Mr Ryan Gottwald v Harbourtown Tyre and Battery Pty Ltd

[2016] FWC 446

[2016] FWC 446

FAIR WORK COMMISSION

DECISION

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

Mr Ryan Gottwald
v
Harbourtown Tyre and Battery Pty Ltd
(U2015/11602)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 22 JANUARY 2016

Application for relief from unfair dismissal – small business fair dismissal code – extent of reasonable investigations – exigencies of a small business experience.

[1] This decision concerns an application by Mr Ryan Gottwald under section 394 of the Fair Work Act 2009 (“the Act”) through which Mr Gottwald seeks an unfair dismissal remedy in relation to his dismissal from his position with Harbourtown Tyre and Battery Pty Ltd (“the employer”).

[2] Mr Gottwald had performed duties for the employer for a period of some 8 years. He was dismissed summarily on 19 August 2015 for reasons of alleged theft.

[3] The employer contended, without controversy, that at the time of Mr Gottwald’s dismissal, the employer employed five employees (comprising three direct employees and two directors who derived a wage from the business). Consequently, the employer contended that Mr Gottwald had been dismissed in accordance with the Small Business Fair Dismissal Code (“the Code”), as provided for at s.388 of the Act.

[4] Section 388 of the Act provides as follows:

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.

[5] The summary dismissal provisions of the Small Business Fair Dismissal Code, as declared, provide follows:

“Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.”

[6] Regulation 1.07 of the Fair Work Regulations 2009 provides as follows:

1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.

[7] The relevant Commission authority in respect of the operation of the summary dismissal provisions of the Small Business Fair Dismissal Code are dealt with in the full bench decision in John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edwin Domingo[2012] FWAFB 1359. In that decision, the full bench commented as follows:

“[29] […] There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.

[31] The question we need to consider in this case is whether Mr and Mrs Pinawin believed on reasonable grounds that Mr Domingo’s conduct was sufficiently serious to justify immediate dismissal.” [My emphasis]

The factual matrix

[8] As mentioned above, there is no contest in this matter that the employer is a small business for purposes of s.23 of the Act. The evidence to this effect was that at the time of Mr Gottwald’s dismissal, the employer employed five people including Mr Gottwald.

[9] For his part, Mr Gottwald claims that on Tuesday 18 August 2015 he was approached by his employer, Mr Barry de Laat, who accused him of stealing money from the business premises. Mr de Laat was the manager and part owner of the business cited above. The other owner was Mr Mark Roberts, whose interaction with the business appears to be limited. The other employees apart from Mr Gottwald were Mr Mark Tough and Mrs de Laat. Mrs de Laat (Mr de Laat’s wife) worked from home in a part-time capacity and carried out accounts related work; she was rarely on the business premises.

[10] When Mr de Laat approached Mr Gottwald he was said to have stated to Mr Gottwald words to the effect that:

“There’s a problem, there’s money missing”.

[11] Mr Gottwald claimed that he said words in reply:

“What do you mean money’s missing?”

[12] Mr de Laat was said to have responded with words to the effect that:

“I believe you took it.”

[13] Mr Gottwald said that he that he vehemently denied the allegation.

[14] Mr Gottwald’s viva voce evidence was to the effect that little more had been said other than that he left the workshop and went down to his motor vehicle following the allegation having been made against him by Mr de Laat. He did so, so he said, in order to check that there was no money in the vehicle’s console. Why he would do this when he had asserted his innocence fundamentally is unknown.

[15] Upon commencing work on the following morning -19 August 2015 - Mr Gottwald claimed that he was instantly dismissed by Mr de Laat without any warning. Mr Gottwald claimed that Mr de Laat had said to him words to the effect:

“I know you are not going to resign so I am sacking you.”

[16] Mr Gottwald claimed that he had been “stitched up” because he believed his employer may have been seeking to terminate his employment and the dismissal was fabricated to avoid having to pay him notice and any pro rata long service leave.

[17] Mr de Laat, for his part, contended that he maintained a petty cash envelope which was only known to himself and Mr Mark Roberts. The petty cash envelope is kept hidden within the filing cabinet in the front office. The petty cash envelope is used to pay suppliers.

[18] All employees generally have access to the front office.

[19] Mr de Laat claimed that in the months prior to Mr Gottwald’s dismissal, he had started to notice that money had begun to disappear from the petty cash envelope. As a consequence he commenced to monitor the cash envelope more closely to try to ascertain who it was that was removing the money.

[20] Mr de Laat spoke with Mr Roberts about the missing money and Mr Roberts indicated that he had not removed any of the money himself and he had no knowledge of money being removed.

[21] Mr de Laat was suspicious of Mr Gottwald for reasons that he was aware that Mr Gottwald was having financial difficulties, but in recent times had started spending an unusual amount of money on his motor vehicle. Mr de Laat also claimed that he kept a close observation of Mr Tough’s behaviour over the same time period but noted that he did not give any evidence of spending any large amounts of money or behaving any differently.

[22] Mr de Laat claimed that on Saturday 15 August 2015 at 9AM, he placed eight $50.00 dollar notes in the cash envelope and photographed each bill.

[23] When he again checked the envelope on Monday 17 August 2015 he noted that there was only $300 in the cash envelope.

[24] Mr de Laat enquired of Mr Roberts if he had removed any of the money over the weekend and Mr Roberts had indicated he had not done so. Concerned by the development, Mr de Laat set about more closely monitoring the petty cash envelope the next day.

[25] Mr de Laat claimed that on Tuesday 18 August 2015 at approximately 9:30AM, he placed additional cash into the petty cash envelope so that there was $450 in the envelope. Mr de Laat took photographs of each $50.00 note that comprised the petty cash, and marked all of the notes by taking a small corner from each note just above the serial number. Mr de Laat also placed the envelope back in the filing cabinet (but in a slightly different location amongst the files, though in the same drawer).

[26] Having done so, Mr de Laat left the workplace to attend the post office and was absent for a period of some 15 minutes. Upon returning to the workplace, Mr de Laat observed Mr Gottwald to be in the front office.

[27] Mr de Laat immediately checked the petty cash envelope and upon counting the money found that $100 was missing.

[28] Mr de Laat spoke with the co-owner, Mr Roberts, and enquired as to whether he had taken any of the petty cash that morning and Mr Roberts informed Mr de Laat that he had been downstairs in the business (where he carries out electronic wheel alignments) for the whole period and had not been to the front office.

[29] With Mr Tough absent from work that day and Mrs de Laat not in attendance either; Mr de Laat formed the view that the only person who was capable of removing the money from the petty cash envelope at this time was Mr Gottwald.

[30] It is in this context that Mr de Laat approached Mr Gottwald and said words to the effect of:

“Mate we have a problem money is going missing from the petty cash.”

[31] Mr de Laat agreed that Mr Gottwald denied taking the money.

[32] In the course of the exchange between Mr de Laat and Mr Gottwald, Mr Gottwald was said to have shown Mr de Laat the contents of his wallet and “half-heartedly pulled out his pockets, but [did] not empty them out or anything like that.” Mr de Laat also observed that Mr Gottwald left the front office and sat in his car for a short period before returning to work following the exchange above. Mr de Laat found this conduct to be unusual and suspected that Mr Gottwald may have hidden the money in the vehicle.

[33] The rest of the day proceeded as normal. However, on Wednesday 19 August 2015 Mr de Laat had a further conversation with Mr Gottwald in the presence of Mr Roberts. On this occasion, Mr de Laat gave Mr Gottwald the option of resigning in lieu of being dismissed. Mr Gottwald declined the offer of resignation and denied taking any of the money from the petty cash envelope. Mr de Laat claimed that as a consequence, he had no option but to dismiss Mr Gottwald. Mr de Laat confirmed that Mr Gottwald indeed was angered by the dismissal and believed that he (Mr de Laat) had “stitched [him] up”.

[34] Mr de Laat reported the matter to the Police and provided a “Statement of Witness”.

[35] Mr de Laat’s Statement of Witness to the Police concluded with the words:

“I would not sack an employee without being positive that they have done the wrong thing, and I am positive that Gottwald had stolen money from us, I have confirmed definitely that between the 15^th August and 19^th August [2015] $200 has gone missing and it could only be Gottwald but there is a large amount of money outstanding that I have not accounted for but I do not have evidence of this but I do for the $200.” (sic)

Consideration

[36] As with the Full Bench cited above, the question I need to consider in this case is whether Mr de Laat believed on reasonable grounds that Mr Gottwald’s conduct was sufficiently serious to justify immediate dismissal, taking into account the exigencies of the small business.

[37] There might always be a question as to further steps in any inquiry that a small business might take. What might be a reasonable investigation to found a reasonable belief will turn on the circumstances of each case, moderated further by the exigencies of the small business itself.

[38] Again, it is not objective proof of misconduct that needs to be founded in such cases as this, only the reasonableness of the state of belief into which the small business employer has fallen. As the Full Bench cited above stated:

“It is not necessary to determine whether the employer was correct in the belief that it held.”

[39] The employer in this instance conducted itself in relation to Mr Gottwald’s employment in a matter that is consistent with the summary dismissal provisions of the Small Business Fair Dismissal Code. The employer completed the Small Business Fair Dismissal Code checklist, if no more than a measure to provide guidance or self-auditing in respect of the process it adopted in relation to Mr Gottwald’s dismissal.

[40] That aside, Mr de Laat held a concern that monies held in the petty cash reserve maintained in the front office of his business were being stolen. Having heard the evidence in this matter, I am persuaded that Mr de Laat is genuine in respect of the concern that he held about the lost funds from the business, and that those funds were lost as a consequence of the actions of a third person. I am not able to discern any evidence that Mr de Laat set about contriving the circumstances of this matter including reporting the matter to the police and including the relevant photographic evidence merely as a means of ridding itself of an unwanted employee who was otherwise entitled to long service leave payments should he be made redundant at some point in time.

[41] Indeed, the evidence I have before me is that Mr Roberts, as the co-owner of the business, was looking to end his employment relationship with the business in the event it became necessary to reduce staff numbers (in order to go travelling with his wife), and had been training Mr Tough to take his place. There appears to be no context in which the employer was actively contemplating any changes in its employment profile and there is no evidence of Mr Gottwald having been threatened with dismissal or redundancy at any prior point in time.

[42] The loss of funds had been occurring over a period of time.

[43] Mr de Laat had observed that at the time between 9AM on Saturday 15 August 2015 and Monday 17 August 2015, two $50 notes had been removed from the petty cash envelope. At this time, Mr de Laat limited his investigation to making an enquiry of Mr Roberts as to whether he was responsible for the removal of the monies.

[44] As a consequence of these circumstances, Mr de Laat took steps on Tuesday 18 August 2015 to closely monitor the petty cash envelope and took steps to identify and keep a record of the cash denominations contained in the envelope. Upon discovering that an amount of cash had been removed he again enquired of Mr Roberts, the co-owner of the business, as to whether he had accessed the monies but Mr Roberts had indicated he had not been upstairs in the front office at any stage that day.

[45] There being no other employees in or near front administration office that day and having observed Mr Gottwald in the front office upon his return from the post office, Mr de Laat formed the view that Mr Gottwald must be responsible for the loss of monies.

[46] The business is a particularly small business and operates in a personalised environment.

[47] I find that Mr de Laat’s effort (as set out above) constitute a reasonable investigation on his part into the loss of monies from the petty cash envelope and the identity of the person responsible. Mr de Laat’s actions amount to something more than mere suspicion. As Mr Gottwald was the only employee in the administration office at the time in question, thus Mr de Laat assumed on a reasonable basis that he (Mr Gottwald) alone could be the person responsible for the theft.

[48] As such, the reasonable investigation was the foundation for a reasonable belief being held by Mr de Laat that Mr Gottwald was the responsible party and must leave the business either by resignation or summary dismissal. With the option, it appears, of resignation seemingly having been refused by Mr Gottwald, Mr de Laat summarily dismissed Mr Gottwald at his own initiative.

Conclusion

[49] Mr Gottwald’s dismissal was in accordance with the requirements of the Small Business Fair Dismissal Code in respect of the summary dismissal provisions therein. Mr Gottwald’s application under s.394 of the Act is therefore dismissed.

[50] This decision does not represent a finding on the balance of probability that Mr Gottwald was responsible for the theft of monies from the employer’s business. I have found only that the employer, Mr de Laat, had a reasonable basis to hold a belief on reasonable grounds that Mr Gottwald’s conduct was sufficiently serious to justify immediate (in this case “summary”) dismissal, and did so in accordance with the Small Business Fair Dismissal Code declared under s.388 of the Act.

SENIOR DEPUTY PRESIDENT

Appearances:

R. Gottwald, Applicant

B. de Laat, of the Respondent

Hearing details:

Brisbane

2016:

18 January

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