Mr Zoran Milosevski v Allcorp Property Services Pty Ltd T/A Allcorp / Menzies

[2011] FWA 1139

[2011] FWA 1139

FAIR WORK AUSTRALIA

DECISION

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

Mr Zoran Milosevski
v
Allcorp Property Services Pty Ltd T/A Allcorp / Menzies
(U2010/13628)

COMMISSIONER CONNOR WOLLONGONG, 22 FEBRUARY 2011

Applications for alleged unfair dismissal— overpayment of wages— allegations of a loss of trust - reinstatement impracticable and not sought— monetary compensation ordered

Introduction

[1] Mr Zoran Milosevski was employed as contract manager for the Illawarra region of Allcorp Property Services Pty Limited (Menzies Property Services Pty Limited). He commenced his employment with Allcorp on Monday, 4 January, 2010 and his services were terminated on Wednesday, 20 October, 2010 when he received the following letter:

"....The company has concerns regarding our ongoing relationship in the future. The company has substantial concerns regarding your credibility and honesty, which have led the company to determine that there has been a substantial breakdown in the employment relationship between the company and yourself.

Therefore, the company has made the decision to cease the employment relationship with yourself. This decision has not been made lightly, however, as we have determined that there is no possibility to repair the relationship at any time in the future, the company has no other alternative than to terminate your employment. As discussed, this termination is with immediate effect.

The company requires the return of all company property (eg motor vehicle keys, mobile telephone device, laptop computer, etc). Following return of this property, your eligible entitlements will be calculated in accordance with legal and statutory requirements... "

[2] Mr Milosevski subsequently lodged an application under s.394 of the federal Fair Work Act 2009 (FW Act). Conciliation was arranged by teleconference on Friday, 12 November, 2010 but that conciliation was unsuccessful and the file was allocated to me for hearing. I set the matter down for mention and programming on Wednesday, 1 December, 2010 and, ultimately for hearing on Monday, 7 February, 2011 and Tuesday, 8 February, 2011. All proceedings before me were conducted in the premises at 90 Crown Street, Wollongong which Fair Work Australia now shares with the Industrial Commission of New South Wales.

[3] I issued standard directions for the matter to proceed. Mr Milosevski, who was unrepresented in the proceedings, provided somewhat limited material in compliance with that direction—essentially a character reference from the Sydney Cricket and Sports Ground Trust where he has worked on a casual basis (and continues to do so). In response, Ms Kokkila, the national human resources manager for Allcorp, who represented it in the hearing, submitted that, since Mr Milosevski had failed to provide sufficient material for Allcorp to respond, she proposed to rely on the material it had already provided as a response to Mr Milosevski's s.394 application. That is clearly the proper course for her to adopt. And that is the course I propose to follow in this hearing. A two day hearing, based as it was on the views the parties initially expressed in the conciliation conference that Mr Milosevski would call four witnesses and Allcorp would call three witnesses, therefore became unnecessary. The hearing on Tuesday, 8 February, 2011 was vacated. Mr Milosevski and Ms Kokkila gave evidence under oath in the hearing.

Issue

[4] Allcorp discovered a substantial overpayment of Mr Milosevski's salary for the pay periods from Wednesday, 7 July, 2010 to Wednesday, 29 September, 2010 paid into his bank account. In the initial response to Mr Milosevski's s.394 application, Allcorp records the overpayment as $14,384.58 gross or $11,636.58 net. In subsequent correspondence received by e-mail from Allcorp it has indicated that the overpayment was $11,726.01 and that is the amount ultimately recovered from Mr Milosevski. In fact, that higher amount appears to be interest payments on the outstanding amount. It is asserted by Mr Milosevki that he keeps the bank account exclusively for a mortgage loan, he has no access to on-line banking.

[5] Allcorp contacted Mr Milosevski on Wednesday, 6 October, 2010 over the alleged overpayment. At first, according to Allcorp, Mr Milosevski denied that he had received the overpayments. Mr Milosevski claimed that he was simply unaware of the overpayments at that time. Allcorp requested that he provide copies of his bank statement to confirm the true position. He agreed to do so. Allcorp again spoke to Mr Milosevski on Friday, 8 October, 2010 and, according to it, he continued to deny the overpayment.

[6] Mr Milosevski claimed that on Monday, 11 October, 2010 he checked with the bank and he also asserts that later that day he spoke to Mr Stephen Heyman, the manager of Allcorp, over the telephone and confirmed the overpayment. Mr Heyman denies that telephone conversation was made to him by Mr Milosevski. He was not called to give evidence in the hearing, however, and there is therefore no evidence before me to rebut Mr Milosevki's assertion in that respect given under oath. In any event, Allcorp accepts that on Friday, 15 October, 2010 Mr Milosevski had conceded the overpayment in a telephone conversation with Mr Heyman and on Monday, 18 October, 2010 at a meeting that had been arranged he produced copies of his bank statement to confirm that fact.

[7] At that meeting on Monday, 18 October, 2010, Mr Milosevski proposed that he make repayment of half his salary each pay period until the overpayment had actually been rectified. That was rejected by Allcorp which insisted that he make immediate repayment of the entire outstanding amount. Of course, any arrangement for repayment by instaslments from his salary was based on Mr Milosevski's continued employment with Allcorp and the salary he would continue to receive in that employment. His dismissal frustrates such an arrangement. It must lapse with his dismissal. Mr Milosevski claims that he has made several attempts to discuss the payment of the debt he clearly admitted to owing Allcorp but there has been no response to his requests in that respect.

[8] I understand that Mr Milosevski undertook to pay Allcorp the outstanding amount within two or three weeks but when no payment was made, Allcorp engaged an independent debt collector and initiated legal proceedings to recover the outstanding amount. That amount was recovered and the debt collector informed Allcorp of that fact on Wednesday, 12 January, 2011. In addition, a cost of $933.20 was incurred by Allcorp from the activities of the debt collector.

Submissions

[9] Ms Kokkila argued that Mr Milosevski's application was without merit and, as I indicated earlier in this decision, he had failed to provide sufficient information for the hearing on which Allcorp may rely and respond. She also submitted that Mr Milosevski's services were terminated because of a loss of faith in Mr Milosevski's honesty and credibility following numerous denials from him concerning the overpayment and his failure to commit to repay the sums which he had incorrectly received. She asserted that Allcorp was entitled in the circumstances to follow the procedure set out in the employment agreement under which Mr Milosevski was engaged, viz:

"Four weeks' notice of intention to end the employment relationship must be provided by either the employer or employee. At the sole discretion of Menzies, you may be released from serving notice and the period of notice shall be paid at the termination. At the date that your attendance for normal duties ceases, all property owned by the company must be returned prior to the release of final termination monies."

[10] In those circumstances, Ms Kokkila argued that Mr Milosevski's application should be dismissed as having no reasonable prospect of success. In that respect she relies on s.587(1)(c) and she makes an application to that effect under s.587(3)(b).

[11] The formal reference from the Sydney Cricket and Sports Ground Trust which Mr Milosevski provided in support of his s.394 application is dated Friday, 26 November, 2010, viz;

"...This is to certify that Zoran Milosevski is currently employed by the Sydney Cricket and Sports Ground Trust as an event day crowd officer. Zoran commenced employment with the Trust on Friday, 24 April, 2009. His duties include:

* liaising with police, management and hirers on event days;

* conducting bag checks and monitoring crowd behaviour to ensure Trust by-laws are complied with;

* on occasions where patrons do not comply with Trust by-laws, issuing infringement notices on behalf of the Trust;

* when incidents occur, completing an investigation report, detailing accounts from patrons involved and witnesses.

Zoran is of fit and proper character. Zoran excels in his role, regardless of the pressure and difficulty of the role placed on him. Zoran is a reliable, honest staff member and is well respected by both Trust management and his fellow employees. I have no hesitations in recommending Zoran for any future endeavour he may wish to take..."

[12] Mr Milosevski argues that he was guilty of no wrongdoing and that there were no grounds for his dismissal.

The Overpayment

[13] It would always have been open to Mr Milosevki and Allcorp to reach some conciliation of Mr Milosevki's application for unfair dismissal and the overpayment made to him together, ie a compromise of both matters and a deed of release prepared to give effect to the settlement of the matter. But with the arbitration of this matter, I am confined only to consider Mr Milosevki's claim of unfair dismissal. Any action by Allcorp to recover the overpayments made to him is a matter which Allcorp would need to pursue separately—as it has done.

[14] By virtue of s.323, there are, in fact, certain restrictions on the deduction of any sums from an employee's wages or salary, viz:

"(1) An employer must pay an employee amounts payable to the employee in relation to the performance of work:

(a) in full (except as provided by section 324); and

(b) in money by one, or a combination, of the methods referred to in subsection (2); and

(c) at least monthly.

(2) The methods are as follows:

(a) cash;

(b) cheque, money order, postal order or similar order, payable to the employee;

(c) the use of an electronic funds transfer system to credit an account held by the employee;

(d) a method authorised under a modern award or an enterprise agreement.

(3) Despite paragraph (1)(b), if a modern award or an enterprise agreement specifies a particular method by which the money must be paid, then the employer must pay the money by that method."

[15] And s.324 reads:

“(1) An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if:

(a) the deduction is authorised by the employee and is principally for the employee's benefit; or

(b) the deduction is authorised by the employee in accordance with an enterprise agreement; or

(c) the deduction is authorised by or under a modern award or an FWA order; or

(d) the deduction is authorised by or under a law of the Commonwealth, a State or a Territory, or an order of a court.

(2) An authorisation for the purposes of paragraph (1)(a);

(a) must specify the amount of the deduction; and

(b) may be withdrawn in writing by the employee at any time.

(3) Any variation in the amount of the deduction must be authorised in writing by the employee."

[16] Therefore, failing agreement between the parties, and particularly in the absence of an ongoing employment relationship, Allcorp's claim for recovery of the sums which Mr Milosevki owed it would need to be pursued elsewhere—as it did.

Conclusion

[17] My task in this hearing therefore is confined to determine whether or not, in all the circumstances, Mr Milosevski's dismissal was, in terms of s.385(b), "harsh"—meaning too severe having regard to all the circumstances—"unjust"—meaning unfair, inequitable, undeserved or biased —or "unreasonable"—meaning immoderate, excessive or extravagant. In Bostik (Australia) Pty Limited v. Gorgevski (No 1) (1992) 36 FLR 20 the Full Bench of the Federal Court (Sheppard, Gray and Harley JJ) considered the words "harsh", "unjust" and "unreasonable" and the majority (Sheppard and Harley JJ) commented (at p.28) as follows:

"…These are ordinary non-technical words which are intended to apply to an infinite variety of situations where employment is terminated. We do not think any redefinition or paraphrase of the expression is desirable. We agree with the learned trial judge's view that a court must decide whether the decision of the employer was, viewed objectively, harsh, unjust or unreasonable. Relevant to this are the circumstances which led to the decision of the employer. Any harsh effect on the individual employee is clearly relevant but, of course, not conclusive. Other matters have to be considered such as the gravity of the employee's misconduct…"

[18] Simply put, in terms of s.381(2) I am required in this hearing to:

"....ensure that a 'fair go all round' is accorded to both the employer and the employee concerned..."

[19] That is a concept which was initially approved by Sheldon J of the former New South Wales Industrial Commission in Re Loty and Holloway and the Australian Workers Union (1971) AR(NSW) 95 at p.99 and which has now been adopted and given statutory recognition in s.381(2). That suggests to me that in the determination of any s.394 application I should rely essentially on what a reasonable observer would consider to be fair in an employment relationship, having regard to the respective positions of the dismissed employee and his former employer.

[20] In particular, s.387 sets out the matters for me to take into account in the determination of whether a dismissal was unfair, viz:

"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 the dismissal; and

(e) if the dismissal related to the unsatisfactory performance by the person - whether the person had been warned about the 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."

[21] Mr Milosevski was notified of the reason for his dismissal [s.387(b)]. It is not altogether clear if he ever was given much of an opportunity to respond to the allegations against him [s.387(c)]; I do not believe he was. But, in any event, the issue before me is essentially to determine whether or not there was a valid reason for Mr Milosevski's dismissal in accordance with s.387(a), ie to use the language of Northrup J in Selvachandran v. Peteron Plastics Pty Limited (1995) 62 IR 371 at p.373 that the reason was "...sound, defensible or well founded...". His Honour went on to say this (at p.373):

"....A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason... 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..."

[22] The second issue, on a decision that a particular dismissal was unfair, is to determine the appropriate remedy for the dismissed employee—reinstatement or, alternatively, monetary compensation in lieu thereof, with preference being given to reinstatement over monetary compensation and that latter remedy only being available if reinstatement is impracticable [Ss.390, 391 and 392]. Mr Milosevski has not sought his reinstatement. However, he claims under oath that during conciliation of his s.394 application, Allcorp offered for him to resume work with it (in Wagga Wagga) which he rejected as he and his family are domiciled in the Illawarra region and he did not wish to move his residence.

[23] Ms Kokkila has no knowledge of such an offer and refutes that it was made. And if Allcorp had formed the views expressed in its letter of Wednesday, 20 October, 2010 terminating Mr Milosevski's services that there has been a "...substantial breakdown in the employment relationship..." between Allcorp and Mr Milosevski and "...there is no possibility to repair the relationship at any time in the future...", it would be surprising to me that it would be prepared to offer him employment elsewhere in its operations. In any event, it would appear to me that there is now no prospect that an effective employer/employee relationship could be established between Mr Milosevski and Allcorp. I am satisfied that the relationship between Mr Milosevski and Allcorp had broken down irretrievably and it cannot now be salvaged.

[24] A question of trust is essential in every employment relationship, to varying degrees depending on the nature of the work, the degree of supervision required in the work in question and the closeness of the relationship to senior management [Del Casale v. Artedormus (Australia) Pty Limited (2007) 165 IR 148 at p.158]. As the Full Bench (Wilcox CJ, Marshall and North JJ) of the then Industrial Relations Court of Australia commented in Perkins v. Grace Worldwide (Australia) Pty Limited (1997) 72 IR 186 at p.191:

"...trust and confidence is a necessary ingredient in any employment relationship. That is why the law imports into employment contracts an implied promise by the employer not to damage or destroy the relationship of trust and confidence between the parties, without reasonable cause... The implication is not confined to employers; it extends to employees: see for example Blyth Chemicals Limited v. Bushnell (1933) 49 CLR 66 at pp.81 and 82 and North v. Television Corporation Limited (1976) 11 ALR 599 at p.609. So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based..."

[25] But, as the Full Bench indicated in Perkins v. Grace Worldwide (Australia) Pty Limited, that loss of trust and confidence must be soundly and rationally based. It should not be capricious or arbitrary on the part of the employer to constitute a valid reason for the dismissal in terms of s.387(a) . The discretions available to be exercised in that respect by an employer should, using the words of Kitto J of the High Court in R v. Anderson; ex parte Ipec-Air Pty Limited (1965) 113 CLR 117 at p.189:

"....be exercised according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself..."

[26] Moreover, to my mind, an argument over an alleged loss of trust and confidence is considerably more relevant as a factor in a determination of whether or not it is possible to restore an effective employer/employee relationship—which is not being sought in this hearing by Mr Milosevski.

[27] It is Mr Milosevski's claim that he had no knowledge of the overpayment until he went to the bank and checked his records. I am satisfied that he did not engineer the overpayments in the first place. That was an error in payroll. His explanation that he did not know that the overpayments had been made into his bank account until the matter was brought to his attention is plausible, in my opinion. Indeed, I regard it as the most likely explanation. The period when the overpayment was first brought to his attention and when he confirmed the overpayment and made arrangements for repayment—from Wednesday, 6 October, 2010 to Monday, 18 October, 2010 (12 days)—was, in my opinion, reasonable in the circumstances, bearing in mind that he had to speak to his bank about it. I do not believe that there was any wrongdoing on his part and there was consequently no valid reason for his dismissal at all, to my mind, and no grounds to argue a loss of trust and confidence in him.

[28] The criteria for deciding the amount of compensation for an unfairly dismissed employee is set out in s.392(2), viz:

"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 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."

[29] And s.392(3) provides further:

"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 (i) by an appropriate amount on account of the misconduct."

[30] Mr Milosevski was employed with Allcorp for over eight months. According to the letter to him dated Tuesday, 25 May, 2010, outlining his conditions of his employment, he received a wage of $55,000.00 per annum at the time of his dismissal. He estimated in his evidence that he received $850.00 per week and that figure was not challenged by Ms Kokkila. His employment with the Sydney Cricket and Sports Ground Trust, referred to in the reference he provided and which I admitted into evidence, was of a casual nature only—producing a limited amount of remuneration for him—$600.00 per annum, according to Mr Milosevski. He has no other employment since the termination of his services by Allcorp, although he has attempted to find other work.

[31] Having regard to the provisions of ss.392(2) and (3) and, in particular, having regard to the guidelines set out by the Full Bench of the former Australian Industrial Relations Commission (Munro J, Duncan DP and Jones C) in Sprigg v. Paul's Licensed Festival Market (1998) 88 IR 21 at pp.24 and 25, I have concluded that Mr Milosevki should receive the sum of $11,200.00. I do not believe that the amount of $933.20 which Allcorp expended in the recovery of the outstanding payment made to Mr Milosevski is a relevant matter to take into account in my assessment of Mr Milosevski's entitlements in these proceedings.

[32] I make a separate order to that effect.

COMMISSIONER

Appearances:

Applicant appeared unrepresented

Lisa Kokkila representing Allcorp Property Services Pty Ltd

Hearing details:

2011

Wollongong

7 February

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