Mr Weihong Tao v Lu & Tao Pty Ltd
[2025] FWC 990
•1 MAY 2025
| [2025] FWC 990 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Weihong Tao
v
Lu & Tao Pty Ltd
(U2024/8794)
Mr Weichen Tao
v
Lu & Tao Pty Ltd
(U2024/8802)
| COMMISSIONER RIORDAN | SYDNEY, 1 MAY 2025 |
Applications for an unfair dismissal remedy
Mr Weichen Tao (Weichen) and Mr Weihong Tao (Weihong) (the Applicants) are brothers and were, until 12 July 2024, employees of Lu & Tao Pty Ltd (L&T/the Respondent) which operates a chicken shop in Yarrawonga, Darwin trading as One Waffle + Two Peck Crispy Chicken. Each of the Applicants own 20% of L&T.
The Applicants filed applications for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Cth) (the FW Act) with the Fair Work Commission (the Commission) on 29 July 2024.
In its Form F3 responses, the Respondent raised jurisdictional objections in each of these matters.
In a Decision issued on 10 December 2024,[1] I dismissed the jurisdictional objections raised by the Respondent.
I held a Directions Conference by telephone on 8 January 2025, during which the Respondent requested that the matter be held over for a period to allow the parties to engage in settlement discussions and to allow the Respondent to talk to its Insurer.
A further Directions Conference was conducted on 10 February 2025, at which the Respondent advised that the matter was unable to be resolved. I therefore set Directions for filing of substantive materials by the parties. A Hearing by Video via Microsoft Teams was scheduled to take place on 8 April 2025.
I note that the parties’ submissions in relation to both matters were substantially identical. The parties’ submissions have been summarised jointly for this reason.
Ahead of the Hearing in these matters, the Respondent wrote to my Chambers providing medical evidence in support of him being unable to attend or participate in the Hearing.
On 3 April 2025, my Chambers wrote to the parties advising that, on the basis that no witnesses were being called in these matters, the Hearing was vacated and the substantive applications would be determined on the papers.
This Decision determines the substantive applications in matters U2024/8794 and U2024/8802.
Statutory Provisions
The relevant sections of the FW Act relating to an unfair dismissal application are:
“396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(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;
(d) whether the dismissal was a case of genuine redundancy.
381 Object of this Part
(1) The object of this Part is:(a) to establish a framework for dealing with unfair dismissal that balances:
(i) the needs of business (including small business); and
(ii) the needs of employees; and(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees; and(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.
Note: The expression “fair go all round” was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
384 Period of employment
(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.
(2) However:(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:
(i) the employment as a casual employee was on a regular and systematic basis; and
(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and(b) if:
(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and
(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and
(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised; the period of service with the old employer does not count towards the employee’s period of employment with the new employer.
385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
see section 388.
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person— whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.”
Whilst the FW Act contains a new definition of ‘casual employee’ at s.15A, which came into effect from 26 August 2024, as the Applicants’ dismissals took effect prior to this date, the previous definition at s.15A is applicable. That section provided:
“15A Meaning of casual employee
(1) A person is a casual employee of an employer if:
(a) an offer of employment made by the employer to the person is made on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person; and
(b) the person accepts the offer on that basis; and
(c) the person is an employee as a result of that acceptance.
(2) For the purposes of subsection (1), in determining whether, at the time the offer is made, the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work for the person, regard must be had only to the following considerations:
(a) whether the employer can elect to offer work and whether the person can elect to accept or reject work;
(b) whether the person will work as required according to the needs of the employer;
(c) whether the employment is described as casual employment;
(d) whether the person will be entitled to a casual loading or a specific rate of pay for casual employees under the terms of the offer or a fair work instrument.
Note: Under Division 4A of Part 2‑2, a casual employee who has worked for an employer for at least 12 months and has, during at least the last 6 months of that time, worked a regular pattern of hours on an ongoing basis may be entitled to be offered, or request, conversion to full‑time employment or part‑time employment.
(3) To avoid doubt, a regular pattern of hours does not of itself indicate a firm advance commitment to continuing and indefinite work according to an agreed pattern of work.
(4) To avoid doubt, the question of whether a person is a casual employee of an employer is to be assessed on the basis of the offer of employment and the acceptance of that offer, not on the basis of any subsequent conduct of either party.
(5) A person who commences employment as a result of acceptance of an offer of employment in accordance with subsection (1) remains a casual employee of the employer until:
(a) the employee’s employment is converted to full‑time or part‑time employment under Division 4A of Part 2‑2; or
(b) the employee accepts an alternative offer of employment (other than as a casual employee) by the employer and commences work on that basis.”
Applicants’ Submissions
The Applicants submitted that they were casual employees of the Respondent, employed on a regular and systematic basis. The Applicants submitted that they worked between 30 and 60 hours per week, depending on the business demands of the Respondent.
The Applicants submitted that they were never officially notified of their dismissals, or given any reasons for their dismissals. The Applicants submitted that they were dismissed on 12 July 2024 when the Respondent closed its store without notifying the Applicants. The Applicants submitted that they became aware of the store closure through a public announcement by the store.
The Applicants submitted that when the Respondent re-opened the store on 19 July 2024, the Respondent created a new ‘WeChat’ group for staff scheduling, and the Applicants were not included in this group.
The Applicants submitted that it was not until the Respondent filed its materials in these matters that they learned the reason for their dismissals was ‘serious misconduct’.
The Applicants relied on the matters outlined in my Decision of 10 December 2024 in relation to the ‘serious misconduct’ allegations.
The Applicants submitted that they were not given any reasons relating to ‘poor work performance’ for their dismissals.
As no formal meetings were held prior to their ‘dismissals’ taking effect, the Applicants noted that they did not ask to have a support person, and there was no denial by the Respondent of a support person.
In relation to why the dismissal was ‘unfair’, the Applicants submitted that while the Respondent has claimed to have sent a termination letter on 12 July 2024, they never received this correspondence. Therefore, the Applicants were never informed of their dismissals or the reasons for their dismissals. The Applicants submitted that they attempted to contact the Respondent on 11 and 13 July 2024, however, their messages were not answered.
The Applicants submitted that in light of the above matters, they were not provided with an opportunity to respond to the dismissals or the purported reasons for their dismissals.
The Applicants maintained that they had not committed any serious misconduct.
As to ‘closing the Respondent’s store on 11 July 2024’, the Applicants submitted that the decision to close the store was not made ‘arbitrarily’, rather, “it was caused by the employer’s failure to restock inventory, leaving no products available for sale”. The Applicants submitted that they “repeatedly informed the employer about the stock shortages, but they ignored [the Applicants’] warnings”. Therefore, the Applicants submitted that this did not constitute misconduct, and was not a valid reason for dismissal.
As to the allegation that the Applicants ‘stole Company funds’, the Applicants submitted that the Respondent falsely accused them of theft and claimed to have reported them to the police. However, the Applicants submitted that they were never contacted by the police in relation to any such allegation.
The Applicants submitted that the Respondent has failed to follow any principles of procedural fairness in effecting the dismissals, and failed to comply with the Small Business Fair Dismissal Code.
The Applicants submitted that the dismissals have caused them financial hardship, and emotional distress particularly in light of the false allegations made against them. The Applicants submitted that the Respondent’s actions have caused them reputational harm.
The Applicants seek financial compensation for their unfair dismissals.
Respondent’s Submissions
Jurisdictional Objection – Casual Employees
The Respondent raised jurisdictional objections in its submissions, the majority of which were dealt with in my Decision of 10 December 2024. Those submissions have not been summarised for the purposes of this Decision. However, a matter that was not dealt with in my Decision of 10 December 2024 is a jurisdictional objection on the grounds that the Applicants were casual employees.
The Respondent submitted that the Applicants were employed on a casual basis, and therefore, to bring an unfair dismissal application they must prove that they were employed on a regular and systematic basis and had a reasonable expectation of ongoing employment. The Respondent disputed that the Applicants met these criteria.
As to ‘regular and systematic’, the Respondent submitted that:
“• The Applicants’ shifts varied week-to-week based on business demand.
· The Respondent did not guarantee set working hours or assign fixed shifts in advance…
· The Applicants did not work continuously—there were multiple breaks in their employment periods…
· The Applicants often had to request work shifts, demonstrating no automatic or systematic allocation of hours.”
The Respondent submitted that the work rosters and payroll records demonstrate that there was “shift variability”, and the Applicants’ pays varied from week to week.
As to ‘expectation of ongoing employment’, the Respondent submitted that:
“• The Respondent never provided any guarantee of continuing employment.
· Casual employees were engaged based on business needs, and there was no contract promising permanency.
· The Applicants were aware of their casual status, and they had no legal entitlement to ongoing work.
· The Respondent’s employment policies explicitly state that casual employees are engaged on an “as-needed” basis.”
Dismissals were Fair
The Respondent maintained that the Applicants’ dismissals were fair and lawful in accordance with the Small Business Fair Dismissal Code, and were effected on the basis of ‘serious misconduct’.
The Respondent maintained that the Applicants were dismissed for serious misconduct on the following grounds:
“• Unauthorised closure of the business during trading hours specially busy lunch time trading time on 11 July 2024, causing financial losses and operational disruption.
· Failure to remit cash sales from the business, resulting in financial discrepancies. (only weichen hold the key for cash till and cash money safe)”
The Respondent submitted that it relied on evidence as follows:
“• Point of Sale (POS) records showing missing cash discrepancies.
· A police report filed in relation to the missing cash. Although the police did not proceed with a formal investigation, the Respondent held a genuine and reasonable belief that serious misconduct had occurred. Under the Fair Work framework, the employer is not required to prove criminal wrongdoing but must demonstrate a reasonable belief that the conduct warranted dismissal.”
The Respondent submitted that if such conduct does not amount to ‘serious misconduct’, it would set a concerning precedent whereby any employee could “unilaterally close a business without authority, regardless of the consequences”.
The Respondent relied on the decision in Pinawin T/A RoseVi.Hair.Face.Body v Domingo[2012] FWAFB 1359 (Pinawin), in which it was held that an employer only needs a reasonable belief that serious misconduct occurred – not actual proof. In relation to the present matter, the Respondent submitted that it reasonably believed that the Applicants’ actions caused serious financial and operational harm. The Respondent believed that the Applicants’ dismissals were justified on the grounds of misconduct. Further, the Respondent submitted that as a small business with limited resources, immediate dismissal of the Applicants was necessary to prevent further loss.
The Respondent also relied on its ‘disciplinary policy’ and ‘internal procedures’, submitting that it complied with its internal procedures in dismissing the Applicants with immediate effect.
Further, the Respondent submitted that prior to the dismissals taking effect, a company meeting was held during which both Applicants “indicated they no longer wished to continue their roles and suggested that the business be sold”. The Respondent submitted that it interpreted this as a “voluntary disengagement from the employment relationship and proceeded accordingly”.
For all of the above reasons, the Respondent submitted that the Applicants’ dismissals were consistent with the Small Business Fair Dismissal Code and, therefore, their applications should be dismissed.
The Respondent has also made submissions to the effect that, as the Applicants are part-owners of the business, this is not a simple unfair dismissal matter, but rather is being progressed as a commercial dispute arising out of a deteriorated ownership relationship. The Respondent submitted that this is a misuse of the Commission’s resources, particularly in light of the business now being insolvent and entering into liquidation. The Respondent urged the Commission to treat this matter as a commercial breakdown rather than a true employment law dispute.
Applicants’ Submissions in Reply
Jurisdictional Objection – Casual Employees
The Applicants submitted that while they were ‘casual’ employees, their employment was regular and systematic and they had a reasonable expectation of continuing employment.
The Applicants submitted that they maintained a high-frequency, stable work schedule with the Respondent over an extended period of time. The Applicants submitted that while shift assignments demonstrated some variability, their core working hours were consistent and the employer demonstrated “ongoing reliance on [their] services”.
The Applicants relied on the following relevant case law:
“a. Yaraka Holdings Pty Ltd v Giljevic [2006] IRCA 35:
The court ruled that employment may be deemed "regular and systematic" if the work arrangement demonstrates a predictable pattern and continuity, and the employer reasonably expected ongoing engagement.
b. Pavlovic v Darwin Hotel [2021] FWC 5149:
The FWC emphasized that "even if working hours fluctuate, employment may still be considered regular and systematic if shifts are consistently allocated and the employer relies on the employee’s continued service."
c. Amarant v Transport for NSW [2013] FWC 6194:
"Minor variations in shifts do not negate regularity if the employer consistently depends on the employee and working hours remain stable."”
The Applicants provided submissions and evidence in relation to their work patterns, including their rosters, which the Applicants submitted were issued in advance, “demonstrating that [their] shifts were pre-planned and systematic rather than allocated on an ad hoc basis”. The Applicants submitted that the Respondent, however, has failed to provide any evidence in support of the Applicants not being regular and systematic casual employees.
As to an ‘expectation of continuing employment’, the Applicants relied on the decision in WorkPac Pty Ltd v Rossato (2021) HCA 23, which the Applicants submitted supports the proposition that a long-term pattern of stable employment can establish a reasonable expectation of continued employment, even for casual workers. The Applicants submitted that their “long-term, stable provision of labor with work hours approaching or exceeding full-time employee standards sufficiently demonstrates the [Applicants’] reasonable expectation of ongoing employment”.
The Applicants submitted that they had continuous employment with the Respondent for over 12 months without significant interruption, with stable working hours as demonstrated by the evidence before the Commission.
The Applicants submitted that the predictability and regularity of their shifts “inherently created a reasonable expectation of ongoing employment”.
Procedural Unfairness
The Applicants maintained that the Respondent failed to provide them with procedural fairness, taking into account the following matters:
· The Respondent failed to issue any formal warning prior to the dismissals taking effect;
· The Applicants were not given any opportunity to respond to any allegations against them, or defend themselves before the dismissal decision was made;
· No investigation was conducted in relation to the alleged misconduct or performance issues before the dismissal decision was made; and
· No evidence of the alleged misconduct was provided to the Applicants.
Further, the Applicants referred to the alleged termination letter dated 12 July 2024. The Applicants again submitted that they had never received this letter, and submitted that the Respondent has failed to provide any evidence that the termination letter was actually sent via email to the Applicants or that they ever received it. Therefore, the Applicants submitted that the Respondent cannot establish that ‘proper notice’ was given in relation to the dismissals.
Response to the Respondent’s claim that the Applicants voluntarily resigned
As to the Respondent’s claim that the Applicants voluntarily resigned at a shareholders’ meeting, the Applicants submitted as follows:
“a. According to corporate governance standards, valid meeting minutes require acknowledgment or signatures from all attending parties. The employer has failed to provide such documentation, raising serious concerns about the authenticity and reliability of their claim.
b. [The Applicants] have evidence confirming that the meeting discussions were solely related to shareholder disputes arising from the employer couple’s dishonest financial reporting.
c. On 11 July 2024, [Weichen] returned the rostering responsibilities to the employer because the store had no inventory to sell, and [Weichen] was uncertain about future shift arrangements. [Weichen] expressly communicated [the Applicants’] expectation of future work arrangements, further demonstrating [the Applicants’] anticipation of continued employment.
d. If the employer claims that the applicants "voluntarily resigned," they must provide complete meeting records and a signed resignation statement; otherwise, this claim cannot be substantiated.”
The Applicants submitted that in light of these inconsistencies, it appears the Respondent did not follow a transparent and procedurally fair process in effecting the dismissals. The Applicants submitted that the Respondent has attempted to “retroactively justify the termination through unverified documentation, undermining the credibility of their actions”.
The Applicants submitted that for these reasons, their dismissals were unfair.
Further, the Applicants maintained that, in accordance with their earlier submissions, there was no valid reason for their dismissals.
As to the allegation of ‘theft’, the Applicants submitted that they contacted the Northern Territory Police and were advised that the report was made to the police on 6 August 2024, not 17 July 2024 as claimed by the Respondent, and was made in relation to ‘trespass’.
In relation to the decision in Pinawin, the Applicants submitted that this decision establishes that an employer cannot rely on a mere belief of misconduct, rather, they must have reasonable grounds based on evidence. The Applicants submitted that in the present matter, the Respondent failed to provide any supporting evidence in relation to the grounds for their dismissals.
The Applicants submitted that “[t]he employer’s repeated changes in their justification for [their] dismissal indicate that they were not acting in good faith and were attempting to fabricate reasons post hoc rather than basing the dismissal on legitimate grounds.”
The Applicants submitted that the timing and nature of their dismissals indicate that it may be linked to their shareholder status or financial disputes, rather than performance or conduct issues. The Applicants submitted that the Respondent’s financial or personal motives seem to have influenced the decision to dismiss the Applicants, rather than legitimate business considerations.
The Applicants submitted that the Respondent’s attempt to “reframe this as a purely commercial dispute is misleading and legally unfounded”.
The Applicants maintained that they seek financial compensation as the remedy for their unfair dismissals.
Consideration
I have taken into account all of the submissions and evidence that have been provided by the parties. The fact that an issue is not mentioned in this decision does not mean that it has not been taken into account.
When considering whether a termination of an employee was harsh, unjust or unreasonable, the oft-quoted joint judgement of McHugh and Gummow JJ in Byrne v Australian Airlines (Byrne)[2] is of significance:
“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.”
In analysing Byrne, a Full Bench of the Australian Industrial Relations Commission in Australian Meat Holdings Pty Ltd v McLauchlan (AMH)[3] held:
“The above extract is authority for the proposition that a termination of employment may be:
· unjust, because the employee was not guilty of the misconduct on which the employer acted;
· unreasonable, because it was decided on inferences which could not reasonably have been drawn from the material before the employer; and/or
· harsh, because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct”.
Further, a Full Bench of the AIRC in King v Freshmore (Vic) Pty Ltd[4] said:
“[24] 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 proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination”.
.
I now turn to the criteria for considering harshness as provided in s.387 of the FW Act.
Section 387(a) - Valid Reason
The meaning of the phrase “valid reason” has been universally drawn from the judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd:[5]
“In broad terms, the right is limited to cases where the employer is able to satisfy the Court of a valid reason or valid reasons for terminating the employment connected with the employee’s capacity or performance or based on the operational requirements of the employer. …
In its context in s 170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies 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. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly…”.
In Rode v Burwood Mitsubishi,[6] a Full Bench of the Australian Industrial Relations
Commission held:
“… the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.”
In Qantas Airways Ltd v Cornwall (Cornwall)[7] the Full Court of the Federal Court of Australia said:
“The question is whether there was a valid reason. In general, conduct of that kind would plainly provide a valid reason. However, conduct is not committed in a vacuum, but in the course of the interaction of persons and circumstances, and the events which lead up to an action and those which accompany it may qualify or characterize the nature of the conduct involved.”
(My emphasis)
Small Business Fair Dismissal Code
Section 388 of the FW Act provides:
“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.”
The Small Business Fair Dismissal Code provides:-
“The Code
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”
It is not in dispute that the Respondent is a small business and that the Small Business Fair Dismissal Code applies to this matter.
The only jurisdictional objection that has not been dealt with previously was the new objection by the Respondent that the Applicants were casual employees who did not work regular and systematic hours and who did not have a reasonable expectation of ongoing employment, therefore cannot bring an unfair dismissal application.
The Applicants deny receiving a letter from the Respondent terminating their employment. The Respondent alleges that the following letter was sent to each Applicant on 12 July 2024:-
“We act for Mr Weibai Lu
We are instructed that there is a dispute that has arisen between the parties.
We reiterate that Mr Lu is the sole officeholder of the company, and that Mr Lu alone is responsible for all managerial decision making. As a shareholder you have no management rights or authority to make decisions in relation to the running of the business on a day-to-day basis.
We understand that you have been working on a casual basis with the business. We advise that your casual services are no longer required. Our client will take necessary steps to remove your access to company assets and IT systems as of today’s date.
There are a number of ancillary matters that have come to the attention of our client that need to be progressed. Our client is extremely concerned that no cash sales for the month of June have been banked and acquitted as required. These funds amount to some $9000.
The absence of these deposits suggest there has been a theft. That matter will be referred to the police for investigation.
We understand that you are interested in receiving the current financials of the company. Once the end of financial year reports are to hand they will be made available to you.
Due to the provocative nature of your recent communication our client no longer wishes to communicate with you directly. Please direct any future correspondence between yourself and our client to our office”
(My emphasis)
This letter, in my view, is an unusual termination letter and has been written in a manner which the Applicants may have had difficulty understanding on the basis that English is not their first language. Further, the correspondence traverses over a number of issues including matters pertaining to the structure and management of the business. The Respondent has not provided any evidence to show that the email was actually sent. I have taken this into account.
Whilst I accept that the tenure of casual employees starts and finishes on the day of engagement, the Applicants clearly understood and believed that their work would be ongoing based on the practice which had existed since the opening of the new takeaway shop. Put simply, the Applicants were in charge of the shop’s operation. As a result, the Applicants’ terminations would have come as a complete surprise, and I cannot find a justifiable reason for their termination. As a result, I am satisfied and find that the Respondent did not have a valid reason to terminate the Applicants.
Section 387(b) - Notified of the Reason
Whilst the Respondent has claimed that it issued a ‘dismissal letter’ to the Applicants via its legal representative on 12 July 2024, the Applicants stated that they never received this letter. The Applicants submitted that they were not notified of the reasons for their dismissals, until the Respondent filed its materials in the Commission. I have taken this into account.
Section 387(c) - Opportunity to Respond
The Applicants submitted that they were not provided any opportunity to respond to the reasons for their dismissals. I have taken this into account.
Section 387(d) - Any refusal of a support person
No meetings were held prior to the Applicants’ dismissals taking effect, therefore, this is a neutral consideration.
Section 387(e) - Unsatisfactory performance
The Applicants were not dismissed for unsatisfactory performance. I have taken this into account.
Section 387(f) - Size of Employer
The Respondent is a small business employer. I have taken this into account.
Section 387(g) - Dedicated HR specialists
The Respondent does not have a dedicated HR team. I have taken this into account.
Section 387(h) - Any other matter
The undisputed evidence of the Applicants is that, despite repeated requests, the Respondent failed to provide them with any stock to sell, which resulted in the shop being closed on the afternoon of 11 July 2024. I am satisfied and find that it would be of limited utility to keep a takeaway chicken shop open if there was no chicken to sell. I have taken this into account.
I have taken into account the dire financial position of the Respondent. The Respondent allegedly owes a substantial amount of money to both the Australian Taxation Office and its landlord.
Conclusion
I find that the Applicants are protected from unfair dismissal, submitted their applications within the statutory timeframe, were not made genuinely redundant, and were not dismissed in accordance with the Small Business Fair Dismissal Code.
I agree with the Respondent that this is an unusual case. I don’t understand why shareholders who own 20% of the business each would be employed as casual employees. However, the vagaries of the ownership and employment structure of the business is not presently before the Commission. I am satisfied and find though, that the Applicants, as shareholders and the actual operators of the Yarrawonga shop, would have had an expectation that their employment would continue, particularly when they were both working in excess of an ordinary 38-hour week on a regular basis.
I am satisfied and find that the Applicants were employees who were covered by the unfair dismissal provisions of the FW Act.
As a result, the Respondent’s remaining jurisdictional objection is dismissed.
I am also satisfied and find that the Applicants were not provided with their statutory entitlement to procedural fairness. I do not accept that the Applicants were sent their dismissal notices on 12 July. Further, even if the Applicants did receive this correspondence, the Applicants were not provided with an opportunity to respond to any allegation of serious misconduct prior to their summary termination.
I am further satisfied that the Respondent acted in an inappropriate manner in not providing the Applicants with any food to sell. I am satisfied and find that the actions of the Respondent in not providing the Applicants with goods to sell justified the closure of the shop.
As a result of the reasons provided above, and my earlier finding that the Respondent did not have a valid reason to terminate the Applicants, I am satisfied and find that the Respondent did not provide the Applicants with a fair go all round.
I find that the Applicants’ terminations were harsh, unjust and unreasonable.
I am satisfied and find that the Applicants were unfairly dismissed.
Remedy
Having found that the Applicants were unfairly dismissed, I now turn to the issue of an appropriate remedy.
The relevant provisions of the FW Act in relation to a remedy for an unfair dismissal are:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
“391 Remedy—reinstatement etc.
Reinstatement
(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:
(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or
(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
(1A) If:
(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer;
the order under subsection (1) may be an order to the associated entity to:
(c) appoint the person to the position in which the person was employed immediately before the dismissal; or
(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
Order to maintain continuity
(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:
(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.
Order to restore lost pay
(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.
(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:
(a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
The Applicants both seek 2 months’ pay for lost wages, as well as an additional payment for emotional stress and reputational damage.
I agree with the Applicants that the primary remedy of the FW Act, being reinstatement, is not appropriate in this circumstance. The Applicants had moved to Melbourne following their terminations and have no desire to return to the Northern Territory.
Compensation
I now turn to the factors to be considered in relation to any award of compensation.
Section 392(2)(a) – effect of order on employer’s viability
The Respondent has provided confidential information that identifies that it owes a substantial amount of money, but has not provided any of the business’s accounts which would show whether the business is an ongoing concern or not. On the basis that there has been no profit/loss statement tabled, I have to assume that the business is not trading insolvent and is an ongoing concern. I have taken this into account.
Section 392(2)(b) – length of service
I have taken into account that the Applicants were employed as casual employees for a little over 12 months.
Section 392(2)(c) – remuneration received if not dismissed
The Applicants worked on average in excess of 38 hours a week. I have taken this into account.
Section 392(2)(d) – effort to mitigate loss
The Applicants have advised that they have gained employment, albeit in Melbourne, and were unemployed for just less than three months. I have taken this into account.
Section 392(2)(e) – amount of remuneration received by the Applicant
The Commission has not been advised of the Applicants’ remuneration in their new roles.
Section 392(2)(f) – amount likely to be earned
This criteria is not a relevant consideration.
Section 392(2)(g) – any other matter
In calculating the appropriate level of compensation, I am cognisant of the method identified in Sprigg v Paul’s Licensed Festival Supermarket,[8] which involves the following steps:-
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
In Hanson Construction Materials v Pericich (Hanson Construction),[9] a Full Bench of the Commission held that:
“[39]...Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission ‘must take into account all of the circumstances of the case’ including the particular matters set out at s.392(2)(a)to(g).”
I have taken this into account.
Applying the four steps of the Sprigg Formula, and taking into account the decision in Hanson Construction, I have determined that the Applicants are entitled to each be paid 4 weeks’ compensation. This 4 weeks comprises of 2 weeks’ pay for the absolute lack of procedural fairness that was afforded to the Applicants by the Respondent, plus an additional two weeks as compensation for their unfair dismissals.
The Commission has no capacity to make an order for emotional stress or reputational damage.
Conclusion
For the reasons stated above, I order that Mr Weichen Tao and Mr Weihong Tao be paid 4 weeks’ compensation each, plus superannuation.
I so Order.
COMMISSIONER
[1] [2024] FWC 3446.
[2] (1995) 185 CLR 410.
[3] (1998) 84 IR 1.
[4] [2000] AIRC 1019.
[5] (1995) 62 IR 371.
[6] PR4471.
[7] (1998) 84 FCR 483.
[8] (1998) 88 IR 21.
[9] [2018] FWCFB 5960.
Printed by authority of the Commonwealth Government Printer
<PR785942>
0
0
0