Ms Elizabeth Merritt v Seventh Day Adventist Aged Care (Victoria) Ltd trading as AdventCare
[2015] FWC 2273
•22 APRIL 2015
| [2015] FWC 2273 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Application for unfair dismissal remedy
Ms Elizabeth Merritt
v
Seventh Day Adventist Aged Care (Victoria) Ltd trading as AdventCare
(U2014/9592)
DEPUTY PRESIDENT SMITH | MELBOURNE, 22 APRIL 2015 |
Application for relief from unfair dismissal; compensation awarded.
Introduction
[1] Ms Elizabeth Merritt was an Executive Administrative Assistant with Seventh Day Adventist Aged Care (Victoria) Ltd trading as AdventCare (AdventCare) before her employment was terminated for serious misconduct on 23 September 2014. The letter terminating her employment referred to her duties as being responsible for the Kronos payroll system. Ms Merritt was responsible for keeping the records of leave and other matters. When she was absent an audit had taken place. It was stated:
The outcome of the audit clearly demonstrates a systematic rorting of the system so that you took 468.3 hours of time in lieu without due authorisation. It also shows that you requested and were granted 351 hours of annual leave that was cashed out due to your financial situation. 1
Statutory prerequisites
[2] Given the submission of the parties and in accordance with s.396 of the Fair Work Act 2009 (the Act) I am satisfied that Ms Merritt was a person protected from unfair dismissal. Further, in accordance with s.398 and s.399 of the Act I conferred with the parties and reached the conclusion that a hearing should be conducted. There are no other jurisdictional considerations before turning to the merits of the application.
Background and evidence
[3] It was submitted by AdventCare that:
● Ms Merritt converted approved applications for annual leave to time off in lieu, and, in addition,
● Exceeded any actual time owing.
[4] It was submitted that a reason for converting annual leave to time off in lieu was to benefit from cashing out some annual leave accruals.
[5] One of the complicating factors in this case is that AdventCare considered that Ms Merritt was only covered by an employment contract where there was no entitlement to taking time in lieu 2. In truth, Ms Merritt did enjoy coverage in relation to her terms and conditions of employment under the Seventh Day Adventist Aged Care (Victoria) Ltd (Trading as Adventcare), ANMF and HSU Enterprise Agreement 2014 (the Agreement) [(2014) FWCA 5024].
[6] Clause 46.6 provides:
In lieu of receiving payment for overtime worked in accordance with this clause, Employees may, with the consent of the Employer, be allowed to take time off for a period of time equivalent to the period worked in excess of ordinary rostered hours of duty, plus a period of time equivalent to the overtime penalty incurred. Such time in lieu shall be taken as mutually agreed between the Employer and Employee, provided that accrual of such leave shall not extend beyond a 28 day period. Where such time has not been taken within the 28 day period, such time shall be paid in accordance with this clause at the rate of pay which applied on the day the overtime was worked.
[7] The other complicating factor was that Ms Merritt did additional hours serving in the kitchen which she regarded as overtime. On occasions she also cooked. On the evidence of Ms Merritt she also attributed time off in lieu on the basis of 1 for 1 3 rather than that prescribed in the Agreement. From the material it appears that Ms Merritt worked in the kitchen after her clock-off time and she treated it as hours towards her time in lieu.
[8] I also note that the Agreement does not appear to provide for paying out annual leave except on termination of employment. I note that a number of payments of this character were made to assist Ms Merritt because of stated financial circumstances. 4 To paraphrase one of the guiding concepts in matters involving unfair dismissal, but in the reverse—this is a mess all round!
[9] What does the evidence reveal? The evidence discloses that:
● Ms Merritt was not aware of how to record time in lieu.
● Ms Merritt altered records in the payroll system to reflect time in lieu when the application was for annual leave.
● Ms Merritt had worked in the kitchen at times which was not recorded as attendance at work.
● There was not a well known method of recording time off in lieu as it was believed by AdventCare that it was negotiable between the employer and the employee.
● Given the employers view of her misconduct, Ms Merritt has not been paid her entitlements upon termination of employment which have been used to partially offset an amount thought to be owing.
Conclusion on harshness etc.
[10] Since the hearing of the matter AdventCare forwarded further submission which sought to demonstrate that Ms Merritt did not perform authorised overtime and therefore has been paid an amount in excess of that to which she was entitled. Ms Merritt has calculated her hours and believes that she is still owed money. Each conclusion is dependent upon underlying assumptions neither of which is satisfactory although they both use the same data.
[11] This matter commenced with Ms Merritt refusing to give her supervisor the password to the payroll system when she was absent. Ms Merritt defends this by citing policies of AdventCare which state that you should give your password to no-one. However, I am not persuaded by this submission. It is clear that access was necessary to the payroll system and in the ordinary course an employee who is absent would provide the relevant password to a supervisor to access the system.
[12] From here certain “irregularities” were noticed which led to a more comprehensive review. It was the outcome of this review which led to the termination of employment of Ms Merritt.
[13] Section 387 of the Act provides:
“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.”
[14] It is to each one of those criteria that I now turn.
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees);
[15] This is a case where notwithstanding an attendance system, it nonetheless had imprecise information as a result of a misunderstanding of obligations and inadequate record keeping. However, the facts remain that Ms Merritt, who held the responsibility for accurate record keeping, adopted a practice which was inconsistent with that objective. Ms Merritt sought to accommodate what she thought she was owed through a method which was not appropriate. Records were altered and reliance was placed on understandings or assertions of approval.
(b) whether the person was notified of that reason;
[16] Ms Merritt was notified of the reason.
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;
[17] Ms Merritt was given an opportunity to respond and did so in significant detail.
(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;
[18] I do not discern any unreasonable refusal by the employer to permit a support person.
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal;
[19] Because Ms Merritt was dismissed for serious misconduct then no warnings occurred in relation to this form of record keeping. It is put by Ms Merritt that nobody told her how to record time off in lieu and therefore her practice continued in reconciling, as best she could, the overtime she worked. This was in circumstances where the record keeping for time off in lieu was not formally recognised by the employer. It was only when the employer discovered the entries in the payroll system did it become alive to the approach taken by Ms Merritt.
(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;
[20] This is not a large organisation but it did have advice from an industrial relations consultancy.
(h) any other matters that the FWC considers relevant.
[21] I consider that the failure of the employer to understand its obligations under workplace instruments to be relevant to this matter. Indeed, the policy of the employer that there were individual contracts which did not permit overtime but gave what was said to be unpaid time off 5 in lieu, is also significant. Ms Merritt did work additional hours to the benefit of the employer and it appears that it was accepted without formal acknowledgment. It can be easily understood that an employer would seek to avoid employees setting their own hours and some protections need to be built in, but it appears to me that the necessary governance structures were not in place.
[22] The basis of the dismissal was said to be fraud. On the evidence before me this may be overstating the circumstances. Ms Merritt sought to explain each of the events relied upon by the employer but it appears that its ignorance of its industrial regulation conditioned its approach to the termination of employment.
[23] I have reached the conclusion that the summary dismissal of Ms Merritt was harsh, unjust and unreasonable.
[24] I now turn to remedy.
[25] To begin, Ms Merritt does not seek reinstatement. It is submitted:
MR SHERRIFF: Mr Deputy President, we seek relief at the higher end of the scale. I note that Ms Merritt has not received her entitlements. We believe - those entitlements are obviously subject to the calculations that we’re providing to you, I guess, but she hasn’t received the balance of her entitlements 6.
[26] I am satisfied that reinstatement is inappropriate given the circumstances of the case and the role Ms Merritt was performing. Therefore I now turn to consider compensation.
[27] Section 392 of the Act provides in part:
“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.
[28] It is appropriate that consideration be given to each of the criteria separately.
(a) the effect of the order on the viability of the employer’s enterprise;
[29] There is no evidence in this regard.
(b) the length of the person’s service with the employer;
[30] Ms Merritt worked in a voluntary capacity with AdventCare but commenced full time in February 2011 until the termination of her employment in 2014. She had over three and a half year’s service.
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed;
[31] In relation to this matter, I am of the view that notwithstanding the lack of governance to employee’s terms and conditions of employment, Ms Merritt nonetheless did not conduct herself in an open and transparent way with her record keeping. She did have financial circumstances which led to cashing out annual leave and her time in lieu records, including the alteration of entries, was not optimal; to put it at its highest. I also note that not only was the employer unaware of the terms of the industrial instruments, not surprisingly nor was Ms Merritt. Her knowledge was conditioned by the contract she signed and that required authorisation for overtime.
[32] This was an unhappy mix of circumstances but Ms Merritt cannot be absolved from tailoring records to suit what she considered fair and reasonable. Given this, I am of the view that her employment would not have lasted more than an additional four weeks.
[33] Care should be taken not to confuse what might be rights under an award or agreement with an assessment of how long the person would have worked. Those rights, if they exist, can be pursued in another jurisdiction.
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
[34] It was submitted that Ms Merritt was seeking employment but unable to obtain employment at the time of the hearing.
(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;
[35] It is apparent that Ms Merritt has not earned any income since the time of the termination of her employment.
(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;
[36] Following on from the earlier conclusion, I estimate that Ms Merritt would have earned 4 weeks pay until the termination of her employment.
(g) any other matter that the FWC considers relevant.
[37] This is a matter where the employer had poor systems and a lack of knowledge about relevant industrial instruments. It is also a case where it is clear that Ms Merritt performed work in excess of her ordinary hours which should have been considered. However, I am also of the view that Ms Merritt did not deal with the matters which confronted her adequately. If the employer had accepted it’s failing in recognising the appropriate industrial instrument, in my view, that would not have led to maintenance of the employment relationship. It would not have ended in summary dismissal but the employment relationship would have ended. I do not propose to discount the amount of four weeks’ pay further.
Conclusion
[38] Having found that the termination of employment of Ms Merritt was harsh, unjust and unreasonable I have decided that a “fair go all round” following the statutory criteria contained in the Act, results in an order of four weeks’ pay (less appropriate taxation) in lieu of reinstatement. An order will issue with this decision.
DEPUTY PRESIDENT
Appearances:
D. Sherriff for the applicant.
M. Rahilly, Solicitor, on behalf of Seventh Day Adventist Aged Care (Victoria) Ltd trading as AdventCare.
Hearing details:
2015.
Melbourne:
January, 27.
Further written submissions:
Mr D. Sherriff, Industrial Officer/Organiser, Health Workers Union, 9 February; 24 March and 15 April 2015.
Mr M. Rahilly, Solicitor, 26 February and 17 April 2015.
1 Exhibit R2.
2 Transcript PN211.
3 Transcript PN470.
4 See letters dated 15 March 2011, 31 January 2012, 28 June 2012 and 19 March 2014.
5 Transcript PN230—However it appears that time in lieu was without deduction of ordinary pay.
6 Transcript PN737.
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