Mrs Patricia Katsambis v Logandale Plaza News

[2013] FWC 3868

[2013] FWC 3868

FAIR WORK COMMISSION

DECISION

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

Mrs Patricia Katsambis
v
Logandale Plaza News
(U2012/17287)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 24 JUNE 2013

Summary: arbitration seeking an unfair dismissal remedy - jurisdictional question disposed of re whether dismissal at initiative of the employer - refusal to provide hours for indefinite period constitutes dismissal - substantive matter evaluated - Applicant dismissed for operational reasons owing to business downturn - not harshly, unjustly or unreasonably dismissed.

[1] On 24 December 2013, Mrs Patricia Katsambis (“the Applicant”) made an application under s.394 of the Fair Work Act 2009 (“the Act”) in which she sought an unfair dismissal remedy for what she alleges to have been her dismissal from the Logandale Plaza Newsagency in Logandale, Queensland (“the Respondent”).

[2] The application has been subject to a conciliation conference (albeit unsuccessfully) and the employer is a national system employer. There is no jurisdictional impediment to the application pressed by the Respondent (bar as discussed below).

[3] The Applicant had been employed in the newsagency since 18 April 2010. The Applicant claims to have been dismissed (and that her dismissal took effect) on 10 December 2012.

[4] It is not disputed that the Applicant had been employed as a casual employee for that period of time.

[5] The central claim is that it was disclosed to the Respondent on Friday 7 December 2012 that the Applicant was pursuing a Q Comp appeal in relation to a previous decision by WorkCover to not allow her claim, and that upon the employer becoming aware of the situation the Applicant was no longer offered hours on an indefinite basis the following Monday 10 December 2012. This was communicated to the Applicant verbally by a telephone call at the initiative of Mrs Hao, who is the proprietor of the newsagency, at around 9:15 AM that same day.

[6] The Applicant argues that there is a causal connection between the awareness of the Q Comp appeal in the decision to cease offering hours. Correspondence (dated 10 December 2012 but) given to the Applicant on 12 December 2012 (“the correspondence of 12 December 2012”) read as follows:

Dear Patricia Katsambis

Due to the business is going down when the home delivery run has been taken, we are unable to offer you any more hours from Tuesday, 11 December 2012. In the future, if the business is getting better, I will contact you.

Thank you for your understanding! (sic)

[7] This correspondence seems to have reflected, at least largely so, the content of a telephone call initiated by Mrs Hao to the Applicant on 10 December 2012 (which is discussed below). Following that conversation it appears the Applicant requested Mrs Hao to put the content of the telephone conversation into a written form (hence the correspondence of 12 December 2012).

[8] The correspondence was signed by Mrs Liz Shi Hao. Mrs Hao, I add at this juncture, is a Chinese lady who required the assistance of a Mandarin interpreter over the course of the proceedings (though she was otherwise assisted by legal representation).

[9] The Applicant argues more specifically that she became aware that Mrs Hao had contacted a work colleague by the name of Ms Anita Gill on Sunday 9 December 2012, and enquired in a “hysterical state” about the Q Comp correspondence she had received.

[10] This invites, so the Applicant suggests, that an inference be drawn that the Applicant was dismissed or offered no more hours for reasons of her conduct in initiating a Q Comp appeal.

[11] The Applicant claims in this respect that she had contacted Mrs Hao by telephone later on 10 December 2012, that is, following their initial telephone conversation, and sought a meeting with her. Upon meeting Mrs Hao, the Applicant inquired why she had been selected for a reduction in hours and not somebody else. Mrs Hao is said to have replied that the Applicant was the last person hired. The Applicant contends that a person she identified only as “Stella” was the last person hired and that she should have been the person who was dismissed on the basis of Mrs Hao’s criteria.

[12] The Applicant also claims that her hours have been offered to other employees.

[13] The Applicant also claims that Mrs Hao took an adverse view of her because she had previously raised earlier in 2012 issues of the appropriateness of the wage rates being paid to employees consequent of a minimum wage increase.

[14] But equally, during the course of her evidence, the Applicant recalled that at no stage had Mrs Hao ever given any indication that she was ill-disposed towards her (the Applicant) because of these actions.

[15] The Respondent argued initially that there had been no termination at the initiative of the employer as the Applicant’s hours had been reduced but she had not been dismissed as such, instead only had her hours reduced for the following week.

[16] I will deal with this matter initially as it raises a jurisdictional point.

[17] As I have cited above, the letter of 12 December 2012 is not confined in the manner the Respondent argues for the purposes of the jurisdictional objection. That is, the correspondence of 12 December 2012 is indefinite in its terms and does not make reference to the unavailability of hours for the following week only.

[18] Further, Mrs Hao herself gave evidence that during the course of the conversation with the Applicant on 10 December 2012 she had stated words to the effect, “At the moment I don’t need you to come.” (sic) Mrs Hao went on to state in her written evidence that she told the Applicant that “she was not terminated and I would call her if more hours became available.”

[19] The correspondence is sufficient in its own terms to indicate to the Applicant that there would be no further work until an indefinite point in the future and then contingent on an upturn in business. Mrs Hao’s own evidence supports this finding.

[20] It is not possible for an employer to sustain an employment relationship with an employee on an indefinite basis merely by refusing to specify the date on which the dismissal takes effect, or by promising more paid hours at an indefinite point in the future. For practical purposes, the Applicant was no longer required as an employee from 10 December 2012, and that marks the effective date on which the dismissal took effect for the purposes of establishing jurisdiction for the purposes of s.385(a) of the Act. The Applicant therefore is not a person who is not protected from unfair dismissal.

[21] It may well be that in the telephone conversation of 10 December 2012, Mrs Hao had informed the Applicant that her hours have been reduced to zero for the coming week only. On the evidence I have heard in this matter it was implausible given the circumstances of the business (which are discussed below) that the Applicant would have been offered hours in the foreseeable future. Further, the 12 December 2012 correspondence, which formalised the state of affairs between the Applicant and her employer, is also couched in indefinite terms, as I have said above.

[22] Whether or not the Applicant was as a consequence harshly, unjustly or unreasonably dismissed for the purposes of s.387 of the Act is another question, to which I will now turn.

[23] Ms Gill, who has been employed at the newsagency for seven years, recalled the telephone conversation of 9 December 2012 (a Sunday night), in which Mrs Hao had asked her to explain what the Q Comp correspondence concerned. Ms Gill thereafter sent an SMS text to the Applicant asking her for her advice so that she could relay it to Mrs Hao.

[24] Ms Gill’s evidence did not suggest that Mrs Hao took an adverse view about the Applicant because of her having taken this step in relation to her WorkCover claim, which had been refused.

[25] Mrs Hao herself gave evidence that the newsagency business of which she was the proprietor was suffering as a consequence of a number of developments. One of these was that Mrs Hao’s husband who had initially run the business had fallen very ill and had to return to China after three months of hospitalisation in Australia. Mrs Hao, who had no experience in running the newsagency, was left on her own whilst pregnant. Ms Gill and Ms Stella Dai (who is referred to below by the Respondent as “Stella”) both corroborated this claim to the extent of their knowledge about Mr Hao’s decline in health.

[26] The newsagency also lost the newspaper home delivery run at this time and Mrs Hao gave further evidence that sales were down by approximately 20%. Mrs Hao tendered the enterprise’s monthly sales figures for March 2011, 2012 and 2013. Over the period March 2012 - March 2013, the monthly sales figures had fallen by $30,000. This is approximately a fall of around 20% of total sales.

[27] Ms Gill also gave evidence that she was aware that at the time “business had been slow and the newsagency had lost the paper run.”

[28] Some closer observations need to be made about the newsagency’s financial situation. The newspaper run had become unprofitable over 2011 – 2012. This is because its critical mass (the number of subscribers) had shrunk during that period. Mrs Hao’s evidence was that the cost of the driver and car maintenance exceeded considerably the profit that was returned to the newsagency from the run. Indeed, the situation was such that when she was six months pregnant, Mrs Hao herself was performing the morning newspaper run in order to reduce the drag on profits.

[29] Mrs Hao was not able to hand the newspaper delivery contract back to its principal until November 2012.

[30] Thus, the very fact the newspaper run itself was unprofitable was not a factor making for the operational circumstances that necessitated the dismissal of the Applicant. The turnover arising from the newspaper run had shrunk over previous year and had eroded profitability for some time before December 2012 (when the Applicant had been dismissed).

[31] In actuality, it was not until the newspaper run was formally handed back to the principal that business activity fell away inside the newsagency itself. Ms Gill, who is a long-standing employee and a person on whom Mrs Hao places great reliance, gave evidence that once the newspaper run had been handed back fewer people came into the newsagency to pay accounts (and make other incidental purchases). Consequently, when the newspaper run was handed back in November 2012 sales volumes fell away in the newsagency itself. It was this development that Ms Gill herself had observed.

[32] Mrs Hao claims that when she received an e-mail from Q Comp she did not understand what the purpose of that organisation was and was in a state of confusion as to what was happening given a previous WorkCover claim had been rejected. It was in this context that Mrs Hao claimed that she contacted Ms Gill.

[33] Mrs Hao also gave evidence that the Applicant’s allegations that another employee was employed subsequent to her (the Applicant) were inaccurate. The person referred to as “Stella” by the Applicant was actually not a paid employee of the newsagency but a young Chinese woman who has been helping Mrs Hao out because of her family situation since her husband’s return to China. Ms Dai’s mother had been long term friends with Mrs Hao’s mother and that relationship facilitated the arrangement.

[34] Section 387 of the Act provides 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

(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)

[35] The Applicant was not dismissed for reasons of her capacity or conduct. The Applicant was dismissed, for reasons that I will give below, because of the operational circumstances of the Respondent’s business. Such reasons for the dismissal are not reasons that provide a valid reason for purposes of s.387(a) of the Act. This much was made clear by the Full Bench in UES (Int’l) Pty Ltd v Leevan Harvey (“Re: UES”).

[36] The Full Bench found that an employer who dismissed an employee for reasons of redundancy did not have a “valid reason” for the dismissal in relation to the employees conduct or capacity:

As we have already indicated, in our view the reasons for the dismissal of Mr Harvey by UES were not related to his capacity or conduct [...]. accordingly, there cannot have been and was not a valid reason for his dismissal related to his capacity or conduct [...]. in the circumstances of this case we regard it as a neutral matter with respect to our consideration as to whether Mr Harvey's dismissal was harsh, unjust or unreasonable.¹

[37] The majority of the Full Bench in Re: UES concluded that where a dismissal was for reasons of redundancy it should be considered under s.387(h) of the Act, and then in the wider context as to whether or not the dismissal was harsh, unjust or unreasonable.

(b) whether the person was notified of that reason

[38] The Applicant was not notified in advance of the reason for her dismissal. The decision was communicated to her at the time the dismissal took effect.

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[39] The Applicant was not dismissed for reason of capacity or conduct as operational reasons do not (on the prevailing authority) reflect on capacity and conduct.

(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

[40] Given the circumstance set out above, the Applicant did not have an opportunity to consider the role of a support person such that the Respondent could be in a position to refuse that assistance (should Mrs Hao have been so inclined).

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[41] This matter did not relate to the Applicant’s performance as such (even though issues of performance, much like conduct and capacity may be a reason for why an employee is selected for redundancy).

(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

[42] The Respondent appears to employ very few employees (regardless of mode of employment), and likely no more than three or so persons. The Respondent, by any definition, is a very small employer.

[43] It is indeed likely that the size of the Respondent’s enterprise impacted upon the procedures used in effecting the dismissal. Mrs Hao was the sole proprietor, she has English language difficulties, and there were no resources available to her to consult of any professional kind. Mrs Hao was required to resort to seeking advice about the Q Comp matter from her long-standing employee, Ms Gill.

[44] It is likely that Mrs Hao had limited capacity and limited resources to provide for anything but the most perfunctory of procedures in relation to dismissing an employee.

(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

[45] For the same reasons as suggested above, it is likely that the absence of procedural richness in relation to the Applicant’s dismissal resulted from the unavailability of HR expertise at Mrs Hao’s disposal.

(h) any other matters that the FWC considers relevant

[46] The Applicant’s essential claim is that she was dismissed for reasons of having initiated a Q Comp review of a prior WorkCover claim.

[47] As I mentioned above, where there is temporal proximity in relation to particular conduct and a dismissal, an inference might be reasonably drawn that there is a causal connection between the two actions. Can such an inference be drawn in the current circumstances?

[48] Demonstrably, there had been an appreciable decline in sales in the small business over the year March 2012 to March 2013. A trending decline in sales of 20% in a small business such as a newsagency is very significant and cash flow is dramatically reduced. Much of this decline in sales, although not all, is attributable to the loss of the newspaper run in November 2012. But the decline in sales and the consequent loss of productivity pre-dated the dismissal of the Applicant. The effect on the business was demonstrated by the steady decline in the numbers of employees across the period 2011 to 2012.

[49] But as I have said above, while the business obviously lagged over the course of 2011-2012, it was only once the newspaper run had been handed back to the principal in November 2012 that business activity levels in the newsagency declined noticeably. With the loss of the newspaper delivery accounts, customer traffic declined and wider sales contracted.

[50] It was in this context a small business such as Mrs Hao’s was left with no other alternative revenue sources, and labour costs (amongst other costs), had to be quickly reduced.

[51] An examination of the monthly sales figures for the enterprise show that there are a range of revenue sources for the business that are all very modest contributors (apart from cigarettes, which itself is declining as a share of sales) to the overall sales figures. That is, there are very few options, if any, by which the Respondent may grow a new revenue stream to replace a lost revenue stream such as newspapers. Newspapers had previously attributed almost 30% of total sales, but had now dwindled to a little over 11%. With the loss of the accounts proper in November 2012 the situation worsened further.

[52] These are telling figures. They persuade me that the Respondent had to act with haste to address its parlous financial predicament. Further, Mrs Hao gave evidence that she had to do as best she could to enhance profitability in order to meet the ongoing costs of her husband’s medical treatment in China. This meant putting more of her own time personally into the business (despite having a very young child) and attempting to reduce costs.

[53] I think it is reasonable that the Applicant had concerns that she had been dismissed for reasons other than those which had been communicated to her verbally on 10 December 2012, and as further articulated in the correspondence of 12 December 2012. She had recently initiated a Q Comp review, believed Mrs Hao had formed a negative view about her because of this development, and felt that the Respondent’s conduct must be related to her actions in that regard. The Applicant no doubt considered her dismissal to be harsh in the circumstances. Communication issues may have exacerbated the situation

[54] Mrs Hao, however, had a number of substantial stressors in her life at the time, and I draw no adverse inference from any reaction she may have had to a new regulatory process commencing about which she had no knowledge or experience. Ms Gill gave no evidence that Mrs Hao had formed any view about the Applicant and Mrs Hao herself gave evidence her motivation at all times was otherwise.

[55] In any event, whilst Mrs Hao may have been concerned about the implications of this new development (the Q Comp review) it had no immediate impact for her as the review decision did not arise until January 2013. As of December 2012, Mrs Hao did not know whether the Q Comp review, if favourable to the Applicant, would have any implications for her as the claim had not been determined in respect of which of the Applicant’s employers would be held liable (noting that the Applicant was employed by two employers at the time).

[56] These matters, in hand with the very serious financial circumstances in which the Respondent had found itself at the time, support a finding that there was not a causal connection, or at least not one of any substantive significance, between the Q Comp review being disclosed to the Respondent, and the Respondent’s subsequent decision to dismiss the Applicant.

[57] Having examined the sales figures for the newsagency over the three years as stated, and the decline in sales volumes and customer traffic, it is evident that decisive action was required to address a decline in profitability and the need to generate funds for Mrs Hao to meet hospital expenses. No other options were available given the nature of the business and its narrow range of revenue points or sources.

[58] Mrs Hao may have been concerned by the Q Comp review, it may have weighed upon her along with her other significant problems, but by December 2012, Mrs Hao’s course of action had been set in train. The Applicant’s employment was to come to an end, and would have at all times had to have come to an end, because of the commercial reality in which Mrs Hao had found herself.

[59] The Applicant’s employment thus came to an end because of an operational necessity.

[60] In effect, the Applicant was made redundant by the Respondent.

[61] As such, the dismissal was sound, defensible and reasonable.

[62] I add that as a small business, the Respondent has no obligation in respect of severance pay under s.121(1)(b) of the Act.

[63] The Applicant did contend that the hours of work that she performed had been reallocated to another employee and that this demonstrated that the operational circumstances claimed by the Respondent were no more than a contrivance. But the evidence in this matter does not make this claim out. Ms Gill, who was said to have picked up the Applicant’s hours, did not have her hours increased by any notable amount. Ms Gill merely swapped an afternoon shift for a morning shift and her hours do not appear to have otherwise changed to any degree that is significant.

Conclusion

[64] The Applicant’s dismissal came abruptly and it was not anticipated. The dismissal was couched as a reduction in hours on an indefinite basis.

[65] But regardless of the circumstances, and regardless of the absence of procedural fairness that attended the effective dismissal, the dismissal itself was effected largely for an operational reason. The circumstances of the newsagency gave it very little flexibility to address its financial situation and to meet Mrs Hao’s pressing personal circumstances other than by reducing labour costs. It is not always the case that an employee who is a casual working only some 13 hours a week will have any close understanding of the financial minutiae of the business. That appears to be the case here.

[66] When all the circumstances are considered, and noting in particular the difficulties faced by a small business at multiple levels, I do not consider that the dismissal was harsh, unjust or unreasonable.

[67] The application under s.394 of the Act is therefore dismissed as a consequence.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr G. Katsambis, for the Applicant

Ms Louise Hogg, for the Respondent

Hearing details:

2013

17 June

Brisbane

1 UES (Int’l) Pty Ltd v Leevan Harvey[2012] FWAFB 5241 at [42].

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