Mrs Lisa Grundy v Simsai Construction Group Pty Ltd
[2024] FWC 274
•29 FEBRUARY 2024
| [2024] FWC 274 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Lisa Grundy
v
Simsai Construction Group Pty Ltd
(U2023/9983)
| DEPUTY PRESIDENT BINET | PERTH, 29 FEBRUARY 2024 |
Application for an unfair dismissal remedy
On 12 October 2023, Ms Lisa Grundy (Mrs Grundy) filed an application (Application) pursuant to section 394 of Fair Work Act 2009 (Cth) (FW Act) with the Fair Work Commission (FWC) alleging she was unfairly dismissed by Simsai Construction Pty Ltd (Simsai).
On 23 October 2024, Simsai filed a Form F3 - Employer Response to Unfair Dismissal Application, noting it had no jurisdictional objections to the Application (Form F3). It appears from the Form F3 that several jurisdictional objections may have been available to Simsai (Jurisdictional Objections).
Simsai declined to participate in a conciliation conference with a staff conciliator and the matter was allocated to my Chambers for determination.
Taking into account the parties wishes and circumstances I determined that a hearing, rather than a determinative conference, was the most effective and efficient way to determine the Application. Consequently, the Application was listed for a hearing in Perth on 5 January 2024 (Hearing).
Directions for the filing of materials in advance of the Hearing were issued to the parties on 27 November 2024 (Directions).
Simsai was placed in liquidation on 5 December 2023.[1] On 22 December 2023 the court appointed liquidators (Liquidators) advised Chambers that they declined to file any of the materials set out in the Directions.[2] Both Parties and the Liquidators declined to make oral submissions. The Hearing date was consequently vacated and the Application determined on the papers.
Evidence
Mrs Grundy filed three witness statements setting out her evidence in chief in relation to the Jurisdictional Objections, the merits of the Application and remedy.
Mrs Grundy also prepared and filed a digital court book containing the evidence and submissions of the parties (DCB).
In reaching my decision, I have considered all the submissions made and the evidence tendered by the parties, even if not expressly referred to in these reasons for decision.
Background
Mrs Grundy commenced employment as an Accounts Assistant with Simsai on 10 December 2013.[3]
Ms Grundy says that until her dismissal she worked from home for a minimum of 35 hours per week making the occasional visit to the office.[4]
In its Form F3 Simsai assert that Mrs Grundy did not commence working from home until the COVID lockdowns and that the arrangement for her to work from home was as a result of those lockdowns.[5]
Mrs Grundy disputes this. She says that she only accepted employment on the basis that she would work from home and attend the office occasionally because at the time she had a young child and a breastfed baby.[6] Mrs Grundy says one of the directors of Simsai, Mr Ashley Thomlinson (Mr Tomlinson) subsequently encouraged her to arrange for her children to be home schooled. Mrs Grundy says that she did so on the basis that Simsai would continue to allow her to work from home.[7] Ms Grundy provided several emails consistent with her primarily working from home. For an example an email asking to be allocated a workstation in the office during a period she had care arrangements in place for her children.[8] I accept that Mrs Grundy’s arrangement to work from home predated COVID.
Simsai asserts that a review was conducted of its business needs and that a decision was made that Mrs Grundy’s duties could best be performed in the office in 20 hours over three days per week. Simsai assert that the reasons for these changes were discussed with Mrs Grundy on multiple occasions.[9]
Mrs Grundy concedes that on 23 June 2023 she received a telephone call from Mr Tomlinson informing her that the business was proposing to change software and hire an accountant and that this would potentially lead to a reduction in her hours of work to 20 hours per week. Mrs Grundy says that Mr Tomlinson also informed her that the business would require her to work from the office moving forward. Mrs Grundy says that she reminded Mr Tomlinson of her home schooling arrangements and told him a reduction in hours would be financially difficult for her family. [10]
Mrs Grundy says that later the same day she phoned Mr Tomlinson and requested that the proposal be put in writing so that she could understand its terms.[11]
A new accountant was subsequently hired.[12]
Mrs Grundy says that Mr Tomlinson did not provide any further information about any changes to her role until 23 August 2023, when he called her again to inform her that as a result of the proposed restructure she would be offered reduced hours of work and she would be required to work in the office. Mr Tomlinson asked Mrs Grundy to confirm by 25 August 2023 whether she wished to accept the new arrangements.[13]
Later the same day Mrs Grundy emailed Mr Tomlinson and requested that the proposal be put in writing so she could understand its terms and asked what would be the consequence of her declining to agree to the new arrangements.[14]
Mr Tomlinson subsequently replied by email the same day formally offering Mrs Grundy a role as a Claims Officer working in the office commencing mid-September 2023.[15] His email provided no further details of the role such as its renumeration and he did not indicate what consequences would flow from her declining to accept the new arrangements.
On the 24 August 2023 Mrs Grundy informed Mr Tomlinson that she was unable to agree to accept the offer within the time framer offered given the lack of details about the new role, the need to make alternative arrangements for schooling her children and the financial impact of the reduction of hours. Mrs Grundy concluded by indicating that she expected that Simsai would treat her refusal to accept the offer as a redundancy.[16]
On 28 August 2023, Mr Tomlinson sent at email to Mrs Grundy denying that she had been made redundant in light of the business offering her ongoing employment and that in the absence of her accepting the new arrangements her employment would cease effective 1 October 2023.[17]
Later the same day, Simsai sent Mrs Grundy a letter confirming that her employment would cease on 1 October 2023. The Termination Letter identifies the reason for her dismissal as:
“Ineffective communication and the resulting performance Issues due to working from home and unavailability at office in line with our accounts department restructuring.”
In its Form F3 Simsai say that a new employee was appointed to the role offered to Mrs Grundy. Ms Grundy acknowledges that an advertisement for the role appeared after she declined the offer and that the advertisement was withdrawn after a few days. Ms Grundy says that since her dismissal she has become aware that some of her duties have been delegated to other staff members.[18]
Mrs Grundy filed the Application on 12 October 2023.[19]
On 1 November 2023 Simsai was placed in Administration.[20] And subsequently placed in liquidation.[21]
Mrs Grundy has provided no evidence of any efforts to mitigate her loss since her dismissal.
Mrs Grundy seeks an order for payment of compensation in accordance with sections 390(3) and 392 of the FW Act.[22]
Is Mrs Grundy protected from unfair dismissal?
An order for reinstatement or compensation may only be issued if Mrs Grundy was unfairly dismissed and Mrs Grundy was protected from unfair dismissal at the time of his dismissal.
Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:
- the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
- one or more of the following apply:
i.a modern award covers the person;
ii.an enterprise agreement applies to the person in relation to the employment;
iii.the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the Fair Work Regulations 2009 (Cth) (FW Regulations), is less than the high income threshold.
For the purposes of Part 3-2 of the FW Act a person is an employee if they are employed by a national system employer. There is no dispute and I am satisfied that Simsai is a national system employer[23] and Mrs Grundy is therefore a national system employee.
Depending on the number of employees employed by an employer the minimum employment period is either six or twelve months.
Mrs Grundy commenced employment with Simsai in December 2013.[24] Mrs Grundy was dismissed effective 1 October 2023.[25]
I am therefore satisfied that, at the time of dismissal, Mrs Grundy was an employee who had completed a period of employment of at least the minimum employment period.
Mrs Grundy’s annual income was $58,240.[26] Her annual earnings fell below the high income threshold of $167,500 which prevailed at the time of her dismissal.
Consequently, I am satisfied that Mrs Grundy was a person protected from unfair dismissal.
Was Mrs Grundy unfairly dismissed?
Section 385 of the FW Act provides that a person has been unfairly dismissed if the FWC is satisfied that:
- the person has been dismissed;
- the dismissal was harsh, unjust or unreasonable;
- the dismissal was not consistent with the Small Business Fair Dismissal Code (Code); and
- the dismissal was not a case of genuine redundancy.
Was Mrs Grundy dismissed?
Section 386(1) of the FW Act provides that a person has been dismissed if the person’s employment was terminated at the employer’s initiative or the person resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by their employer.
Section 386(2) of the FW Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant.
There was no dispute, and I find, that Mrs Grundy’s employment with Simsai was terminated at the initiative of Simsai.[27]
I am therefore satisfied that Mrs Grundy has been dismissed within the meaning of section 385 of the FW Act.
Was Mrs Grundy’s dismissal consistent with the Small Business Fair Dismissal Code?
Section 388 of the FW Act provides that a person’s dismissal is consistent with the Code if:
- immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
- the employer complied with the SBFD Code in relation to the dismissal.
A “small business employer” is defined in section 23 of the FW Act as:
“23 Meaning of small business employer
(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2) For the purpose of calculating the number of employees employed by the employer at a particular time:
(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.
(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a) the employee who is being dismissed or whose employment is being terminated; and
(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”
Both Mrs Grundy and Simsai originally indicated that Simsai was a small business for the purposes of the section 388 of the FW Act.
The Code was declared by the Minister for Employment and Workplace Relations on 24 June 2009 and provides as follows:
“Small Business Fair Dismissal Code
Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009.
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”
Mrs Grundy subsequently submitted that Simsai was not a small business for the purposes of section 388 of the FW Act.[28] Whether or not Simsai was a small business I am satisfied that Mrs Grundy was not summarily dismissed. There is no evidence before me that the requirements for an ‘Other dismissal’ were met. Simsai have not provided evidence of compliance with the Code.
I am therefore not satisfied that Simsai was obliged to or did comply with the Code in relation to the dismissal.
Was Mrs Grundy’s dismissal a case of genuine redundancy?
Pursuant to section 389 of the FW Act, a person’s dismissal was a case of genuine redundancy if:
- the 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
- the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
In correspondence with Ms Grundy Simsai asserted that the dismissal was not a redundancy. In its Form F3 response Simsai did not assert that Ms Grundy’s dismissal was a case of genuine redundancy. Mrs Grundy submits that Simsai failed to engage in any consultation with her with respect to her position being made redundant.
In the absence of evidence to the contrary I am not satisfied that the dismissal was a case of genuine redundancy.
Was the Application made within the period required?
Pursuant to section 396 of the FW Act, the FWC is obliged to decide whether an application was made within the period required in subsection 394(2) of the FW Act before considering the merits of an application.
Section 394(2) of the FW Act requires that the Application is to be made within twenty-one (21) days after the dismissal took effect.
It is not disputed, and I find, that Mrs Grundy was dismissed from her employment effective 1 October 2023 and made the Application on 12 October 2023.[29] I am therefore satisfied that the Application was made within the period required in subsection 394(2) of the FW Act.
Was the dismissal harsh, unjust or unreasonable?
The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd by McHugh and Gummow JJ as follows:
“…. 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.”[30]
Section 387 of the FW Act provides that, 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);
b.whether the person was notified of that reason;
c.whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;
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;
e.if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal;
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;
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.
Each of these criteria must be considered to the extent they are relevant to the factual circumstances of the Application.[31]
Was there a valid reason for the dismissal related to Mrs Grundy’s capacity or conduct?
In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”[32] and should not be “capricious, fanciful, spiteful or prejudiced.”[33] It is not the role of the FWC to stand in the shoes of the employer and determine what the FWC would do if it was in the position of the employer.[34]
The employer carries the onus of establishing a valid reason.[35]
The Termination Letter identifies the reason for Mrs Grundy’s dismissal as:[36]
“Ineffective communication and the resulting performance Issues due to working from home and unavailability at office in line with our accounts department restructuring.”
Mrs Grundy denies that her communication was ineffective or that there were problems with her performance. Simsai have provided no evidence to the contrary.
Based on the evidence before me I am not satisfied there exists a valid reason for Mrs Grundy’s dismissal relating to Mrs Grundy’s capacity or conduct.
Was Mrs Grundy notified of the valid reason?
Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,[37] and in explicit,[38] plain and clear terms.[39]
There is insufficient evidence to establish that Mrs Grundy was notified of the reasons for her dismissal as set out in the Termination Letter prior to receiving that letter.
Was Mrs Grundy given an opportunity to respond to any valid reason related to his capacity or conduct?
An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee’s employment.[40]
The opportunity to respond does not require formality and this factor is to be applied in a common sense way to ensure the employee is treated fairly.[41] 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.[42]
There is insufficient evidence to establish that Mrs Grundy was given an opportunity to respond to the reasons for her dismissal as set out in the Termination Letter prior to receiving that letter.
Did Simsai unreasonably refuse to allow Mrs Grundy to have a support person present to assist at discussions relating to the dismissal?
Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
There is no evidence that Mrs Grundy requested and was denied the presence of a support person.
Was Mrs Grundy warned about unsatisfactory performance before the dismissal?
Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employer about the unsatisfactory performance before the dismissal. Unsatisfactory performance is more likely to relate to an employee’s capacity than their conduct.[43]
There is no evidence that any performance concerns were raised with Mrs Grundy until the Termination Letter.
To what degree would the size of Simsai’s enterprise and the absence of dedicated human resource management specialists or expertise be likely to impact on the procedures followed in effecting the dismissal?
Where an employer is substantial and has dedicated human resources personnel, and access to legal advice, there will likely be no reason for it not to follow fair procedures.[44]
Simsai is a small scale business without internal human resources support and with limited financial capacity to secure advice externally. This is reflected in the deficiencies in the process they adopted in effecting the dismissal.
What other matters are relevant?
Section 387(h) of the FW Act requires the FWC to take into account any other matters that the FWC considers relevant to determining whether the dismissal was harsh, unjust or unreasonable.
Mrs Grundy has not identified any other relevant matters. I have taken into account those matters that I consider relevant such as her length of service.
Conclusion
I have made findings in relation to each matter specified in section 387 of the FW Act as relevant.
I have considered and given due weight to each factor as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.
Having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of Mrs Grundy was unreasonable because she was not informed of the reasons for her dismissal or given an opportunity to respond to those reasons before the decision to dismiss her was made.
I am therefore satisfied that Mrs Grundy was unfairly dismissed within the meaning of section 385 of the FW Act.
Remedy
Having found that Mrs Grundy was protected from unfair dismissal at the time of being dismissed and was unfairly dismissed I must determine whether to make an order for reinstatement or compensation.
An order for compensation may only be made if I am satisfied that reinstatement is not appropriate.
I am satisfied that reinstatement is not appropriate because Simsai has ceased trading and is in liquidation.
I may only make an order for compensation to Mrs Grundy if it is appropriate in all the circumstances.
I am satisfied that an order for compensation is appropriate in all the circumstances of this case in particular because of the lack of valid reason for Ms dismissal and the length of her service.
Section 392 of the FW Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered. I have considered these matters below.
Mrs Grundy’s annual income was $58,240.[45]
Her evidence is that she intended to remain in the employment of Simsai indefinitely however the company was placed in liquidation on 5 December 2023 so her employment could not have extended beyond that date. It is quite possible her employment would not have continued beyond 1 November 2023 when Simsai was placed in Administration.[46]
Mrs Grundy says that she endeavoured to mitigate her loss by securing alternative employment but has been unable to do so and as a consequence did not received any remuneration between her dismissal and 5 December 2023.
I find it is not appropriate in the circumstances that a contingency should be applied.
Given that Simsai is already in liquidation I find that an order for compensation will not affect the viability of Simsai’s enterprise.
Mrs Grundy was employed by Simsai for nearly 10 years. I have taken this into account when calculating the amount of compensation to be ordered.
Ms Grundy has provided no evidence of her efforts to secure alternative employment. She was given four weeks notice of her impending dismissal and says that she was unable to secure any employment between 28 August 2023 and 5 December 2023. With the current labour shortages in Western Australia and consequential willingness of employers to provide working from home and flexible working hours of work in the absence of evidence to the contrary I am not satisfied that Mrs Grundy has fully mitigated her loss.
I have not found any misconduct by Mrs Grundy that contributed to the dismissal.
I note that the amount of compensation I propose to order does not include a component for shock, humiliation or distress.
The amount of compensation I which I propose to order does not exceed the compensation cap.
Conclusion
I am satisfied that the Applicant was protected from unfair dismissal, that the dismissal was unfair and a remedy of compensation of $5000 gross less applicable tax is appropriate.
An Order[47] to this effect will be issued with this Decision.
DEPUTY PRESIDENT
[1] Digital Court Book (DCB) v1 50. The matter proceeded in reliance of the decision of the Full Bench in Belan v National Union of Workers (NSW Branch)[2018] FWCFB 94 that the FWC is not a court and therefore proceedings are not stayed by virtue of section 471B of the Corporations Act 2001 (Cth).
[2] DCB v2 74.
[3] DCB v1 10.
[4] DCB v1 10.
[5] DCB v2 67.
[6] DCB v1 30.
[7] DCB v1 10.
[8] DCB v1 7-8.
[9] DCB v2 67- 72.
[10] DCB v1 10, 18-19.
[11] DCB v1 11, 19.
[12] DCB v1 30.
[13] DCB v1 10, 18-19.
[14] DCB v1 11, 19, DCB v2 69.
[15] DCB v2 70
[16] DCB v1 19, DCB v2 71 – 73.
[17] DCB v2 72.
[18] DCB v1 30.
[19] DCB v1 8.
[20] DCB v1 20.
[21] DCB v2 74.
[22] DCB v1 6.
[23] DCB v1 10.
[24] DCB v1 5.
[25] DCB v1 5.
[26] DCB v2 64, DCB v1 34.
[27] DCB v1 13.
[28] DCB v1 51.
[29] DCB v1 3-13.
[30] (1995) 185 CLR 410, 465 (McHugh and Gummow JJ).
[31] Sayer v Melsteel Pty Ltd[2011] FWAFB 7498, 4 [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB), (Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].
[32] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
[33] Ibid.
[34] Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
[35] Culpeper v Intercontinental Ship Management Pty Ltd (2004) 134 IR 243.
[36] DCB (n 1).
[37] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 [73].
[38] Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).
[39] Ibid.
[40] Crozier (n 71), 151 [75].
[41] Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1, 14 – 15 [26] quoting Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).
[42] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).
[43] Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.
[44] Jetstar v Meetson-Lemkes (2013) 239 IR 1, Ibid [21] – [22], [68].
[45] DCB (n 1) v2 64, DCB v1 34.
[46] DCB v1 20.
[47] PR771953.
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