Mrs Betty Mond v Seymour-Gross Pty Ltd T/A George Gross & Harry Who

[2014] FWC 5547

[2014] FWC 5547 Note: An appeal pursuant to s.604 (C2014/6799) was lodged against this decision and the order arising from this decision - refer to Full Bench decision dated 5 May 2015 [[2015] FWCFB 3707] for result of appeal.]

FAIR WORK COMMISSION

DECISION

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

Mrs Betty Mond
v
Seymour-Gross Pty Ltd T/A George Gross & Harry Who
(U2014/4346)

COMMISSIONER ROE MELBOURNE, 18 AUGUST 2014

Termination of employment.

[1] The matter arises from an application filed on 4 February 2014 under Section 394 of the Fair Work Act 2009 (Cth) (the Act) by Ms Betty Mond (Applicant) for relief in respect to the termination of her employment from Seymour Gross Pty Ltd T/A George Gross & Harry Who (the Respondent).

[2] The Applicant sought that George Gross & Harry Who Design Company Pty Ltd be added as a Respondent. The Applicant gave evidence that although her pay slips showed the employer as Seymour Gross Pty Ltd T/A George Gross & Harry Who her clothing allowance was paid in the name of George Gross & Harry Who Design Company Pty Ltd. Mr Newlands gave evidence that the Respondent met any fringe benefits tax liability in respect to the supply of clothing from George Gross & Harry Who Design Company Pty Ltd. The Respondent is a wholly owned subsidiary of George Gross & Harry Who Design Company Pty Ltd.

Is the Applicant protected from unfair dismissal?

[3] Both parties were acting under misunderstandings concerning the unfair dismissal provisions of the Act. The Respondent seemed to be acting under the impression that they were entitled to dismiss a casual employee without reason and that ending the employment of a casual was not a dismissal. The Applicant seemed to be acting under the impression that where a casual employee was engaged for a long period on a regular and systematic basis they were entitled to be deemed to be a permanent part time employee and hence would be entitled to redundancy notice and severance pay.

[4] It is not in contention that the Applicant was employed by the Respondent from February 2005 until 15 January 2014. A roster was published a month or two in advance and the Applicant attended for the rostered shifts. The Applicant was described as a casual employee on her pay slips, she received at least 25% above the full time award hourly rate and she did not receive paid annual leave. The Applicant was paid long service leave upon termination.

[5] The Applicant produced an email to her from the Respondent dated 24 December 2013 which set out her proposed “roster” for the period from 7 January 2014 until 16 February 2014 and her responding email accepting the roster.

[6] The Applicant gave evidence that:

● Advance rostering of her shifts had been the general practice throughout her employment.
● She sometimes swapped shifts with other employees but that this occurred rarely.
● Except when she was ill the Applicant attended for the shifts which had been allocated to her in the advance roster which she had accepted.
● She completed an application form to take periods of leave during the course of her employment and this was her normal practice.
● Apart from the periods from 24 July 2012 until 7 August 2012, 21 August 2012 until 4 September 2012, 30 October 2012 until 13 November 2012, and 27 November 2012 until 5 March 2013 the Applicant worked every fortnight during the period from 1 July 2012 until her dismissal on 15 January 2014. 1

The Applicant was either on leave due to her illness, family illness or on approved periods of holiday during the fortnights when she did not work.

The Applicant’s earnings during each fortnight varied. In the final six months of her employment the highest pay in a fortnight was $1899.48 whilst the lowest pay in a fortnight (excluding the fortnight in which she was dismissed) was $523.94.

[7] The pay slips and other information produced by the Applicant show that the Applicant did work regularly each fortnight. The number of hours did vary but in most cases the pay slips provided show work of between 30 and 40 hours a fortnight. There were some fortnights when greater or lesser hours were worked.

[8] In the absence of any contrary evidence I accept this evidence.

[9] The General Retail Industry Award 2010 provides that:

“13.1 A casual employee is an employee engaged as such.

13.2 A casual employee will be paid both the hourly rate payable to a full-time employee and an additional 25% of the ordinary hourly rate for a full-time employee.”

[10] I am satisfied that the Applicant was a casual employee.

[11] The Fair Work Act 2009 provides as follows:

“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.”

[12] The Respondent submitted that the work pattern was not regular and systematic. However, there is a regular and systematic pattern which is established by factors including that:

● The Applicant worked consistently for the Respondent over a period of nine years.
● The periods of absence were advised to the Respondent and were approved and were for reasons of illness or holiday.
● Apart from these periods the Applicant worked every fortnight.
● The Applicant was provided with a roster in advance and accepted the roster and then, apart from illness or approved absence, worked those shifts on the roster.

[13] I am satisfied that the period of employment of the Applicant as a casual employee was on a regular and systematic basis and that during the period of service the Applicant had a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

[14] The Respondent submits that it had over 55 employees at the time of the termination of the Applicant.

[15] I am therefore satisfied that the Respondent is a national system employer, the Respondent is not a small business employer, and the Applicant had the minimum employment period for protection from unfair dismissal. I am also satisfied, and it is not in contention, that the termination of employment was at the initiative of the employer.

[16] There is some confusion about whether or not the termination was for reasons of genuine redundancy or whether it was for other reasons.

[17] The Applicant worked at various times at the Chadstone, Doncaster and Armadale stores and outlets of the Respondent in Victoria. Mr Newlands for the Respondent gave evidence that the David Jones outlets for the Respondent were progressively closed between 16 and 30 January 2014 and the clearance outlet linked to the Armadale store was closed in mid-February 2014 and the Respondent continued trading with limited staff and stock from the Armadale store until 31 March 2014. Mr Newlands for the Respondent produced an email from George Gross to the employees at various stores dated 6 January 2014 which advised that “we will exit the David Jones stores at the end of January and then continue to trade at our freestanding stores until all our stock is cleared.” Ms Colls for the Respondent gave evidence that around this time she spoke to all employees including the Applicant and advised them of the impending closure of the operations. Ms Colls was the manager responsible for the stores and outlets in a number of States including Victoria. The store managers reported to Ms Colls.

[18] The Applicant submitted that she had not received the correspondence of 6 January 2014 but there was no evidence contesting the evidence of Ms Colls that she advised the Applicant of the impending closure. I am therefore satisfied that the Applicant was aware from sometime around 6 January 2014 that the stores were progressively closing. I am satisfied that this meant that the Applicant had notice that her position was likely to be made redundant when all stock was cleared or at some time before that time. Ms Colls and Mr Newlands accepted that the Applicant did not receive any advice that altered the rostered shifts which were allocated to her in email correspondence between 24 and 26 December 2013. 2 The last of those rostered shifts was on 16 February 2014.

[19] Having considered all of the evidence I am satisfied that there was work for the Applicant to do on her rostered shifts up until at least 16 February 2014. I do not believe that the evidence considered as a whole supports a conclusion that the Respondent intended to make the Applicant redundant before that date. I am satisfied that the Applicant would have been made redundant at some time between 17 February 2014 and 31 March 2014.

[20] I am satisfied that the decision to cease trading notified to employees around 6 January 2014 constituted notice of impending redundancy. It is not clear how the consultation requirements under Clause 8 of the General Retail Industry Award 2010 (the Award) were satisfied. It is not clear that affected employees were provided with an opportunity to discuss issues such as the timing of their termination and opportunities for redeployment to related businesses. Of course the Applicant as a casual employee is not entitled to payment for notice or severance payment in the circumstances of a redundancy. However, the Applicant is entitled to the benefit of consultation in accordance with the Award and the exemption from unfair dismissal protection only applies where the dismissal is a case of genuine redundancy (Section 389 of the Act). To be a genuine redundancy the reason for the termination must be redundancy, the job must be no longer required to be performed by anyone because of operational changes, the consultation obligations in the award must have been complied with and it must not have been reasonable to redeploy the person within the enterprise or an associated entity.

[21] It is not in contention that the Applicant was told to leave work by Ms Colls shortly after the start of her shift at 2pm on 15 January 2014. The Applicant had been rostered to work for five hours on that day. The Applicant was paid three hours pay given that she had attended for work and the Award provides a three hour minimum. Later that day at around 6pm Ms Dianne Colls gave evidence that she told the Applicant in a telephone conversation that she would not be rostered for any further shifts. The Applicant gave evidence that Ms Colls told her leave the store and that she would not be rostered for any further hours during the 2pm conversation.

[22] I am satisfied that the employment of the Applicant was terminated at the initiative of the Respondent either at around 2pm or at around 6pm on 15 January 2014. Effectively the Respondent argues that the termination of employment occurred at 6pm on 15 January 2014 whilst the Applicant argues that the termination occurred at 2pm on 15 January 2014.

[23] The Respondent in their submission state:

“Di Colls assessed the situation and concluded that she had two clear courses of action to choose from. She could instantly dismiss Betty Mond for serious and wilful misconduct and immediately refer the matter to Victoria Police. Alternatively as Betty Mond was a casual employee and the company was closing she could simply advise Betty Mond that we had no more shifts for her.”

[24] On 21 January 2014 Mr Newlands wrote to the Applicant:

“As you are aware George Harry and Kathy are retiring and George Gross & Harry Who business will be closed down.
Over the years you have been employed by us as a casual retail employee and as a consequence of the business closing down we no longer have any work for you.
Attached is your payslip for the hours worked over the last pay period and also attached is your long service leave payout calculation.
We thank you for your service and wish you all the best for the future.”

[25] However, I am satisfied that the Respondent would have continued to employ the Applicant for some further rostered shifts if it had not been for the alleged misconduct. That is, the termination would not have occurred at that time if it had not been for the alleged misconduct. Mr Newlands accepted this. 3

[26] Ms Colls in her statement to the police concerning this matter after setting out the allegations concerning the alleged stock irregularities stated that:

“Given all this it was clear that we could no(sic) have Betty Mond working our shops any longer”. 4

[27] Ms Colls in her evidence confirmed that she was the decision maker in this matter. I accept her statement to the police establishes that the decision maker decided to terminate the employment of the Applicant on 15 January 2014 because of the alleged stock irregularities.

[28] Ms Buchanan gave evidence that Ms Colls asked Ms Buchanan to stay back and work the Applicant’s shift from 2pm to 7pm which she agreed to do. Ms Buchanan gave evidence that Ms Colls made this request in a telephone conversation prior to the Applicant starting work at 2pm. When the Applicant arrived at work Ms Buchanan said that Ms Colls rang again and in that conversation asked to speak to the Applicant and after the Applicant concluded the conversation with Ms Colls the Applicant had to leave the premises. However, in cross examination Ms Buchanan said that she was not 100% sure whether the request to stay back was raised in the first telephone conversation or in the second telephone conversation. Whether the request to stay back was made in the first or the second conversation it is Ms Buchanan’s evidence that the request was made prior to Ms Colls speaking to the Applicant. Ms Buchanan confirmed that at some stage during that day she became aware that the Applicant was not returning to employment with the Respondent. I am satisfied that Ms Buchanan was told that the Applicant had been dismissed at some stage on 15 January 2014.

[29] Ms Colls asked Ms Buchanan to stay back and work the Applicant’s shift from 2pm to 7pm prior to the 2pm conversation between Ms Colls and the Applicant. Having considered all of the evidence I consider it more likely than not that Ms Colls had made the decision to tell the Applicant to leave the store prior to the conversation with the Applicant at 2pm.

[30] To the extent that the Respondent argues that the reason for the termination was the impending closure of the stores which occurred progressively from 16 January and finished on 31 March 2014 I reject that submission. In my view the evidence is clear that the Applicant would have been terminated for reasons for redundancy at some stage between 16 February 2014 and 31 March 2014. However, I am also satisfied that the termination did not occur on 15 January 2014 for reasons of redundancy but rather the Respondent decided to terminate the employment because of the concerns the Respondent had about handling of stock.

[31] The termination was not a genuine redundancy but was a termination at the initiative of the employer for reasons of alleged misconduct. However, had the termination not occurred the Applicant would have been made redundant at some time between 17 February and 31 March 2014.

[32] The Applicant is protected from unfair dismissal.

Did the alleged misconduct occur?

[33] There is no suggestion of any concerns about the Applicant’s conduct or performance in the almost nine years of her regular and systematic employment prior to the date of her termination on 15 January 2014. The Applicant gave evidence that no issues of conduct or performance had been raised with her prior to that date. Neither Ms Colls nor Mr Newlands challenged this evidence.

[34] The Applicant says that she was rostered to work on 15 January 2014. Shortly after 2pm when her shift began the Applicant says that she was told by telephone by Ms Colls that a sequin evening dress had been retained inappropriately by the Applicant for her uniform allowance and that the Applicant had no more hours and that the Applicant should leave the floor.

[35] Ms Buchanan gave evidence that the conversation between Ms Colls and the Applicant took place at around 2pm but she did not overhear the content of the conversation and she does not recall discussion about the entries in the order book or any particular items of clothing.

[36] In a telephone conversation at 6pm that day the Applicant says that she told Ms Colls that the handwriting in the order book was not hers. The Applicant says that Ms Colls then made a complaint about transfer of old stock to the backshop. The Applicant conceded to Ms Colls that she had failed to put a red skirt in the book. The Applicant says that she returned the item and that it was the first time she had ever forgotten to put an item in the book. The Applicant says that she was so upset that she was unable to properly and fully respond to the matters raised during the telephone conversation.

[37] Ms Colls says that she told the Applicant in the 2pm conversation that she needed to talk to her about a number of matters including a particular order in the Chadstone store order book. Ms Colls says that the Applicant immediately denied that she had made the notations in the book. Ms Colls says that she told the applicant to please leave the store without making a scene. Ms Colls said that she wanted to have a further conversation with the Applicant later in the day. That conversation eventually took place around 6pm and Ms Colls says that the conversation ended with Ms Colls telling the Applicant that “as you are aware we are closing all our shops and as you are a casual as of today you will not be rostered for any further shifts”.... “I made no mention of dismissal.”

[38] Ms Colls says that in addition to the matter relating to the notation in the book she also raised other irregularities with the Applicant in the conversation at 6pm that day.

[39] It was alleged that a red skirt was returned by the Applicant to the Armadale outlet at about 4pm on 15 January 2014. Ms Colls says that it was left with Sharon Lindner without any explanation. Ms Colls says that the computer records show that the skirt had been listed as missing on 27 November 2013. Ms Colls says that the removal of the skirt was not documented in the “out book” as required by company procedures. Ms Colls says that the Applicant admitted that she had the garment for some time and could not provide an explanation for having removed the garment without purchasing it or documenting the removal.

[40] It was alleged that at 4pm on 15 January 2014 the Applicant also presented two items of clothing that she had brought from the Chadstone outlet to the Armadale outlet. Ms Colls says that the two items were at that time priced at between 40% and 50% off recommended retail price, however, the Applicant requested Ms Carr to process the items for her as a sale at 85% off recommended retail price. Ms Colls says that Ms Carr refused to do this as this was highly irregular and would result in a financial loss to the company. Ms Colls alleges that in the conversation at 6pm the Applicant offered no explanation when the allegation was put to her.

[41] Ms Colls suggested that the Applicant breached company policy that you don’t process your own clothing returns. The Applicant gave evidence, which I accept in the absence of any details which might suggest otherwise, that she did not process her own returns.

[42] The staff employment letter provided to the Applicant states that: “our company places an emphasis on stock and cash control and failure to follow procedures and instructions in relation to stock and cash may lead to instant dismissal. The removal of cash or stock from any store without proper purpose or authorisation will result in instant dismissal.” 5

[43] It is not in contention that the Applicant and some other staff received a uniform allowance of $500 a quarter which could be utilised to purchase company clothing from the wholesale arm of the company George Gross & Harry Who Design Company Pty Ltd. Employees could also purchase discounted clothing.

[44] Ms Colls also alleges that on the day after the dismissal Ms Carr called her to say that she had found two plastic bags of stock in the outside storage area with the Applicant’s name on the bags. Ms Colls suspects that the Applicant placed these bags in the storage area so that she could purchase them at a later date at a discounted price as older stock which is not sold is generally able to be purchased at a discounted price. Ms Colls says that removal of the stock from the retail floor reduces the chance that the stock will be purchased and leads to losses for the company. This allegation was not put to the Applicant until the Respondent provided material as part of the unfair dismissal proceedings.

[45] The allegations were reported to the police on 6 April 2014. The Applicant submits that this was about 10 weeks after the dismissal, 8 weeks after the unfair dismissal application was made and 5 days after the unsuccessful unfair dismissal conciliation conference. Copies of the correspondence between the Respondent and the police have been provided. The police concluded on 12 July 2014 that there was no basis for them to proceed against the Applicant. They found that the red skirt was returned in saleable condition and was in fact subsequently sold.

[46] The evidence about the stock irregularities was quite confusing and contested. It is therefore appropriate to summarise the evidence in respect to the five stock irregularity allegations made by Ms Colls in her evidence. 6

a. “Kim Chadwick drew my attention to more than two separate stock irregularities.” Under cross examination Ms Colls could only remember two examples, one of which is the allegation at (b) below. There was no evidence from Kim Chadwick or documentation to support the allegation of the existence of these stock irregularities. The other allegation which Ms Colls could recall was the allegation that on a Sunday when working alone the Applicant had returned an item which is contrary to the practice that employees don’t process their own returns. 7 I found Ms Colls’ evidence about this matter somewhat vague and confusing. This allegation was not put to the Applicant in the conversation at 2pm.8 The Applicant gave evidence, which was unchallenged and which I accept, that in fact she was not working at the Chadstone store on the Sunday in question and that another employee processed the return of the skirt in question.

b. “Betty Mond and I discussed one of the stock irregularities raised by Kim Chadwick.” This was the matter which was discussed in the conversation at 2pm. The allegation was that a sequin evening dress had been requested by the Applicant to not be available for sale to customers but should be available to her for purchase. The basis for this allegation was a notation in the order book. The Applicant gave evidence that she had never made this request and that the notation in the order book was not made by her and was not in her writing. There was no evidence to contradict the Applicant’s evidence. Some of the evidence suggests that it is possible that the entry in the order book was made in error due to confusion between this item and another item referred to in allegation (c).

c. The Applicant requested Ms Carr to process a sale to her of two items of clothing at 85% off recommended retail price when those items were priced at 40% and 50% off recommended retail price. It is alleged that the Applicant transferred the items from the Chadstone outlet to the Armadale outlet even though there had been no customer or management request to transfer the items. It is not suggested that the Applicant did in fact purchase the items. Ms Carr was not called by the Respondent to give evidence. There was no documentary evidence provided. The Applicant gave direct evidence about this matter. There was no other direct evidence about the matter. It was the Applicant’s direct evidence that she followed normal procedures and policy in respect to her potential purchase of the two items. The Applicant says that she was working in the Armadale store on Monday 13 January 2014 and on that day she discussed the matter with another employee at the Armadale store, Jenny, and with Ms Carr and completed the appropriate paperwork for the purchase of the items. The Applicant says that a week earlier she had identified one of the items she wanted on the computer and the item was in the Adelaide store. She says that she spoke to another employee, Rachael at the Chadstone store to check if the item had arrived. Rachael told her that the order number was linked to a customer. The Applicant asked Rachael to check with the customer if she still wanted the item. Rachael confirmed that the customer advised that they did not want the item and the Applicant asked that the item be transferred from Adelaide to Armadale where the Applicant could purchase the item. The Applicant says that Ms Carr approved the purchase of the clothing. The Applicant agreed that she suggested an 85% discount and that they had then agreed the appropriate discount was 80%. The Applicant says that she completed the appropriate application paperwork on Monday 13 January 2014. It was agreed that the Applicant would purchase the items on Thursday 16 January 2014. The Applicant says that the stock was transferred from Adelaide to Chadstone in error and that after she had been dismissed by Ms Colls at 2pm she took the items to the Armadale store and advised them that given she had been terminated she would not be purchasing the items.

d. Bags of stock were found in the rear shed which had the Applicant’s name on them. Ms Colls alleges that Ms Carr advised her of this. Ms Carr did not give evidence. There is no other evidence or details of any investigation. The Applicant denies that she ever removed stock without recording it except in the case of the red skirt.

e. Ms Colls alleges that the Applicant removed a red skirt without authorisation and without recording it in the out book and then returned the skirt at about 4pm on 15 January 2014. The Applicant agrees that she failed to record the item in the out book and she cannot recall if she discussed it with another employee to get authorisation. The Applicant agrees that she returned the item on 15 January 2014. The item was reported as missing in November 2013. There is no suggestion that the Applicant was aware of this or had anything to do with this. Some time later around Christmas 2013 the Applicant says that she considered that the item might be suitable for one of her daughters. She took the item from the clearance items in the back shed at the Armadale store and put it in her car but then forgot about it. She says that she discovered the item following the conversation with Ms Colls at 2pm on 15 January 2014 when she decided to return the other two items to the Armadale store. She returned the item. It is not in dispute that the item was in saleable condition and was in fact sold. The item originally had a recommended retail price of $179, however, the Applicant says that it was available for purchase at approximately $20. Mr Newlands says that the item was available at 65% discount through the internet shop. The advice Mr Newlands provided to police was that stock of this age would probably be available through the clearance outlet at an 85% discount. Ms Colls and Mr Newlands agree that had the Applicant not returned the item the Respondent would never have been aware that the item was in the Applicant’s possession given that it had been recorded as missing prior to the Applicant taking it.

[47] I found the Applicant to be a credible witness. Her evidence was plausible, consistent and direct and was not shaken by cross examination. The Applicant admitted her failure to record the red skirt and did not attempt to hide her responsibility in this regard. Ms Colls was unable to recall important details in the witness box which I consider raised doubts about the details which were included in her witness statement. Generally I preferred the evidence of the Applicant to the evidence of Ms Colls where there was a conflict in the evidence.

[48] Allegation (b) was put to the Applicant in the conversation at 2pm. The Applicant gave evidence that she had been told by Kim Chadwick that she never raised any allegation about stock irregularities involving the Applicant with Ms Colls. Although I generally found the Applicant to be a truthful witness in the absence of evidence from Ms Chadwick I do not rely on this evidence. I found it strange given the degree of attention paid to the termination of the Applicant and the level of passion involved on all sides including the decision to involve the police, that the Respondent produced no evidence of the other stock irregularities allegedly identified by Kim Chadwick. I found it implausible that Ms Colls could not recall any details of any of the alleged stock irregularities other than the one concerning the sequin evening dress and the vague details concerning the return of another item (see allegation (a)). I am therefore not satisfied that at the time of the conversation with the Applicant at 2pm on 15 January 2014 Ms Colls was aware of any alleged stock irregularities other than the one concerning the sequin evening dress and the matter of the return of an item. I am also satisfied that had Ms Colls considered the response given by the Applicant to the allegation concerning the sequin dress she would have found that the Applicant was not responsible for the notation in the order book and was therefore not involved in any stock irregularity concerning the sequin dress. Had Ms Colls considered the response given by the Applicant she would also have found that the Applicant did not process the return of the item. This matter is one of the reasons why I generally prefer the evidence of the Applicant to the evidence of Ms Colls where there is conflict in the evidence.

[49] Ms Colls and the Applicant both gave evidence that Ms Chadwick was not at work on Wednesday 15 January 2014. I accept that employees do contact other employees concerning work matters on days when they are not at work. However, I consider it unlikely that Ms Chadwick would have considered it imperative to contact Ms Colls about this relatively minor and detailed matter on a day when she was not at work. Ms Colls says that Ms Chadwick provided details of the matters including the relevant stock numbers and details of the entry in the order book. Of course it is possible that Ms Chadwick had these details when not at work but I consider it more likely that such details would be communicated by email or telephone when an employee was at work.

[50] Ms Colls gave evidence that in denying responsibility for the entry in the order book the Applicant said that she swore on her mother’s grave that she was telling the truth. The Applicant gave evidence that she never said this and that her mother was still alive. 9 I accept the evidence of the Applicant and this is another matter which leads me to generally prefer the evidence of the Applicant to that of Ms Colls.

[51] I accept the evidence of the Applicant in respect to allegation (c). There was no direct evidence at all to support allegation (c). There is no basis for a conclusion that the Applicant was involved in stock irregularities in respect to allegation (c).

[52] I accept the evidence of the Applicant in respect to allegation (d). There was no direct evidence at all to support allegation (d). Allegation (d) was never put to the Applicant except during the unfair dismissal proceedings. There is no basis for a conclusion that the Applicant was involved in stock irregularities in respect to allegation (d).

[53] I accept the evidence of the Applicant in respect to allegation (e). There was no direct challenge to this evidence or any evidence to support an alternative version of the events. The Applicant says that when challenged in the 6pm conversation she told Ms Colls that she had forgotten to put the item in the book. 10 Ms Colls does not contradict this. It is clear that the Applicant breached the Respondent’s policies and procedures in failing to record the removal of the red skirt. I accept that the item is one which would in the normal course of events have been available for the Applicant to purchase at discounted rates if there was no current customer order. It is also clear that the appointment letter made it clear to the Applicant that breach of stock control policy was regarded seriously by the Respondent and could lead to termination.

[54] I accept that the actions of the Applicant in this case were an oversight and the fact that she returned the item without any prompting when she discovered that she still had the item in her car supports such a conclusion. I can see no basis for the suggestion of the Respondent that the Applicant returned the item because she knew she was about to be discovered. The only records of the Respondent showed the item was missing in November 2013 and I am satisfied that there was minimal risk that the Respondent would have found out that the Applicant had the item.

[55] The Respondent argued that the Applicant should have obtained approval to remove the item from a responsible employee. This might be good practice however the evidence before me did not establish that this was required and or was the commonly followed procedure. I am satisfied that approval of a responsible employee was required for the discounted sale of an item to an employee whether it was part of uniform allowance or otherwise. However, in this case the Applicant did not purchase the item but was removing it temporarily to consider whether or not she wished to purchase it. In these circumstances I am satisfied that it was an acceptable practice to record the removal of the item in the book. It was this policy or procedure which the Applicant failed to follow.

[56] Ms Colls gave evidence that stock movements were recorded in the computer, in the order book and in the out book which recorded items such as those sent off for repairs or drycleaning. 11 I am satisfied that it was a breach of established procedure known to the Applicant to fail to record the stock movement in one of these three ways.

[57] Ms Colls gave evidence that once she became aware of the allegation concerning the red skirt she considered there was no need to further investigate or pursue the other matters. However, I am satisfied from the evidence of Ms Colls in the witness box and in her statement to police that she believed that the Applicant was probably guilty of other irregularities at the time she made her decisions on 15 January 2014. The Respondent did not provide any evidence which suggested that there had been any substantive investigation of the other matters nor did they provide any evidence which established that the Applicant was guilty of misconduct in respect to those matters.

[58] The only allegation which could potentially amount to misconduct is the allegation concerning the failure to report the taking of the red skirt. It has been established that this misconduct occurred. I will shortly consider whether or not this misconduct provided a valid reason for termination.

[59] The legislation provides as follows:

“s387 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.”

Was there a valid reason for termination? (S 387(a))

[60] I am satisfied that the failure of the Applicant to follow the Respondent’s policy and procedure by failing to record the red skirt in the book could, depending upon the circumstances, provide a valid reason for termination. I am satisfied that there was no proper basis for the Respondent to allege that the Applicant had stolen the red skirt. It should have been obvious to the Respondent that, given that the item was returned in saleable condition and that the Applicant denied she had any intention to keep the item without paying for it, there was no real prospect of an allegation of theft being established. The Applicant breached the policy of the Respondent by failing to record the taking of the skirt. The Applicant was aware that breach of such a policy was regarded as a serious matter. The Applicant had no explanation except that it was an oversight and she then forgot that she had the skirt in her car for several weeks. I accept the submission of the Respondent that stock shrinkage due to the action of employees, including employees seeking to engineer lower prices for their own purchases, is a significant problem in the retail industry. This justifies taking breach of stock control policy seriously. I am satisfied on balance that the failure to follow the Respondent’s policy and procedure by failing to record the red skirt in the book was a valid reason for termination which relates to the Applicant’s conduct.

Procedural matters. S387(b)-(g)

[61] I consider that the Applicant was terminated at around 2pm on 15 January 2014. I prefer the evidence of the Applicant to that of Ms Colls about the content of that conversation. I am satisfied that Ms Colls told the Applicant to leave the store and that she had no more hours. It is not in contention that the issue of the red skirt was not raised in the 2pm conversation. The Respondent was not aware of the red skirt until after 4pm that day. The Applicant was not notified of the reason, namely the red skirt issue, until the conversation at 6pm. The Applicant was given an opportunity to respond to that allegation at that time but not before. It is well established that a person must be given an opportunity to respond prior to the decision to terminate being made.

[62] Ms Colls dismissed the Applicant at 2pm but made it clear that she wanted to discuss the matters further with the Applicant later that day. A reasonable conclusion to draw from this is that Ms Colls might have considered reinstating the Applicant after further investigation and after hearing the response of the Applicant. The matter of the red skirt was raised with the Applicant and she accepted that she had failed to record the item in the book and she offered no excuse for that. Ms Colls then decided that further employment was untenable and dismissed the Applicant.

[63] I am satisfied that Ms Colls made the decision not to reinstate the Applicant not just because of the red skirt allegation but also because she considered that there were other inappropriate stock control matters. It was not reasonable for Ms Colls to consider these other matters because they had not been properly investigated. That said I accept the evidence of Ms Colls that the matter of the red skirt was the main factor which influenced her final decision not to reinstate the Applicant in the 6pm conversation.

[64] Ms Colls gave evidence that she considered it necessary to direct the Applicant to leave the premises at 2pm because of the risk to the business. I find this explanation implausible. After nine years of service and with no prior issue about performance or conduct it is hard to see how there was any realistic risk to the business in allowing the employee to continue at work whilst allegations about stock documentation were being investigated. The two matters Ms Colls was aware of at 2pm at their highest were, if proven, significant breaches of procedure but they were not allegations of theft. As found earlier I am satisfied that Ms Colls had decided to replace the Applicant with Ms Buchanan for the shift prior to speaking with the Applicant at 2pm. These factors all support the conclusion that Ms Colls dismissed the Applicant because of the alleged misconduct concerning the sequin dress and that Ms Colls intended to investigate further and discuss the matter with the Applicant subsequently and then consider whether or not to reinstate the Applicant.

[65] In my view this was an unreasonable, unfair and unjust way to approach the matter.

[66] The factor in Section 392(2)(b) stands in favour of a finding that the termination was unfair. However, because the Applicant was notified of the red skirt issue at 6pm when I am satisfied that Ms Colls was open to the possibility of reinstatement this factor is not a major unfairness.

[67] The factor in Section 392(2)(c) stands in favour of a finding that the termination was unfair. However, because the Applicant was given the opportunity to respond to the red skirt issue at 6pm when I am satisfied that Ms Colls was open to the possibility of reinstatement this reduces the unfairness. On the other hand I am satisfied that Ms Colls was influenced by other factors which were never properly investigated and in respect to which the Applicant was not given an adequate opportunity to respond. I am not satisfied that the Applicant was given an adequate opportunity to respond to the allegations in the telephone conversations at either 2pm or 6pm. At 2pm Ms Colls did not want to talk about the allegations at all and wanted to get off the telephone and return to other duties serving customers in Brisbane. At 6pm the Applicant had no notice of the allegations and there was no proper opportunity to properly understand the basis for the allegations or to have her responses considered fairly given that the conversation was conducted by telephone. The capacity for effective communication by telephone in a stressful situation where the outcome could be termination of employment is limited. There is no capacity to examine documentary material or to use body language both of which are important when considering evidence and responses.

[68] The factor in Section 392(2)(d) is neutral. The Applicant was not refused a support person. However, given that the conversation at 2pm was without advance notice and that the conversations at 2pm and 6pm were on the telephone the Applicant was in practice unable to have a support person.

[69] The factor in Section 392(2)(e) is not relevant as the dismissal relates to conduct not performance.

[70] The factors in Section 392(2)(f) and (g) are neutral factors given that the business is not a small business and that the failures of procedure are failures of natural justice which should be followed regardless of whether or not human resource management expertise is employed.

Other matters. S387(h)

[71] I consider that the long service, almost nine years, without any warnings or other concerns about conduct or performance is a relevant factor which stands in favour of a finding that termination of employment was harsh and disproportionate.
[72] I consider that the failure to provide adequate opportunity to be represented because the meetings were without warning and on the telephone is a factor that stands in favour of finding that the termination was unjust. The interviews by telephone were not conducted in conditions where the Applicant could be said to have had a reasonable opportunity to understand the allegations and respond. The Applicant gave evidence that she was shocked and distressed.

[73] I consider that although the failure to follow policy by not recording that the dress had been taken was misconduct, termination was a disproportionate and unreasonable and harsh response given:

● the relatively low value of the item;
● that it would probably have been able to have been purchased by the Applicant;
● the absence of any evidence that it was anything other than an oversight;
● the evidence that the item was not actually used by the Applicant and that it was returned in saleable condition; and
● the fact that the actions were out of character in that there had been no previous incidents where the Applicant had breached the policy.

Conclusion concerning harsh, unjust and unreasonable.

[74] Although there was a valid reason for the termination I consider that termination was, in all of the circumstances, a disproportionate, harsh and unreasonable response to the misconduct. I also consider that there was significant injustice in the procedures adopted by the Respondent. I consider that the good record and long service of the Applicant contribute to a finding that the termination was harsh or disproportionate. It should be noted that whether the termination took place at 2pm or 6pm is not decisive to my assessment. I would still have concluded that the termination was unfair if I had found that the termination had taken place in the 6pm telephone conversation. In my assessment the Applicant did not have a reasonable opportunity to respond in the 6pm telephone conversation. In the circumstances of this case it was unfair, unreasonable and unjust to expect the Applicant to respond to allegations of which she had no notice on the telephone. I also found that termination because of the single instance of failure to follow policy in not recording the red skirt was harsh and disproportionate in the circumstances.

[75] Taking all of the factors into consideration I am satisfied that the termination was unfair.

Remedy

[76] I am satisfied that reinstatement is not possible given that the Respondent has ceased trading. The parties agree with this proposition. I am satisfied that a payment of compensation is appropriate in the circumstances of this case. Section 392 requires that I consider the following, noting that the Applicant was earning significantly less than the high income threshold.

“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.”

[77] Mr Newlands for the Respondent submitted that apart from inter-company loans the Respondent has no debts or liabilities and all creditors have been paid. The Respondent does not argue that any order I might make would effect the viability of the employer’s enterprise (Section 392(2)(a)). Mr Newlands on behalf of the Respondent undertook that any Order would be paid. In these circumstances I can see no reason why I need to determine the inclusion of the holding company George Gross & Harry Who Design Company Pty Ltd as a Respondent. It is not necessary to decide the question but based upon the evidence before me I doubt that it was an employer of the Applicant.

[78] The Applicant submitted that “the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed” was not confined to the income the person would have received from their employer and that I should also take into account the fact that the Applicant was unable to earn income from other employers because of the complaint made to police. It is quite clear that had the person not been dismissed they would not have earned income from another employer. It is therefore clear that it is only the income from the employer which can be considered. The most commonly used methodology for calculation of compensation in unfair dismissal matters was established by a Full Bench of the former AIRC in Sprigg v Paul’s Licensed Festival Supermarket 12. That methodology has been confirmed as appropriate by subsequent Fair Work Commission Full Benches under the present Act. In Sprigg the remuneration that a person would have received or would have been likely to receive if the person had not been dismissed is determined by reference to the length of time it is estimated that the person would have remained in employment with the employer.

[79] The Applicant was employed for nine years and I consider that in the normal course the employment would have continued for a considerable number of years (Section 392(2)(b) and (c)). However, it is a fact that but for the dismissal the Applicant would have been made redundant at some time between 16 February and 31 March 2014. Given that the Applicant did work at the Armadale store (amongst other locations) and that she was a long serving experienced employee I consider it likely that she would have remained in employment closer to the final date of 31 March 2014. The maximum period of further employment is ten and a half weeks. Allowing for contingencies I estimate that the Applicant would have remained in employment for a further nine and a half weeks, that is, until 23 March 2014.

[80] We know what the rostered shifts for the Applicant were between 15 January 2014 and 16 February 2014 inclusive as we have the roster. 13 The hourly rate on weekdays was $22.78 and on Sundays $36.27. The Applicant’s roster was 15 Jan - 5 hours (3 hours paid), 19 Jan - Sunday - 9 hours, 5 Feb - 5 hours, 12 Feb - 5 hours, 14 Feb - 5.5 hours, 16 Feb - Sunday - 9 hours. The total for this period is $398.65 + $652.86 = $1051.51 plus 9.25% superannuation = $1148.70. The total for the remaining period of five weeks must be estimated. I consider the average rate of pay over the previous 26 weeks prior to the dismissal is the most appropriate method to determine the likely earnings. During the proceedings the parties did not object to the proposal that I should use the material on past earnings in Appendix A to the Applicant’s statement to estimate average earnings. The Applicant earned $11,844.61 (inclusive of superannuation) in the 26 weeks prior to the termination.14 I have looked at the 13 whole fortnights prior to the fortnight in which the Applicant was dismissed as the fortnight of the dismissal was not a whole fortnight. This results in average earnings of $455.56 per week and therefore earnings in five weeks of $2,277.80. I therefore estimate the earnings the Applicant would have received if the dismissal had not occurred to be $3,426.50.

[81] The Applicant argues that had the employment continued past February 2014 she would have had an additional year of service and would have received an additional two week’s of long service leave pay. In many situations it would not be appropriate to include such an amount as it would be speculative. However, in a situation when it is known that the Applicant would have been made redundant at some time between 17 February 2014 and 31 March 2014 we can be confident that the Applicant would have received additional long service leave. The rate at which long service leave is paid upon termination in Victoria takes into account partial years of service as it is calculated based upon the total number of weeks of service divided by 60. I estimate that the additional long service leave which the Applicant would have received would have been 0.16 of an additional week. This increases the total earnings the Applicant would have received if the dismissal had not occurred to $3499.39 (Section 392(2)(c)).

[82] The uniform or clothing purchase allowance becomes available quarterly. It is not paid to employees but is effectively an account which can be utilised to purchase company clothing. I am not aware of the dates when it becomes available so I do not know if a new quarter’s allowance would have become available. Furthermore, I am not certain that the account should be regarded as remuneration that the person would have received, or would have been likely to receive. I have not included uniform or clothing allowance as I regard it as too speculative. Furthermore the parties did not object to the proposal that I rely upon the figures in Appendix A to the Applicant’s material.

[83] I am satisfied that the Applicant did not earn anything during the period from the dismissal to 23 March 2014. I am also satisfied that the Applicant did not apply for any jobs during this period. I am also satisfied that the Applicant was shocked and distressed by her termination and that this made it difficult to focus on seeking new employment. Given the relatively short period I am satisfied that I should not find that the Applicant did not make adequate efforts to mitigate her loss during this period (Section 392(2)(d)). I do not consider it appropriate to discount the compensation for this reason.

[84] Given that the period of expected employment ended prior to the hearing of this matter I do not consider the factors in 392(2)(e) and (f) to be particularly relevant. In any case I estimate that the income during these periods will be nil.

[85] Given that the expected earnings and the actual earnings can be derived with reasonable accuracy there is no justification for deduction for contingency.

[86] The issue of misconduct is difficult. The allegations raised at 2pm when the dismissal occurred were not the actual misconduct which has been established. I must make a discount for misconduct where the actual misconduct of a person contributed to the employer’s decision to dismiss the person. In this case it contributed to the decision not to reinstate as the decision to terminate had been made earlier in the day. I therefore cannot make a discount for misconduct. If I am wrong about this matter I would have made a deduction of no more than 10% for that misconduct (Section 392(3)).

[87] The Applicant argues that I should increase the amount of compensation because of what they submit was the unacceptable conduct of the Respondent in making an unjustified report to the police, delaying the proceedings, and denying the Applicant natural justice. The Applicant argues that she was unable to seek new employment because of the police inquiry. The Applicant also argues that the hearing of the unfair dismissal application was delayed because the Respondent applied for an adjournment on the grounds of the police inquiry. These factors added to the Applicant’s economic loss and the Applicant says that this should be considered in the compensation (Section 392(2)(g)).

[88] Although I cannot include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, I accept that in certain circumstances compensation might be increased or decreased having regard to fairness between the employer and the employee because of factors including the conduct of the employer (Section 392(2)(g)).

[89] It is a reasonable inference to draw from the evidence and the submissions that the complaint to the police was a response to the failure of the conciliation of the unfair dismissal matter. However, it is also reasonable to conclude that the employer was concerned to defend the basis for the termination and once it was clear that the unfair dismissal matter was proceeding decided to make the complaint to the police in April 2014. For understandable reasons the Applicant was very upset and offended by the police report. It does not necessarily follow that the Respondent was coercing the Applicant not to proceed with the unfair dismissal application. Although the police found that there was no basis for a report or for prosecution it does not necessarily follow that making the complaint to the police was vexatious. I have found that the Applicant’s actions were misconduct even if I found that there was no reasonable basis for a finding of theft.

[90] The compensation is in lieu of reinstatement. In the case of reinstatement there could be no specific compensation for some of the factors referred to by the Applicant.

[91] The actual loss of income to the Applicant because the Respondent made the police report is speculative. In the absence of evidence about the particular jobs the Applicant had a reasonable basis to believe she could not apply for because of the existence of the police investigation it is impossible to make a reasonable estimate of the loss.

[92] I am therefore not satisfied that there are other factors in the circumstances of this case which warrant an increase or decrease in compensation (Section 392(2)(g)).

Conclusion as to Remedy

[93] I will therefore order an amount of compensation of $3499.39 less appropriate taxation be paid to the Applicant within fourteen days. An order will be published separately.

Costs

[94] The Applicant foreshadowed an application for costs under Section 400A of the Act at the hearing on 4 August 2014. The Applicant also foreshadowed a further application for costs pursuant to Section 611 of the Act at the hearing on 7 August 2014.

[95] The first application for costs is for $2678.50 of legal costs incurred by the Applicant in responding to the complaint made by the Respondent to the Victoria Police. The Applicant alleges that these costs were incurred because of an unreasonable act and or omission in connection with the conduct of U2014/4346.

[96] The second application for costs relates to the costs incurred by the Applicant’s representative, Mr Mond, in prosecuting U2014/4346. Mr Mond confirmed in proceedings on 7 August 2014 that he is not a lawyer or a paid agent for the Applicant.

[97] The Applications under Section 400A and Section 611 must under Section 402 be made within 14 days after the Fair Work Commission determines the matter.

[98] In order to avoid further costs to the parties it was agreed by the parties at the hearing on 7 August 2014 that I would record in my decision that the Applicant was making the applications immediately following the decision and that within 14 days of the issuing of this decision the Applicant would provide submissions in support of the applications to the Fair Work Commission and the Respondent. The Respondent would then have 14 days to respond, excluding the first two weeks in September when Mr Newlands is unavailable. The Fair Work Commission would then make a decision in respect to the costs applications based upon the written submissions received.

COMMISSIONER

Appearances:

Mr D Mond appeared for the Applicant.

Mr B Newlands appeared for the Respondent.

Hearing details:

2014

Melbourne

August 4 & 6

 1   Exhibit A 1, Statement of Betty Mond, Appendix A.

 2   Exhibit A 1, Appendix J.

 3   PN1466 to PN1467.

 4   Exhibit G1, Attachment to witness statement of Dianne Colls.

 5   Letter dated 11 February 2005.

 6   Exhibit G1, at para 27.

 7   PN970.

 8   PN1049.

 9   PN333.

 10   PN527.

 11   PN1237 to PN1238.

 12 (1998) 88 IR 21.

 13   Exhibit A1, Appendix J.

 14   Exhibit A1, Appendix A.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR554269>