Mr Wayne Sheahan v Kingswood Investigations Pty Ltd - [2012] FWA 5725

[2012] FWA 5725

FAIR WORK AUSTRALIA

DECISION

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

Mr Wayne Sheahan
v
Kingswood Investigations Pty Ltd
(U2012/151)

COMMISSIONER HAMPTON

ADELAIDE, 24 JULY 2012

Termination of employment - intended resignation - whether dismissal - whether resignation forced - whether decision of employer to accept immediately became a dismissal - dismissal found - termination unreasonable - compensation awarded.

BACKGROUND AND CASE OUTLINE

[1] Mr Wayne Sheahan (the applicant) has made application to Fair Work Australia pursuant to s.394 of the Fair Work Act 2009 (the Act) in relation to an alleged unfair dismissal. His employer until January 2012 was Kingswood Investigations Pty Ltd (the respondent).

[2] The matter has not been resolved through the Fair Work Australia conciliation process and I have now heard all elements of the application. The parties represented themselves and although their occupation and experience is such that they are familiar with proceedings in Courts and Tribunals, I ensured that there was clear understanding of the issues associated with this matter and the hearing that was conducted.

[3] The applicant worked for the respondent as a Senior Investigator. On 20 January 2012, he sent an email to his employer indicating in effect that certain alleged changes to the employment arrangements were not acceptable, that he had found alternative employment and was seeking confirmation of his lawful entitlements/requirements. This was treated by the employer as a resignation and the respondent initially sought that the applicant complete his work files before concluding and confirmation of the last day of employment.

[4] The applicant responded that he was unaware of the requirements as to notice and enclosed a medical certificate covering the next two weeks. The respondent then immediately responded by email to the effect that the resignation would be taken as “forthwith” and accepted as “immediate”.

[5] The applicant claims that the last email of 20 January 2012 was not known to him until some days later. In any event, he contends that any resignation was a forced resignation and that the employer initiated the dismissal when the alleged resignation was accepted forthwith without notice or pay in lieu of notice. This, it was contended, was a dismissal within the meaning of the Act and was unfair. The applicant sought the maximum compensation available under the Act.

[6] The respondent contends that the applicant informed the employer that he had found alternative employment and resigned his employment. This resignation was not forced and although it concedes that it should have paid the two weeks sick leave, it was within its rights to waive the notice (of two weeks) that it understood the applicant had given. On that basis there was no dismissal within the meaning of the Act and the application itself should be dismissed.

[7] There are a series of disputes underlying each of these contentions including the status and impact of an Australian Workplace Agreement (AWA), the nature and impact of certain apparently new arrangements associated with the payment of administration time and a bonus scheme. Further, the import and effect of the purported “resignation” and immediate acceptance of that position lie at the heart of this matter.

THE EVIDENCE BEFORE FAIR WORK AUSTRALIA

[8] The applicant gave evidence and relied upon a series of written communications and other documents. 1

[9] Mr Harry Klavins, the respondent’s Director (and the decision maker) also gave evidence about the circumstances leading to the cessation of the relationship and also relied upon a package of written documents. 2

[10] Both of these witnesses gave their evidence without in my view attempting to mislead the Tribunal. I do however have reservations about elements of their evidence. The applicant was somewhat evasive in terms of the purpose of a disciplinary meeting held in late December 2011 and was not convincing as to the intention of, and circumstances leading to, the purported resignation email. Mr Klavins was not closely involved in the administration of the respondent at times during the process and was not clear on why the resignation should have been treated as being given with two weeks notice. I treat all of these and related elements of the evidence with caution.

[11] I have determined the facts of this matter based upon my assessment of the witnesses and by placing particular weight upon the written objective evidence.

THE GENERAL FACTS OF THE MATTER

[12] It is not necessary to expressly deal with all of the facts contended in this matter. The following establishes the broad context of the matter against which I will deal with the particular facts and issues critical to the determination of the application.

[13] The respondent conducts an investigation business involving private investigations being conducted for various insurance companies and statutory bodies.

[14] The applicant commenced employment with the respondent on 9 February 2004 as a casual Senior Investigator and became a full-time employee on 1 July 2006. The applicant’s employment became subject to an AWA at that time. Both parties conducted their case on the basis that the AWA was approved by the relevant authority at that time and no action was taken to formally terminate the instrument. I note that under the relevant transitional legislation, 3 the AWA was preserved and remained effective up until the time of the cessation of the employment relationship.

[15] The AWA relevantly provided as follows in relation to termination of employment:

“7.1 You or we may terminate your employment by the provision of notice (or payment in lieu thereof) as follows:

Employee’s period of continuous service	Period of notice
Not more than 1 year	At least 1 week
More than 1 year but not more than 3 years	At least 2 weeks
More than 3 years but not more than 5 years	At least 3 weeks
More than 5 years	At least 4 weeks

7.2 The period of notice is increased by one week if you are over 45 years old and have completed at least two continuous years service with us.

7.3 We may terminate your contract of employment without notice if you engage in misconduct, malingering, neglect of duty or other serious misconduct that would justify instant dismissal.

7.4 You acknowledge that inappropriate behaviour and conduct will not be tolerated, and will result in disciplinary action, up to and including termination of employment. You also acknowledge that unsatisfactory performance will result in disciplinary action, up to and including termination of employment.

7.5 Monies paid to you in advance by us may be recovered from any accrued entitlements owing to you following presentation of a statement of all amounts owed by you to us.

7.6 Any payment in lieu of notice will be paid at the ordinary rate of pay.

7.7 If you do not give the required notice, we shall have the right to withhold moneys due to you for an amount equal to the ordinary time rate of pay for the outstanding period of notice.

...”

[16] In May 2007, the parties purported to enter into a new contract of employment. 4 This included, amongst other matters, the introduction of a new title (Factual Investigator Training Officer) and a new rate of pay that was to be indexed annually. The contract was signed by both parties and recorded an intention that the changes would be ratified in an amendment to the current AWA, which was not done. This occurred in the context of some training work that had been undertaken by the applicant and the respondent’s appreciation of the work performed by him more generally.

[17] The May 2007 pay rate was indexed in July 2008 and July 2009.

[18] In mid 2009, the applicant raised concerns about the treatment of the hours of work including whether the 38 hours per week was to be averaged over a period and whether it met the requirements of the new National Employment Standards 5 (the NES). It is not necessary to deal with this particular issue in this matter.

[19] In December 2009, the applicant received an offer from a rival investigation firm. Following discussions with the management of the respondent, during which he had intended to resign, the parties agreed to a revised rate of pay and the implementation of a bonus scheme. The scheme was to provide an annual bonus in the form of a holiday in the vicinity of $5,000, “pending KPI”. This proposal was implemented in practice however the written confirmation of the new arrangements was not signed by the applicant as it contained various inaccuracies. 6 The applicant marked up a modified version of the document for the respondent and this was eventually put back to the applicant by his employer, but never signed or completed by either party.

[20] The unexecuted “contract” provided that the employee may terminate their employment by giving two weeks notice to the employer. A period of one week was specified, “if applicable”, as notice by the employer. It is likely that each of the subsequent “contracts” offered to the applicant in 2010 and 2011 contained the same provision, however those versions were also not executed by the parties. 7 This included the modified version of the original December 2009 proposal that was provided back to the applicant in March 2011.

[21] During 2011, tensions arose between the applicant and the management of the respondent. By September 2011, various issues were the subject of email exchanges and these included the ongoing difference of view about the contract and the averaging of hours, an alleged lack of support by ‘management’ an indication that assignments would be reduced, and a suggestion from Mr Klavins that if the applicant considered he could run the business better, “please feel free to buy me out”. 8

[22] In November 2011, a document was drafted by the applicant that was designed to record the concerns of himself and other investigators about certain issues in the workplace. These included workloads and the impact of the NES. It is not clear to me the extent that the applicant’s concerns were shared by the other employees however the material before the Tribunal does support the notion that some tensions were shared more broadly. The draft document was not supplied to management however it is evident that Mr Klavins became aware of its existence and the applicant’s role in that regard.

[23] In late November, Mr Klavins took objection to the tone of some emails sent by the applicant and more importantly what he understood to be remarks made by the applicant to other employees about the business. This led him to seek a meeting to discuss the issues with the applicant and in due course a formal request was made. Although the applicant indicated that he was not aware that this was to be a disciplinary meeting, the nature and tone of the request, the stated subject matter and the emphasis given to having a support person attend with the applicant, all demonstrate that its intended purpose should have been clear. The applicant did however also seek to discuss the ongoing concerns with his contract.

[24] A meeting took place on 1 December involving the applicant, Mr Klavins and a colleague of the applicant who attended at the applicant’s request. It is not necessary that I deal with all elements of the dispute about that meeting or with the substance of the allegations made. What is clear is that Mr Klavins went through a list of alleged “complaints” that the applicant’s colleagues had made. In general terms these involved the applicant allegedly saying negative things about the company and its management. The applicant denied the allegations however I note that the substance of at least one such conversation was apparently supported by the applicant’s own support person. The applicant was informed that he would be given a first written warning.

[25] The applicant was informed that the meeting was not to discuss the AWA.

[26] Later on 1 December 2011, a first written warning, which the applicant refused to sign (or keep) was sent to him. I note that on 29 December, the applicant provided a response to the warning which questioned both the nature of the meeting and the allegations, as well as the process adopted by the employer.

[27] Relationships between the applicant and the other staff were tense in the office particularly after the disciplinary meeting. The applicant did advise Mr Klavins about this time that he needed to take time off with his family and foreshadowed the need for surgery to address a foot complaint. This was sympathetically received by Mr Klavins.

[28] In the second half of 2011, the respondent introduced revised arrangements for administration hours. This involved an increased ability to charge administration hours against some clients, and for the Investigators to be paid for such as part of billable hours.

[29] Mr Klavins undertook a further review of the approach to administration hours and the investigator’s employment contracts in late 2011. On 29 December 2011, he indicated that contracts reflecting the new arrangements would be provided in the New Year.

[30] In early January, email exchanges occurred between the applicant and the relatively newly appointed Senior Investigator, Mr Thiele, about the payment of administration hours. I do note that at least some of the claimed additional hours were paid by the respondent whilst others were rejected.

[31] The applicant took pre-booked leave commencing on 6 January 2012. There is a dispute as to whether the applicant took all or most of his personal belongings with him prior to his departure on leave. On balance, I find that the applicant did take some, but not all, of his personal belongings from the office on that occasion.

[32] On 13 January 2012, Mr Klavins made available to the applicant and others, a proposed new contract for their perusal. This communication also confirmed the loss of the previous four hours of administration time in the context of the new billing parameters and that if there were any queries, the employees could contact him. The proposed new contract was a comprehensive document which made no reference to the AWA but did purport to reflect the NES in certain respects. The new contract made no mention of a bonus.

[33] The new contract was received by the applicant on 16 January 2012. On 17 January, the applicant emailed Mr Klavins with concerns as to certain apparent errors in the draft and seeking clarification about the absence of the bonus and the previous link to CPI adjustments.

[34] Later on 17 January 2012, Mr Klavins responded by indicating that the bonus was linked to the performance of training, which he said was not now being undertaken, and the suggestion that the new contract would put all staff on the same basis given recent changes in the nature of the work.

[35] On 18 January, the applicant attended a General Practitioner and obtained a medical certificate for a period of just over two weeks. The certificate indicated unfitness for work but did not provide the basis of the diagnosis. I understand that the certificate was based upon workplace stress however this was not disclosed to the respondent prior to these proceedings and it is a reasonable inference that Mr Klavins considered that the absence may have been related to some form of foot problem.

[36] On 19 January 2012, after apparently receiving advice, the applicant prepared a response to the respondent. Around that time, he also had discussions with a prospective employer about obtaining work.

[37] On 20 January 2012, the applicant sent an email with the following letter attached:

“...

RE: Employment Contract

I refer to your email dated 13 January 2012 regarding an updated employment contract and your subsequent email dated 17 January 2012 regarding the omission of entitlements.

As a result of drastic changes to conditions as outlined in the above I have no other choice but to seek alternative employment to mitigate losses that will occur at the cessation of the previous arrangement.

Thankfully I have found alternative employment.

Can you please confirm my lawful entitlement / requirements.

...”

[38] Mr Klavins then sent the following response:

“...

It is with regret that I accept your resignation. As you would have been aware the new NES employment are standard for everyone and are negotiable at any stage to the employee and the employer. It is a pity you did not take up the option to contact me to go through your contract.

In saying that I wish you well in your new employment.

I have engaged our accountant to organise your entitlements and will email you the figures as soon as possible.

I would appreciate you completing your files prior to your departure. Could you please advise me of your last day of employment.

...”

[39] The applicant then indicated by a further reply email that he was unaware of the requirement regarding notice and attached the medical certificate.

[40] Mr Klavins then sent the following response by return email:

“...

Your resignation is of today as per your email, so I take it as forthwith.

You have at no stage given me any indication whilst on leave that you were ill, only that you were not happy with your contract. From here on I accept your resignation as immediate.

Please forward your key to the office and I will notify you via email your entitlements.

...”

[41] This was not read by the applicant on that night and at some stage, probably over the weekend, the applicant’s access to the work email was shut down.

[42] On 31 January 2012, the respondent sent a letter to the applicant seeking the return or destruction of all work related files being held by the applicant. A copy of the last email of 20 January 2012 from Mr Klavins was also provided. The letter also confirmed that once this had been attended to, the employer would formalise the entitlements.

[43] The applicant confirmed that he had no work related material and later the applicant was paid his outstanding Long Service Leave but was not paid for any period after 20 January 2012.

[44] I add that Mr Klavins considered the applicant to be a highly regarded investigator and he was the highest paid employee in that category within the business.

WAS THE APPLICANT DISMISSED WITHIN THE MEANING OF THE ACT?

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

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

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

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

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

[46] On this aspect of the case, the applicant in effect contended that the actions of the respondent, in allegedly unilaterally varying the contract of employment in the manner that it did, represented a breach of the contract. Those elements principally relied upon were the loss of the bonus and the changes to the administration hours. The effect of the applicant’s position is that the respondent’s conduct should be considered to be a repudiation which conferred upon him the right to regard the contract as being at an end. In the alternative, the applicant argued that when the respondent chose to accept the alleged resignation immediately, it, in effect, substituted a dismissal for the resignation. On either approach, the applicant contended that it was a dismissal at the initiative of the respondent within the meaning of s.386 of the Act.

[47] The respondent rejected any notion that the resignation was forced and denied that any changes had been implemented that would lead to such an outcome. Further, having been provided with the applicant’s resignation, and the applicant then failing to advise the final date of work, it chose to have the resignation apply immediately. In effect, the respondent contends that it waived the notice otherwise required by the applicant, although it does concede that the two weeks notice (that was covered by the sick leave certificate) should have been paid. On that basis, no dismissal within the meaning of the Act should be found in this case.

[48] Although applied under the previous Act, the following approach of the Full Bench of the Australian Industrial Relations Commission in O’Meara v Stanley Works Pty Ltd 9 in my view remains generally apposite:

“[21] In this Commission the concepts have been addressed on numerous occasions and by a number of Full Benches. In Pawel v Advanced Precast Pty Ltd (Pawel) a Full Bench said:

“[13] It is plain that the Full Court in Mohazab considered that an important feature in the question of whether termination is at the initiative of the employer is whether the act of an employer results directly or consequentially in the termination of the employment and that the employment relationship is not voluntarily left by the employee. However, it is to be noted that the Full Court described it as an important feature. It plainly cannot be the only feature. An example will serve to illustrate this point. Suppose an employee wants a pay rise and makes such a request of his or her employer. If the employer declines and the employee, feeling dissatisfied resigns, can the resignation be said to be a termination at the initiative of the employer? We do not think it can and yet it can be said that the act of the employer i.e. refusing the pay rise, has at least consequentially resulted in the termination of the employment. This situation may be contrasted with the position where an employee is told to resign or he or she will be terminated. We think that all of the circumstances and not only the act of the employer must be examined. These in our view, will include the circumstances giving rise to the termination, the seriousness of the issues involved and the respective conduct of the employer and the employee. In the instant case the uncontested factual findings are that the applicant had for almost the whole of his employment performed welding duties; that there was no objective threat to his health and safety involved in the requirement that he undertake welding duties so long as it was not on a continuous basis and that the welding he was required to do was not continuous.”

[22] In the Full Bench decision of ABB Engineering Construction Pty Ltd v Doumit (ABB Engineering) it was said:

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.” 10

[49] An objective consideration of the parties’ conduct is required. Further, in this particular case it is clear that Fair Work Australia must consider whether that conduct was of such a nature that the conclusion of the employment relationship was the probable result, or more particularly, whether the applicant’s actions to in effect accept the alleged repudiation was forced by the course of conduct of the employer. Further, the effect of the immediate acceptance of the resignation must be considered.

Was there a resignation by the applicant?

[50] To be effective, a resignation must be clear and unambiguous. Account needs to be taken of the context in which the statements are made and the ensuing circumstances. In Kwik-Fit (GB) Ltd v Lineham 11 Wood J expressed this view in the following terms:

If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure (`being jostled into a decision') and indeed the intellectual make-up of an employee may be relevant: see Barclay v City of Glasgow District Council [1983] IRLR 313. These we refer to as `special circumstances'. Where `special circumstances' arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer's risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the `special circumstances' the intention to resign was not the correct interpretation when the facts are judged objectively. 12

[51] It is clear that the email of 20 January 2012 from the applicant was, at the very least, notice of an intention to resign. The attachment clearly stated that the applicant had found other work. He was a full-time employee and objectively this was intended to communicate that the applicant was intending to give notice of his resignation.

[52] The communication did not specify a date of effect and it is evident that the applicant was seeking confirmation of what notice and arrangements were required. The respondent took it as a resignation and requested confirmation of when the applicant would be concluding. The applicant did not at the time contest the notion that it should be treated as a resignation but merely confirmed that he was seeking clarification as to the extent of notice. At that point, the objective intention to resign from the employment is clear.

[53] There are issues about the effectiveness of the resignation, and the consequences of the employer’s subsequent actions, arising from the absence of a stated period of notice, however I will deal with those aspects in due course.

Was the “resignation” forced?

[54] I have carefully considered the overall context in which the apparent resignation was provided. This includes the disciplinary process and the relationships within the workplace at the time. The applicant did not specifically rely upon this aspect however it arises from the case as presented. There is a fine line between disciplining an employee because of the nature of their communication about concerns with working conditions and taking action because they are pursuing their concerns about those conditions. The latter of course being a legitimate workplace right which cannot be the basis for proper action. 13

[55] Whilst I am not without reservations on this aspect, I consider on balance that the issues being taken up by management were in this case about the tone and manner of communication and more importantly, the alleged undermining of management, rather than because the workplace rights were being exercised. The respondent strongly denied any link between the agitation about the AWA and related matters and the disciplinary process and I accept the evidence of Mr Klavins on that point.

[56] In terms of the changes to the employment relationship, the main concerns raised by the applicant are those associated with the bonus. I accept that the loss of a guaranteed $5,000 per annum is capable of being a repudiation given the nature of the employment and the remuneration otherwise payable here.

[57] The lack of precision in the manner in which the contract arrangements were conducted makes this a difficult assessment. The bonus was introduced as part of a contract proposal that was not executed and the applicant did not agree with certain elements of that proposal. The wage rates and bonus were however implemented by the employer in practice. The bonus was related to KPI, which I assume is a reference to Key Performance Indicators. No specific KPI’s were set, however the fact that the bonus as proposed was at some level conditional, is a consideration.

[58] The absence of CPI adjustment in the last contract is also a consideration. However it is not clear what the effect of the AWA commitment was in that respect. That is, the rate being paid was in excess of the rate specified in the AWA and even allowing for its indexation this may well have been case.

[59] The respondent contends that the January 2012 contract was a draft proposal and that it was open to negotiation. It is also evident that this draft was, at least in part, a response to the concerns raised by the applicant about the outdated AWA. The response provided by the respondent when the issue was raised appeared to be definitive however this was not explored by the applicant. History would suggest that the terms of the contracts for the applicant were negotiable. The applicant acknowledged that he could have insisted upon the retention of his former arrangements or sought changes at the time. 14 The respondent expected this to occur and indeed held such negotiations with all other relevant staff prior to finalising their arrangements.

[60] I have also considered the change of administration hours. This evidence from both parties about the impact of these changes is unsatisfactory. The AWA refers to two hours of administration time per week in addition to the 38 ordinary hours (and reasonable additional hours). The evidence as to whether it was treated as being 40 hours of paid time for leave and other purposes is not clear and the new billing arrangements may have allowed the 40 hours to be billed out and paid for in any event.

[61] The applicant indicated in evidence that it was the loss of the bonus that was the critical issue 15 and that he could have raised concerns about this aspect of the new proposed contract, if he had not been “dismissed”.

[62] Even accounting for the different environment operating at that time, I am not persuaded that the conduct of the respondent was such that at the time of the resignation, a repudiation had occurred. I also do not consider that the course of conduct by the respondent forced the resignation of the applicant.

[63] Accordingly, there is no forced resignation within the meaning of the Act.

Did the respondent dismiss the applicant by immediately accepting the intended resignation?

[64] The starting point for consideration of this aspect is the obligations of the parties in respect of notice. The still applicable AWA required both parties, in the circumstances of the applicant, to give five weeks notice. There are caveats on that associated with misconduct which are clearly not relevant here. The AWA did not expressly provide for the waiving of notice but does permit payment in lieu of notice. In the case of resignation, clause 7.7 reinforces that in that event the required notice must be given.

[65] The AWA must, at the time of resignation, be read subject to the import of the NES. 16 Relevantly, this provides for the same period of notice or pay in lieu as the AWA in the case of an employer initiated dismissal.17 There is no NES requirement in relation to employee notice and accordingly the AWA provision continued to operate.

[66] The executed employment contract made in May 2007 continued to rely upon the AWA in terms of these provisions.

[67] The unexecuted “contracts” in later years purported to provide for different periods of notice. However, they cannot provide, even if considered to be effective contracts, lesser entitlements than either the AWA or the NES. In the case of resignation, the unexecuted “contracts” purported to provide a period of two weeks notice of resignation. In my view there is sufficient uncertainty associated with the status of these contracts that it is not safe to assume that they reflected the basis of the employment contract at that time. This arises from the fact that they were never presented in an agreed form and the exact content of the later documents is not known with any certainty.

[68] In any event, I am not satisfied that the revised resignation arrangements within the unexecuted contracts could oust the operation of the AWA. At one level they may be seen as more beneficial and capable of being applied as an over-agreement benefit. However, the shorter period of notice could also lead to the reduction in the extent of employment and payments consequent upon the giving of the resignation.

[69] Accordingly, the obligations at the time were for five weeks notice of resignation to be given by the applicant and the same period of notice, or pay in lieu, by the employer.

[70] The evidence of Mr Klavins is that he did not intend that the employment relationship end immediately, but rather to accept that the resignation would operate with effect from the two weeks notice that he understood the applicant had given. 18 As alluded to earlier, I have some reservations about this aspect of the evidence. In submissions, Mr Thiele for the respondent contended that in effect the respondent had waived the notice period.

[71] Even if the intended resignation provided by the applicant was effective, it did not expressly or impliedly communicate a date of effect. The applicant was seeking confirmation of the required period. I add that given the confusion as to the correct contractual position, the request for clarification was entirely reasonable.

[72] The objective intention of the final email from Mr Klavins on 20 January 2012 was that the relationship would end immediately. Although the respondent now accepts that it should have paid the two weeks sick leave, its actions at the time were also consistent with the intention that the employment relationship would cease immediately.

[73] The Full Bench of the AIRC in ABB Engineering 19summarised the principles applying in different but related circumstances as follows:

“The effect of the giving of notice is summarised by Gray J in the Federal Court in Birrell v Australian National Airlines Commission :"The giving of notice of termination of a contract, in accordance with the terms of that contract, is a unilateral right. Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice." McCarry "Termination of Employment Contracts by Notice" sums up his view of the situation as:"A valid notice of termination, once received, will operate to end the contract of employment when the period of notice expires or is due to expire, unless in the meantime the contract is ended by some other independent cause. The employer/employee relationship will end with the contract, if it has not ended earlier, but aspects of the contract can still be enforced thereafter." We assume for this purpose, and it was not suggested otherwise, that the action taken by Mr Doumit was action he could take under his contract. There is no need to consider matters such as inadequate notice or conditional termination as was the case in Gunnedah Shire Council v Grout and other authorities such as Automatic Fire Sprinklers Pty Ltd v Watson. There is no suggestion in this case that the employee gave notice which was inadequate or inappropriate. This meant that there was no option for the employer to decide whether or not to accept the notice. The employee could not withdraw the notice unilaterally [see discussion thereon in Birrell at pages 109 - 110]. The only thing required was the effluxion of time. The employer took no issue with the notice and acted, or at least intended to act, in accord with the contract by giving pay in lieu of notice. It proffered the payment in lieu because it considered that the contract had been terminated. That was a reaction. It was not an initiative to terminate the employment so as to bring the termination under Part VIA Division 3 of the Act as a termination at the initiative of the employer. In the employer's perspective, its actions did not substitute a fresh termination for that which was initiated by Mr Doumit. However, the employer's action did operate to substitute an earlier termination of the employment relationship than that initiated by Mr Doumit. The employer's action operated to reduce some of the benefits that would have accrued if Mr Doumit had worked out the notice period. We consider that having regard to all relevant circumstances and particularly the length of the notice period, and the scale of payment to Mr Doumit, the company's action to bring forward the date of effect may and should be conceived as consequential to the resignation. In our view the circumstances of the case do not establish matters of fact or degree that would justify our finding that the employer took advantage of the resignation to in effect substitute a termination of the employment on its own initiative. We do not preclude the possibility of there being such a case, particularly in circumstances where a long period of notice is given in the form of a resignation. But this is not such a case. “

[74] The approach summarised in ABB Engineering demonstrates that where notice of a resignation is given in accordance with the contract it will be valid and where the employer accepts such resignation but elects to pay out the notice period without requiring the employee to work the notice, the resignation does not become a dismissal at the initiative of the employer merely because of that action. However, the Full Bench in that case also confirmed that a contract during a resignation notice period could end by some other intervening event and in certain circumstances a dismissal by the employer could in effect be substituted for the resignation.

[75] In Gunnedah Shire Council v Grout 20the Full Court of the Industrial Relations Court of Australia also confirmed that even where the notice of resignation was less than that required, it was possible for the employer party to treat and accept such notice as being effective.

[76] In this case, there are significant differences to the circumstances considered in both ABB Engineering and Gunnedah. These include that the applicant did not specify a period of notice and was seeking clarification from the employer. The respondent understood that it was intended to be a resignation with notice and that a period of actual notice was to be given. Further, the respondent did not confirm the extent of notice that should be provided, but rather decided that it would operate with effect immediately and did not seek to pay in lieu of any notice.

[77] It is not clear that the intended resignation was effective given these particular circumstances. If not, then what followed would have been a dismissal by the employer.

[78] In any event, even if the resignation was effective, in these rather unique circumstances the reason why the employment relationship ended when it did was that the respondent chose to treat the resignation and the cessation of the employment relationship as being effective immediately. It was not simply the consequence of the resignation but rather a further related but intervening action. Further, what is now claimed to be the waiver of notice was in fact the withholding of the payment for the period of notice in a manner that was not consistent with the terms of the AWA. 21

[79] The intended resignation was replaced by a dismissal at the employer’s initiative.

WAS THE DISMISSAL OF THE APPLICANT HARSH, UNJUST OR UNREASONABLE?

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

“385 What is an unfair dismissal

(1) A person has been unfairly dismissed if FWA is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(d) the dismissal was not a case of genuine redundancy.”

[81] I have found that the applicant was dismissed by the respondent, the employer is not a small business within the meaning of the Act and this is not a matter involving a redundancy. As a result, I must consider whether the dismissal was harsh, unjust or unreasonable.

[82] The Act relevantly provides as follows:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that FWA considers relevant.”

[83] It is clear that s.387 of the Act contemplates that an overall assessment as to the nature of the dismissal must be made by Fair Work Australia. In so doing, the Act sets out a number of considerations that must, where relevant, be weighed up in totality. 22

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

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

[85] Valid in this context is generally considered to be whether there was a sound, defensible or well founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly. 23

[86] Although I have found that there was a dismissal at the initiative of the employer, the objective circumstances are that this took place in the context of an announced intention by the applicant to resign to take up other employment. The employment relationship was coming to an end and it is reasonable given the nature of the industry that the applicant be disengaged from the practical operation of the business at an early time. However, the reason why the “resignation” was given effect to immediately was that the respondent formed the view that the applicant was not intending to return to work given his sick leave. This of course, presumed that the notice intended by the applicant was two weeks; however that was an assumption at best. Further, the provision of the medical certificate itself played a role in the decision to have the intended resignation operate immediately.

[87] There are issues about the lack of consultation and the decision not to provide pay in lieu of notice, however whilst these are relevant considerations they do not go to the reason for the cessation of the relationship.

[88] In that light, there was a valid reason to seek the early cessation of the employment however it is not clear that that reason could be said to be related to the applicant’s capacity or conduct within the meaning of s.387(a) of the Act.

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

[89] The applicant was advised by the respondent that it (wrongly) considered that the resignation would be effective immediately however the assumptions leading to that point were not notified.

Section 387(c) – whether the applicant was given an opportunity to respond to any reason related to her capacity or conduct.

[90] The reasons for dismissal did not relate to the applicant’s capacity or conduct.

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

[91] No request for a support person was made by the applicant in connection with the dismissal.

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

[92] The applicant’s dismissal was not related to unsatisfactory performance.

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

Section 387(g) – the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal.

[93] The respondent is a relatively small organisation and it does not have dedicated human resources specialists. The absence of these resources did impact upon the manner in which the contract arrangements were handled and more importantly, the manner in which the resignation was treated. These are relevant considerations to be taken into account.

Section 387(h) – any other matters that FWA considers relevant.

[94] The length of the applicant’s employment and more importantly the intended resignation are relevant to the nature of the dismissal.

[95] The decision by the respondent not to meaningfully engage with the applicant about the extent of notice to be given and the implication of the sick leave absence are also relevant considerations. The failure to provide any pay in lieu of notice is a further factor in this case.

Conclusion as to the nature of the dismissal

[96] Having regard to the considerations raised by s.387 of the Act I find that the dismissal of the applicant was unreasonable.

REMEDY

[97] The applicant does not seek reinstatement and I consider that it would not be appropriate.

[98] The Act relevantly provides as follows in relation to compensation:

“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), FWA 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 FWA considers relevant.

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA 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 FWA 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 FWA 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.

393 Monetary orders may be in instalments

To avoid doubt, an order by FWA under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.

[99] Accordingly, I must, having regard to the considerations in the Act, determine whether compensation in lieu of reinstatement is appropriate and if so, to what extent.

[100] Section 392(2) requires me to take into account all of the circumstances of the case including the factors that are listed in paras (a) to (g). These factors include in ss.(g) any other relevant considerations. Without detracting from the overall assessment required by the Act, it is convenient to discuss the identified considerations under the various provisions.

The effect of the order on the viability of the employer’s enterprise

[101] The respondent conducts a small but apparently robust business and there is no indication that any order for compensation contemplated by the Act would impact upon the viability of the business.

The length of the person’s service with the employer

[102] The applicant was employed by the respondent for almost eight years. This is a relatively long period and subject to the consideration of the other circumstances impacting upon the nature of that service, must be taken into account.

The remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[103] This involves in part a consideration of the likely duration of the applicant’s employment in the absence of what I found to have been an unfair dismissal.

[104] The relationship was concluding. It would not have continued beyond the period of notice specified in the AWA. That is a period of five weeks from the intended resignation. I have considered whether this period should run from the point that the dismissal was in effect communicated to the applicant however, the more reasonable presumption here is that the applicant originally intended a period of notice of no more than the five weeks set out in the AWA as from 20 January 2012.

[105] The parties have agreed that a week’s pay for present purposes should be calculated at $35.00 per hour using a basis of 40 hours per week. This equates to $1,400 per week and $7,000.00 over the five weeks projected.

[106] In this particular case, an allowance for contingencies should also be made noting that it is entirely feasible that an alternative period of notice could have been mutually agreed. 24

The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[107] The applicant commenced employment with a new employer only a few weeks after the dismissal. He has also pursued other employment options. No reduction in the amount of compensation should in my view be made on this basis of (the lack of) efforts to mitigate.

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

[108] The applicant has earned $22,974 from alternative employment over the 20 weeks following his dismissal. That commenced some two weeks after the advice of the immediate end of employment with the respondent. In terms of the five weeks over which I have projected the continuation of the relationship, this would mean no income in the first three weeks and in the order of $2,300 for the other two weeks or so. 25 This should be taken into account in the final assessment of the compensation.

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

[109] This factor is not significant in this case given the period over which I have assessed the likely duration of the employment.

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

[110] Subject to the limitations under the Act, I have considered all of the circumstances of this case in determining the remedy. This includes the prospect that if the notice period had been worked out, the applicant would have accrued an additional 1.3 weeks of Long Service Leave. However, there is no guarantee that the actual notice, and period of service, would have extended that far. On that basis, this aspect should also be subject to a reasonable contingency discount.

[111] There is no misconduct that could reduce the amount otherwise payable as compensation, as provided by s.392(3) of the Act.

[112] I will make no allowance for any shock, distress or humiliation that may have been caused by the manner of the dismissal. 26

[113] The amount of compensation that I assess as appropriate is less than the maximum prescribed by s.392(5) of the Act as applied in this matter.

COnCLUSIONS AND ORDERS

[114] I find that the applicant was dismissed and that it was unfair within the meaning of the Act.

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

[116] I find that compensation is appropriate. Having regard to the considerations established by s.392 of the Act and to the present statutory charter I find that compensation should comprise a payment by the respondent to the applicant calculated as follows:

Allow 5 weeks projected lost income $7,000

Allow 1.3 weeks additional LSL $1,820

Less a contingency discount of 20% on the above ($1,746)

Deduct relevant income from the alternative employment ($2,300)

Total compensation $4,774.00

[117] The compensation payment, less any required deduction of taxation, is to be made within 14 days of this decision.

[118] An order to the above effect has been issued in conjunction with this decision.

[119] The parties should appreciate that I have not dealt with their apparent dispute about the obligations of the AWA in terms of the averaging of hours or related matters. These are issues for the Fair Work Ombudsman and/or a Court of competent jurisdiction.

COMMISSIONER

Appearances:

W Sheahan the applicant in person.

M Thiele on behalf of Kingswood Investigations Pty Ltd.

Hearing details:

2012

Adelaide

July 3, 4

1 Exhibit A1 and attachments.

2 Exhibits R1 or R6.

3 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Schedule 2, Item 2.

4 Attachment WS2 to exhibit A1.

5 This is reference to Part 2-2 of the Act and in particular Division 3 of that Part dealing with maximum weekly hours.

6 It was apparently based upon a casual contract rather than full-time and also had other obvious mistakes.

7 Neither party had a copy of the complete documents to provide to the Tribunal. It is however likely that the provision remained the same.

8 Exhibit A1 - attachment WS9.

9 PR973462, 11 August 2006 per Giudice J, Watson VP and Cribb C. This appeal was determined under the provisions of the Workplace Relations Act 1996 pursuant to the provisions of the Act as in force prior to the coming into operation of the Workplace Relations Amendment (Work Choices) Act 2005. As a result, the primary jurisdictional question was whether the applicant had been dismissed by the employer which was considered having regard to the formulation in the Termination of Employment Convention which in turn referred to termination at the initiative of the employer.

10 PR973462 (footnotes omitted).

11 [1992] ICR 183.

12 Ibid at 191.

13 This would be contrary to the General Protections Provisions of the Act.

14 PN167.

15 PN1467.

16 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 - Schedule 3, Part 5, Item 23.

17 S.117(2) of the Act.

18 PN795.

19 AIRC Print N6999.

20 [1995] IRCA 694.

21 Clause 7.7 of the AWA provides the circumstances in which entitlements may be withheld and such do not apply here.

22 Explanatory Memorandum Fair Work Bill 2008 para 1541.

23 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation, per Ross VP, Williams SDP, Foggo C PR948009, 15 June 2004 and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation [2010] FWAFB 8868, 2 December 2010 per Kaufman SDP, Richards SDP and Hampton C at par [36].

24 See the discussion of contingencies in Ellawala v Australian Postal Corporation AIRC Print S5109, 17 April 2000 per Ross VP, Williams SDP and Gay C and in Enhance Systems Pty Ltd v James Cox AIRC PR910779, 31 October 2001 per Williams SDP, Acton SDP and Gay C.

25 I have used an average figure for these purposes.

26 In light of the express requirements of s.392(4) of the Act and the absence of any evidence to support such a proposition.

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