Ms Angela Shadwell v Vratislav Krsek T/A Harbour-side Gelateria
[2019] FWC 7510
•14 NOVEMBER 2019
| [2019] FWC 7510 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Ms Angela Shadwell
v
Vratislav Krsek T/A Harbour-side Gelateria
(U2019/6154)
COMMISSIONER HUNT | BRISBANE, 14 NOVEMBER 2019 |
Application for an unfair dismissal remedy – jurisdictional objection that dismissal not at respondent’s initiative – jurisdictional objection dismissed – Small Business Fair Dismissal Code applied to respondent – respondent alleged dismissal for financial reasons – applicant alleged dismissal due to higher rate of pay than other employees – dismissal due to applicant’s higher rate of pay – no valid reason for dismissal – Code not met – dismissal was harsh, unjust and unreasonable – compensation ordered.
[1] On 22 May 2019 Ms Angela Shadwell made an application to the Fair Work Commission (the Commission) pursuant to s. 394 of the Fair Work Act 2009 (the Act) alleging that her dismissal from Vratislav Krsek T/A Harbour-side Gelateria (Harbourside Gelateria) was harsh, unjust and unreasonable.
Background and jurisdictional objection
[2] Harbourside Gelateria is a small, kiosk-style gelateria owned and operated by Mr Vratislav Krsek. Mr Krsek trades as a sole trader. Harbourside Gelateria is a tenant to Morgan’s Seafood Restaurant Scarborough, Queensland, and is positioned within the seating area of the Morgan’s Seafood Restaurant.
[3] Ms Shadwell commenced employment with Harbourside Gelateria in October 2016 as a casual sales assistant.
[4] It is not in dispute, and I so find that Harbourside Gelateria is a small business employer in accordance with s. 23 of the Act, employing three employees. 1
[5] Between 19 April 2019 and 14 June 2019, the seating area of the restaurant was under construction for renovations. During this time the restaurant was only operating on weekends.
[6] In the Form F4 – Objection to Unfair Dismissal Application, Mr Krsek objected to the application on the basis that Ms Shadwell had not been dismissed in accordance with s.386 of the Act.
[7] On 1 October 2019 I issued directions to Mr Krsek to provide material relating to wages of other employees relevant to the time of the alleged dismissal. Attached to the directions was the Small Business Fair Dismissal Code (the Code). On 3 October 2019, Mr Krsek produced documents as directed to my chambers and on the same date I issued a Confidentiality Order [PR713000] over the documents produced by Mr Krsek.
Determinative Conference
[8] The matter was listed for hearing before me on 23 October 2019. Ms Shadwell appeared on her own behalf, with her mother, Ms Tracey Shadwell. Mr Krsek appeared on his own behalf. After obtaining the views of the parties, I decided to hold the matter as a determinative conference.
The Legislative Framework
[9] Section 385 of the Act defines the meaning of “unfair dismissal” and states as follows:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
[10] Section 386 of the Act sets out when a person has been dismissed from their employment and states:
“386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person's employment with his or her employer has been terminated on the employer's initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person's employment, to avoid the employer's obligations under this Part.”
[11] Section 388 of the Act provides:
“The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.
(2) A person's dismissal was consistent with the Small Business Fair Dismissal Code if:
(a) 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
(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”
[12] The Small Business Fair Dismissal Code was declared by the Minister for Employment and Workplace Relations on 24 June 2009, and states:
“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. [original emphasis]”
[13] It is first necessary to determine if Ms Shadwell was dismissed pursuant to s.386 of the Act. If I find that she was not dismissed pursuant to s.386 of the Act, the application will be dismissed. If I find that she was dismissed, it is then necessary to determine if the dismissal was in accordance with the Code.
[14] If I determine Ms Shadwell’s dismissal was not in accordance with Code, it is necessary for me to consider if the dismissal was harsh, unjust or unreasonable pursuant to s. 387 of the Act, which states:
“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.”
Evidence and submissions of Ms Shadwell
[15] Ms Shadwell stated that she worked Monday to Friday on a fixed roster. Her rate of pay was $25.99 as a casual employee and she is aged 23.
[16] Construction work within the restaurant commenced on 29 April 2019, and it is Ms Shadwell’s evidence that Mr Krsek was provided with approximately three weeks’ notice of the construction.
[17] On 6 May 2019, Ms Shadwell spoke with Mr Krsek at length regarding her managing the shop while he was travelling in Europe from 24 May 2019. Mr Krsek gave Ms Shadwell permission to work weekends in the event another casual employee called in sick for weekend work.
[18] On 10 May 2019 she informed Mr Krsek that she was commencing an unpaid photography internship commencing on Friday, 17 May 2019. 2 Accordingly, she advised that she would be unavailable until 2:00 pm on Fridays. Another employee, Ms Amelia Hislop, had agreed to work Fridays while Ms Shadwell attended her internship. Ms Hislop was unavailable on Friday 17 May 2019 due to her own University commitments, however she was available to work the following Fridays.3
[19] It is Ms Shadwell’s evidence that Mr Krsek asked Ms Shadwell if she would be able to attend the store at 4:00pm on Friday, 17 May 2019 for a staff meeting, to which she advised that she would make it.
14 May 2019
[20] On 14 May 2019 Ms Shadwell reminded Mr Krsek that she was unable to work 17 May 2019 due to her internship. Mr Krsek said to her that he was unaware that Ms Hislop was unavailable, and due to his own squash commitments, Mr Krsek was unable to work that day. He requested Ms Shadwell reschedule her internship. Ms Shadwell was unable to reschedule her internship, and advised Mr Krsek in a text message at 4:57 pm on 14 May 2019, which is set out below: 4
“Hey Roger, I just heard back from the agency and unfortunately they can’t reschedule Friday because they’ve already booked the model and stylist to come in. I’m sorry for this inconvenience.”
[21] Ms Shadwell missed two calls from Mr Krsek at 5:55 pm and 6:01 pm. At 6:28 pm, Ms Shadwell returned his call. Her evidence is that the conversation with Mr Krsek was to the following effect:
Krsek: | You told me Amelia was covering it. |
Shadwell: | Yes, but I said she couldn’t do Friday 17th because of prac. I told you that. |
Krsek: | [reiterated his claim numerous times as if he had been misinformed]. I cannot employ staff members who dictate to me what I must do. Do you understand that, Angela? |
Shadwell: | I’m not dictating you. I’m only telling you I can’t do a shift that you knew about last week and approved. I followed the correct protocol. I’ve asked you what I’ve done wrong and you haven’t been able to answer me. |
Krsek: | [continued with point about not employing staff who dictate him]. |
Shadwell: | Are you saying you’ll fire me if I don’t work Friday? |
Krsek: | No, I just wouldn’t give you any more shifts. |
Shadwell: | So that means you’ll fire me. |
Krsek: | Well, yes. |
Shadwell: | Would I work until you get back from your holiday? |
Krsek: | No. I will close up shop until construction has finished. I wanted to be loyal to you by staying open, but you’re not being loyal to me. |
[22] It is Ms Shadwell’s evidence that during the conversation Mr Krsek said statements to the following effect:
(a) Should I cancel my holiday Angela, would that make you happy?
(b) My staff are now telling me that they don’t give a shit about me.
(c) If I close the shop, the other staff will be out of work also. Think about what you want to do and get back to me tomorrow.
[23] Following the conversation, Ms Shadwell sent to Mr Krsek a screenshot of Ms Hislop’s text to him on 10 May 2019 confirming that she would be on ‘prac’ on Friday, 17 May 2019. Mr Krsek replied, “I am aware of that text.”
15 May 2019
[24] At approximately 9:50 am on 15 May 2019, Ms Shadwell and Mr Krsek spoke on the telephone regarding the renovations. Ms Shadwell stated that Mr Krsek said words to the effect: 5
“I’ve been thinking about it all night Angela and I’ve decided it’s not viable for the business to remain open while construction is being completed. The days are too quiet. I’ve decided that we’re going to close on weekdays. I was going to be loyal to you guys but it’s just not working out, Angela.”
[25] The following text messages were exchanged between Ms Shadwell and Mr Krsek on 15 May 2019: 6
Shadwell: | I’d like to be sent a separation certificate ASAP please. |
Krsek: | You can re apply for work here once the construction is completed. |
Shadwell: | I would like the separation certificate to clarify why I have presently lost my job and would thus have to re-apply. |
Krsek: | Your role is currently not financially viable for the business. |
Shadwell: | It was as of yesterday and according to the roster. |
Krsek: | Circumstances change. |
Shadwell: | I understand but I do not feel like I have been given a valid reason. You only brought up firing me on the phone last night for a shift I am unable to cover on Friday that you were aware of a week prior and agreed to. I am entitled to a separation certificate and would like one today if possible. |
[26] Ms Shadwell stated that Mr Krsek had not provided her with any reason for her dismissal; she had simply been told by Mr Krsek that it was not viable for the business to be open and that her role was no longer financially viable as set out above.
16 May 2019
[27] On 16 May 2019 Ms Shadwell attended Harbourside Gelateria. She stated that she was angered by the circumstances in which she had been dismissed, and she held suspicions that the shop was going to be kept open. Mr Krsek was at the store, and Ms Shadwell recorded the following conversation:
Shadwell: | Hey, so much for being closed. |
Krsek: | Sorry? |
Shadwell: | You said yesterday that you were closing until construction had finished. |
Krsek: | Well it’s my choice, Angela, it’s my business. |
Shadwell: | Yeah, but you supposedly fired me because we’re closing until construction finishes. |
Krsek: | Angela, no, you’ve got it all wrong. You know, I can’t afford your wage, we don’t make your wage. |
Shadwell: | I was on the roster. It’s clear that you’ve done this because you’re pissed off about tomorrow. It is so clear that that’s the reason. That’s not a valid reason. |
Krsek: | Angela, you know, it’s my business, it’s my reasons, I can offer you whatever I want. |
Shadwell: | I know. But it’s unfair dismissal. Like, you know that. C’mon. This is because of tomorrow. Anyway, I would like a separation certificate please, I’m entitled to it. |
Krsek: | Well, I’m here involved now, so I’m busy at the moment. |
Shadwell: | Yeah I know, but can I please have it tonight? Or I’m happy to bring it in. I’ll sign everything else and just have you sign it. Yeah? |
Krsek: | Yep. |
Shadwell: | OK, sweet. |
[28] At approximately 3:30pm, Ms Shadwell returned with a separation certificate completed as much as possible, leaving the reason for termination blank. She attended with her mother. It is her evidence the conversation went as follows:
Krsek: | Angela, I’m not signing this. |
Shadwell: | Why? It will help me with Centrelink. |
Krsek: | Angela, no, I’m working. I’m not signing this on a whim. |
Shadwell: | You don’t have to sign it now. You can sign it whenever and send it to me when you can. |
Mrs Shadwell: | It’s compulsory, I used to be a business owner. |
[29] Mr Krsek did not immediately sign the separation certificate, and Ms Shadwell left the store with her mother.
18 May 2019
[30] It is Ms Shadwell’s evidence that at approximately 12:30pm on 18 May 2019, a former employee, Jess, sent a text message to Ms Hislop advising that Mr Krsek had asked Jessica to consider returning to work at the store and working weekdays.
[31] Ms Hislop and Jess then worked weekdays that had earlier been rostered for Ms Shadwell. The store remained opened while Mr Krsek was on holidays and while construction was being completed.
[32] It was Ms Shadwell’s evidence that during her time with the respondent, Mr Krsek had wanted to open another store, but he needed to be satisfied that the first store could run independently. Ms Shadwell stated that she always followed protocol to seek time off work and she never took time off without provide notice or without his approval.
[33] During the determinative conference Ms Shadwell agreed that at various times during the period of approximately 2.5 years that she had worked for Mr Krsek, she had broken her casual employment, including for an overseas holiday. She agreed that the period of relevant service was from August 2017 to May 2019, a period of approximately 21 months.
[34] Ms Shadwell secured new employment very quickly. She sought the following amount to be paid to her in compensation:
(a) Rostered days: | 15, 16, 20, 21 and 22 May |
x 7 hours per day x $25.99 per hour = $909.65 | |
(b) Week 2 Unavailable Fridays: | 4 days per week x 7 hours per day x $25.99 per hour |
= $727.72 per week less $549.13 earned in new job | |
= $178.59 | |
(c) Week 3 Unavailable Fridays: | 4 days per week x 7 hours per day x $25.99 per hour |
= $727.72 per week less $592.32 earned in new job | |
= $135.40 | |
Total: | $909.65 + $178.59 + $135.40 = $1,223.64. |
Evidence and submissions of Mr Krsek
[35] On 17 June 2019 Mr Krsek filed his response to Ms Shadwell’s application in his matter. On 19 August 2019 Mr Krsek raised a jurisdictional objection that Ms Shadwell had not been dismissed on 15 May 2019.
[36] Mr Krsek stated that the construction works for the renovation of the seating area of Morgan’s Seafood Restaurant was affecting his business during the week. He was unable to meet the expense of weekly wages or operational costs. 7 This led to Mr Krsek’s decision to close Harbourside Gelateria on weekdays, opening only on weekends during the renovation period.
[37] In advancing his jurisdictional objection, Mr Krsek submitted that Ms Shadwell had not been dismissed. He said that on 16 May 2019 Ms Shadwell had requested to be separated from her employment after he had advised her on 15 May 2019 that her role was unaffordable during renovation works. 8
[38] As noted above, prior to the determinative conference, I directed Mr Krsek to provide evidence of wages paid and hours worked for all employees during the time of renovations. A number of payslips were provided outlining the hourly rate of all employees engaged at the time of dismissal. The ordinary hourly rate on weekdays for Harbourside Gelateria employees are as follows, on account of some of the employees being school-aged junior casual employees:
Ms Shadwell: | $25.99 |
Employee A: | $20.79 |
Employee B: | $10.39 |
Employee C: | $18.19 |
[39] During the determinative conference I asked Mr Krsek how Ms Shadwell’s employment had ended. Mr Krsek stated that he had to remove her from the roster as he was planning on closing the shop during the week while the renovations were underway. 9
[40] However, in Mr Krsek’s evidence, 10 he decided to open the shop during the week following a conversation with Morgan’s Seafood Restaurant, as they wanted him to continue to sell coffees during weekdays. Mr Krsek confirmed that following his discussions with Ms Shadwell, he contacted a former employee, Jess, to cover Ms Shadwell’s shifts.
[41] During the determinative conference, I put to Mr Krsek that he had not requested Ms Shadwell to return to work her shifts as he considered that her hourly rate was too expensive. The following discussion between myself and Mr Krsek occurred during the determinative conference:
Commissioner: | If you thought there had been some end of employment with Ms Shadwell, why didn’t you offer her the work – it was because she was too expensive? |
Mr Krsek: | She was too expensive and she already requested to be separated from the business by requesting the separation certificate. |
Commissioner: | It was because you were sending her text, weren’t you? |
Mr Krsek: | No I wasn’t Commissioner. |
Commissioner: | Wednesday, the 15 May at 11:36 am. This is just about an hour and half after she left the premises, where she left about 10:00 am. You’ve said that “you can re apply for work here once the construction is completed” and you’ve said that “your role is currently not financially viable for the business.” |
Mr Krsek: | That is correct Commissioner. |
Commissioner: | So it’s currently not financially viable for the business because she is earning $25.99 an hour, is it? |
Mr Krsek: | Well that’s a massive burden for me Commissioner. I mean you can see in that period that I had lost $15,000 – I mean that’s the loss we incurred during that construction period. |
Commission: | Well that’s not - $15,000 is not the difference between $25.99 an hour and $18-something an hour? |
Mr Krsek: | No it’s not Commissioner. |
[42] I again asked Mr Krsek how the employment ended, and he stated as follows:
Commissioner: | If you didn’t dismiss her, how did the employment end? |
Mr Krsek: | Well I said to her that we will have to close the shop during the weekday because it doesn’t make sense to pay an entitlement of over $200 a day when the revenue the shop is generating is around 50. |
Commissioner: | When you changed your mind, you then chose not to contact her because you wanted cheaper people for the work. |
Mr Krsek: | No Commissioner |
Commissioner: | Well sorry I thought that was your evidence. |
Mr Krsek: | Commissioner I had the three days – the Wednesday, the Thursday and the Friday – I had sort of free. So I thought it will give me time to think and consider all the facts and in the meantime I will open the shop and work myself |
Commissioner: | You’re also contacting Jess who gets $18-something an hour who no longer works for you - |
Mr Krsek: | Alright I am unaware of the exact date that I contacted Jess. Do you have that evidence there? |
Commissioner: | No I don’t have that detail. But you contacted a former employee in Jess and asked her to return? |
Mr Krsek: | Well I asked her if she would reconsider – yes |
Commissioner: | You chose not to do that for Ms Shadwell because she was earning $25.99 an hour? |
Mr Krsek: | Commissioner but that was after Ms Shadwell already requested a separation certificate |
Commissioner: | Well she’s in the same boat as Jess isn’t she? In that they’re former employees? |
Mr Krsek: | Yeah but one works at a cheaper rate than the other one. |
[43] Mr Krsek further submitted that while he did not terminate Ms Shadwell, he was forced to take action in the interest of the business to ensure that it would survive the difficult period. In the respondent’s Form F3 – Employer response to unfair dismissal application, Mr Krsek stated that Ms Shadwell’s pay rate was unaffordable during the landlord’s construction works, and she was advised that the situation would be appraised once construction was complete.
[44] Mr Krsek stated that he considered Ms Shadwell was being paid at ‘the premium rate’. 11 I note that Ms Shadwell was paid the bare minimum award rate for a casual employee at the lowest classification within the General Retail Industry Award 2010 for the rates operative from the first full pay period on or after 1 July 2018.
Was there a dismissal in accordance with s.386(1) of the Act?
[45] Ms Shadwell’s submission is that she was dismissed at the initiative of her employer on 15 May 2019. It is Mr Krsek’s submissions that the telephone discussions and text message exchange between himself and Ms Shadwell were not in relation to the end of Ms Shadwell’s employment but were in reference to Ms Shadwell’s hourly rate being unaffordable during renovations. 12 Mr Krsek contends that Ms Shadwell’s employment was not terminated.
[46] Accordingly, I must determine whether Ms Shadwell’s employment with Harbourside Gelateria was terminated at the initiative of the respondent.
Was Ms Shadwell terminated at the initiative of the respondent?
[47] In accordance with Mohazab v Dick Smith Electronics Pty Ltd (No 2) (Mohazab), 13 a termination is at the employer’s initiative when:
• the employer’s action ‘directly and consequentially’ results in the termination of the employment; and
• had the employer not taken this action, the employee would have remained employed.
[48] In O’Meara v Stanley Works Pty Ltd (O’Meara), 14 a Full Bench of the Australian Industrial Relations Commission, as this Commission then was, considered Mohazab and other case law considering when a termination will have been at the initiative of the employer, and concluded that there must be:
“[23] …some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end.”
[49] While the question of whether an act of the employer results directly or consequentially in the termination of employment is an important consideration, all of the circumstances must be examined including the conduct of both the employer and employee. 15
[50] In the current matter, I must determine whether the phone discussions on 14 and 15 May 2019, and the text message exchange following the 15 May 2019 phone call are sufficient to satisfy a termination of Ms Shadwell’s employment at the initiative of the respondent.
[51] I have considered the evidence of all parties regarding Ms Shadwell’s hourly rate being unaffordable at the time during renovations and Ms Shadwell’s attempt to receive an Employment Separation form on the 15 May 2019.
[52] I accept Ms Shadwell’s evidence that during the telephone call of 14 May 2019, Mr Krsek flagged that he would likely not offer to Ms Shadwell any more shifts, and when pressed as to whether that meant she would be fired, he responded, “Well, yes.” Mr Krsek determined over the coming day that Ms Shadwell’s adult rate of pay was too expensive for him to accommodate during the renovation period, and he wanted to bring in cheaper workers who did not need to be paid the adult rate of pay.
[53] I do not accept Mr Krsek’s response, outlining that it was not financially viable for Ms Shadwell to remain employed and that Ms Shadwell separated from employment. As noted above at [41] Mr Krsek referred to there being a loss of approximately $15,000 due to the renovation, yet conceded in the determinative conference that the difference between Ms Shadwell’s hourly rate and Employee C’s hourly rate did not amount to the loss. Further, had it not been for the discussion on the morning of 15 May 2019, it is clear that Ms Shadwell would not have requested a separation certificate.
[54] I determine that, on the evidence before me, the phone discussion between Ms Shadwell and Mr Krsek and the following text messages from Mr Krsek on 15 May 2019 amounted to dismissal of Ms Shadwell’s at the respondent’s initiative. I accept that Mr Krsek’s phone call and text message directly and consequentially resulted in the termination of the employment, and had Mr Krsek not taken this action, Ms Shadwell would have remained employed. I do not accept that Ms Shadwell’s request for a separation certificate ended the employment.
Conclusion – dismissal at the initiative of the employer
[55] I determine that Ms Shadwell was dismissed at Mr Krsek’s initiative on 15 May 2019 pursuant to s.386(1)(a) of the Act, and the jurisdictional objection is dismissed.
Was the dismissal consistent with the Small Business Fair Dismissal Code?
[56] A dismissal will not be an unfair dismissal if the employer is a small business and the dismissal was consistent with the Code. I have earlier found that Harbourside Gelateria is a small business employer within the meaning of s.23 of the Act.
[57] Ms Shadwell was a casual employee, and I have found that Mr Krsek dismissed her. No submissions were made that the dismissal was due to conduct reasons involving ‘Summary Dismissal’ or for performance reasons involving ‘Other dismissal’ in accordance with the Code.
[58] In my view it is extraordinarily difficult for an employer to satisfy the Commission that the Code has been met relevant to a summary dismissal if the employer asserts that there was no dismissal by the employer. This is so because the Code requires, relevant to ‘Summary Dismissal’ for the employer to assert and demonstrate that they had a reasonable belief that the person had engaged in serious misconduct.
[59] In the determinative conference, I asked Mr Krsek the following:
Commissioner: | If there was a dismissal, was there a dismissal because of any serious misconduct on behalf of Ms Shadwell’s part or because of performance issues? |
Mr Krsek: | No Commissioner. |
[60] Given there was no submission made that there was misconduct on Ms Shadwell’s part, nor that there were any issues with her performance relevant to ‘Other dismissal’, I determine that the dismissal was not in accordance with the Code for either a ‘Summary Dismissal’ or ‘Other dismissal’.
Was Ms Shadwell’s dismissal harsh, unjust or unreasonable?
[35] The Code not having been complied with, it is then necessary to determine whether the dismissal was harsh, unjust or unreasonable taking into account the criteria in s.387 of the Act.
s.387(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)
[61] The respondent must have a valid reason for the dismissal of Ms Shadwell, although it need not be the reason given to her at the time of the dismissal. 16 The reasons should be “sound, defensible and well founded”17 and should not be “capricious, fanciful, spiteful or prejudiced.”18
[62] During the determinative conference, Mr Krsek stated that the financial burdens of Ms Shadwell’s wages were too great during the period of construction for the renovation.
[63] I had the following exchange with Mr Krsek:
Commissioner: | Can you tell me if there was a valid reason for the dismissal related to the person’s capacity or conduct? If the Commission finds there was a dismissal. |
Mr Krsek: | Commissioner there was a valid reason in relation to the health of the business. I can’t say conduct of Ms Shadwell. |
Commissioner: | So not her capacity or conduct? |
Mr Krsek: | No Commissioner. |
[64] I put to Mr Krsek that if this was the case, there may also be a consideration of whether the dismissal was a genuine redundancy in accordance with s. 389 of the Act. To be satisfied the dismissal was a case of genuine redundancy, I must be satisfied the role of a casual sales assistant was no longer required to be performed by anyone because of operational changes to the respondent. I am not satisfied that Mr Krsek no longer required Ms Shadwell’s job to be performed by anyone, as the evidence is clear that Mr Krsek had attempted to, and did rehire Jess to perform Ms Shadwell’s role.
[65] I put to Mr Krsek the calculations of difference in pay between Ms Shadwell and the other employees noted above in [38], which would have been a difference of approximately $55 per day. Mr Krsek maintained that the reason for requiring cheaper staff was to limit the loss his business was experiencing at the time.
[66] Ms Shadwell submitted there was not a valid reason related to her capacity of conduct.
[67] Having regard to the reason for the dismissal being that Mr Krsek wanted to obtain another employee (Ms Hislop), together with a former employee (Jess), to perform the same work as Ms Shadwell but at a marginally lesser rate of pay for a relatively short period of time, I do not accept that there was a valid reason for the dismissal related to Ms Shadwell’s capacity or conduct. This is particularly so where I accept that Mr Krsek considered that Ms Shadwell could reapply for work once the renovations were completed.
s.387(b) - Whether the person was notified of that reason
[68] I consider that Mr Krsek’s agreement with Ms Shadwell on 14 May 2019 that he would likely not offer her any shifts, and his confirmation of such on 15 May 2019 constituted notification of the reason for the dismissal. He informed her that he considered her role – when in fact it was her higher rate of pay – to be unviable for the business.
s.387(c) - Whether there was an opportunity to respond to any reason related to the capacity or conduct of the person
[69] The parties agree that there was no issue related to Ms Shadwell’s capacity or conduct. While Mr Krsek explained that he couldn’t afford to pay for Ms Shadwell over the renovation period and she had an opportunity to respond to that statement, it was not related to her capacity or conduct.
s.387(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
[70] The parties agreed that Ms Shadwell did not request for a support person to assist the discussion relation to dismissal. Accordingly, I find that there was not an unreasonable refusal by Mr Krsek to allow a support person present.
s.387(e) - Was there a warning of unsatisfactory work performance before dismissal
[71] As noted above at [59], Mr Krsek had no concerns regarding unsatisfactory work performance of Ms Shadwell.
s.387(f) - Whether Harbourside Gelateria’s size impacted on the procedures followed and s.387(g) - Whether the absence of a dedicated resource management specialist impacted on the procedures followed
[72] I accept that Harbourside Gelateria is a small business without any dedicated resource management specialists, and I have taken that into consideration.
s.387(h) - Other matters
[73] Mr Krsek requested that I take into account Ms Shadwell’s hourly rate of $25.99, it being a higher rate than the other employees’ rates of pay, and Harbourside Gelateria’s financial status at the time which he declared as ‘stressed’. I have taken those matters into account.
Conclusion
[74] Having considered all of the matters above, I conclude that the dismissal was harsh, unjust and unreasonable. The dismissal was carried out because during a relatively short period of time, Mr Krsek considered that he could reduce the cost of labour by hiring younger, cheaper staff to undertake the shifts that Ms Shadwell regularly worked during the week, and for which I find she had a reasonable expectation of continuing to work.
[75] Mr Krsek invited Ms Shadwell to reapply for her role once the renovations were complete. That is inappropriate, having regard to her right to be paid, as a minimum, the award rate of pay.
[76] I find that Ms Shadwell was unfairly dismissed.
Remedy
[77] Section 390 of the Act reads as follows:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[78] Ms Shadwell was a person protected from unfair dismissal for the Act’s purposes, and is a person who has been unfairly dismissed. Accordingly, I am empowered to exercise discretion as to whether she can be reinstated.
[79] Ms Shadwell does not seek reinstatement and I am satisfied in all of the circumstances that reinstatement is inappropriate.
[80] I now turn to consideration of compensation.
Compensation
[81] Section 392 of the Act provides:
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
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.”
Authorities
[82] The approach to the calculation of compensation is set out in a decision of a Full Bench of the Australian Industrial Relations Commission in Sprigg v Paul’s Licensed Festival Supermarket. 19 That approach, with some refinement, has subsequently been endorsed and adopted by Full Benches of the Commission in Bowden v Ottrey Homes Cobram and District
Retirement Villages inc T/A Ottrey; 20 Jetstar Airways Pty Ltd v Neeteson-Lemkes21and McCulloch v Calvary Health Care (McCulloch).22
[83] I have had regard to the above authorities, and I have considered the submission of each party.
The effect of the order on the viability of Harbourside Gelateria
[84] When questioned during the determinative conference on this issue, I asked Mr Krsek what, if any effect an order would have on Harbourside Gelateria’s viability. Mr Krsek responded that an order of $1,223.64 would affect the viability of Harbourside Gelateria. As a sole trader he has expenses of approximately $20,000 - $30,000 for a fitout of the second premises.
[85] I have had regard to the fact that Mr Krsek has spent monies opening a second shop.
The length of Ms Shadwell’s service
[86] Ms Shadwell had approximately 21 month’s service. I have had regard to the decision of SDP Richards in Davidson v Griffiths Muir’s Pty Ltd [2010] FWA 4342. His Honour determined at [140]:
“As an employee for a short period of time, the length of Applicant’s service with the Respondent on its own is not a powerful force making for a compensation remedy (or a compensation order of significant quantum)”
[87] I find that Ms Shadwell was employed for a relatively short period of time.
The remuneration that Ms Shadwell would have received, or would have been likely to receive, if she had not been dismissed
[88] Ms Shadwell submitted that had she not been dismissed, she would have received income for her rostered hours between 15 May 2019 and 5 June 2019, totalling:
15 May to 22 May 2019: | 5 days x 7 hours at $25.99 per hour = $909.65 |
23 May to 29 May 2019: | 4 days x 7 hours at $25.99 per hour = $727.72 |
30 May to 5 June 2019: | 4 days x 7 hours at $25.99 per hour = $727.72 |
[89] Mr Krsek submitted that he would have been concerned that Ms Shadwell was going to be moving closer to the city as she had been discussing moving out of home, and he considered it was uncertain as to how long the employment might have lasted.
The efforts of Ms Shadwell (if any) to mitigate the loss suffered because of the dismissal
[90] Ms Shadwell gained employment one week after being dismissed from her employment at Harbourside Gelateria.
[91] I am satisfied that Ms Shadwell took appropriate measures to mitigate the loss suffered because of the dismissal.
The amount of any remuneration eared by the person from employment or other work during the period between the dismissal and the making of the order for compensation.
[92] Ms Shadwell’s evidence is that she received income from her new employment. In the first week of employment, the week of 23 May 2019, Ms Shadwell received $549.13. In her second week of employment, the week of 30 May 2019, Ms Shadwell received $592.32.
The amount of any income reasonably likely to be so earned by Ms Shadwell during the
period between the making of the order for compensation and the actual compensation
[93] This factor is not relevant in the circumstances of this matter.
Other relevant matters
[94] No other matters not already addressed were put for the Commission’s consideration.
Misconduct reduces amount
[95] I have not found any misconduct by the applicant that contributed to the dismissal.
Shock, distress etc. disregarded
[96] I confirm that any amount ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to Ms Shadwell by the manner of the dismissal.
Compensation Cap
[97] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the applicant, or to which the applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or the high income threshold immediately prior to the dismissal.
[98] The high income threshold immediately prior to the dismissal was $145,400, and the amount for 26 weeks was $72,700. The amount of compensation the Commission will order does not exceed the compensation cap.
Payment by instalments
[99] Mr Krsek submitted that any award of compensation should be paid by Harbourside Gelateria over a period of six months. Ms Shadwell submitted this period of time was stretched out.
[100] Mr Krsek stating during the determinative hearing that he had $30,000 set aside for the new premises from around 5 October 2019. Given that Mr Krsek is a sole trader, I inquired as to the personal assets owned by him. He stated that he owns a car and a motorbike, but does not have any other substantial assets. He pays rent for the home he lives in.
[101] There appears to me to be a broad discretion afforded to the Commission to decide whether to allow a compensation order to be paid in instalments. I will order Mr Krsek to pay Ms Shadwell the amount ordered in two instalments; the first within 14 days of the date of this decision, and the second within 28 days of the date of this decision.
Order of Compensation
[102] I have determined that the respondent is to pay to Ms Shadwell the amount of $1,223.64 less tax as required by law. The first payment of $611.82 is to be paid within 14 days of the date of this decision, with the balance of $611.82 to be paid within 28 days of the date of this decision.
[103] In addition, the respondent is to pay superannuation on the amount of $1,223.64 at the rate of 9.5% into Ms Shadwell’s superannuation fund within 28 days of the date of this decision.
[104] An order will be issued with this decision.
COMMISSIONER
Appearances:
A Shadwell for the applicant
V Krsek for the respondent.
Determinative conference details:
Brisbane
23 October
2019.
Final written submissions:
Applicant, 9 September 2019.
Respondent, 2 September 2019.
Printed by authority of the Commonwealth Government Printer
<PR713877>
1 Form F3 – Employer response to unfair dismissal application, 17 June 2019, Part 1.7.
2 Applicant’s Statement of Evidence – Witness Statement number 1 – Ms Angela Shadwell, pg 5.
3 Ibid.
4 Applicant’s Documents 6 -7 – Text Exchanges – “Between Roger and I before and after the phone call”.
5 Ibid.
6 Applicant’s Documents 9 - 10 – Text Exchanges – “Between Roger and I following my dismissal”.
7 Respondent’s Statement of evidence – Witness statement 1
8 Respondent’s Outline of Argument: Objections , 2 September 2019, pg 19.
9 Audio – 48:17.
10 Respondent’s Statement of evidence – Witness Statement number 1 – Mr Vratislav Krsek, pg 5.
11 Respondent’s Outline of Arguments: merits pg 13.
12 Respondent’s Outline of Argument: Objections, 2 September, pg 19.
13 [1995] IRCA 645.
14 O’Meara v Stanley Works Pty Ltd PR973462 (AIRCFB, Giudice J, Watson VP, Cribb C, 11 August 2006) at [23]; citing Pawel v Advanced Precast Pty Ltd Print S5904 (AIRCFB, Polites SDP, Watson SDP, Gay C, 12 May 2000); Mohazab v Dick Smith Electronics Pty Ltd (No 2) [1995] IRCA 645; ABB Engineering Construction Pty Ltd v Doumit Print N6999 (AIRCFB, Munro J, Duncan DP, Merriman C, 9 December 1996).
15 Pawel v Advanced Precast Pty Ltd Print S5904 (AIRCFB, Polites SDP, Watson SDP, Gay C, 12 May 2000); O’Meara v Stanley Works Pty Ltd PR973462 (AIRCFB, Giudice J, Watson VP, Cribb C, 11 August 2006) at para. 23, [(2006) 58 AILR 100]; Mohazab v Dick Smith Electronics Pty Ltd (No 2) [1995] IRCA 645 (29 November 1995), [(1995) 62 IR 200]; ABB Engineering Construction Pty Ltd v Doumit Print N6999 (AIRCFB, Munro J, Duncan DP, Merriman C, 9 December 1996).
16 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378.
17 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371, 373.
18 Ibid.
19 (1998) 88 IR 21.
20 [2013] FWCFB 431.
21 [2014] FWCFB 8683.
22 [2015] FWCFB 2267.
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