Mrs Joanne Elizabeth Wright v Wimmera Laundry Services Pty Ltd
[2024] FWC 2485
•17 SEPTEMBER 2024
| [2024] FWC 2485 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Joanne Elizabeth Wright
v
Wimmera Laundry Services Pty Ltd
(U2024/4893)
| COMMISSIONER WILSON | MELBOURNE, 17 SEPTEMBER 2024 |
Application for an unfair dismissal remedy. Merits considered. Dismissal found to be unfair. Compensation appropriate.
This decision concerns an application for an unfair dismissal remedy made by Joanne Wright (the Applicant) pursuant to s.394 of the Fair Work Act 2009 (the FW Act). The application was filed in the Fair Work Commission (the Commission) on 1 May 2024, after she was dismissed by Wimmera Laundry Services Pty Ltd (the Respondent), with effect from 22 April 2024.
For the reasons set out below I find Ms Wright was unfairly dismissed and that, while reinstatement is inappropriate, an award of compensation is appropriate.
PRELIMINARIES
Section 396 of the FW Act requires the determination of four initial matters before consideration of the merits of the application. Those matters are, whether the application was made within the period required in s.394(2), whether the person was protected from unfair dismissal, whether the dismissal was consistent with the Small Business Fair Dismissal Code, and whether the dismissal was a case of genuine redundancy. In relation to the elements within s.396, I find that Ms Wright’s application was lodged with the Commission within the 21-day period for making such applications and that, at the relevant time she was dismissed, she was a person protected from unfair dismissal.
It is necessary though to consider whether Ms Wright’s dismissal was a genuine redundancy and, because of the Respondent’s size, whether her dismissal was consistent with the Small Business Fair Dismissal Code.
Having had regard to ss.397 – 399 of the Act and having consulted with the parties, I conducted a determinative conference about these matters on 31 July 2024, at which Ms Wright appeared and gave evidence for herself. Mr Ben Chislett, the Respondent’s Director, appeared and gave evidence for Wimmera Laundry Services.
BACKGROUND
The Respondent to these proceedings is Wimmera Laundry Services Pty Ltd, which has operated the business in which Ms Wright was employed since, on or around, 7 November 2022. Ms Wright however says that she was employed by Wimmera Laundry Services and its predecessors since about September 2010. When she commenced employment with the business of that name, it was owned and operated by a different entity to the Respondent, and it appears was at least one further entity that operated the business between 2010 and the present. While noting this evidence of Ms Wright, it is not necessary for me to determine the identity of the previous operators of the business or to establish whether there has been a transfer of business between any of the operators or whether Ms Wright has had a period of continuous service since 2010.
On Friday, 12 April 2024 Mr Chislett took Ms Wright aside and said to her words to the effect that he was thinking of making her role redundant and that there would be a pay cut. Ms Wright asked him if there would be a job for her as a normal worker, to which Mr Chislett responded that he had not yet decided. Ms Wright was upset and stated to Mr Chislett that she would start looking for another job.
The conversation between the two on 12 April 2024 was recorded by Mr Chislett, without Ms Wright’s knowledge, and Mr Chislett endeavoured to have the recording admitted into the evidence to be taken into account by me in the course of arbitration of this matter. I refused the request on the basis that there had been directions issued for the filing of material by both parties by particular dates and that Mr Chislett had not brought forward the recording in his original response to those directions, only seeking to file the recording on 26 July 2024, shortly after the deadline for submission of the Respondent’s response.
The recording was plainly not responsive to any matters that Ms Wright had brought forward but was instead a matter that Mr Chislett relied upon as part of his case but had elected not to disclose it at an earlier time. In that regard, it should be noted that the deadline for the Respondent’s case was 26 June 2024, with it not filing any material in response to that part of the directions.
It follows that I have not taken the recording into account in forming these reasons for decision, which are based only upon the other evidence and material before me.
Mr Chislett says in his evidence that he had prepared a redundancy letter to give to Ms Wright on 12 April 2024 but accepts that he did not give it to her on that day. He also says that it was very clear from the conversation the two had on 12 April that Ms Wright’s position had been made redundant and that he only held off from giving the documentation to her because of her reaction and not wishing to embarrass her further.[1]
Ms Wright took the conversation on 12 April 2024 as not being a definitive statement of the end of her employment and returned to work on Monday 15 April 2024, performing her usual duties and working her usual hours throughout the week with no one querying as to why she was there.
When Ms Wright was next paid on Friday, 19 April 2024, she noticed a change to her pay. This change had never been discussed with her, so she queried the change in pay with Ms Nikki Chislett, Ben Chislett’s partner.
Ms Wright also gave evidence that, on the same day, there were several new employees in the Wimmera Laundry Services premises undertaking training. One was operating the washers and dryers and two were operating the ironer. Ms Wright also noticed that Mr Chislett was “in and out” of the laundry all day and that, before she left for the day, she asked whether there was anything Mr Chislett needed, to which he said “no”. Mr Chislett said nothing in the course of the day which could be taken as a query as to why Ms Wright was working.
Mr Chislett does not contradict Ms Wright’s narrative about the events of Friday 19 April 2024.
On Sunday 21 April 2024, Ms Wright received a text message from Mr Chislett asking her not to work the following day. The text stated;
Hi Jo,
We are not needing you in the Laundry tomorrow, so please have the day off. We are training more people tomorrow to prepare for double shifts. I will call you tomorrow after lunch to discuss.
Regards
Ben
Ms Wright responded acknowledging the request and stating that she looked forward to his call.
The following day on Monday, 22 April 2024, Ms Wright sent an email to Mr Chislett at about 9:30 AM querying her pay, which then prompted a response from Mr Chislett informing her that she had been made redundant on 12 April. Ms Wright’s submissions in this regard are the following;
“On Monday the 22nd, after requesting his email address, I sent him a letter expressing my concerns about my pay (including 12 hours of my annual leave balance that had been used on a pay slip in February, that I never took) and some recent issues that had occurred in the store that I felt I had been getting blamed for due to the treatment I was receiving from Nikki especially.
A couple hours later, I received an email response from Ben, saying that he was not going to address anything in my letter, and that he had planned on calling as he didn't know why I had come to work for the previous week as I had been made redundant on the 12th of April. He stated that he was surprised that I had turned up for the entirety of the previous week and didn't say anything as he didn't want to embarrass me. Even when I left on Friday the 19th, I specifically asked him if there was anything he needed from me which he had responded with no. On this day, I had also been left on my own, running the laundry with 3 brand new trainees. If I had already been fired, like his email stated, I should not have been running the place and training his new staff.
He also never requested that I return the keys to the premise. (I returned these on my own accord on Monday the 22nd.)”[2]
When Mr Chislett responded to Ms Wright, shortly after noon on 22 April 2024, he sent an email with an attachment. The email communicated the following;
“Hi Jo,
Thank-you for taking the time to send me an email and express your concerns.
I won't address each point here, except to say on Friday the 12th of April, you and I had a formal conversation at the end of the day and your position was made redundant and your employment was terminated.
As you stormed off and left saying "I'll start looking for another job", I was not able to give you the paperwork and list entitlements owed to you and your redundancy letter.
We were all extremely surprised that you came to the Laundry on Monday the 15th April.
In an effort not to cause an embarrassing scene for you and other staff, I told Killian to leave you working until I get back at the end of the week.
On Friday 19th April, I was going to clarify why you had come back to the Laundry and give you the documentation I wasn't able to the week before.
As other people were around I didn't get to have that conversation with you.
Attached is your redundancy letter and a list of your annual leave entitlements to be paid out to you.
I want to thank you for your efforts at work while with the Laundry.
I wish you all the best with your future endeavours and will be happy to provide any future employer with a favourable written reference.”[3]
The attachment to the email stands as the termination which states the following;
“Dear Joanne,
As discussed in our meeting of 12th of April 2024, business restructuring will cause your position to become redundant on 12th of April 2024 .. Further to this, despite considerable effort, we have been unable to identify a suitable redeployment opportunity for you elsewhere within Wimmera Laundry Services PTY LTD.
We therefore regret to advise that your employment is to be terminated by way of bona fide redundancy, with this effective as at close of business 12th of April 2024.
Due to the length of your full time employment and that we employ under 15 employees, the fair work act 2009 requires we pay you your annual leave that you have accrued. This will be done in the next pay run.
Should you have any questions regarding this matter, please do not hesitate to contact me. In the meantime, we wish to extend our sincere appreciation for the commitment you have maintained towards your employment, and to wish you every success with your future endeavours.
Yours sincerely,”[4]
In his evidence to the Commission, Mr Chislett said that the termination letter, dated 12 April 2024, had been prepared by him prior to that date, with his intention being to provide it to Ms Wright at the meeting they had on 12 April, with it eventually being the case that it was not provided to her until his 22 April 2024 email.
For her part, Ms Wright accepted the letter sent by Mr Chislett on 22 April 2024 as the termination of her employment.
On 24 April 2024, Ms Wright was provided with an employment separation certificate which refer to 8 December 2023 as being the date Ms Wright started working for the Respondent and 19 April 2024 as being the date her employment ceased, with the reason for separation being stated as redundancy.
LEGISLATION
The material received by the Commission from the Respondent asserts that it objects to the continuation of Ms Wright’s application, based on the ground that the dismissal was a case of genuine redundancy, as well as that the employer is a small business employer and that it complied with the small business fair dismissal code.
It is unnecessary to consider to any degree whether the dismissal was consistent with the Small Business Fair Dismissal Code as the code does not deal with the circumstance of redundancy, instead dealing only with the two categories of “Summary Dismissal” and “Other Dismissal”, neither of which have application to the circumstances of this matter.
The circumstances of this matter however require consideration of whether Ms Wright’s termination of employment was for reason of genuine redundancy and, if it was not, whether the dismissal was otherwise an unfair dismissal.
Genuine redundancy
In this case, Wimmera Laundry Services argue Ms Wright was dismissed for reason of genuine redundancy and does not say that Ms Wright’s capacity or conduct was the reason for her dismissal. With that being the case, s.396 requires determination of whether the dismissal was a case of genuine redundancy, “before considering the merits of the application”.
The Act defines a genuine redundancy in the way set out in s.389:
389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
Whether an unfair dismissal
In the event of a finding that Ms Wright’s termination of employment was not a “genuine redundancy” as defined, the Commission’s consideration turns to whether her dismissal was otherwise unfair. The legislative provisions relevant to this matter are set out in s.387 of the FW Act, which is as follows:
“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.”
CONSIDERATION
Whether Genuine Redundancy
As set out above, s.389 of the FW Act provides that a dismissal is a “genuine redundancy” in the event of three considerations;
that the job in question is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise;
that the employer has complied with any obligation of an applicable modern award or enterprise agreement to consult about the redundancy; and
and a termination cannot be a genuine redundancy if redeployment would have been reasonable in the circumstances.
In relation to the question of an applicable award, the Respondent identifies that the Dry Cleaning and Laundry Industry Award applied to Ms Wright’s employment. Scrutiny of the scope provision of that award shows that Ms Wright’s duties of employment fit within its scope, which provides;
“4. Coverage
4.1 This industry award covers employers throughout Australia in the dry cleaning and laundry industry and their employees in the classifications listed in Schedule A—Dry Cleaning Classificationand Schedule B—Laundry Classificationsto the exclusion of any other modern award.
4.2 Dry cleaning and laundry industry means the industry of:
(a) dry cleaning, dyeing and/or repairing and/or invisible mending of garments or articles in dry cleaning establishments or their auxiliary receiving depots; and
(b) washing, sorting and/or packing of laundry in laundries and laundrettes including the repair of items and preparation of garments for rental; and
(c) performing any operation incidental to the activities in clauses 4.2(a) or 4.2(b) of this definition in dry cleaning, laundry or combined dry cleaning/laundry establishments”
The award then requires employers to consult employees about “major changes” likely to have “significant effects on employees”, which includes termination of employment (see clause 32).
The circumstances of this case lead to the conclusion that a positive finding can be made only in respect of the second of these considerations under s.389 of the Act, dealing with the obligation of an employer to consult with employees about a redundancy. That is, I cannot be satisfied from the evidence before me that the job performed by Ms Wright was no longer required to be performed by anyone because of changes in the operational requirements of Wimmera Laundry Service. I am though satisfied that redeployment would not have been reasonable in all the circumstances.
Consideration of the material before me shows that Mr Chislett formed his view about Ms Wright’s redundancy, primarily on the basis of his views about Ms Wright’s work performance.
Ms Wright’s evidence is that her role at the Laundry was expanded when Mr Chislett became the owner. Under the previous management, her role had consisted of washing and ‘sorting sheets, packing orders and things like that’.[5] When Mr Chislett took over management of the laundry, Ms Wright’s evidence is that she learned the other jobs, such as starting the machinery and shutting them down at the end of the day, dealing with customers and putting sheets through the iron. Ms Wright attributes this expansion of her role to Mr Chislett’s relatively hand’s off management approach, ‘as Ben was not an on-site boss, so he was relying on existing staff to run the business’.[6]
Ms Wright describes her job at the time of termination as a “co-management role” involving liaising with other staff and customers.[7] Ms Wright was however reluctant to enter a management role, having not had any previous experience in management, but in an email to Mr Chislett stated she was ‘comforted by the fact that there would be someone else to be there to help with the less on-the-floor part of the management’.[8] At some point, Ms Wright says that she was told that a manager was going to be employed to run the Laundry and that she would work under them, negotiations with this potential manager then fell through and they were not employed, so various administrative tasks that would otherwise have been their responsibility instead fell to Ms Wright to undertake.[9]
Mr Chislett agreed that part of Ms Wright’s work involved taking calls from customers and that Ms Wright had been provided with a phone in order to deal with customers. Mr Chislett then said that he had taken this phone away from Ms Wright, because the business was receiving a lot of customer complaints. After this occurred, Mr Chislett’s wife began dealing with the customers. Having taken that responsibility away from Ms Wright, the question remaining is whether Ms Wright’s position was still required. Mr Chislett’s evidence is that he had many performance concerns regarding Ms Wright and that, if he took further functions away from Ms Wright to address those concerns, her role would become “null and void”. His view was that, if he took functions away from Ms Wright because of his concerns around her performance, that would make her position redundant, and so he decided to do precisely that.[10]
I am not satisfied from this evidence that it can properly be said that Ms Wright’s job was no longer required to be done by anyone because of changes in the operational requirements of Wimmera Laundry Services. Instead, what emerges from the evidence is that the redundancy masks what Mr Chislett was actually endeavouring to deal with, namely Ms Wright’s work performance.
With respect to the potential redeployment of Ms Wright to an alternative role within the business, Mr Chislett gave evidence that the laundry had trainees working from time to time. What is unclear from that evidence is the extent to which the trainees were working, with Mr Chislett saying that trainees were not used in the laundry very often.[11] However, Mr Chislett also gave evidence to the effect that the roles that the laundry did have from time to time were very physical roles, with Ms Wright’s most recent employment being described by him as a customer focused role.[12] Overall, the evidence before me about whether there were positions in which to redeploy Ms Wright is inconclusive. The likelihood is that the best that could be said about alternative roles is that some came up from time to time on a short-term basis but that there were none to which Ms Wright could be redeployed to on a full-time basis.
It follows from this analysis, particularly of the question of whether Ms Wright’s job was no longer required to be done by anyone because of changes in the operational requirements of the Respondent, that her dismissal was not a situation of genuine redundancy.
WAS MS WRIGHT UNFAIRLY DISMISSED?
So far as it is relevant to the circumstances of this case, a dismissal is unfair, in the case of a person protected from unfair dismissal, when that person is dismissed in a manner that was harsh unjust or unreasonable, taking into account the criteria within s.387. I will deal with each of the criteria within s.387 in turn.
(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)
Valid reason – general principles
To be a valid reason, the reason must be “… sound, defensible or well-founded.” A reason which is “… capricious, fanciful, spiteful or prejudiced …” cannot be a valid reason.[13] The reason for termination must be defensible or justifiable on an objective analysis of the relevant facts.[14] The valid reason for termination is not to be judged by legal entitlement to terminate an employee, “… but [by] the existence of a reason for the exercise of that right” related to the facts of the matter.[15] Ascertainment of a valid reason involves a consideration of the overall context of the “practical sphere” of the employment relationship.[16]
The reason relied upon by Wimmera Laundry Services for Ms Wright’s termination is redundancy, however the core element of redundancy, being that the job performed by Ms Wright is no longer required to be performed by anyone because of changes in the operational requirements of the Respondent’s business, has not been met. In particular, I am not satisfied that the changes made to Ms Wright’s job came about because of changes in the operational requirements of the respondent’s business.
As described above, Mr Chislett’s decisions in April 2022 included actually taking away some of the functions performed by Ms Wright, most significantly those involving Ms Wright’s dealing with customers over the phone, potentially doing so in order to resolve work performance concerns held by him. Mr Chislett’s motivations for removing these responsibilities from Ms Wright were plainly due to a series of performance concerns he held.
It follows that the situation is not to be described as one in which the loss of Ms Wright’s job was because of changes in the operational requirements of Wimmera Laundry Services, the Laundry still requires someone to deal with customers over the phone. Instead, the changes to Ms Wright’s employment came about because of concerns held about Ms Wright’s performance. Those concerns had not been put to Ms Wright and were not identified to her when she was dismissed. They have also not been cogently expressed to the Commission in these proceedings.
On this basis, I am not satisfied that the Respondent held, at the time it dismissed Ms Wright, a valid reason for her dismissal.
(b) whether the person was notified of that reason
It is well established that consideration of s.387(b) is directed to whether or not the dismissed person was notified of the valid reason for their termination, before the decision to dismiss them was made, with it being expected that the notification of the valid reason is in explicit terms.
Ms Wright was notified that her termination of employment came about because of redundancy, whereas the actual reason for the redistribution of her duties was related to her performance. Ms Wright was not notified of those matters.
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person
For the Commission to have regard to whether an employee has been given an opportunity to respond to the reason for dismissal, there needs to be a finding that there is a valid reason for dismissal.[17] While so, it is also accepted that “an opportunity to respond” amounts to an opportunity to provide reasoning to a decision maker that would, all things being equal, allow a reasoned explanation to cause the decision maker to accept what is proffered and to change from their foreshadowed path.[18]
A provision in predecessor legislation, requiring there not be dismissal until “the employee has been given an opportunity to defend himself or herself against the allegations made”, has been held to be a requirement not needing any particular formality, being “intended to be applied in a practical, common sense way so as to ensure that the affected employee is treated fairly.[19] Where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section”.[20]
Whereas Ms Wright had the opportunity to respond to Mr Chislett’s proposition that her job was redundant and demonstrably did so, she had no opportunity to respond to the performance concerns he held about her.
(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
Ms Wright did not seek and neither did Mr Chislett offer a support person to assist Ms Wright in the discussion which took place on 12 April 2026. Consideration of this criterion is a neutral matter in my determination as to whether Ms Wright was unfairly dismissed.
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal
I am satisfied that an operative part of the termination of Ms Wright’s employment related to the performance concerns held by Mr Chislett about her. The evidence before me does not suggest that the Respondent’s performance concerns were either detailed to Ms Wright or put to her in such a manner as might be found to be a warning about unsatisfactory work performance.
(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
The Respondent submitted in its Form F3 Employer Response Form that at the time of Ms Wright’s termination of employment it had 8 employees. I am not aware of any associated entities the employees of which need to be taken into account in considering the size of the employer’s enterprise. Further, there is no direct evidence before the Commission about whether the size of the enterprise likely impacted on the procedures followed by the Respondent in effecting Ms Wright’s dismissal.
(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
The Respondent is a small business employer, however there is no evidence before the Commission about the degree if any to which the absence of dedicated human resource management specialists or expertise available to it may have impacted upon the procedures it followed in effecting Ms Wright’s dismissal. Mr Chislett’s evidence however, did include that, prior to dismissing Ms Wright, he had consulted a solicitor. As there is no direct evidence before the Commission relating to how Mr Chislett formed his views or decided upon the procedure to follow when dismissing Ms Wright, consideration of this criterion is a neutral factor in my decision.
(h) any other matters that the FWC considers relevant
The evidence before me does not raise any other matters that I consider to be relevant to forming an opinion as to whether Ms Wright was unfairly dismissed.
CONCLUSION
Conclusion on the s.387 criteria
After considering each of the criteria within s.387, I am not satisfied there was a valid reason for Wimmera Laundry Services’ dismissal of Ms Wright. I am also of the view that her dismissal was procedurally unfair, as the reasons held by the Respondent for her dismissal included matters that were not put to Ms Wright before they were acted upon, giving her no opportunity either to remedy deficient performance or to give a response to Mr Chislett about concerns he held.
The Act requires the Commission to consider whether a dismissal was harsh, unjust or unreasonable by taking into account the matters at ss.387 (a) to (h). The meaning of the term “harsh, unjust or unreasonable” was considered by the High Court in the matter of Byrne and Frew v Australian Airlines Limited:
“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.”[21]
It has been further held that a dismissal 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.[22]
I find that Ms Wright’s dismissal was unjust and unreasonable. It was unjust as she was not given an opportunity to respond to the Respondent’s conclusion that she should be dismissed. Her dismissal was unreasonable since the factors relied upon for her dismissal were not established as factually correct.
Accordingly, I find that Ms Wright’s dismissal was an unfair dismissal.
REMEDY
The sections of the Act dealing with remedy once a finding of unfair dismissal has been made are set out in ss.390 – 393.
Pursuant to sub-s.390(3), an order for the payment of compensation to a person must not be made unless the Commission “is satisfied that reinstatement of a person is inappropriate” and the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case.”
Neither party argues that reinstatement should be considered by the Commission in the event of a finding of unfair dismissal.
After reviewing the evidence and other material before the Commission and taking into account the size of the enterprise and the now strained relationship of Mr Chislett and Ms Wright, I concur that in this case, reinstatement would be inappropriate.
Compensation – what must be taken into account in determining an amount?
Having determined that reinstatement is inappropriate, compensation may only be ordered if the Commission considers an order for payment of compensation is appropriate in the circumstances of the case (s.390(3)(b)). That is, an order for compensation is not automatic if reinstatement is found to be inappropriate, and is instead a discretion to be exercised, subject to certain further consideration. In this regard, s.392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement, including:
“(a) the effect of the order on the viability of the Respondent’s enterprise;
(b) the length of the Applicant’s service;
(c) the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;
(d) the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;
(e) the amount of any remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation;
(f) the amount of any income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the Commission considers relevant.”
I consider all the circumstances of the case below.
Effect of the order on the viability of the Respondent’s enterprise
There is no evidence before me about the effect of an order for compensation on the viability of the employer’s enterprise.
Length of the Applicant’s service
Ms Wright was employed by Wimmera Laundry Services Pty Ltd, between 7 November 2022 and 22 April 2024, a period of slightly more than two years and five months. Ms Wright also puts forward that she worked for the previous owners of the business from around 27 September 2010. There is however no evidence before me that she had continuous service from that time. While conceding the matter of continuous service, Mr Chislett does not contest that Ms Wright worked in the business of predecessor owners.
Whether or not the length of Ms Wright’s service was continuous from 2010, it is appropriate to note the overall circumstances, both because of what appears to be a lengthy period of work with previous owners as well as Ms Wright’s age, being 58. Together, those matters suggest Ms Wright has shown some considerable loyalty to the business and its various owners, and it is likely that, because of those overall circumstances, Ms Wright may face difficulties in finding alternative employment.
Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed
Assessment of the remuneration an Applicant would have received, had it not been for their dismissal is both an essential and difficult task.
As stated by a majority of the Full Court of the Federal Court, “[i]n determining the remuneration that the Applicant would have received, or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.”[23]
According to Mr Chislett’s evidence, he intended to give notice of termination to Ms Wright on Friday, 12 April 2024, but for some reason did not do so at that time. Instead, he mooted the prospect of redundancy to Ms Wright and then did not confirm the decision that she would lose her job until Monday of the following week, 22 April 2024. Mr Chislett’s evidence also included that he had some considerable criticisms of Ms Wright’s work performance.
I accept that Mr Chislett did not actually, definitively say to Ms Wright on 12 April 2024 that she was dismissed with effect on that day. To accept that Mr Chislett did actually say words to that effect would then require some gymnastics in order to reconcile the end of employment with the fact that Ms Wright kept working for the whole of the following week. It follows that Ms Wright’s date of termination of her employment was the date that she was provided with the letter by Mr Chislett, namely Monday, 22 April 2024.
Had Mr Chislett said directly to Ms Wright on 12 April 2024, that he held certain performance concerns about her, and warned her that dismissal may follow if she did not remedy the concerns, it is likely that Ms Wright would have argued against them and followed through on what she said to Mr Chislett in the conversation the two had on that day, “I'll start looking for another job”. There were significant tensions in the relationship between the two to suggest that an indefinite working relationship in the face of a conversation about performance and warnings was highly unlikely. It is also the case that, had these things being communicated by Mr Chislett on 12 April 2024, the datum point for consideration of the length of future employment would be that of an earlier date, rather than 22 April 2024.
In the circumstances, it would have been highly likely that Ms Wright’s employment with Wimmera Laundry Services would only have continued for a few weeks. In the overall circumstances, I set the anticipated period of employment at three weeks from the date of termination, 22 April 2024.
Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal
The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[24] What is reasonable depends on the circumstances of the case.[25]
Ms Wright’s evidence is that she made several job applications after being dismissed and that she heard back from only one of those prospective employers. She was successful in obtaining some work with that particular employer 4 or 5 weeks prior to the hearing, working significantly fewer shifts per week than her previous employment of 38 hours per week.[26]
Given the circumstances, as well as the fact that the applicant lives and works in a regional area and is at an age where finding further employment can be difficult, I am satisfied that Ms Wright has taken reasonable steps to mitigate the loss she incurred because of her dismissal.
Amount of remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation
Informing my view about an appropriate level of compensation to be awarded to the applicant, I take into account that Ms Wright has recently obtained the employment referred to above as well as the fact that that her hours of work associated with that new employment are substantially less than when she worked at Wimmera Laundry Services.
As my finding about the anticipated period of employment is shorter than the period of unemployment Ms Wright experienced, I do not consider that any deduction is required to be made from the order for compensation proposed by me.
Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation
While there is no evidence before me on the subject, I also take account of the fact that the anticipated period of employment identified by me is considerably shorter than the period between the time of Ms Wright’s dismissal and the issuing of this decision. Accordingly, no deduction needs to be made from the order for compensation for this criterion.
Other relevant matters
Ms Wright claims that she has continuous service with the predecessors of Wimmera Laundry Services Pty Ltd and that, as such, she is entitled to the payment of accrued long service leave upon termination of her employment under the Victorian Long Service Leave Act 2018. There is insufficient evidence before me to establish that there was such continuous service. I also of course, take into account that an order could not be made in relation to long service leave by the Commission, in relation to this application. To the extent that Ms Wright believes she is entitled to the payment of long service leave upon termination of employment, she should make contact with the Victorian Wage Inspectorate.
Compensation – how is the amount to be calculated?
The well-established approach to the assessment of compensation in unfair dismissal matters is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).[27] The approach and Sprigg reasoning has been confirmed several times in Full Bench decisions, including in ERGT Australia Pty Ltd v Kevin Govender.[28]
The approach in Sprigg is as follows:
Step 1: Estimate the remuneration the Applicant 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.
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.
Step 1
At the time of Ms Wright’s dismissal, she was in receipt of a salary of $65,000 per year.
It follows that my estimate of the remuneration Ms Wright would have received or have been likely to have received if her employment had not been terminated is $3,750.
Added to that amount is $412, being the amount of statutory superannuation contributions Ms Wright would have received for the anticipated period of employment (on the basis of 11% being the applicable rate from 1 July 2023 and before 30 June 2024).
Step 2
The second step in Sprigg requires the deduction of monies earned since termination, with the only exclusions being moneys received from other sources and unrelated to work done. As set out above, I do not consider there is a necessity to make any deduction for reason of earnings Ms Wright has received from the employer she commenced working with in the three or four weeks prior to the Commission’s hearing. This is on the basis that the period of unemployment between the date of dismissal and the date that she obtained the alternative work is longer than the anticipated period of employment referred to in step 1 and paragraph [76] above.
Step 3
It is necessary to consider the impact of both favourable and unfavourable contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment,[29] noting that it may not be appropriate to deduct contingencies if all of the projected period of continued employment has passed.[30] In Ms Wright’s case, I find there are none that ought to be taken into account in this matter, since the whole of the anticipated period of employment has passed.
Step 4
I have considered the impact of taxation, but have elected to settle a gross amount as set out in the table below and the compensation to be ordered will be subject to taxation according to law.
Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.”[31]
I am satisfied that the compensation to be ordered by me is proportionate to the circumstances of the case. In this regard, I consider the total quantum to be appropriate, with no deductions either for efforts to obtain further employment, or post-termination earnings.
Compensation – is the amount to be reduced on account of misconduct?
If I am satisfied that misconduct of the Applicant contributed to the employer’s decision to dismiss, I am obliged by s.392(3) of the Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct.
In determining the amount by which it is appropriate to reduce an order for compensation on account of misconduct, the Commission must consider, amongst other things, whether the Applicant engaged in misconduct and, if so, whether that misconduct contributed to the Respondent’s decision to dismiss the person. A Full Bench of the Commission has observed that, “[t]he section seems to require such consideration even if the FWC has found there was no valid reason for the person's dismissal.”[32] However, the Full Bench goes on to say that, “if there was no valid reason for the dismissal we think that may be relevant to the FWC's decision as to the ‘appropriate’ amount by which to reduce the amount of compensation the FWC would otherwise order.”[33]
I have not identified misconduct on the part of Ms Wright therefore no deduction is made for that purpose.
My calculation of the amount payable to Mr Rouessart is set out in the following table:
| 1. Estimate the amount the employee would have received or would have been likely to receive if the employment had not been terminated, | 3 weeks projected lost income at the rate of $1,250 per week/$65,000 per year. | $3,750 |
| Employer superannuation contribution – 11% (as applicable after 1 July 2023 and until 30 June 2024) | + $412 | |
| Subtotal | $4,162 | |
| Deduction attributable to mitigation efforts | $0 | |
| Deduction for misconduct | $0 | |
| 2. Deduct monies earned since termination, | $0 | |
| 3. Deductions for contingencies, | $0 | |
| TOTAL | $4,162 | |
| 4. Calculate any impact of taxation, | To be taxed according to law | |
| 5. Apply the legislative cap. | Does not exceed the compensation cap. |
An order for compensation consistent with the above table will be issued by me at the same time as this decision. The order will require a payment of wages in the amount of $3,750, to be taxed according to law, and of superannuation in the amount of $412, to be paid into Ms Wright’s nominated superannuation fund, each to be paid within 14 days of the date of this decision.
Ms Wright’s application is determined accordingly.
COMMISSIONER
Appearances:
Mrs J Wright, for the Applicant.
Mr B Chislett, for the Respondent.
Hearing details:
31 July.
2024.
[1] Teams recording of determinative conference, 36:58 – 39:51
[2] Application Form, Form F2, Item 2.1; Digital Hearing Book, p.4.
[3] Applicant’s Documents; Digital Hearing Book, p.25.
[4] Ibid, p.26.
[5] Teams recording of determinative conference, 10:09 – 11:13
[6] Ibid.
[7] Form F2, Application Form; Digital Hearing Book p.3.
[8] Applicant’s Submissions; Digital Hearing Book, p.23.
[9] Teams recording of determinative conference, 12:06 – 13:03
[10] Teams recording of determinative conference, 51:23 – 53:30.
[11] Ibid, 36:58 – 39:51.
[12] Ibid; 48:29.
[13] Selvachandran v Peteron Plastics (1995) 62 IR 371, 373.
[14] Robe v Burwood Mitsubishi Print R4471 (AIRCFB, Ross VP, Polites SDP, Foggo C, 11 May 1999).
[15] Miller v UNSW [2003] FCAFC 180 (Gray J), [13].
[16] Selvachandran v Peteron Plastics (1995) 62 IR 371, 373.
[17] Chubb Security Australia Pty Ltd v Thomas (unreported, AIRCFB, McIntyre VP, Marsh SDP, Larkin C, 2 February 2000) Print S2679 [41].
[18] Wadey v YMCA Canberra [1996] IRCA 568 cited in Dover-Ray v Real Insurance Pty Ltd[2010] FWA 8544; (2010) 204 IR 399 at [85].
[19] Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1; [2010] FWAFB 1200 at [26] citing Gibson v Bosmac Pty Ltd [1995] IRCA 222; (1995) 60 IR 1 at 7 (Wilcox CJ).
[20] Gibson v Bosmac Pty Ltd [1995] IRCA 222 (5 May 1995); (1995) 60 IR 1 at 7 (Wilcox CJ).
[21] [1995] HCA 24 (McHugh and Gummow JJ), [128].
[22] Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1,10 citing Byrne v Australian Airlines Ltd [1995] HCA 24 (McHugh and Gummow JJ), [128].
[23] He v Lewin [2004] FCAFC 161, [58].
[24] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].
[25] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.
[26] Teams recording of determinative conference, 30:01.
[27] (1998) 88 IR 21.
[28] [2021] FWCFB 5389, [35].
[29] Enhance Systems Pty Ltd v Cox[2001] AIRC 1138, [39]
[30] Bowden v Ottrey Homes[2013] FWCFB 431, [54].
[31] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [17].
[32] Read v Gordon Square Child Care Centre Inc [2013] FWCFB 762, [83].
[33] Ibid.
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