an amount of $16,000 gross plus 9 per cent in superannuation.” 90

[84] The misconduct to which the Full Bench referred was an event in the year prior to dismissal, and not the event that led to dismissal. However the Respondent had referred to the matter in its termination letter when it stated the following;

“As you are aware, Gordon Square Child Care Centre Inc investigated the complaint received by a client on 12/03/2012, which alleged that you inadequately supervised a child within the centre and that you did not meet the supervision requirements that every child should always be supervised actively and diligently. Although you denied any such wrongdoing in your written response on 15/03/2012, during our meeting on 20/03/2012 you admitted that you had left the child alone in the room to answer the phone, and that you believed it was best to leave the child to settle herself. You also confirmed that you did not give the child breakfast that morning, as is usual practice.

Furthermore, your obligations concerning the supervision of children have previously been discussed with you in August 2011 and as the Director you are aware of the licensing requirements of a child care centre.” 91 (emphasis added)

[85] In Bowden the Full Bench deducted 20% for reason of contributory misconduct. 92

[86] In this matter, Yarra Trams dismissed Mr Farmer, but without valid reason, because it assessed him to have breached the company’s Cardinal Rule 2 and Rules 9 and 23. While Yarra Trams did not make reference to Mr Farmer’s prior employment history in its termination letter, 93 it took that history into account in the course of its investigation.94 Mr Foudoulis, who made the decision to dismiss Mr Farmer, also took the history into account, with his witness statement recording what was discussed in the dismissal meeting on 21 February 2014;

“I also noted that the Applicant had been given several opportunities to modify his behaviour yet despite this he continued to breach the rules. I reiterated the seriousness of his actions and the risks and dangers associated with his behaviour. I then advised him that this could no longer be viewed as a mistake or error.” 95 (emphasis added)

[87] In the Merits Decision, within the context of the Commission’s consideration of the criterion within s.387(e), of whether a dismissed person had been warned about unsatisfactory performance before the dismissal, the following was found about the import of Mr Farmer’s past employment history in the company’s decision to dismiss him;

“[69] As referred to above, I have determined that I am unable to find that Mr Farmer operated a tram while using a handheld mobile device; that I am not satisfied that Mr Farmer behaved in a way likely to put public safety in danger or undermine public confidence; but that I am satisfied that Mr Farmer allowed himself to be distracted whilst his tram was in motion. The only finding that is overall negative to Mr Farmer is that in respect of being distracted, and my finding in relation to that matter is that it did not, of itself, comprise a valid reason for dismissal.

[70] Yarra Trams do not rely on Mr Farmer’s past conduct as reasons for dismissal, although they took it into account in forming their recommendations in the investigation report. As a result, within the context of these findings, the argument that Mr Farmer had previously been warned about his behaviour has limited effect.

[71] Notwithstanding this observation, Yarra Trams submit that Mr Farmer’s employment history shows an occasion in August 2007 in which Mr Farmer was found to have breached the company’s policy with the use of an earpiece while driving; an incident in March 2008 on a similar issue; a warning issued in September 2010 regarding the use of a mobile phone while driving; and lastly counselling in 2008 also for the use of a mobile phone. In context, it can be inferred that perhaps Yarra Trams might be more lenient toward a person in Mr Farmer’s situation of a report about a breach of the company’s Cardinal Rules and Rules, but without his employment history; however there was not direct evidence on this point.

[72] In Mr Farmer’s case, his employment history appears to have become merged to some extent in consideration with what Yarra Trams believed him to have done in February this year. However, I am not satisfied that the evidence about the extent to which Yarra Trams relied upon Mr Farmer’s past history rises to the level of suggesting that Mr Foudoulis’ decision to dismiss was taken because of, or for reasons that substantially include, Mr Farmer’s employment history.

[73] Overall, however, I am satisfied that Yarra Trams had made Mr Farmer aware before his dismissal of the consequences of using a mobile phone while driving.” 96

[88] It was submitted on behalf of the Applicant, in relation to a misconduct deduction, that he is contrite “in relation to the mistakes he did make”, and that together with the lack of deliberate misconduct and other factors are reasons not to make such a deduction. 97

[89] Yarra Trams submitted on this subject that, given the proven breaches of the rules the assessed compensation must be reduced by a significant proportion. 98 The Respondent’s submissions about the reasoning for a reduction for misconduct included the following;

“... we say, section 392(3) of the Act mandates that the amount is reduced. It is not a situation where it’s a discretion. We say section 392(3) of the Act, 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 you would otherwise order. Now, whether that’s even by a dollar or by one per cent, it is mandatory upon this Commission to do that. We say the misconduct has occurred although, it was not misconduct with grounded or valid reason, but it was misconduct. Not to put a too fine a point on that, but there’s no other way to describe that, and therefore, in that context, the quantum of any reduction ought to be taken in line with what we say is our safety imperative, the past record, and those related issues.” 99

[90] This analysis leads me firstly to the conclusion that the decision to dismiss included a belief by Yarra Trams that Mr Farmer’s misconduct warranted dismissal; secondly to the conclusion that Mr Foudoulis, as the decision maker, had before him details about Mr Farmer’s employment history; and thirdly, that the Commission’s findings on merit included that Mr Farmer breached two of the company’s Rules.

[91] I find therefore that Mr Farmer’s misconduct contributed to the Yarra Trams’ decision to dismiss him.

[92] As a result, I must reduce the compensation otherwise payable to Mr Farmer. In doing so, I note the reasoning of the Full Bench in Read v Gordon Square Child Care that such reduction may be even if the FWC has found there was no valid reason for the person’s dismissal, but that such factor may be relevant to the assessment of the quantum of any reduction. 100

[93] Having considered these matters and taking into account all of the evidence provided to the Commission, including that given in the course of the merits hearing, I consider it appropriate that the reduction be 15% of the assessment of lost remuneration.

CONCLUSION AND ORDERS

[94] After consideration of the foregoing issues, I find that reinstatement is not an appropriate remedy in this case and that a payment of compensation to Mr Farmer is appropriate.

[95] It is first relevant to consider Mr Farmer’s total amount of remuneration, which I find was $49,383 in the 26 weeks immediately before his dismissal, or an average of $1,899 per week. This amount differs from the rate put to me by the parties and has been arrived at after taking into account the following considerations;

● Mr Farmer’s evidence is that his average weekly gross earnings in the 27 week period before his dismissal were $1,708 and that in addition to those earnings he received superannuation benefits of 9.25%. 101

● The “compensation cap” referred to in s.392(5) and (6) has application in this matter, and is therefore relevant to the calculation. The sections require that the cap be determined after consideration of the employee’s remuneration in the 26 weeks immediately before dismissal.

● Because the cap has relevance, I consider the rate of remuneration to be used by me in the calculation of compensation should be referable to the same period used in calculation of the cap - that is, a period of 26 weeks and not 27.

● The Respondent filed a spreadsheet in the Commission after the conclusion of the merits hearing which showed his earnings for all 27 pay periods between the period ending 24 August 2013 and 22 February 2014.

● Re-calculation of the material in the Respondent’s spreadsheet shows that Mr Farmer’s total weekly earnings in the 26 weeks immediately before dismissal were $45,201.61, or an average of $1,738.52 per week. The addition of 9.25% for superannuation brings his total amount of remuneration in that period to $49,383 or a weekly average of $1899, both rounded to the nearest dollar.

[96] My assessment of compensation is on the basis that the anticipated period of employment is 12 months, and I make the following calculations;

● The remuneration Mr Farmer would have earned in that period is $90,428 (calculated as $1,739 x 52) with a further amount of $8,365 attributable to superannuation, which brings the total assessed loss to $98,793;

● From this amount there will be deductions for the following;

• $6,832, being for the amount of money paid in lieu of notice;



• $14,819, or 15% of the amount of the total assessed loss, attributable to misconduct; and



• $5,000 for Mr Farmer’s failure to mitigate his loss from dismissal;

● These deductions leave a total of $72,142.

[1] The above amount exceeds the “compensation cap” applying at the time of dismissal, which in Mr Farmer’s case was $49,383, which I have determined after consideration of the following matters;

● Subsections 392(5) and (6) provides the means by which the cap is to be calculated;

“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.

(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.”

● Mr Farmer’s income at the time of dismissal was lower than the high income threshold, and he was not on leave without pay or without full pay, so s.392(5)(a) requires use of the formula in s.392(6)(a). As discussed above, I have assessed Mr Farmer’s total weekly remuneration in the 26 weeks immediately before dismissal to be $49,383. As a result, the order for compensation must not exceed that amount.

[2] An order requiring Yarra Trams to pay to Mr Farmer the total amount of $49,383, taxed according to law, is issued in conjunction with this decision.

[3]
In accordance with this decision, $45,202, less taxation, is to be paid directly to Mr Farmer, and $4181 is to be paid to his superannuation account.

COMMISSIONER

Appearances:

Ms N Bloch (of Counsel)for the Applicant

Mr N Barkatsas (VECCI) for the Respondent

Hearing details:

2015.

Melbourne:

23 March.

 1   [2014] FWC 6539

 2   Ibid, at [5]

 3   [2015] FWCFB 454, at [35]

 4   [2014] FWC 6539, at [9] - [10]

 5   Exhibit R3, para 10

 6   Ibid, at [54]

 7   Exhibit R10, para 3

 8   Anderson v Theiss Pty Ltd[2015] FWCFB 478, at [22]; see also Brambleby v Australian Postal Corporation T/A Australia Post[2014] FWCFB 9000 at [26];

 9   Nguyen & Le v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter[2014] FWCFB 7198, at [10]; also affirmed in Brambley, at [45]

 10   Exhibit A10, para 10

 11   Ibid, para 11

 12   Ibid, paras 11 - 12

 13   Ibid, para 13

 14   Exhibit A8, paras 9 - 10

 15   Exhibit A10, para 14

 16   Exhibit A10, para 33; see also para 50

 17   Exhibit R14, para 14

 18   Exhibit R14, para 17, (with reference to the reasoning in Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186 at [191], per Nguyen[2014] FWCFB 7198 at [28])

 19   Exhbit R14, para 18

 20   Ibid

 21   Exhibit R14, para 25, (with reference to the Merits Decision, [2014] FWC 6539, at [54] )

 22   Exhibit R14, paras 33 – 35

 23   Ibid, para 39

 24   Ibid, para 41

 25   Kingsley v KDR Victoria Pty Ltd[2014] FWC 9371, at [91]

 26   Ibid, at [92]

 27   Exhibit R14, para 44

 28   Exhibit A8, para 14

 29   Exhibit R14, para 54

 30   Ibid, para 59, citing IGA Distribution (Vic) Pty Ltd v Nguyen[2011] FWAFB 4070, at [38]

 31   Exhibit R11, paras 6, 8 11, 12 and 17

 32   Exhibit R12

 33   Exhibit R13

 34   [2014] FWCFB 7198

 35   Ibid, at [23] - [24]

 36   Ibid, at [27] - [28]

 37   Exhibit A10, para 12

 38   Ibid, para 13

 39   Ibid, para 8

 40   Exhibit R14, para 18;

 41   Exhibit R11, para 11 - 12

 42   Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186, p.191; cited in Nguyen[2014] FWCFB 7198, at [21]

 43   Exhibit A8, para 10

 44   Exhibit R10, para 3

 45   [2014] FWC 6539, at [54]

 46   Exhibit R9, para 25

 47   Exhibit R11, para 6

 48   Exhibit R12, para 6 - 7

 49   Exhibit R11, para 7

 50   Exhibit A10, para 19

 51   Exhibit A8, para 14

 52   [2012] FWC 9617

 53   Ibid, at [7]

 54   Ibid, at [55] - [57]

 55   Ibid, at [63]

 56   Ellawala v Australian Postal Corporation, AIRCFB (2000), Print S5109, at [33] and [34].

 57   Haigh v Bradken Resources Pty Ltd[2014] FWCFB 236, at [8]

 58   Ibid, at [12]

 59   Ibid

 60   Bowden v Ottrey Homes[2013] FWCFB 431, at [34]

 61   Exhibit A8, para 12

 62   Exhibit A10, paras 43 - 44

 63   Exhibit R14, para 74

 64   Merits Hearing Transcript, PN 492

 65   Exhibit A10, para 50

 66   Exhibit R9, para 25

 67   [2013] FWCFB 762

 68   Ibid, at [41]

 69   Ibid, at [6]

 70   Ibid, at [40]

 71   Ibid, at [68]

 72   Exhibit A8, para 7

 73   Exhibit A10, para 41

 74   Merits HearingTranscript, PN 487; see also Merits Hearing Transcript, PN 2187

 75   Exhibit R14, para 77

 76   [2013] FWCFB 762, at [68]

 77   See Merits Hearing Transcript, PN 482; see also Exhibit A8, para 9

 78   [2013] FWCFB 762 at [68]

 79   Exhibit A8, paras 6 - 8

 80   Exhibit R14, para 74 and 79

 81   Exhibit A10, para 47

 82 (1995) 67 IR 316

 83   Ibid, p.328

 84   [2000] AIRC 1151, Print S5109,

 85   Ibid, at [41] - [43]

 86   Ibid, at [71] - [74]

 87   [2013] FWCFB 431

 88   Ibid, at [45], and [53] - [55]

 89   Ibid, at [54]

 90   Ibid, at [83] - [88]

 91   Ibid, at [41]

 92   [2013] FWCFB 431, at [59]

 93   See Exhibit A4, Annexure 8

 94   See Exhibit R4, Attachment BB4, item 3.3.4

 95   See Exhibit R7, para 22

 96   [2014] FWC 6539, at [69] - [73]

 97   Exhibit A10, para 50

 98   Exhibit R14, para 80

 99   Remedy Hearing Transcript, PN 214

 100   [2013] FWCFB 762, at [83]

 101   Exhibit A8, para 5

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