Mr Robert Nicholl v The Grout Guy Pty Ltd T/A the Grout Guy
[2018] FWC 3037
•30 MAY 2018
[2018] FWC 3037
The attached document replaces the document previously issued with the above code on 30 May 2018.
Paragraph [75] has been amended to correct a typographical error with the Applicant’s name.
Michael McManus
Associate to Deputy President Beaumont
Dated 13 June 2018
| [2018] FWC 3037 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Robert Nicholl
v
The Grout Guy Pty Ltd T/A The Grout Guy
(U2018/374)
DEPUTY PRESIDENT BEAUMONT | PERTH, 30 MAY 2018 |
[1] On 11 January 2018, Mr Robert Nicholl (Mr Nicholl) made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy in respect of his dismissal (the Application).
[2] The Grout Guy Pty Ltd T/A The Grout Guy (The Grout Guy) employed Mr Nicholl as a Wall and Floor Tiler from 22 April 2014 albeit Mr Nicholl had worked on and off for The Grout Guy since 5 September 2012. On 22 December 2017, The Grout Guy terminated the employment of Mr Nicholl citing that Mr Nicholl had demonstrated poor work performance and mannerisms towards customers and office staff 1.
[3] The Grout Guy said it had 14 employees and lodged a jurisdictional objection to the Application on the basis that it was a small business employer at the relevant time and it had complied with the Small Business Fair Dismissal Code (Code). For reasons that will become clear, I was not satisfied that The Grout Guy was a small business employer as that term is understood under s.23 of the Act, and therefore was compelled to determine whether Mr Nicholl’s dismissal was unfair.
[4] This decision deals with The Grout Guy’s jurisdictional objection and the Application.
Background
[5] Mr Nicholl commenced his initial period of employment with The Grout Guy on the inception of the business in or around September 2012. At that time the business consisted of two tradesman, namely Mr Bradley Young, Managing Director of The Grout Guy (Mr Young), and Mr Nicholl.
[6] Both Mr Nicholl and Mr Young acknowledged that a friendship was established during the employment relationship, with Mr Nicholl considering that Mr Young had, at a point, been his best friend.
[7] Mr Young candidly admitted that the friendship had not helped matters when it came to business, and while it was true that both he and Mr Nicholl had been best mates for 5 years it had become a grey area and a lesson had been learnt. The blurring of the lines between work relationship and that of friends was evident in the ‘familiarity’ that Mr Nicholl’s assumed in texting of his Manager, Mr Young:
Like its not a fix up… Makes no sense going back to tell them exactly what can be put in a email. Work done is good. People cant just say aw yeah we want front of hob done now. N i put on a shower rose n pole for them. N your man in nollamara tomo well me n him gonna fall out. Thon job was a joke n he’s a joke. House is a fcukin tip. N Cameron telling people we clean 10yars of fcuikin dirt n fcuk knows what else of tiles ain’t happening. N we supposedly magically can remove rust like a magician. Shit pisses me off! 2
[8] While not precisely scribed in English one gets the gist of the tone of communication that Mr Nicholl considered appropriate to send to Mr Young.
[9] There were periods in 2012-2014 where Mr Nicholl worked on and off for The Grout Guy whilst on a working visa. It was accepted that from early to mid-2014 that Mr Nicholl had been in full-time employment and that The Grout Guy had sponsored Mr Nicholl for a Temporary Work (Skilled) (Subclass 457) Visa, which was granted on 20 August 2014 (the Visa) 3.
[10] An employment contract of 16 June 2017 was submitted into evidence 4. Mr Young explained that he had asked Mr Nicholl to sign a contract of employment in 2017 because the Visa required a valid and signed employment contract5 (the Employment Contract). The Employment Contract provided for an hourly rate of $30.00 and required Mr Nicholl to re-grout, undertake tiling repairs, quote jobs through use of the management software, maintain the appearance of The Grout Guy vehicle, refuel The Grout Guy vehicle, replace silicon and tapware and make purchases of materials6.
[11] Mr Young said that in October 2015 he had cause to talk to Mr Nicholl about a job in Stirling. Mr Young had quoted the job and Mr Nicholl had presented to undertake the work, which involved grouting a bathroom and shower. Mr Young received a complaint from the client that there was grout haze or dust that had not been cleaned up. Mr Young, having liaised with Mr Nicholl considered that the client was exaggerating to get out of paying. However, afterward he formed the view that the haze was excessive and the job should have been done a lot better.
[12] In 16 October 2016, Mr Nicholl was sent to replace grout around a soap dish. A complaint was received about that job outlining that dried grout slurry had been left on the superior and inferior tile surfaces, and Mr Young gave evidence that Mr Nicholl abusively called the customer who expressed concern with the job.
[13] On 23 November 2017, Mr Young issued to Mr Nicholl, what I considered to be a warning letter, although the term ‘warning’ was not used (Letter of Warning). The Letter of Warning set out:
…
It is imperative that you do not replicate the following;
● Wednesday 1st November Job number 23572, the employee did not perform the tasks set out in the quote. Tuesday 21st November regarding the same job the employee discuss with the managing director that the client had nothing to complain about and that the job was ‘perfect’. On inspection by the managing director on the 22nd of November it was found that the cleaning of the ‘kid’s bathroom’ was not undertaken as per the quote given to the client 7.
[14] The background to the job on 1 November 2017 that having been assigned the work Mr Nicholl was required to complete it, which he did not. This was despite Mr Young having had multiple discussions with Mr Nicholl who protested that there was nothing wrong with the job and that he had left it in perfect condition 8. Mr Young had to fix and clean the kid’s bathroom9.
[15] In addition to these particular jobs, Mr Young said that he had a discussion with Mr Nicholl in July of 2017 for leaving The Grout Guy vehicle looking like a pig sty. It took Mr Young 2-3 days to clean the vehicle and re-organise it to make it presentable.
[16] Mr Nicholl refuted that he had been warned multiple times, and noted that on several of the jobs mentioned it was his word against Mr Young and there were no records of warning save that of 23 November 2017.
[17] During the period of 23 November 2017 to the date when Mr Nicholl was provided with his notice of termination no other performance, or for that matter misconduct issues, had arisen.
[18] On 1 December 2017, Mr Nicholl was asked to return The Grout Guy vehicle, iPad and iPhone. The reason provided to Mr Nicholl regarding the vehicle was that it required an upgrade and on his return from a holiday in the United Kingdom he would be provided with a new van 10.
[19] On 3 December 2017, Mr Nicholl was contacted by Mr Young regarding the iPad and iPhone by WhatsApp. When Mr Nicholl asked why Mr Young was making the enquiries no reason was given but Mr Young responded that he would visit Mr Nicholl at his residential property on that Sunday night.
[20] Mr Young’s evidence was that he was getting sick of the repetition of Mr Nicholl’s behaviour concerning his lack of customer service skills, the way he spoke to office staff, a lack of punctuality concerning responding to calls and his inability to accept feedback without becoming defensive.
[21] On the evening of 3 December 2017, Mr Young went to see Mr Nicholl to tell him that he did not have a job. However, Mr Young said words to the effect that he ‘didn’t have the balls to do it as his missus was there’. Mr Young said that he did not sleep that night, got up for work on the Monday morning, 4 December 2017, tried to call Mr Nicholl and could not get through and therefore sent an email giving him notice of the termination of his employment, and sent a WhatsApp message, informing him to check his messages. The email read:
Dear Robert,
Due to you [sic] ongoing behaviour The Grout Guy Pty Ltd has decided to cease your employment effective 22nd December 2017. All monies owed will be withheld until all of The Grout Guy’s property is returned.
Brad Young
Managing Director
The Grout Guy (the Termination Email) 11
[22] As a consequence of having his employment terminated at the time when it was, Mr Nicholl did not have the opportunity to actually work during a notice period as he was on leave, and he no longer had a sponsor for his Visa. On returning from his leave on 3 January 2018 to Australia, he reported that he had a limited amount of time in which to return to the United Kingdom.
[23] Mr Nicholl disputed that The Grout Guy was a small business employer and listed 15 workers that he understood to be employees 12. Mr Jeff Uphill, Representative for The Grout Guy (Mr Uphill), responded in Hearing by submitting that there were only 14 employees within the business at the relevant time and observed that a Mr Leon Sainken was not an employee but undertook advertising activities.
[24] Tendered into evidence was a document titled Payroll Activity which was created on 4 May 2018 (Payroll Activity List) 13. I observe that this list of employees on the Payroll Activity List may not have necessarily have been the employees that were employed at the relevant time14. However, it is observed that there were 14 employees on that List and The Grout Guy sought to rely upon it regarding its jurisdictional objection.
[25] With regard to the Payroll Activity List, I observed that Mr Young was not included. At Hearing it was asked of the parties whether I should consider Mr Young an employee given he was a Director. No helpful submissions were made in this respect.
[26] Given that Mr Nicholl is now resident in the United Kingdom and gave his evidence via Skype from the same location, he has submitted that reinstatement is not on the cards but he feels he is strongly entitled to compensation.
[27] On the point of remedy Mr Young gave evidence at Hearing on the effect that a compensatory order would have on the viability of The Grout Guy. He said that if compensation was to amount to $10,000, there would be a tightening up of the budget going forward. Should the amount increase to $20,000, then that would come out of the budget for money otherwise allocated to advertising. Given advertising was the way in which work was generated then the existing employees would be hurt if they could not be given work.
Initial matters
[28] Section 396 of the Act provides that, before considering the merits of an application for unfair dismissal remedy order, the Commission must determine some other initial matters which include:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code; and
(d) whether the dismissal was a case of genuine redundancy.
Small Business Fair Dismissal Code
[29] A person has not been unfairly dismissed where the dismissal is consistent with the Code. It is useful to set out ss.388(2) of the Act:
388 The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small
Business Fair Dismissal Code.
(2) A person’s dismissal was consistent with the Small Business Fair
Dismissal Code if:
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Small Business Fair
Dismissal Code in relation to the dismissal.
[30] The Code is only relevant if the employer is a small business as defined in s.23 of the Act. Section 23 of the Act states:
(1) [Meaning of small business employer]
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) [Calculating the number of employees]
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 had been employed by the employer on a regular an systematic basis.
(3) [Associated entities are taken to be the one entity]
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) [Dismissed or terminated employees are to be counted]
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.
[31] When deciding if The Grout Guy is a small business employer it is necessary to consider the number of employees of The Grout Guy and those of any associated entities.
[32] Further, when examining whether the employer has less than 15 employees consideration is given to all employees employed at the particular time. Therefore, consideration must be given to whether a Director of a company is considered an employee. For example, a Managing Director is usually a full-time employee of the company with day-to-day responsibilities 15.
[33] The party objecting to jurisdiction assumes the evidential onus of making out their case. It follows that The Grout Guy must provide sufficient evidence to establish its case concerning its jurisdictional position.
[34] If an employer is a small business employer then the Code is applicable and it provides:
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
[35] If it is the case that the dismissal is not by way of ‘Summary Dismissal’ and the facts in the circumstances of this case would suggest not, then the ‘Other Dismissal’ part of the Code is triggered. This requires consideration of the following:
• did the respondent give the applicant a reason for dismissal;
• was the reason a valid reason having regard to the applicant’s conduct or capacity;
• was the applicant warned that she risked being dismissed if there is no improvement; and
• did the respondent provide the applicant with an opportunity to respond to the warning and give her a reasonable chance to rectify the problem(s), having regard to the applicant’s response 16.
[36] In applying these requirements, I must also have regard to the procedural matters highlighted within the Code.
[37] If Mr Nicholl’s dismissal was consistent with the Code, it cannot be considered to be unfair within the meaning of the Act. However, if Mr Nicholl’s dismissal was inconsistent with the Code then it is the case that the objection premised on compliance with the Code falls away and my attention turns to the consideration of s.387 of the Act to determine if the dismissal was unfair.
Agreed matters
[38] I am satisfied on the evidence before me that:
(a) Mr Nicholl is a person protected from unfair dismissal because, at the time of his dismissal, he had completed a period of employment with The Grout Guy of at least the minimum employment period, and a modern award applied 17 to Mr Nicholl in relation to his employment18;
(b) Mr Nicholl was dismissed by The Grout Guy 19;
(c) Mr Nicholl’s dismissal was not a case of genuine redundancy 20; and
(d) the Application was made within the period required 21.
[39] Mr Nicholl’s annual rate of earnings was less than the high income threshold and it was not apparent on the evidence before me that Mr Nicholl was employed on a casual basis.
Matters in dispute
[40] Mr Nicholl contends that The Grout Guy is not a small business employer and therefore it follows that the Code does not apply. Further, he considers that he was unfairly dismissed. The Grout Guy advanced a contrary argument.
CONSIDERATION
Small Business Employer and Code compliance
[41] I have considered the Payroll Activity List of Employees tendered by The Grout Guy and have accordingly observed that 14 employees are listed.
[42] However, absent from that list is Mr Young. During the course of the Hearing it was evident that Mr Young took an active full-time role in managing the business of The Grout Guy on a day to day basis. Activities included following up on customer complaints, quoting jobs, rectifying jobs and managing staff. Mr Young signed the Form F3 as Managing Director and an email referred to in the Hearing was similarly signed off. It is usually the case that a Managing Director is an employee.
[43] At the hearing Mr Uphill was afforded the opportunity to make submission or tender evidence about the issue of Mr Young, his position as Managing Director, and what bearing that had concerning The Grout Guy advancing it was a small business employer. I am of the view that The Grout Guy has not provided sufficient evidence to establish its case as to its jurisdictional position in the absence of further comprehensive employment documentation, and evidence concerning the employment, engagement or fee for services for Mr Young. Accordingly the jurisdictional objection to Mr Nicholl’s case for unfair dismissal must fail given I do not consider The Grout Guy to be a small business employer as understood by reference to s.23 of the Act.
[44] However, if I am wrong on the point that The Grout Guy is not a small business employer then it remains the case that The Grout Guy has not made out its jurisdictional objection because I am not satisfied it complied with the Code.
[45] My reasons for arriving at this finding are briefly stated.
[46] It was not advanced by either party that Mr Nicholl was summarily dismissed. While Mr Nicholl states that he considered he was not paid the full amount of his notice period, in my view that was not indicative that the termination was a summary dismissal. Notice of termination was provided via email on 4 December 2017 with the effective date of the dismissal being 22 December 2017.
[47] It is therefore the case that the ‘Other Dismissal’ provisions prove relevant and as provided in these provisions the employer is required to give the employee a reason why he or she is at risk of being dismissed if there is no improvement. The Letter of Warning satisfies this part. However, subsequent to the Letter of Warning of 23 November 2017 there was no other conduct or performance issue that arose. It is therefore puzzling why it was the case that Mr Nicholl was dismissed when he was. When this very issue was raised with Mr Uphill he conceded to the effect that this was a difficulty. Clearly there were no conduct or capacity issues that arose subsequent to the warning. Further, it simply was not the case that a reasonable chance had been given to Mr Nicholl to rectify the problem.
[48] Having considered that The Grout Guy has not succeeded with its jurisdictional objection, consideration is now given to whether the dismissal of Mr Nicholl was harsh, unjust or unreasonable as those terms are understood by reference to s.387 of the Act.
Valid reason for the dismissal – ss.387(a)
[49] When determining if a dismissal was unfair the Commission must take into account whether there was a valid reason for dismissal relating to the employee’s capacity or conduct 22.
[50] Where the reason for termination of employment relates to an employee’s capacity or conduct, it is not the Commission’s function to stand in the shoes of the employer and determine whether or not the decision made by the employer was a decision that would be made by the Commission. It is for the Commission to assess whether the employer had a valid reason connected with the employee’s capacity or conduct 23.
[51] The reasons considered are the employer’s ‘reason(s)’ 24. The Full Bench in B, C, and D v Australia Postal Corporation T/as Australia Post25 (Australian Postal Corporation) stated:
[34]... In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (eg. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1).
[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.
[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal 26.
[52] Therefore, the question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the matter before it. As referred to in Australian Postal Corporation, the test is not whether the employer believed, on reasonable grounds after sufficient enquiry the employee was guilty of the conduct which resulted in termination 27.
[53] The valid reason need not be the reason given to the employee at the time of the dismissal 28 and the reason should not be ‘capricious, fanciful, spiteful or prejudiced’29. It is the case that the provisions must be applied in a practical, common sense way to ensure that the employer and employee are treated fairly30.
Consideration
[54] While Mr Nicholl received a Letter of Warning for his behaviour on 23 November 2017, it is unclear on the evidence before me what the reason was for Mr Nicholl’s dismissal. The Termination Email referred to Mr Nicholl’s ongoing behaviour, but between the time the Letter of Warning was given and the Termination Email received by Mr Nicholl, there appeared to be no further capacity or conduct issue.
[55] Mr Nicholl’s evidence was he left the meeting with Mr Young on 3 December 2017 none the wiser that there was an issue concerning his capacity or conduct. His evidence and that of his partner, Ms Samantha Murdoch, who was present at the meeting and a witness in these proceedings, was that Mr Young never mentioned that there were any issues with Mr Nicholl’s performance or conduct and had offered an apology for the issuing of the Letter of Warning. In his evidence Mr Young conceded that the issuing of the Letter of Warning may have been a bit ‘trigger’ happy and said words to the effect ‘yeah it was harsh I guess’.
[56] While I consider there is no place in an employment relationship to send the text message referred to at the beginning of this decison and the text message ‘Tell Tracey to change her fcuking mindset for Christ sake!’ 31, I am mindful that the relationship between Mr Nicholl and Mr Young was blurred between that of friend, and employer and employee. Further, it is apparent that Mr Young had not addressed the content of Mr Young’s text messages.
[57] Further, while Mr Young was dissatisfied with Mr Nicholl’s customer service and interaction with colleagues, with the exception of the Letter of Warning, I am not satisfied on the evidence before me that Mr Young made it explicitly clear to Mr Nicholl that his conduct was unacceptable or his performance was dissatisfactory.
[58] In the circumstances I am not satisfied that there was a valid reason for dismissal relating to Mr Nicholl’s capacity or conduct 32.
Notification of the valid reason –ss.387(b) and an opportunity to respond –ss.387(c)
[59] The Commission must take into account whether notification of a valid reason for termination has been given to an employee protected from unfair dismissal before the decision is made 33, and in explicit34, plain and clear terms. It is accepted that this is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality35.
Consideration
[60] Having received the Termination Email it was evident that Mr Young had made the decision to dismiss Mr Nicholl before Mr Nicholl was notified of a valid reason. Further, there simply was no opportunity afforded to Mr Nicholl to respond.
Unreasonable refusal of a support person – ss.387(d)
[61] When 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.
Consideration
[62] Given the circumstances of this case there was no opportunity provided to Mr Nicholl to request a support person, which has been taken into account.
Warnings regarding unsatisfactory performance – ss.387(e)
[63] When 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.
[64] Unsatisfactory performance is more likely to relate to the employee’s capacity to do the job, than their conduct 36. The Commission must take into account whether there was a period between an employee being warned about unsatisfactory performance, and a subsequent dismissal. This period gives the employee the opportunity to understand their employment is at risk and to try to improve their performance37.
Consideration
[65] Mr Young said that the performance of Mr Nicholl when compared to other employees was ‘night and day’, with the exception of another employee who had also been dismissed. Mr Young referred to Mr Nicholl’s poor phone manner, customer skills, dealings with staff, and maintaining a clean and tidy work vehicle. While it was the case that Mr Nicholl was warned concerning his performance regarding the job on 1 November 2017 there had simply been insufficient time for Mr Nicholl to try to improve his performance.
Impact of the size of the respondent on procedures followed and absence of dedicated human resources management specialist/expertise on procedures followed – ss.387(f)-(g)
[66] When considering whether a dismissal was harsh, unjust or unreasonable, the Commission must take into account the degree to which: (a) the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and (b) 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.
Consideration
[67] The Grout Guy is a smallish business employing 15 employees and does not have a dedicated Employee Relations or Human Resources function. It was evident that Mr Young had limited expertise in managing employees or understanding what was required by him under the Act. Mr Young acknowledged that the business had grown quickly.
[68] Submissions were made to the effect that The Grout Guy was addressing the deficits regarding its human resources expertise albeit that does not assist it for the purpose of this particular matter. If a business decides to employ its workers, then this undoubtedly is coupled with a responsibility to know what is required of it by law. There are resources available to assist employers in this respect, particularly those that are small in size.
[69] I have duly considered the size of The Grout Guy and its absence of a dedicated human resources management specialist at the relevant time. However, I am of the view that there was a total disregard for affording procedural fairness to Mr Nicholl. Mr Young’s lack of courage to have an awkward discussion with Mr Nicholl does not in any way excuse this deficiency.
Other relevant matters – ss.387(h)
Proportionality
[70] 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 38. 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 39.
[71] In short, a dismissal may, depending on the overall circumstances, be considered to be harsh on the person due to the economic and personal consequences resulting from being dismissed.
[72] Mr Nicholl was dismissed at a time when he was departing to the United Kingdom for a holiday. He had no forewarning that disciplinary action was imminent and I am not convinced that the Letter of Warning was the harbinger of the dismissal. Having departed for the United Kingdom for a holiday, and given he was on a Visa, Mr Nicholl was placed in the unenviable position of returning to Australia only to make the necessary arrangements to relocate.
[73] While it was the case that Mr Nicholl may have sought another employer willing to nominate him it is observed that his Visa expired on 20 August 2018 40. Therefore it is reasonable to surmise that Mr Nicholl’s prospects of re-employment may have been limited by this factor.
[74] I do not consider that the dismissal was a proportionate response in circumstances where it is unclear what the offending conduct, or capacity issue, was that arose after the issuance of the Letter of Warning. Further, so far as the issues plaguing Mr Nicholl could be characterised as performance issues, there was an insufficient time provided for Mr Nicholl to demonstrate improvement to the satisfaction of The Grout Guy.
[75] I am satisfied that the withdrawal of Mr Nicholl’s sponsorship by way of the dismissal created a greater hardship than a dismissal would have in the ordinary course. Mr Nicholl faced the risk of deportation if he failed to find another sponsor, and expressed he had to pack up his life in Australia and move back to the United Kingdom in a relatively short amount of time. I consider the dismissal particularly harsh when taking into consideration these circumstances 41.
Conclusion
[76] I have taken into account each of the matters specified in s.387 of the Act and have considered Mr Nicholl’s capacity and conduct in addition to the actions of The Grout Guy. I am not satisfied that The Grout Guy had a valid reason for Mr Nicholl’s dismissal and conclude that the dismissal was unjust, unreasonable, and harsh. I turn now to address whether an order with respect to remedy is warranted in the circumstances.
REMEDY
[77] The Act provides the following with respect to remedy:
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.
[78] Subsection 390(3) of the Act underscores the primacy of reinstatement as a remedy for an unfair dismissal.
[79] A decision of the Commission to order a person’s reinstatement is a discretionary decision, 42 exercisable if the Commission is satisfied the person was relevantly protected, the person was unfairly dismissed and the person has made a s.394 application43.
[80] A Commission decision to order the payment of compensation to a person is also a discretionary decision, but is only exercisable if, amongst other things, the Commission is satisfied reinstatement of the person is inappropriate and the FWC considers a compensation order is appropriate in all the circumstances of the case. 44
[81] Section 392 of the Act sets out the criteria to which regard must be had in determining any amount of compensation ordered.
[82] In determining the amount of compensation to be ordered, the Act provides:
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.
CONSIDERATION
Reinstatement
[83] Mr Nicholl does not seek reinstatement, and submitted he does not want to be re-employed by The Grout Guy.
[84] In all of the circumstances, including those that contributed to the dismissal and were traversed, I am satisfied there would be little prospect of re-establishing a productive and cooperative relationship in the absence of trust between both Mr Young and Mr Nicholl. It would be a fair assessment to say that there is significant personal animosity between the two.
[85] To compel Mr Nicholl to return back to work with The Grout Guy when he is currently resident in the United Kingdom would, in my view, lead to unnecessary complications in circumstances where neither Mr Young nor Mr Nicholl wants to work with the other. Given the evidence it cannot be said that reinstatement is appropriate or practical.
[86] I find an order for compensation is appropriate and will consider each of the criteria in s.392 of the Act to determine the quantum of the compensation.
Compensation
[87] The ‘Sprigg Formula’, derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket 45(Sprigg), is the well accepted approach for assessing the amount of compensation under ss.392(2) of the Act. The Full Bench in Gloria Bowden v Ottrey Homes and Cobram and District Retirement Villages Inc (t/as Ottrey Lodge)46 (Bowden) adopted the Sprigg Formula in the context of determining compensation under the Act.
[88] In Bowden the approach was described in the following way:
[33] 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:
‘... 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 s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’... 47
[89] In Haigh v Bradken Resources 48, the Full 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; fourth, to calculate any impact of taxation; and fifth, to apply the legislative cap49.
[90] The Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries 50 stated:
The identification of this starting point amount ‘necessarily involves assessments as to future events that will often be problematic’ 51. Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of six months’ pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case.
[91] The notion of ‘taking into account’ a matter (such as those described in s.392 of the Act) connotes a genuine consideration of the relevant provision and the apportionment of the appropriate weight in the circumstances 52. In Construction, Forestry, Mining and Energy Union v Hamberger and Another53, Katzmann J pointed out that ‘[t]o take a matter into account means to evaluate it and give it due weight’54 and that ‘mere advertence will not be enough’55.
Remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed
Anticipated period of employment
[92] The Applicant has submitted to the Commission that his earnings at the time of dismissal were based upon an hourly rate of $30.00 per hour and that he worked 38 hrs per week. This equates to a weekly salary of $1,140.00 per week.
[93] There is evidence before the Commission that Mr Nicholl’s performance had been called into question and a Letter of Warning issued before his dismissal on 4 December 2017. By all accounts, Mr Nicholl was unreceptive to feedback and I am satisfied that Mr Young was experiencing performance issues with Mr Nicholl albeit they had not been appropriately addressed. With regard to the Letter of Warning, I acknowledge that Mr Young conceded to the effect that it was ‘trigger’ happy.
[94] The question of the anticipated period of employment is a particularly difficult issue in this matter. On the one hand Mr Nicholl may point to his expectation of indefinite ongoing employment by The Grout Guy although his Visa’s expiry date was 20 August 2018. On the other hand Mr Young can point to an employee who he considered was demonstrating a lack of respect for the company vehicle, was demonstrating at times poor customer service, and poor communication with office staff and colleagues, and who had not completed the work assigned for the job on 1 November 2017.
[95] I have had regard to the evidence and am satisfied that there were performance issues percolating. When an employee takes little or no accountability for his actions or otherwise demonstrates that he is unreceptive to feedback, it may be said that it is likely that the performance issues would have continued. I am of the view that a dismissal of Mr Nicholl by The Grout Guy later than 22 December 2017, where procedural fairness had been afforded, would have seen Mr Nicholl’s employment continue for at least 8 weeks of the maximum compensation period. As result I set the anticipated period of employment at 8 weeks.
Notice period
[96] Mr Nicholl’s dismissal took effect on 22 December 2017 having been notified of the termination on 4 December 2017.
[97] Mr Nicholl’s period of employment with The Grout Guy had been more than 3 years but not more than 5 years therefore entitling him to 3 weeks’ notice. It was submitted that there was no need for adjustment regarding the notice period as Mr Nicholl was on leave while it was being served. At the time when Mr Nicholl was dismissed he was on unpaid leave and was due to return back to work on 3 January 2018. Therefore, I do not consider that much, if anything turns, on the notice period
The effect of the order on the viability of the employer’s enterprise
[98] The Grout Guy addressed this factor in its submissions but did not tender any evidence, save the oral testimony of Mr Young, which I have taken into account. There are no financial difficulties advanced although Mr Young gave evidence that an order of compensation in the amount of $10,000.00 would see the budget re-organised and an amount up to $20,000.00 may see monies diverted from advertising. I am not satisfied that a deduction is warranted by way of contingency.
Length of the person’s service with the employer
[99] The Applicant had been in the employment for the Respondent from 22 April 2014 until 22 December 2017, some 3 years. This is a length of service that lends support to the making of an order for compensation.
The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal
[100] Mr Nicholl gave evidence of the efforts undertaken to mitigate the loss suffered because of the dismissal. I am alive to the issues that Mr Nicholl faced post dismissal. These included relocating back to the United Kingdom having only just been there on holiday, and the unfortunate loss of his grandparent. I am satisfied that having settled back into life post these events, come February 2018 he commenced looking for work. I note that Mr Nicholl had secured some casual work with a relative, which I have taken into account. Given the circumstances of this case I am not minded to reduce the compensatory amount due to a lack of effort on Mr Nicholl’s behalf to mitigate his losses. Although, Mr Nicholl admitted that his efforts to mitigate his loss were hampered by the death of his grandparent, undertaking this Application and migrating back to the United Kingdom having felt settled in Australia.
The amount of remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation
[101] Mr Nicholl gave evidence that he had earnt approximately £70 a day whilst working for his cousin one day a fortnight from the middle of February 2018. This amount equates to a daily rate of approximately $126.00. Having considered Mr Nicholl’s evidence that he worked one day a fortnight from the middle of February until the making of the order this would equate to 7 days work, amounting to a deduction of $882.00. However, given that the anticipated period of employment would have taken Mr Nicholl to 22 February 2018, I do not consider it necessary or appropriate to reduce the compensatory amount.
Any amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation
[102] I am satisfied that Mr Nicholl has been unable to secure employment although he stated to the effect that he had been actively looking for jobs online in Ireland and the United Kingdom.
[103] There is no reasonable expectation that Mr Nicholl may obtain income of any kind between the making of the order of compensation and the actual compensation. While Mr Nicholl expressed optimism concerning a job in the prison service in Northern Ireland there was no evidence to suggest he was likely to be a successful applicant.
Misconduct and shock, distress or humiliation
[104] I do not consider there has been any misconduct which would require me to reduce the amount of compensation. I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.
Compensatory cap
[105] The amount of compensation the Commission may order is capped. If the appropriate quantum of compensation initially assessed exceeds that cap then the Commission must reduce the amount to the amount of the cap.
[106] The Act stipulates that the compensation cap is the lesser of:
• the amount of remuneration received by the person, or that he or she was entitled to receive (whichever is higher) in the 26 weeks before dismissal;
• half the amount of the high income threshold immediately before dismissal 56.
[107] The high income threshold is defined in s.333 of the Act as an amount prescribed by, or worked out in the manner prescribed by, the Regulations. Regulation 2.13 sets out the manner in which the high income threshold is to be worked out. The steps in Regulation 2.13(3), particularly Step 1 and Step 2, refer to ‘ordinary time earnings’. The Act defines ‘earnings’ such that they exclude contributions to superannuation fund 57.
[108] Under ss.392(5) of the Act I am obliged to determine the amount worked out under ss.392(6) of the Act. The amount is calculated by reference to the ‘total amount of remuneration’ received by the person or to which the person was entitled (whichever is higher) for any period of employment with the employer during the 26 weeks immediately before dismissal. ‘Remuneration’ is not defined in the Act.
[109] Both ss.392(6) of the Act and ss.392(2) of the Act refer to ‘remuneration’ under Part 3-2.
[110] The meaning of ‘remuneration’ has been considered in various iterations of what is now the Act and with regard to differing legislative provisions. What appears clear from the decisions is that the term ‘remuneration’ has adopted a consistent meaning whereby superannuation is included.
[111] For the purpose of ss.392(5) of the Act, I am satisfied the amount is $34,164. I have considered that under the Applicant’s employment contract he was entitled to superannuation contributions at 9.5%.
Any other matter that the Commission considers relevant
[112] I have considered all of the circumstances of the case and there are no further matters that I consider relevant when arriving at the compensatory amount.
CONCLUSION AND ORDERS
[113] After consideration of the foregoing issues, I find that Mr Nicholl was dismissed and that it was unfair within the meaning of the Act.
[114] Reinstatement is not an appropriate remedy in this case and therefore I find that compensation is appropriate. The calculation for compensation is set out in the following table.
Compensation | Calculation | Gross | Total Gross Amount (inclusive superannuation) |
Anticipated employment period | 8 weeks x $1,140 = $9,120.00 + $866.40 (superannuation) | $9,120.00 | $9,986.40 |
Notice period | $0.00 | $0.00 | $0.00 |
Deduct monies for misconduct | $0.00 | $0.00 | $0.00 |
Deduct monies earned since termination | $0.00 | $0.00 | $0.00 |
Deduction for contingencies | 0% | $0.00 | $0.00 |
Calculate any impact of taxation | To be taxed according to law | ||
Apply the compensation cap | Last six months amount of remuneration received by Mr Nicholl $31,200 + (9.5% superannuation $2964) = $34164 Half the amount of the high income threshold = $71,000 | Cap applied | |
TOTAL | $9,986.40 |
[115] For the reasons I have given earlier, and on the basis of the calculations completed, I order that The Grout Guy pay to Mr Nicholl an amount of $9,986.40. In determining the amount for the purpose of the order I have taken into account all of the circumstances of the case including the criteria set out in ss.392(2) of the Act.
[116] The total amount does not exceed the compensation cap applying at the time of dismissal. The amount ordered to be paid must be subject to ordinary taxation.
[117] The compensation is to be paid within 14 days from the date of the accompanying order 58 (as issued simultaneously with this decision).
DEPUTY PRESIDENT
Appearances:
Mr Robert Nicholl, as the Applicant, via Video Link from the United Kingdom.
Mr Jeff Uphill, on behalf of the Respondent.
Hearing details:
2018
9 May.
Printed by authority of the Commonwealth Government Printer
<PR607514>
1 Exhibit A4 Document 4.
2 Exhibit R1 Document 21.
3 Exhibit A4 Document 6a.
4 Exhibit R1 Document pg 2-9.
5 Ibid.
6 Ibid.
7 Ibid Document pg 17.
8 Ibid.
9 Ibid.
10 Exhibit A3 [3].
11 Exhibit A4 Document 4.
12 Exhibit A3 [3b].
13 Exhibit R1 [23].
14 Ibid.
15 Travis van Dreven v Safety Xpress Unit Trust T/A Safety Xpress [2017] FWC 4893 [14].
16 Danute Kristina Grigonis v Adelaide Coffee Company Pty Ltd[2011] FWA 1586 [55].
17 Building and Construction General On-site Award 2010 [MA000020].
18 s.382 of the Act.
19 ss.385(a) of the Act.
20 ss.385(d) of the Act.
21 ss.394(2) of the Act.
22 ss.387(a) of the Act.
23 Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.
24 Owen Sharp v BCS Infrastructure Support Pty Limited[2015] FWCFB 1033 [25].
25 [2013] FWCFB 6191 [34].
26 Ibid [34] – [36].
27 King v Freshmore (Vic) Pty Ltd [2000] AIRC 1019 [24]; B, C and D v Australian Postal Corporation T/A Australia Post[2013] FWCFB 6191 [34].
28 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 377-8.
29 Ibid.
30 Ibid as cited in Potter v WorkCover Corporation (2004) 133 IR 458 and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation (2010) 202 IR 17 [36].
31 Exhibit R1 Document 22.
32 ss.387(a) of the Act.
33 Trimatic Management Services Pty Ltd v Daniel Bowley[2013] FWCFB 5160; Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 151.
34 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151; Previsic v Australian Quarantine Inspection Services Print Q3730.
35 Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1 14-15.
36 Annetta v Ansett Australia Ltd (2000) 98 IR 233 237.
37 Johnston v Woodpile Investments Pty Ltd T/A Hog’s Breath Café – Mindarie[2012] FWA 2 [58].
38 (1995) 185 CLR 410.
39 Ibid 465.
40 Exhibit R4 Document 6a.
41 Gurbinder Singh v Dairy Kosher Catering Pty Ltd T/A Milk n Honey [2016] FWC 5284 [41]; Esad Ismailov v Hisoftware (Australia) Pty Ltd[2014] FWC 3751 [22]; Ms Maricar Virata v NSW Motel Management Services Pty Ltd T/A Comfort Inn Country Plaza Halls Gap [2015] FWC 7932 [63].
42 Ellawala v Australian Postal Corporation, Print S5109 [24].
43 Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey [2013] FWCFB 431 [15].
44 Ibid[16].
45 Print R0235, (1998) 88 IR 21.
46 [2013] FWCFB 431.
47 See also Ellawala v Australian Postal Corporation Print S5109 [34].
48 [2014] FWCFB 236.
49 Ibid [10].
50 [2016] FWCFB 7206 [17].
51 Smith, Arthur and Kimball, Brett v Moore Paragon Australia Ltd PR942856 [32].
52 Ms Diane Lewis v Glendale RV Syndication Pty Ltd T/A Glendale Care Bundaberg [2014] FWC 1086.
53 (2011) 195 FCR 74.
54 Ibid [103].
55 Ibid.
56 Subsections 392(5) and (6) of the Act.
57 Subsections 332(2)(c) and (4) of the Act; Craig Ablett v Gemco Rail Pty Ltd [2010] FWA 8124.
58 PR607515.
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