Mrs Toni Hardman v Australian Institute of Project Management
[2023] FWC 2954
•14 DECEMBER 2023
| [2023] FWC 2954 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Toni Hardman
v
Australian Institute of Project Management
(U2023/6424)
| DEPUTY PRESIDENT CROSS | SYDNEY, 14 DECEMBER 2023 |
Application for an unfair dismissal remedy
Mrs Toni Hardman (the Applicant) was employed by Australian Institute of Project Management (the Respondent). Her employment commenced on 2 November 2020, and she remained employed until her dismissal on 10 July 2023. No reasons for dismissal were provided by the Respondent to the Applicant at the time of dismissal.
Three days after the dismissal the Applicant enquired as to the reason for her dismissal. The response, authored by the CEO of the Respondent, Dr Darius Danesh, provided:
As you would be aware, in accordance with your contract of employment, your employment may be terminated on the giving of four weeks of written notice pursuant to Clause 13 of the contract.
I confirm that AIPM has simply decided to exercise its contractual rights, as it is lawfully entitled to do.
We confirm the payment of your statutory entitlements and your payment in lieu of notice was made on 13 July 2023.
[Emphasis added]
Why the Unfair Dismissal Jurisdiction Exists
The unfair dismissal jurisdiction exists because of the ratification of International Labour Organisation Termination of Employment Convention 1982 (ILO Convention 158) and the Termination of Employment Recommendation 1982 (ILO Recommendation 166). The jurisdiction specifically addresses dismissals that occur in circumstances such as those present in this matter. While the Applicant’s contract did allow termination on notice, the Fair Work Act 2009 (Cth) (the Act) provided protection from unfair dismissal.
In June 1982 the International Labour Conference adopted both ILO Convention 158 and ILO Recommendation 166. The main provisions in ILO Convention 158 were carried over in substantively the same terms from the Termination of Employment Recommendation 1963 (No 119). Key provisions in the Convention outlined the following:[1]
the employment of a worker shall not be terminated at the initiative of the employer unless there is 'a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service;
the following inclusive list shall not constitute valid reasons for termination: union membership or activities; taking part in legal proceedings against an employer; race; colour; sex; marital status; family responsibilities; pregnancy; religion; political opinion; national extraction or social origin; temporary absence from work due to illness or injury; or being on maternity leave;
termination for reasons related to the conduct or performance of an employee must not take place until that employee has been provided with an opportunity to defend himself or herself against the allegations made, unless the employer cannot reasonably be expected to provide that opportunity;
the Convention applies to 'all branches of economic activity and to all employed persons'; and
some categories of employed persons may be excluded by a member state from all or some of the provisions in the Convention. These include workers engaged under a contract of employment for a specified period of time or specified task, workers serving a period of probation or qualifying period that has been determined in advance and is of a reasonable duration, and workers engaged on a casual basis for a short period of timeP4 Two further categories of employees may be excluded under art 2(4) and (5). The first class is employed persons whose terms of employment are governed by special arrangements that provide protection at least equivalent to the protection afforded under the Convention (art 2(4)). The second category is employees in respect of which special problems of a substantial nature arise in light of the particular conditions of employment, or the size or nature of the undertakings in which they are employed (art 2(5)). Importantly though, art 2(6) requires that in order for exclusions made under art 2(4) and (5) to be valid, they must be listed in the first report of the relevant member state.
Recommendation 166 expands on the provisions of Convention 158 in a number of respects. It recommends the addition of age (subject to national law and practice regarding retirement) and compulsory military service to the list of grounds that are not valid reasons for termination." It also provides that employers ought to furnish written warnings in relation to termination for misconduct or lack of performance, written notice of termination of employment, and, upon request, a written statement of reasons for dismissal. In addition, the Recommendation 166 provides that an employee should be permitted to be assisted by another person in defending himself or herself against allegations of misconduct or lack of performance.
[Emphasis added]
ILO Convention 158 formed the basis for the unfair dismissal provisions contained in the Industrial Relations Reform Act 1993 (Cth), and ILO Convention 158 and ILO Recommendation 166 were annexed as Schedules to the Industrial Relations Act 1991 (Cth). It is readily apparent how the ILO Convention 158 and ILO Recommendation 166 form the basis of the unfair dismissal jurisdiction.
While the Respondent relied on what was perceived to be their existing contractual right to terminate the Applicant’s employment, it disregarded the ascertainment of what legal rights and obligations should exist, involved in the exercise of arbitral power in the unfair dismissal jurisdiction.[2]
On 15 September 2023, directions were issued to program the manner in which the Application was to proceed to hearing (the Directions). The parties complied with the Directions. In particular:
(a) On 22 September 2023, the Applicant filed an Applicant’s Submissions Regarding Merits, an Applicant’s Submissions Regarding Jurisdictional Objection, together with annexed documents;
(b) On 20 October 2023, the Respondent filed an Outline of Submissions (the Respondent’s Submission) and a Statement of Dr Darius Danesh; and
(c) On 30 October 2023, the Applicant filed an Applicant’s Reply Submission, a Statement of the Applicant with annexures.
The matter was heard on 10 November 2023 (the Hearing).
Background Facts
The Applicant commenced with the Respondent on or around 2 November 2020, in the role of Head of Membership and Organisational Partners. From 5 June 2023, the Applicant reported to Dr Darius Danesh, Chief Executive Officer of the Respondent, though relevantly Dr Danesh was located in Canberra and the Applicant was located in North Sydney.[3] The Applicant’s salary at the time of dismissal was $140,000.00 plus superannuation.
The Applicant was employed pursuant to a contract of employment dated 21 October 2020 (the Contract). The Contract included the following terms:
13. Termination of Employment
AIPM may terminate your employment by giving notice in accordance with the following schedule.
| Period of continuous service | Notice period |
| Probationary period | 2 weeks |
| Post-probationary period | 4 weeks |
After two (2) years service, and if you are over 45 years of age, you will be entitled to an additional one (1) week notice.
You may terminate your employment by providing notice to AIPM in accordance with the schedule. AIPM may terminate your employment without notice for serious misconduct, in which case you will be paid up to the time of dismissal only.
In the event you have not provided AIPM with the required period of notice, AIPM may deduct the period of notice not provided by you from any outstanding wages or accrued leave entitlements.
The Applicant was responsible for, among other things, negotiating, preparing and constructing contracts for clients, and developing packages to offer to clients as well as to potential clients.
The Applicant’s performance was measured by key performance indicators (KPIs). The KPI’s for the Applicant were based upon the number of organisational partners she could sign up. For the purposes of her KPIs, the contracts the Applicant brought in weren’t assessed on their financial merit, but rather solely based upon the number of contracts she brought in.[4]
On 10 July 2023, Dr Darius Danesh issued a termination letter without prior warning (the Termination Letter). It provided:
Termination of your employment
I am writing to you about the termination of your employment with the Australian Institute of Project Management (“AIPM”).
Your employment will end immediately and that you will not be required to attend the offices or undertake any further work.
Based on your employment contract dated 20 October 2020 and the length of your service with AIPM, your notice period is five weeks. In lieu of working out the notice period, we have decided to provide payment in lieu of notice.
You will also be paid your accrued entitlements and any outstanding pay, up to and including your last day of employment. This includes the balance of any time off instead of overtime accrued but not yet taken (paid at the overtime rate applicable when the overtime was worked), and superannuation. If you have been paid annual leave in advance, any amount of annual leave still owing will be deducted from your final pay.
You will need to arrange to return all AIPM property, materials, and passwords within 7 days.
Some termination payments may give rise to waiting periods for any applicable Centrelink payments. If you need to lodge a claim for payment you should contact Centrelink immediately to find out if there is a waiting period.
We thank you for your service and wish you all the best for the future.
Yours sincerely,
Dr Darius Danesh
On 13 July 2023 the Applicant sent an email in response to the termination letter. The email stated:
Darius,
Would you please explain to me the reason why you decided to proceed with termination of my employment with AIPM?
Toni Hardman
On the same day, Dr Danesh responded (the 13 July Email), drawing the Applicants attention to clause 13 of the Contract and providing no further reasons. As noted above, Dr Danesh’s email relevantly stated:
Dear Toni,
As you would be aware, in accordance with your contract of employment, your employment may be terminated on the giving of four weeks of written notice pursuant to Clause 13 of the contract.
I confirm that AIPM has simply decided to exercise its contractual rights, as it is lawfully entitled to do.
We confirm the payment of your statutory entitlements and your payment in lieu of notice was made on 13 July 2023.
Kind regards
[Emphasis added]
The following day, on 14 July 2023, the Applicant filed her Form F2. In the Form F2 the Applicant noted the contents of the Termination Letter and the 13 July Email. The Applicant sought a compensation order as a remedy for her alleged unfair dismissal. The Applicant said that her dismissal should be treated as a redundancy given that nine other employees were dismissed on or around the same time.
On 8 August 2023, the Respondent filed a Form F3 which relevantly raised two jurisdictional objections. Under section 3.1, the reasons provided for the Applicants dismissal were as follows:
1. The respondent exercised its contractual right in accordance with Clause 13 of the applicant’s employment contract dated 20 October 2020.
2. The employer is a small business employer and the employer complied with the Small Business Fair Dismissal Code.
3. Genuine redundancy.
4. The respondent reserves the right to raise matters in relation to the employee’s capacity or conduct that would have resulted in immediate dismissal.
[Emphasis added]
Further, in their Form F3 the Respondent answered the following in response to question 3.2, titled ‘What is the employer’s response to the Applicants contentions?’ It relevantly stated:
1. The applicant received a clear and concise reason for the dismissal, that being in accordance with the terms of the employment contract.
2. The employer contends there was no need for discussion with the employee as the dismissal was lawful and a genuine redundancy.
3. The respondent has complied with Clause 13 of the applicant’s employment contract such that the dismissal is not harsh, unjust or unreasonable.
4. In lieu of the required 5-weeks’ notice, the respondent has paid the applicant for the notice period and the payslip was sent on 13 July 2023 following the termination letter sent 10 July 2023 in accordance with s117(2)(b) of the Fair Work Act.
5. The respondent reserves the right to raise matters in relation to the employee’s capacity or conduct that would have resulted in immediate dismissal.
[Emphasis added]
On 13 September 2023, the Applicant filed a request for an Order requiring a person to produce documents to the Commission (s.590(2)(c))(the Form F52). The Form F52 clearly sought to challenge the Respondent’s assertion that it was a small business. The Form F52 sought:
1. Payroll records that list all employees employed by the Respondent as of 9 July 2023 and 10 July 2023, including, without limitation employee pay slips and termination payment summaries.
2. Records that record the leave accruals for employees employed by the Respondent as of 9 July 2023 and 10 July 2023.
On 18 September 2023, the Respondent submitted the following in opposition to the issuance of the Form F52:
1. In response to the Applicant’s application dated 13 September 2023, the Respondent employer objects to the proposed Summons being issued on the following grounds:
(a) The summons is proposed to be addressed to Mr Darius Danesh who is the Chief Executive officer of the Respondent. Mr Danesh does not hold any of the documents sought in the summons as any such records which may exist in relation to employees of the Respondent would be business records of the Respondent, not Mr Danesh.
(b) The information sought by the Applicant will include an unreasonable invasion of the private and confidential records of other persons not a party to these proceedings. That information would potentially include information such as to their addresses, rates of pay and other information that could not be relevant to any matter in issue in these proceedings.
(c) The proposed overarching request sought by the Applicant for “payroll records” is overly broad, oppressive and unclear.
(d) The proposed requested records relating to “leave accrued” is overly broad, oppressive and unclear and could not be relevant to any matter in issue in these proceedings.
(e) The proposed requested records relating to “termination payment summaries” is overly broad, oppressive and unclear and could not be relevant to any matter in issue in these proceedings.
(f) The Commission has made orders that the Respondent file and serve an outline of submissions, witness statements and other documentary material by 17 October 2023. The Applicant has now sought an adjournment of that order, presumably on the basis of wishing to exploit the coercive powers of the Commission to obtain certain documents via this Summons to support her allegations. Where the Applicant is yet to file any evidence to support her allegation that the Respondent employed more than 15 employees at the relevant time, the Respondent contends that seeking the Commission issue a Summons in the current terms proposed amounts to an abuse of the Commission’s processes.
(g) Further, in the circumstances where the Respondent employer has raised the jurisdictional issue in respect of the number of employees at the relevant time, the Respondent will bear the onus at hearing. As such, the issuing of the Summons in the terms sought be the Applicant at this time is unnecessary as the Respondent is yet to file and serve its outline of submissions, witness statements and documentary material.
[Emphasis added]
The Form F52 clearly went to the two jurisdictional objections relied upon by the Respondent in the Form F3. Accordingly, the Form F52 was made on 21 September 2023.
On 28 September 2023, the Respondent complied with the Form F52 and produced, among other documents, a list of employees containing the names of 15 employees. The Applicant’s evidence, which was not subject to challenge, was that there were 19 other employees at the time of her dismissal.
In the Respondent’s Submission filed on 20 October 2023, the Respondent withdrew their jurisdictional objections contained in their Form F3, and instead asserted the following as constituting “Events leading to the Applicant’s dismissal”:
7. On his commencement as Chief Executive Officer, Dr Danesh observed a number of issues with the operations of the Respondent. These included the decline in membership, the excessive expenses being incurred, the lack of performance from staff, the complaints from members and the inaccurate reporting.
8. One of the responsibilities the Applicant had was to enter into contracts on behalf of the Respondent. Dr Danesh found that the Applicant had, on more than one occasion, entered into a contract that was not commercially viable and caused the Respondent to spend more delivering the contract than it received in revenue.
9. Dr Danesh also found that the Applicant had entered into contracts on behalf of the Respondent outside her authority.
10. On or around 10 July 2023, Dr Danesh decided that he needed to terminate the employment of the Applicant.
11. Dr Danesh did not have a discussion with the Applicant prior to the termination of her employment. Given the concerns he had regarding the operations of the Respondent and the issues he had with the Applicant’s conduct, he decided to terminate the employment of the Applicant immediately.
12. The Applicant’s employment was terminated effective 10 July 2023.
The Applicant obtained alternative employment on a similar salary 10 weeks after the dismissal.
The Evidence
The Applicant submitted that she did not receive a clear and concise reason for her dismissal. She was not made aware of any reason in relation to her capacity or conduct that resulted in her dismissal. She had received no prior warnings from the Respondent nor from Dr Danesh as to any alleged deficiencies in her performance or conduct. She asserted that the Respondent never engaged in any discussions with her pertaining to the reasons for her dismissal, and she was provided with no opportunity to respond. That evidence was not disputed by the Respondent.
The Applicant further submitted in her Form F2 that nine of her colleagues at AIPM were also sent termination letters on 10 July 2023, and she considered in the circumstances that she (and her co-workers) were in fact made redundant. The evidence of Dr Danesh was that “4 or more than 4” [5] employees were terminated in early July 2023, for alleged performance issues. The termination letters to those other employees did not raise performance issues, and as with the Applicant’s termination letter, they simply referred to the contractual right to terminate.[6]
In cross-examination the Applicant dealt with the allegations of poor performance that were finally raised in the statement of Dr Danesh. In doing so the Applicant was clear and concise in her answers, readily conceding the limits of her duties and authority, but with substance effectively disputing all of the performance deficiencies eventually alleged against her.
The only witness for the Respondent was Dr Danesh. His evidence asserted three performance issues with the Applicant, being:
(a)Lack of care, skill and ability – non-commercial agreements;
(b)Contracts entered into without authority issues (sic.); and
(c)Breach of contract/misuse of confidential client information issues.
While the full recitation of the Respondent’s evidence is affected by confidentiality orders sought by, and granted to, the Respondent, it was clear on the evidence advanced that the Respondent failed to establish any of the issues alleged.
Regarding the first issue of lack of care, skill and ability, and non-commercial agreements, the Respondent only presented “a single example”, which went nowhere near establishing the allegation. Dr Danesh disregarded the clear limits of the Applicant to bind the Respondent, and the involvement of other more senior employees, particularly the Chief Financial Officer, in the contracting to agreements.
Regarding the second issue, the totality of Dr Danesh’s evidence (with redaction for confidentiality) was:
40. The Applicant held the responsibility for all matters pertaining to our partners and oversaw all existing agreements.
41. The Applicant caused the Respondent to enter into contracts, including with [Deleted] and other organisations which were subject to strict [Deleted] constraints, which were outside of her authority.
The Respondent’s evidence went nowhere near establishing the second alleged issue.
As to the third issue of “breach of contract/misuse of confidential client information issues”, the Respondent again relied on only one actual example. The evidence fell well short of the conduct alleged, and constituted an email authored by Dr Danesh around 10 weeks after the Applicant’s dismissal, allegedly summarising statements made by another person who was not called to give evidence.
Preferred of Evidence
Where there exists any difference between the evidence of the Applicant and Dr Danesh, and where facts were contested, I have preferred the evidence of the Applicant. I observed the Applicant to be a considered and honest witness who took great care to consider the questions asked of her and answer those questions honestly.
Dr Danesh, however, presented as someone who would make whatever statements he saw as necessary, sworn or otherwise, to defeat the Applicant’s claim, notwithstanding that such statements were simply untrue. In particular:
(a) While Dr Danesh was only CEO for one month prior to the Applicant’s dismissal, by reason of being a Director he said he was aware of the Applicant’s alleged deficiencies for one or two years and claimed he had discussed the issues in “ad hoc meetings” with the Applicant. When asked why such meetings were not referred to in his evidence, Dr Danesh stated:[7]
Because how I can put the Microsoft Teams conversation as evidence? How can I do that?
It is beyond comprehension that a legally represented party could consider that teams conversations could not be lead as evidence in proceedings.
(b) Regarding the contents of the Form F3, and the jurisdictional objections of redundancy and small business employer, the evidence of Dr Danesh, on questioning by the Commission, was:
You've been represented in these proceedings, from an early stage? You've been represented, by Mr Tierney, from an early stage in these proceedings? Yes, from the - -
Yes, about the time you received the application? Yes.
Mr Tierney acts on the instructions that you give him? Yes.
It's an odd proposition that a lawyer would not act upon - - -? He's always asking me - - -
Yes, and upon the things that you tell him he can then, for example, complete court documents? Yes.And he did so complete a form F3, in response to the applicant's application in these proceedings? I don't know the number, but, yes.
Turn to page 92 of the digital court book? Ninety-two?
Yes? Yes.
Do you see that, the form F3, 'Employer response to unfair dismissal application'? Yes. I remember this, yes.
In this response document the respondent put, squarely, that the dismissal was a case of genuine redundancy? Yes, I know that, and I mentioned that before, I don't know I have to say that or not, but the form, the Fair Work form don't have any option for termination. That's why, you know, and I discussed that as well. So we never redundant this position, was termination. Even in my letter I said termination. But if you see the form - - -
Have a look at page 97? Sure.
Of the digital court book? Yes. Ninety-seven?
Yes? Yes.
The dismissal was a case of genuine redundancy. That was the position clearly put by the respondent in it's form F3. You smile and you shake your head, but it's incorrect, or is it correct? Why was that - why was a genuine redundancy identified so many times in the form F3? Because the closest one to termination was that and, to be honest, other things is not apply to Ms Hardman. So I think that would be reason and, to be honest, Mr Deputy President, I'm not lawyer and I told to you on the - - -
No, you're not a lawyer, but you had a lawyer and you spoke to the lawyer and you said to the lawyer, 'Redundancy is the correct response', is that the case? Was termination, was not redundancy.
It is mentioned, on numerous occasions, in the form F3, that it was claimed to be a genuine redundancy. Dealing with your evidence, I'll just confirm, at around the time of the applicant's termination I think you've indicated there were four, or possibly more, terminations that occurred? Yes.
But you say they were all for poor performance, is that the case? Yes.
The letters notifying these people of their terminations not mention their performance? The letter to them?
Mm? Just the closer which was from their contract, I mentioned that in the letter, termination letter, yes, I put that.
Yes, you didn't say, 'It's due to your poor performance', you just said, 'You are being terminated because we can', is that the case? I said, 'Based on the contract, section blah, blah, blah', yes.
The Form F3 could not be sensibly construed as being confusing to Dr Danesh, whether legally represented or not. At question 3.1 it specifically asked for the reasons for dismissal, and genuine redundancy was stated. It is also apparent that on three occasions in the Form F3 the Respondent “reserved the right to raise matters in relation to the employee’s capacity and conduct”. Dr Danesh was clearly aware that such issues could be agitated, but specifically pleaded that the dismissal was a genuine redundancy.
(c) In an example of impermissible manipulation of documents and their contents, Dr Danesh sought to rely on end of financial year surpluses or deficits of the Respondent generally, to impugn the Applicant individually. The raw figures the subject of his evidence were:
For the FY2023, the evidence was the financial surplus was $551,741.00.
Just how it could be said that the Applicant could in any way be held responsible for the reduction in surplus in FY2023 was not sensibly explained, but the seizing upon the figure was indicative of the nature of the evidence of Dr Danesh. Dr Danesh’s evidence on questioning by the Commission was:
When you talk of the $200,000 reduction or loss, that then shows that, from last year there was $792,000 down to 551? Yes. Yes, sir.
Okay. And 551 is unacceptable, is that what you're saying? Yes, and that's, I'm sure, if we don't do anything as soon as possible, this number, as I said, as much as we go the end of these contracts we're losing more and more money.
…Now, you just said that you'd be losing more money? Yes.
Well, the year before, the $792,000 figure, the profit was $349,000? Yes, that's good.
And the year before that was $334,000? Yes.
And the year before that was a loss? Yes.
So, in comparison to those particular results, the 551,000 is quite positive, correct? I have explanation for that.
Well, you can answer my question first and then you might give an explanation, if it's asked of you? Sure. Not really.
So 551,000 is not really better than 349,000? In number, yes, but the way this money injected to financial system is the problem.
Consideration
There were, by the time of the Hearing, no jurisdictional objections to the Applicant’s application being determined by the Commission. Specifically, I am satisfied that:
(a) the Applicant was dismissed at the initiative of the employer (ss 385(a) 386(1)(a));
(b) her unfair dismissal application was lodged within the 21 day statutory time limitation found at s 394(2) of the Act;
(c) the Applicant is a person protected from unfair dismissal in that:
(i) she had completed the minimum employment period set out in ss 382 and 383 of the Act; and
(ii) her salary was below the high income threshold;
(d) her dismissal was not a case of genuine redundancy (s.385(d)); and
(e) her dismissal was not a case involving the Small Business Fair Dismissal Code (s.385(c)).
The only outstanding issue is whether the Applicant’s dismissal was ‘harsh, unjust or unreasonable,’ and therefore an unfair dismissal. To this end, I must direct attention to s.387 of the Act, dealing with the matters to be taken into account by the Commission in determining whether the dismissal was unfair. It is trite to observe that each of the matters must be considered and a finding made on each of them, including whether they are relevant or not.
Was the Dismissal Harsh, Unjust or Unreasonable?
Section 387 of the Act identifies the matters that the Commission must take into account in deciding whether a dismissal was “harsh, unjust or unreasonable:”
(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.
Section 387(a) - whether there was a valid reason for the applicant’s dismissal
In Rode v Burwood Mitsubishi,[8] a Full Bench of the then Australian Industrial Relations Commission discussed the meaning of valid reason in the context of the relevant provisions of the Workplace Relations Act 1996, and referring to Selvachandran v Peteron Plastics Pty Ltd[9] (Selvachandran). The Full Bench found:
[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).
[19] We agree with the appellant’s submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.
As I have found above, the Respondent failed to establish any of the alleged performance deficiencies that were eventually relied upon at the Hearing. As such the Respondent has failed to establish a valid reason for the dismissal related to those alleged performance deficiencies.
Further, however, it is apparent on the evidence that the reason for the dismissal of the Applicant (and it would appear her co-workers) was redundancy. Dr Danesh, appointed as CEO one month prior to the dismissal, appeared in his evidence to be on a cost cutting drive. That resulted in between 4 and 10 employees, out of no more than around 25 employees, losing their jobs on or about the same day in early July 2023. I have no hesitation in finding that the actual reason for the dismissal of the Applicant was redundancy, albeit not a genuine redundancy because there was no discernible need for the significant reductions in staff numbers other than Dr Danesh’s whim.
Procedural fairness- s.387(b)-(e)
Sub-sections (b) - (e) of s 387 of the Act may be broadly characterised as issues relevant to whether a dismissed employee was afforded procedural fairness. The Respondent accepted that there was no discussion with the Applicant prior to the termination of her employment.
Size/Human Resource Specialists s. 387(f), (g)
While in the Respondent’s Submission it was put that the Respondent is relatively small business and it did not have a dedicated human resources function, it emerged in the Hearing that the Respondent did have an HR Manager who was terminated at the same time as the Applicant, and who was on leave prior to her dismissal.
The proper characterisation for the purposes of s.387(f) and (g) is that while the Respondent had a Human Resource specialist, it chose not to avail itself of the skills possessed by that specialist. There is no basis for apportioning any weight to these matters as excusing the conduct of the Respondent.
Conclusion
I have made findings in relation to all matters specified in section 387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable and therefore an unfair dismissal.
I consider that the dismissal of the Applicant was overwhelmingly harsh, unjust or unreasonable. Despite the initial refusal to provide reasons, the reasons subsequently and variously advanced were baseless, apart from there being an ingenuine redundancy. There was a complete failure of procedural fairness.
REMEDY
The Applicant does not seek reinstatement or re-employment. As the Applicant has obtained alternate employment, I consider reinstatement as inappropriate (s 390(3)).
S 392 of the Act sets out the matters the Commission must take into account when assessing compensation for unfair dismissal. These are:
‘(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer's enterprise; and
(b) the length of the person's service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.’
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer's decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person's dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period--the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
As noted by the Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v
Humphries,[10] the well-established approach to the assessment of compensation under s.392 of
the Act 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).[11] This approach was articulated in the context of the Act in Bowden v Ottrey Homes
Cobram and District Retirement Villages.[12]
The effect of the order on the validity of the employer’s enterprise – s.392(2)(a)
There was no submission that there would be any effect of the order on the viability of the employer’s enterprise.
The length of the person’s service with the employer – s.392(2)(b)
The Applicant’s period of employment was approximately 2 years and 8 months. The Applicant’s length of service does not weigh in favour of reducing or increasing the amount of compensation ordered.
The remuneration that the person would have received, or would have been likely to
receive, if the person had not been dismissed – s.392(2)(c)
The assessment of the length of continued employment is a discretionary decision. It also involves on the facts of this case an interesting conundrum as the Respondent specifically eschewed in the submissions it advanced that a redundancy occurred.[13]
I consider the Applicant’s employment would have continued for a significant period had it not been terminated. In those circumstances, I consider that reasonably considered the Applicant’s employment would have continued without termination and would have continued for at least a further year. The remuneration received in that year would have been $140,000.00 plus superannuation.
While I have found above that the real reason for dismissal was redundancy, I do not consider that finding affects the above estimate of the period of expected continued employment as I have also found that to not have been a genuine redundancy.
Mitigation/Remuneration Earned – s.392(2)(d) and (e)
There Applicant mitigated her loss and 10 weeks after the dismissal began work in a new position on a similar salary to that earned with the Respondent. That mitigation significantly reduces the compensation figure to 10 weeks pay plus superannuation.
Other Matters Relevant – 392(2)(g)
The Applicant received five weeks’ pay in lieu of notice as provided for by the Contract. It is appropriate to reduce the amount of compensation by the amount of that notice period.[14]
While this decision and my conclusion that the Applicant was in fact made redundant, together with the Respondent’s belated concession it is not a small business employer, may give rise to a claim by the Applicant to be paid redundancy pay pursuant to the National Employment Standards, I make no deduction in relation to any such prospective claim.
In the Termination, Change and Redundancy Case,[15] the Full Bench of the then Federal Commission held regarding redundancy payments:
Having regard to the other aspects of our decision and having regard to what we have said about the existence of, and reason for, unemployment benefits we do not believe that the primary reason for the payment of severance pay relates to the requirement to search for another job and/or to tide over an employee during a period of unemployment.
...
We prefer the view the view that the payment of severance pay is justifiable as compensation for non-transferrable credits and the inconvenience and hardship imposed on employees.
Noting the above rationale, I consider that even if redundancy payments were paid, or were to be paid in the future as I consider they should, that would be irrelevant to the question of mitigation.
Due to the certain nature of the mitigation in this matter I do not consider it appropriate to make any deduction for contingencies in this matter.
Conclusion and order as to remedy
I consider that reinstatement is not an appropriate remedy and that an award of compensation is appropriate. While I estimate the Applicant would have received at least a further years remuneration had she not been terminated, that amount is reduced by mitigation and pay in lieu of notice to five weeks pay plus superannuation.
I make no deduction for contingencies, consider the impact of taxation on the amount needs no accommodation, and note the Compensation Payment will be subject to the deduction of taxation. The Compensation Payment is below the compensation cap (s. 392(5) and (6)).
The Compensation Payment, less any required deduction in taxation, is to be made within 21 days of this decision. I consider that such a result satisfies the ‘fair go all round’ test in s 381(2) of the Act.
The parties are directed to confer and provide agreed orders as to the gross and nett amounts of five weeks ordinary pay to the Applicant within seven days from the date of this decision. In the absence of agreement, brief written submissions should be provided by that date to enable me to determine the appropriate amount to be included in any order for payment.
I observe that my conclusion regarding the real reason for dismissal being redundancy should result in a redundancy payment being made to the Applicant, or the Applicant pursuing such payments in the appropriate forum, in the amount of six weeks pay pursuant to the National Employment Standards.
DEPUTY PRESIDENT
Appearances:
Mrs Hardman, T (the Applicant).
Mrs Perigo, A (of Counsel) for the Respondent.
Mr Tierney, S (Instructing Solicitor) for the Respondent.
Hearing details:
2023.
Sydney.
10 November.
[1] Anna Chapman, Declining Influence of ILO Standards in Shaping Australian Statutory Provisions on Unfair Dismissal, Monash Law Review Vol 29, No.1, 2003, at P 112.
[2] Re Ranger Uranium Mines Pty Ltd; Ex parte FMWU (1987) 163 CLR 656 at 666.
[3] Transcript PN 106.
[4] Transcript PN293 and 294.
[5] Transcript PN 637 and 638.
[6] Transcript PN 738 to 743.
[7] Transcript PN 718.
[8] Print R4471, at [18] and [19].
[9] (1995) 62 IR 371
[10] [2016] FWCFB 7206, at [16].
[11] (1998) 88 IR 21.
[12] [2013] FWCFB 431.
[13] Transcript PN 869 to 877.
[14] Bank of Sydney Ltd v Repici[2015] FWCFB 7939, at [3]; Darryl Waitere, Darren Westlow, Mark Harvey v NewCold Melbourne No. 2 Pty Ltd[2019] FWC 6594 at [142]; Jemal v ISS Australia[2015] FWC 776 at [31]; Gleeson v Blenners Transport Pty Ltd [2013] FWC at [25]; Auberson v Clough Downer Joint Venture[2015] FWC 1179 at [113]; Davey v JR Bulk Liquid Transport[2014] FWC 9307 at [11].
[15] (1984) 8 IR 34 at P. 73.
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