Ms Lillian Lampton v Ferdy's Haven Alcohol Rehabilitation Aboriginal Corporation T/A Ferdy's Haven

[2013] FWC 1769

Note: An appeal pursuant to s.604 (C2013/4002) was lodged against this decision.

[2013] FWC 1769

FAIR WORK COMMISSION

DECISION

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

Ms Lillian Lampton
v
Ferdy’s Haven Alcohol Rehabilitation Aboriginal Corporation T/A Ferdy’s Haven
(U2012/16612)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 28 MARCH 2013

Summary: whether dismissal harsh unjust or unreasonable - requirements of funding agreement with Commonwealth - conditions for funding - employee disqualified by criminal convictions not a valid reason but operational reason - meaning of capacity in s.387(a) of the Act.

[1] On 10 December 2012, Ms Lillian Lampton (“the Applicant”) made an application under s.394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy in relation to her dismissal by Ferdy’s Haven Alcohol Rehabilitation Aboriginal Corporation T/A Ferdy’s Haven (“the Respondent”).

[2] The Applicant was dismissed from her position as manager on 6 December 2012. The Applicant was dismissed for reasons that she had at an earlier time (in 2010) been convicted of fraud, such that the Respondent’s funding might be jeopardised.

[3] The conviction related to a fraud charge concerning Centrelink in 2010. The conviction appears to have been recorded on 30 March 2010. The Applicant pleaded guilty and also paid an amount (approximately $4700.00) in part restitution.

[4] Generally, the requirement to identify the criminal history of employees is a precondition that the Respondent must meet to receive (Commonwealth) funding through the Office for Aboriginal and Torres Strait Islander Health (OATSIH). I hereafter refer to this document as the “funding agreement”. There is more detailed discussion of the funding agreement and its terms below.

[5] In November of 2012, it appears that the then board raised with the Applicant her criminal record in the context of the funding agreement and its wider fraud control procedures (which require the identification of employees’ criminal histories at the point of recruitment).

[6] OATSIH is claimed to have informed the Respondent - through its regional manager based in Townsville, Mr Terry Farrelly - that it would no longer provide funding to the Respondent if the Applicant remained in its employment as CEO. Again, this is because the funding agreement between the Commonwealth and the Respondent is said to preclude a person with a conviction for a serious criminal offence from dealing with projects funded through the funding agreement.

[7] I point out that the conditionality required by the funding agreement referred to above took effect in the 2009-2010 funding agreement (“the prior funding agreement”), which appears to have been current in the Commonwealth in May 2011 until it was replaced by a 2011-2012 funding agreement which commenced in 2012. That latter funding agreement appears to include the same conditionality as the earlier agreement.

[8] The Applicant appears to have commenced performing duties as acting manager from around this same time - May 2011. Her formal contract of employment was not signed until 23 November 2011, though the Applicant states that she was offered permanent employment by the board in around September 2011. There does not appear to be any dispute about these matters.

[9] As acting manager, the Applicant in (what appears to be around May) 2011 organised police checks (at the then board’s request) on all employees including herself pursuant to the Respondent’s Fraud Policy (which was required by the then funding agreement). It does not appear that the then board acted on the Applicant’s own criminal record at that time. Just as to why this did not happen at this time is a matter of interest.

[10] It appears that the Applicant gave her criminal record history arising from the police check to the Respondent’s financial controller based in Cairns to table and move discussion at a board meeting in 2011. The financial controller (on the Applicant’s evidence) was given the documentation just prior to the board meeting. Given her own reporting commitments and travel constraints, the financial controller did not have an opportunity to table the document or move a discussion of the Applicant’s criminal history.

[11] The matter seems to have fallen into complete abeyance thereafter. The Applicant did nothing to focus the board’s attention on the matter (as on her evidence the record would have no effect on her employment as manger). For its part, the board did not return to complete the review of the police checks (or else it presumed there was no issue in relation to the Applicant as her criminal record was never tabled).

[12] A new board was elected in November 2012.

[13] Shortly after this, one of the directors - Ms Deniece Geia - questioned the Applicant about her criminal history, and whether she had a criminal conviction. The Applicant (on her own evidence) informed the director that she should investigate this matter for herself.

[14] The issue of the Applicant’s criminal record thereafter became the focus of the board’s attention. It appears that the criminal record that was given to the financial controller, who tabled it or else made it available to the board members.

[15] Once the board became seized of the criminal history, it notified OATSIH. OATSIH thereafter directed the Respondent in the manner set out above.

[16] The Applicant states that she inadvertently came across a meeting of the board on 6 December 2012. Upon joining the meeting she discovered that the board was discussing her employment status in the context of the OATSIH direction.

[17] There appears to have been some attempt by the board to discuss the matter with the Applicant at this time, though the Applicant was of the view that the board had already formed a concluded view and engagement on the issue was futile.

[18] Indeed, the Applicant essentially contended that she was dismissed without any process other than being in receipt of correspondence formally notifying her of her dismissal.

[19] More precisely, on 6 December 2012 the board of directors for the Respondent directed correspondence to the Applicant in the following relevant terms:

At the time of your employment you advised the board of directors that there were no conditions relating to your employment that would have an adverse effect on Ferdy’s Haven funding, or any breach of your employment contract. As per our risk management assessment and plan which we have undertaken to satisfy OATSIH, our funding body, we were required to complete police checks on all our employees. Due to this process it has come to light that you have a conviction which is classified as a serious offence. Due to this conviction we are unable to continue your employment due to our funding agreement with OATSIH, effective immediately. As per your employment conditions, we will be paying you two weeks paid in lieu of notice. Also due to the proximity of the Christmas period we are electing to provide you with a further two weeks pay. You will also be paid any remaining entitlements, TOIL and any other amounts, in the form of work hours, owing. Upon these payments all matters relating to your employment are finalised and are at an end.

As per your contract, please return any Ferdy’s Haven property to the board of directors. This includes but is not limited to: laptop, debit card and any keys to the cars or premises. (sic)

The Applicant’s further contentions

[20] The Applicant contends further that the Respondent’s fraud policy as it relates to recruitment states that before engaging a new recruit a police check should be carried out before the person commences employment. The Applicant contends that she was employed in the absence of a police check. It was therefore an error on the part of the Respondent that it engaged her as the manager on a contract of employment absent a police check.

[21] The Applicant also states that she sought the advice of the assistant manager as to any legislative prohibitions to her applying for the position as manager, along with two serving directors of the then board (including the then chairperson). The acting manager may have provided advice to the Applicant that it was appropriate for her to apply because the legislative prohibitions only extended to directors, as they have the responsibility arising from financial delegations. The then board chairperson, so the Applicant said in her oral evidence, simply endorsed her course of action and gave no explanation.

[22] I note also that the Applicant also claims that OATSIH had consented to her performing her role as manager. But its apparent consent, conveyed in an email dated 9 July 2011, was conditional. It appears that OATSIH was satisfied that the Applicant could perform the role of manager “whilst she was sorting out her case” and so long as the Applicant did not have access to funds.

[23] The Applicant could not assist in explaining why OATSIH’s approval was conditional in relation to time. It appears OATSIH may have presumed the Applicant was preparing for her case, or else appealing it.

[24] The second condition was that the Applicant not have access to funds.

[25] I note at this juncture that the Applicant’s contract of employment (at clause 8) makes it clear that the Applicant’s position “has no delegated authority for expenditure and approvals”, and:

All approvals and authorisations other than normal recurrent expenditure as specified within the Respondent’s schedule of delegations rests with the board until such time as otherwise determined by the board.

[26] The manager has limited access to funds.

[27] Most spending is approved by the financial controller and through the board’s approvals.

[28] But the Applicant did have a delegation, as she advised, up to $1000.00. She exercised this delegation by raising an invoice or through use of a credit/debit card. Though the Applicant was of the view most of her expenditures were for food for the Respondent’s clients or otherwise for fuel, it appears (from the Applicant’s claims) that the debit card may have been used for wider purposes.

[29] The Applicant also claims that the issue of the Applicant’s conviction had prior currency in the Respondent’s business. The Applicant had been a director on the Respondent’s board in 2010, in which role she performed the function of treasurer. The Applicant volunteered to step down from the board because of her conviction at that time. This was because it was revealed that a director could not perform the function of a director should they have a conviction.

[30] The chairperson of the current board is Ms Josephine Geia. Ms Geia was a director of the board in 2010 when the Applicant stood down voluntarily. The board, the Applicant claims, cannot be said to have been uninformed of the Applicant’s circumstances given the chairperson’s knowledge of the prior situation. Indeed, it was the same board from which she resigned in 2010 that engaged her under her contract for employment in September/November 2011. It can hardly have done so innocent of any knowledge of the Applicant’s conviction.

[31] The Applicant’s further argument appeared to be that the OATSIH funding agreement had been amended following her appointment and featured a number of elements dealing with disclosure for reasons of convictions of a serious kind. That is, the amended OATSIH funding agreement only came into effect after such time as the Applicant had been employed as the manager. The Applicant is of the view it is unreasonable to have taken steps adverse to her employment for reasons of an amendment to the funding agreement subsequent to her engagement. I have made comment earlier on the contents of the various funding agreements.

[32] The Applicant is also of the view that no representative of OATSIH conveyed either in writing or verbally a direction that the Respondent must terminate the Applicant’s employment or else have its funding withdrawn. The board, it seemed the Applicant argued, had acted precipitously or on the basis of wrong information in dismissing her.

Respondent’s contentions

[33] As set out above, in November 2012 (at what appears to have been its induction meeting) the board required police checks to be done of all its employees in order to give effect to its fraud policy. These steps were taken because of the requirements of the funding agreement between the Commonwealth and the Respondent which places conditions around involvement in funded projects and participation with vulnerable persons. The new board set about the task of ensuring it was not in breach of the funding agreement.

[34] Though the Applicant did not facilitate access to her criminal record at that time, she came to provide a copy the financial controller, who in any event would have possessed the record from earlier on when it had not been able to be tabled when the prior board considered the same issues.

[35] At the meeting at which the criminal record was tabled the Applicant was invited to explain whether the record was serious or not. The Applicant replied that it was not a serious offence. 1

[36] It is also claimed (and arguably this evidence overlaps) by the Respondent’s witnesses that at that same meeting the Applicant contended that the Office of the Registrar of Aboriginal and Islander corporations (ORAIC) had confirmed that it was acceptable for the Applicant to maintain her position as manager notwithstanding the criminal conviction. Ms Geia, a board director, invited the Applicant to confirm that claim in writing to the board. 2

[37] Ms Geia also claimed that the Applicant had mentioned on a number of occasions that her conviction had been “quashed”. Another board director, Ms Clay, also claimed the Applicant had advised the board that her charges had been “quashed”. The Respondent’s wider evidence, such as that of Ms Norman, indicated however that the Applicant actually had stated that she intended to have the conviction quashed (rather than the conviction had been quashed).

[38] At a later point on 5 December 2012 the Respondent’s financial controllers, Business Mapping Solutions, appear to have advised Ms Josephine Geia, the chairperson of the board, that the Applicant would need to be dismissed, if funding was to be maintained.

[39] The following day (6 December 2012) there was a further board meeting and Ms Deniece Geia conveyed to the board that the criminal record for fraud was of a serious nature and the Applicant had to be stood down immediately.

[40] A teleconference was convened between Mr Farrelly (of OATSIH) and the board. The seriousness of the Applicant’s criminal record was discussed, and Mr Farrelly informed the board, so the Respondent says, that the Respondent’s ongoing funding would be withdrawn if the board did not stand the Applicant down straight away because of her fraud conviction. Mr Farrelly was also said to have set an ultimatum: the Applicant should be dismissed by 12PM that day. 3

[41] The board appears to have made some efforts to contact the Aboriginal Corporations Department or OATSIH directly to confirm the advice given in these matters. It was unsuccessful in obtaining any clarity in this regard. It appears as though the board was also informed upon its seeking legal advice that it should dismiss the Applicant.

[42] The Applicant appears to have been in attendance that day during a telephone conference with Mr Farrelly, but her attendance appears to have been intermittent. 4 The Applicant may not have heard Mr Farrelly’s comments, and there were no opportunities to discuss over a continuous period with the Applicant the implications of the events of that day.

[43] The Respondent contends that the board invited the Applicant to show cause why she should not be dismissed. It was said that the Applicant’s response was that she should not be terminated because the fraud was not committed against the Respondent and she was therefore entitled to keep her position. Mr Alfred Clay, a board director, responded that this did not matter as fraud was fraud no matter where it was committed. 5

[44] It appears at one stage in this context the Applicant offered to resign her position (when this option was put to her by Mr Clay) but she later recanted because of its implications for her access to Centrelink payments. 6

[45] The Respondent has a fraud control policy, as a feature of its wider risk management policies.

[46] There is little benefit in replicating that policy here and it is without controversy. It is necessary only to observe that the policy is of the conventional kind and refers to the importance of recruitment strategies incorporating a requirement that applicants undergo police checks. The policy does not preclude the employment of such persons who might have recorded a criminal conviction or otherwise. At its best, the policy requires the employer to manage the risk of any circumstances that are disclosed by a police check.

The OATSIH Funding Agreement

[47] The OATSIH funding agreement (which is formally referred to as the “Head Agreement for Multi- Project Funding” between the Commonwealth as represented by the Department of Health and Ageing and the Respondent) imposes certain requirements on personnel who work with vulnerable people including children and receive Commonwealth funding. These requirements fall upon those who are employees and directors of the board for the Respondent. In summary the funding agreement relevantly provides for the following.

Before a person commences performing a project or part of a project the Respondent must conduct a police check on the relevant persons; confirm that the person is not prohibited under a law from being employed or engaged in the relevant capacity; and comply with all laws relating to the employment of that person in any capacity.

[48] The Respondent must also ensure that the person does not perform a project if a police check of the person indicates that the person has a “serious record”, or a “criminal record” or “court record” if the participant has not conducted and documented a risk assessment of that person.

[49] The point of this provision, which is at clause 9.2(b)(i) of the funding agreement is to identify a person who has a “serious record” as opposed to a person with a criminal or court record and about whom the Respondent has not conducted a risk assessment.

[50] If the Respondent conducts a risk assessment for a person with a criminal or court record it is required to notify the Commonwealth.

[51] If it identifies a person as charged with a “serious offence” (which as I will explain below results in a conviction which gives rise to a “serious record”), the Respondent must immediately notify the Commonwealth and comply with all applicable laws relating to persons working in or acting in any capacity where they may have contact with a vulnerable person.

[52] If any person is convicted of a serious offence, the Respondent must immediately notify the Commonwealth and ensure that the person does not from the date of the conviction perform any work or role relating to the project. The Respondent must otherwise comply with any relevant laws.

[53] Where the Respondent identifies an employee who has a criminal court record or has been charged with or convicted of another offence the risk assessment must consider whether the circumstances are directly relevant to the employee’s functions or are reasonably likely to impair the employee’s ability to perform those functions.

[54] The risk assessment will be informed by such matters as the length of time that has passed since the record of charges etc; the nature and circumstances of the offences; whether the conviction involved a vulnerable person; the circumstances in which the person has or will have or is likely to have contact with a vulnerable person in connection with his or her role; and the merits of the person continuing to perform the functions for which they are employed (along with any other relevant matters).

[55] Any such risk assessment, as mentioned above, must be fully documented and evidenced so that it is satisfactory to the Commonwealth.

Defined terms for the purposes of the funding agreement

[56] The terms serious offence and serious record are defined terms within the funding agreement.

[57] A serious offence means a crime or offence involving (amongst other things) dishonesty, fraud, money laundering, insider dealing or any other financial offence or crime, including those under legislation relating to companies, banking, insurance or other financial services.

[58] The funding agreement defines a “serious record” as meaning a conviction or any finding of guilt for a “serious offence”.

[59] A criminal or court record is defined as meaning any record of any offence (other than a serious offence, presumably).

[60] The project means a project identified in part two of the funding agreement under the project schedule.

[61] Part three of the agreement refers to funding arrangements. At clause 4.2 thereof, the agreement provides for the Commonwealth to suspend, not pay or reduce the payment of any funds when, amongst other matters, the participant has failed to perform any of the participant’s obligations under the agreement or the participant has otherwise breached the agreement (clause 4.2(e)).

[62] It appears that where there is a breach of the agreement an alternative course is open to the Commonwealth and that is to appoint a funds administrator (under clause 23.1), who would administer and control all or part of the funds and otherwise provide guidance on governance and constitutional issues and manage any projects.

[63] It does not appear to me that the funding agreement itself necessitates or otherwise requires the dismissal of an employee who is convicted of a serious offence (as defined by the funding agreement).

[64] However, the person who is convicted of a serious offence, as defined, is a person who cannot perform any role in relation to a project arising out of the funding arrangements.

Applicant’s duties

[65] Schedule 1 to the Applicant’s contract of employment sets out the various duties of the Applicant as the CEO.

[66] Those duties read as follows:

Manage the day-to-day operations at Ferdy’s Haven.

Key duties:

• Deliver and manage quality programmes for clients



• Ensuring that all administrative functions at Ferdy’s Haven are met



• Ensuring all staff perform in their designated roles



• Ensuring all expenditure and budgets are complied with and where applicable source funding



• Liaise with other organisations to achieve Ferdy’s Haven’s strategic plan is achieved (sic)



• Provide secretarial support of the board



• Liaise with funding bodies and other stakeholders as required.

[67] The key duties of the manager are inextricably related to the delivery and management of projects arising from the funding agreement. The Applicant’s further viva voce evidence was that she oversaw the delivery of the various projects for which funding is received and reported on their outcomes.

[68] As I have mentioned above, the contract of employment does not vest in the Applicant a delegated authority for expenditure and approvals other than for the purposes of normal recurrent expenditure. This conditionality did not preclude the Applicant having a delegation to spend money up to $1000.00, having access to a debit card, along with a responsibility to ensure all expenditure and budgets were complied with.

[69] The Applicant cannot be said to have been detached from the financial affairs of the Respondent nor from involvement in the numerous projects for which funding is received from the Commonwealth.

Legislative provisions

[70] In order to determine whether in all the circumstances the Applicant was dismissed harshly unjustly and unreasonably I must take into account the various matters set out at s.387 of the Act.

[71] Section 387 of the Act provides as follows.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.

Consideration

Section 387(a): whether valid reason

[72] The Applicant’s employment was terminated for reasons arising from a changed contractual funding relationship with the Commonwealth, as I have explained above. In effect, the Applicant was disqualified from performing her role as manager because of the operation of the funding agreement between her employer (the Respondent’s board) and the Commonwealth.

[73] Section 387(a) of the Act requires me to have regard to whether there was a valid reason for the Applicant’s dismissal related to capacity or conduct or performance. The Respondent was of the view that the operation of the funding agreement caused the Applicant to lose her capacity to perform her duties, and therefore fell within the meaning of s.387(a) of the Act.

[74] The notions of capacity or conduct appear in conjunctive relationship in the section. Taken together, it appears to me that the statute refers inherently to personalised phenomena. That is to say, the reference to capacity I take to mean the personal attributes of an employee in relation to their ability to carry out their duties, just as “conduct” refers to the personal conduct of the employer for which he or she is responsible.

[75] Many circumstances may impact upon the capacity of employee in this respect. An employee might cease to exhibit the technical capacity (or competency) required for the position for which he or she was employed (a circumstance distinguishable from deficient performance as such). Perhaps, alternatively, an employee might lose his or her capacity to apply manual labour to the position in the manner required to perform the duties for which he or she was employed. Here the employee might have lost the capacity to perform the job for reason that he or she no longer possessed the inherent requirements of that job owing to physical or mental impairments etc. These are all matters that go to the personal capacity of an employee to perform the services for which he or she was contracted.

[76] Arguably, an altogether different circumstance arises, however, when by effect of an external instrument (which in this case bears on the commercial viability of the employer) an employee is disqualified from performing duties (but his or her personal capacities remain unchanged).

[77] In circumstances before me the Applicant did not lose her capacity to perform the job as such. She remained as capable of performing the role of manager on her last day of work as she had on her first day of work. In short, her capacity to perform her duties remained unchanged. However, the Applicant was disqualified from performing the position for which she was employed by dint of the application of an external standard. It is arguable therefore that a circumstance such as this might be a matter to be taken into account for the purposes of s.387(h) of the Act.

[78] Yet, the scope of the meaning of “inherent requirements” of the job, which demonstrably on the authorities applies to “capacity” under s.387(a) of the Act, travels beyond physical and mental impairments. Some relevant circumstances might be where an employee is required to possess, as a term of his or her contract of employment, an accredited technical qualification or legal competency, such as a driver’s licence in relation to employment in the transport industry. The loss of a driver’s licence for a courier driver, for example, might constitute the loss of an inherent requirement of the job, and thus provide for a valid reason on grounds of (in)capacity (to perform driving duties at all).

[79] Here, clause 7.1.4(e) of the Applicant’s contract of employment states that the Applicant’s employment could be terminated for reasons of a conviction, where that conviction precludes or inhibits the further performance of the duties under the contract of employment. This clause anticipates the interaction of the Applicant’s position and the Respondent’s funding arrangements.

[80] When it became known that the Applicant had a conviction for a serious offence (under the terms of the funding agreement) and the funding authority indicated its concerns as a consequence, the Applicant lost her capacity to perform the inherent requirements of her job. Some may lose their capacity by implication (for example where an employee cannot physically be present to perform any duties whatsoever owing to injury). But here, the Applicant was disqualified from further employment as she lost her capacity to meet the inherent requirements of an express term of her contract of employment

[81] There was, therefore, a valid reason for the dismissal of the Applicant in the terms contemplated under s.387(a) of the Act in relation to the Applicant’s capacity.

[82] A strand of argument did course through the proceedings that the Applicant had acted dishonestly in representing her criminal history to both the prior board and the new board, and that this dishonesty grounded a further finding of a valid reason under s.387(a) of the Act.

[83] The evidence is weak in relation to any deception carried out by the Applicant in relation to the prior board. The Applicant’s own evidence was that she resigned from her position in 2010 as a director of that board for reasons of her criminal conviction (when it appeared there might be a condition of appointment as a director that precludes a person with a criminal conviction). That claim on the Applicant’s behalf was not challenged. It leads me to conclude that the prior board would reasonably have possessed corporate knowledge of the factual situation concerning the Applicant’s conviction.

[84] Indeed, it was this same board, as the employing authority, that appointed the applicant to the position of manager in May 2011 (less than a year following her resignation from the board) and did so without recourse to a police check.

[85] Further, there was a summary of the minutes of a meeting of the board (on 13 May 2010) that formed part of the evidence that was said to suggest that the Applicant had sought at that time to mislead the board as to the status of her conviction. I am not so sure that is the case on a full reading of the e-mail. The e-mail suggests no more than that the Applicant contested her charges and was unsuccessful:

Lillian Lampton asked to address the meeting regarding an issue with an overpayment of Centrelink payments. Lillian has challenged this matter in court as she believes that she is innocent as she declared all her earnings. Unfortunately she was unsuccessful and charged with fraud ordered to pay half of the overpayment and had community service hours to do [...]. Chairperson thanked Lillian for her honesty and for bringing this matter to the board’s attention. 7

[86] Perhaps like many others who are charged and convicted, the Applicant felt herself blameless. But that is far from setting out to mislead the board as to the existence of the conviction itself. Be that as it may, I do not see in the evidence that the Applicant had set about to deceive the prior board or that the board had been unaware of her conviction because of her subtle nuancing of her circumstances (which was I think the Respondent’s subtext).

[87] I add to this that the Applicant gave what I believe to be particularly sound (and unrefuted) evidence that the former chairperson of the prior board had contacted her (upon her directing a query to him about her employability given her conviction) and explained that her appointment as manager was unaffected by her criminal conviction. The Applicant’s evidence was that the telephone call was a simple affirmation of this fact and that the chairperson did not go into any details or provide any explanation of how the board had come to this view.

THE SENIOR DEPUTY PRESIDENT: No, just one other question that comes to mind. In the evidence, earlier in the cross-examination Ms Lampton you indicated that before you accepted or before you applied for the position as manager you approached two members of the board, and I wasn't sure whether they were members of the board at that time or whether they had been members of the board at some other time?---No. At that time they were members of the board and I also asked the assistant manager to investigate whether it would be proper for me to apply for the job.

Yes. No, putting aside the assistant manager - - -?---No.

Putting that position aside you say - I mean, the assistant manager doesn't employ you, the board does. So that's just the assistant manager - - -?---Okay.

- - - saying something, who approached you and so on. But who would probably have a view because she approached you and invited you to apply and so on, so she probably has a view. But look, putting her aside, she's not the employer. The employer is the board. Now you say you approached the chairman - the chairperson of the board?---The chairperson and the treasurer.

And the chairperson was?---Victor Daisy, and the treasurer was Arthur Clumpoint.

And you say both those people, both those members of the board said what?---At that time, yes.

They said?---At the time of my applying for the job.

What did they say to you? What did they say to you? Did they write to you or did they meet you personally?---No, the assistant manager rang and he said that there was a position available, and then I rang them to - Victor Daisy and Arthur Clumpoint, "You find out properly whether it's okay for me to apply for the job and then I will", and that's what I said to them. They never rang me.

All right, so how did you ever find their - what did they say to you in reply to your question?---Well, they - about a week later they came back and said, "Lillian, you can send your application in then. It's okay to apply for the job" and that's what I did. Then I applied for the job.

Did they ring you up a week later or did they write to you?---Yes.

They both rang you up?---No, not both. Victor did.

All right, the chairman - - -?---The chairperson.

- - - or the chairperson rang?---Yes. Yes.

And he told you it was okay to apply for the job because - - -?---Yes, to apply - - -

Did he say why he said because - - -?---I don't know. Made that decision with that board. I - you know, I only wanted to know if it was all right for me to - - -

Did he give a reason why it was appropriate for you to - - -?---No, not that I - - -

- - - apply?---- - - can recall.

He just said, "It's okay"?---He said, "It's okay for you to apply".

And he remained chairperson of the board until November 2012?---Eleven, I think. Yes two - yes, 2012. Sorry. 8

[88] The Applicant no doubt had been comforted by this information in relation to the board’s apparent disposition (as I explain below).

[89] I add further that the Applicant had provided a copy of her criminal conviction to the board’s financial administrator in November 2011 for the purposes of the then board meeting which was to examine the criminal history of employees for the purposes of its risk or fraud management policy. The examination was never completed. It may be the case that I could infer from such circumstances that the Applicant should have agitated the issue at later board meetings. But equally, if the Applicant had been acting on the presumption of the prior board chairperson’s advice, the failure to so agitate the issue may be cast in a more benign light.

[90] It was said by a number of the Respondent’s witnesses that the Applicant had indicated to them that her conviction had been quashed. But there also is doubt about this claim. One of the Respondent’s witnesses claimed that the Applicant only claimed that she was intending to quash her conviction, in a prospective sense. I note that the letter of termination dated 6 December 2012 made no express claim that the Applicant had dishonestly represented her criminal history to the new board. I would have thought that such a breach of the implied and express terms of her contract of employment (see clause 7.1.4(b) thereof) would have warranted attention at that time if the Board was of the view the Applicant had misrepresented her criminal record. As it was, the Applicant provided a copy of her criminal record to the Respondent’s financial controller (in what appears to be late November 2012) for tabling when the issue of her criminal record arose once more at that time.

[91] I add finally that the Applicant did not conduct herself in a cooperative manner when the board attempted to interview her on 6 December 2012. She appears to have deliberately avoided engagement with the board members or to focus on the issue at hand. Such conduct is regrettable as it had implications for the board’s decision making. I discuss this a little more below. But whilst the Applicant was uncooperative at that time, that instance of conduct did not found in its own right a valid reason for the dismissal.

[92] Because of my findings in these regards I am not of the view that a valid reason (under section 387(a) of the Act) for the dismissal existed for reasons of the Applicant’s conduct.

Section 387(b) of the Act: whether notified of the reason for dismissal

[93] The Respondent was clearly of the view that she was notified of her dismissal and that the Respondent had a closed mind in relation to that decision. The Applicant therefore claims that she was not notified in advance of the reason for the dismissal.

[94] This position sits uncomfortably with the evidence of the Respondent. While the Respondent appears to have engrossed itself in discussion about the implications for its business because of the non-compliance with the funding agreement, it appears on the evidence that the Applicant was nonetheless provided an opportunity to show cause. Mr Alfred Clay gave evidence to this effect which struck me as being honestly and dispassionately given. He stated that the board sought to sit down and speak to the Applicant and explain to her how all of this came about including information from the funding body that the funding arrangements were in jeopardy and to probe further the Applicant’s claims that there had been some institutional support for her ongoing employment (through ORAIC). This was also the evidence of Ms Elizabeth Clay and Ms Deniece Geia (through oral testimony) and the sworn statement of Ms Clay. 9

[95] The evidence of these witnesses, which I have heard, is very difficult to put aside, and I prefer it to that of the Applicant.

[96] In my view, the evidence suggests that the Applicant reached the view that her dismissal was imminent and that approaches to her to discuss the matter would be pointless in the circumstances. When the Respondent sought to discuss the matters with the Applicant, the Applicant in my view was deliberately evasive and unwilling to engage with it in relation to the important issues at hand.

Section 387(c) of the Act: whether given an opportunity to respond to the reasons

[97] Given my findings above, I am of the view that the Applicant was given an opportunity to respond to the reasons for her dismissal even though she may have subjectively understood the board to have had a closed mind on the subject.

Section 387(d) of the Act: whether refusal to allow support person

[98] The circumstances of this matter did not generate an opportunity for the Applicant to consider the role of a support person. There was therefore no point in time at which the Respondent can be said to have refused to allow a support person to assist the Applicant in the discussions (as they were) in relation to the dismissal.

Section 387(e) of the Act: whether warned in relation to performance issues

[99] As mentioned above, the Applicant’s employment was terminated for reasons related to the operational circumstances of the Respondent. No issue of the Applicant’s performance arose.

Section 387(f) of the Act: whether dismissal affected by size of Respondent

[100] The Respondent is a smaller business in the not-for-profit stream. It employs some 17 or so employees under various modes of employment, but most are casuals (according to the Applicant’s evidence).

[101] The evidence in this matter shows that the size of the Respondent’s operation meant that it had few resources to devote to managing staff relationships in the context of the financial circumstances in which it found itself. But this will often be the case where a board must deal directly with its effective CEO, in any event.

Section 387(g) of the Act: whether dismissal affected by the absence of HR resources

[102] As mentioned immediately above, the Respondent had limited resources and no dedicated HR expertise at its disposal. The board lacked access to dedicated resources in order to execute investigations or to examine practical options regarding dismissal. In any event, given the size of the establishment and its functions and resources, any advice that may have been received from any dedicated HR expertise may not have altered the ultimate outcome.

Section 387(h) of the Act: whether other matters

[103] The Applicant appeared to suggest that her status was only brought into question because of Ms Geia’s personal disposition towards her.

[104] I can add little to this.

[105] There may well have been issues of personal and familial antagonism at work in the re-agitation of the police checks at the induction of the new board in November of 2012, but I am unaware of this as a matter of evidence. As a matter of actual evidence, however, the Applicant had a criminal record for fraud, and this is unchallenged. And the funding agreement stipulated various conditions in relation to the role of persons who have had such convictions held against them.

[106] There is no evidence of any determinative kind that either OATSIH (in any unconditional way) or ORAIC approved or sanctioned the role of the Applicant as a manager in the context of the requirements of the funding agreement. The July 2011 e-mail does not bear this out. Nor did the Applicant bring any evidence in relation to any advice that she had received from ORAIC.

[107] The Applicant’s case in part was that the responsibility for her employment rested solely with the Respondent’s board and it should have exercised greater diligence than it did in appointing her as manager. There is something to be said of this argument. As I have commented above, the board that appointed the Applicant to the position as manager in 2011 was also the board from which the Applicant had resigned her role as director in 2010 for reasons of her conviction. How this state of affairs could have come to pass is a mystery to me.

[108] But whilst the Applicant may have reason to wonder herself as to the conduct of the earlier board and its disregard for what must have been its corporate knowledge (and especially within a community as small as Palm Island), it does not save her in relation to the requirements of the funding agreement. The new board - as elected in October/November 2012 - took matters in hand and applied the risk management strategies (as required by the funding agreement) with a rigour the earlier board had not pursued.

[109] It may be contended that the dismissal was harsh for reason that the funding agreement does not necessitate the dismissal of a person who is convicted of a serious offence, as defined within the terms of the funding agreement. Arguably, the Respondent may have deployed the Applicant to another position.

[110] But this does not take account of the very small size of the Respondent’s enterprise. Other than the Applicant herself there were only some two other full-time positions (a caseworker and a healthcare worker), the rest being employed on a casual basis for reasons of the fluctuating client demands. I infer from the circumstances that there was no reasonable alternative to dismissal.

Conclusion

[111] There is much that is regrettable in the circumstances that arose in 2011 - 2012. But be that as it may, the Respondent dismissed the Applicant for reasons that were soundly based and reasonable given the requirements of the funding agreement.

[112] It appears to me that the Respondent (given its size and resources) was left with no other choice, once the funding agreement terms were amended in the manner described above, than to dismiss the Applicant from her role as manager. The Applicant was entirely unhelpful on 6 December 2012 when the board attempted to engage her about her circumstances. Dismissal was the only practical option with which the board was left at the end.

[113] Much might be said about the inflexibility of the funding agreement in relation to persons who have been convicted of what it defines as serious offences. The agreement cites any conviction for dishonesty at any time as being a serious offence. It is possible to imagine circumstances in which such conditionality might prove to be particularly unfair, especially where a conviction was in the long distant past, had been at the lesser end of the continuum, and a person had been of good character since.

[114] But a funding body will manage its risks as it sees them, and usually on the basis of its experience. A public funding body will be inclined to be risk averse. The funding agreement between the Commonwealth and the Respondent is particularly risk averse in terms. Perhaps the Applicant herself understood this when in the course of her viva voce evidence she volunteered her knowledge that there had been a history of misappropriation of public monies in public bodies.

[115] It strikes me as perfectly tenable that Mr Farrelly may have placed the Respondent on a deadline for the purposes of removing the Applicant from dealing with or managing projects which the Commonwealth was funding in light of her conviction. But it would be unlikely and inconsistent with the terms of the funding agreement if he had indicated that the Respondent should dismiss the Applicant from its employment. Some of the evidence from the Respondent was that Mr Farrelly had stated that the Applicant should be stood down or not perform her duties any longer. There is therefore not any necessary inconsistency between the claims of the Respondent and the Applicant in relation to Mr Farrelly’s comments (as they have been).

[116] Yet even if Mr Farrelly (or even if the Respondent’s financial controller) had made the claim that the Applicant should be dismissed, little turns on this. I have reached my own view on an objective basis about the options the Respondent faced on 6 December 2012.

[117] Within the constraints of the organisational structure and size of a not-for-profit organisation (where there were only two other full time employees performing client contact roles), the Respondent gave effect to the dismissal and managed the Applicant as best it could.

[118] When all the circumstances are considered I cannot conclude that the decision to dismiss the Applicant was harsh unjust or unreasonable. I must therefore dismiss the application for unfair dismissal remedy as lodged by the Applicant.

SENIOR DEPUTY PRESIDENT

Appearances:

Ms L. Lampton, Applicant

Mr R. Haddrick, Counsel, for the Respondent (instructed by Macdonnells Law)

Hearing details:

2013

20 & 21 March

Townsville

 1   See Exhibit R3 - Statement of Rosina Norman at paragraph 8.

 2   See Exhibit R2 - Statement of Elizabeth Clay at paragraph 7; and Exhibit R4 - Statement of Deniece Geia at paragraph 11.

 3   See Exhibit R3 - Statement of Rosina Norman at paragraphs 11 and 13; and Exhibit R2 - Statement of Elizabeth Clay at paragraph 11.

 4   See Exhibit R3 - Statement of Rosina Norman at paragraphs 13; and Exhibit R2 - Statement of Elizabeth Clay at paragraphs 13-14.

 5   See Exhibit R1 - Statement of Alfred Clay at paragraphs 11-12.

 6   See Exhibit R1 - Statement of Alfred Clay at paragraphs 14-15; and Exhibit R3 - Statement of Rosina Norman at paragraphs 13.

 7   Exhibit A2 - Minutes of board meeting of 13 May 2010.

 8   Transcript of proceedings dated 20 March 2013, a PN [1069]-[1087].

 9   Exhibit R2 - Statement of Elizabeth Clay at paragraph 13.

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