Ms Megan Lyons v Any Signs and Printing

[2013] FWC 2385

[2013] FWC 2385

FAIR WORK COMMISSION

DECISION

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

Ms Megan Lyons
v
Any Signs and Printing
(U2012/17156)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 22 APRIL 2013

Summary: unfair dismissal remedy - small business code - test of reasonableness for reaching state of belief - no valid reason - compensation remedy order.

[1] On 27 December 2012, Ms Megan Lyons (“the Applicant”) made an application under s.394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy in respect of the alleged termination of her employment by Any Signs and Printing (“the Respondent”).

[2] The Applicant had been an employee with the Respondent since May 2011.

[3] I have found by way of my prior decision in [2013] FWC 2384 (“the prior decision”) that the application was within jurisdiction and that I should turn to consider the substantive merits of the application.

[4] This decision should be read entirely in conjunction with the prior decision, which provides all relevant evidentiary detail and background. In summary, I reached the conclusion in the prior decision that the Applicant’s employment was terminated at the initiative of the employer for reason that it had precipitously concluded a view that the Applicant had repudiated her employment (when she had not).

LEGISLATIVE PROVISIONS

[5] The relevant legislative provisions arise under s.387 of the Act which reads as follows:

387 Criteria for considering harshness etc.

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.

[6] Before proceeding, I point out that the evidence in this matter demonstrates that the Applicant is a small business employer for the purposes of s.23 of the Act.

[7] As such, the Small Business Fair Dismissal Code (“the Code”) applies to the application.

[8] Section 396 requires the determination as to whether there was a dismissal consistent with the Code before considering the merits of the application. The Small Business Fair Dismissal Code relevantly states as follows:

“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. .....”

[9] I have set out in the prior decision my reasons for concluding that the Applicant was dismissed at the initiative of the Respondent and that the Applicant could not have been taken to have repudiated her employment by her own actions when objectively considered.

[10] Equally so, the circumstances of this case as I have set out in the prior decision provide no basis for the dismissal having been fair for reason that the Respondent was positioned to form a reasonable belief that the Applicant’s conduct was sufficiently serious to warrant immediate dismissal. The Applicant’s conduct itself was not at the serious end of the spectrum. Nor were the particular circumstances of this case able to demonstrate that the Respondent had reasonable grounds for reaching the conclusion that it did about the Applicant’s behaviour and its ramifications.

[11] The Full Bench in John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edwin Domingo 1 set out the basis for the test of reasonable belief as it arises under the Code:

[24] This test brings the position for small businesses into line with the test for unfairness applied by tribunals in the UK in misconduct cases. In the leading case of British Home Stores Ltd v Burchell, the Employment Appeal Tribunal held that:

“What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further.”

[25]There have been few decisions discussing the requirements of the relevant paragraph of the Small Business Fair Dismissal Code in Australia and no Full Bench cases. Commissioner Deegan in French v Lufra Investment expressed her conclusion on consistency with this part of the Small Business Fair Dismissal Code as follows:

“[41] The respondent appeared to argue that the applicant’s conduct was serious misconduct as it was “wilful and deliberate behaviour by an employee that is inconsistent with the contract of employment”. I am not satisfied that the applicant’s conduct in initially refusing to restore the shed to its former state or refusing to discuss the matter with Ms Holland some short time later was, in all the circumstances “wilful or deliberate behaviour” or in fact conduct so serious as to justify summary dismissal. I will expand on my reasons for reaching this conclusion in dealing with the matter of whether the dismissal was harsh, unjust or unreasonable. As summary dismissal was not warranted in this case the dismissal was inconsistent with the Code.”

[26] In our view this approach is not consistent with the requirements of the Small Business Fair Dismissal Code as it equates the test in the Code with a determination by the tribunal of whether summary dismissal was warranted.

[27] Deputy President Bartel in Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe said:

“[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant’s conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based.”

[28] Senior Deputy President O’Callaghan in Harley v Rosecrest Asset Pty Ltd T/A Can Do International said:

“[8] For an employer to believe on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s.387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred.

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.”

[29] We believe that the approach and observations in these two decisions are correct. There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.

[12] In my view, not only was the Applicant’s conduct not at the end of the spectrum that could be characterised as so serious as to warrant instant dismissal (and I have set this conduct out in the prior decision), the evidence before the Respondent was such that it was necessary to conduct some elemental investigation before such time as it reached the conclusion the Applicant’s employment should terminated.

[13] Consequently, the Code does not have application in the current circumstances, and I now turn to consider whether there was a valid reason for the dismissal for the purposes of s.387(a) of the Act.

[14] There are special circumstances relating to this application.

[15] The finding that I have reached in the prior decision largely constitutes a complete answer to the question as to whether or not the Applicant was harshly unjustly or unreasonably dismissed. There are no other surrounding circumstances that bear materially upon the conclusion.

[16] That is to say, there was no valid reason for the dismissal for the purposes of s.387(a) of the Act. As I found in the prior decision the Respondent acted precipitously in accepting the Applicant’s apparent repudiation of her employment contract and thereafter refusing her access to the workplace to perform her duties thereafter.

[17] This was because in fact the Applicant had not abandoned her employment at all, and that should have been sufficiently in evidence to a reasonable person on 11 December 2012, let alone on 13 December 2012 when even further information about the circumstances became evident.

[18] Consequently, there was no procedural fairness afforded to the Applicant in relation to s.387(b) and s.387(c) of the Act. The Respondent, through Mr Taylor, had reached its decision before such time as the Applicant was extended an opportunity to affect that decision through a full explanation of her conduct.

[19] No circumstances of any relevance arose in respect of s.387(d) of the Act.

[20] The matter did not give rise to any performance issues as such, and therefore there were no circumstances relevant to s.387(e) of the Act that required consideration. The reason for the dismissal was because the Respondent reached a view, not available to it on an objective basis, that the Applicant had repudiated her employment.

[21] I do note for the purposes of s.387(f) and s.387(g) of the Act, that the Respondent is a small business for the purposes of s.23 of the Act, and had only some four or so employees (at the time of the dismissal). Neither does the Respondent (for reasons of its size) have any dedicated human resource expertise at its disposal. My questioning of the Respondent witnesses demonstrated that there was no HR expertise at its disposal.

[22] A reasonable inference is drawn from the circumstances that the Respondent took steps to deal with the apparent abandonment by the Applicant of her employment and did so without advice of a professional kind.

[23] Section 387(h) of the Act requires me to take into account any other matters that are relevant. There are no matters that are immediately relevant, other than that the Applicant herself was at the very tail end of her employment record with the Respondent.

[24] Taking all the circumstances into account, I conclude that the Applicant was harshly unjustly or unreasonably dismissed from her employment by the Respondent. I so conclude regardless of the impact of the size of and the absence of HR resources at the disposal of the Respondent and the fact the Applicant only had a short period of employment remaining. In the context of this application at least, these matters do not override, in my judgement, the absence of a valid reason and the denial of an opportunity for the Applicant to place her conduct in important context.

Remedy

[25] Section 390 of the Act reads as follows:

Division 4—Remedies for unfair dismissal

390 When FWA may order remedy for unfair dismissal

(1) Subject to subsection (3), FWA may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) FWA 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) FWA may make the order only if the person has made an application under section 394.

(3) FWA must not order the payment of compensation to the person unless:

(a) FWA is satisfied that reinstatement of the person is inappropriate; and

(b) FWA 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.

[26] The Applicant is 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 a discretion as to whether the Applicant can be reinstated. Section 391 of the Act provides as follows:

391 Remedy —reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If FWA makes an order under subsection (1) and considers it appropriate to do so, FWA may also make any order that FWA considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

[27] There are no grounds on which to re-employ the Applicant in respect of her previous position or to reinstate her to an alternative position. This is because the Applicant had already reached an agreement with the employer to cease employment in a few days time (on 20 December 2012).

[28] I have found it would be inappropriate to reinstate the Applicant to her prior position and for the same reasons I will not appoint the Applicant to a commensurate position (in the Respondent’s business).

[29] Because of these findings, I must consider the option of compensation. Section 392 of the Act provides as follows:

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), FWA 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 FWA considers relevant.

[30] In respect of the above matters that I must take into account I find as follows:

(a) the effect of the order on the viability of the employer’s enterprise

[31] There is no evidence that any order I might make for compensation would in some manner affect the Respondent’s viability.

(b) the length of the person’s service with the employer

[32] The Applicant was employed for some 18 months with the Respondent, and as such would be taken to have consolidated her employment. This is a not a long period of service and if anything has a neutral effect on my disposition as to whether or not to make an order.

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[33] The Applicant would only have been employed by force of her own agreement with the Respondent for a period of nine days following the day on which the Respondent assumed she had repudiated her employment (11 December 2012).

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[34] The evidence in this matter is that the Applicant would have been absent from work pursuant to her medical certificate for the period 12 and 13th of December 2012; have attended work on Friday, 14 December 2012; and have been hospitalised on Monday, 17 December 2012 before such time as her employment came to an end on 20 December 2012. I do not consider that in this short period of continuous availability between 18 to 20 December 2012 inclusive (which is the residual of the anticipated period of employment) that I should have expected the Applicant to have mitigated her losses following her effective dismissal.

(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 not necessary to take into account any such earnings as they fall outside the anticipated period of further employment, and do not bear upon the compensation that may be ordered. In the period of anticipated further employment, the Applicant had no further earnings (see immediately above).

(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] This is not a matter that requires any consideration as it is irrelevant to these proceedings. The order as made below specifies that payment must be made no later than seven working days from the date of the order. There is insufficient certainty as to the time within that seven day period in which the payment is to be made for me to take into account a precise quantum of projected earnings. If the order did not need to be complied with for a longer period of time, then this statutory concern would warrant attention. In any event, in the current circumstances, the compensation, as is the period in which earnings are relevant, is limited to a short window of time between 11 December 2012 and 20 December 2012.

(g) any other matter that FWA considers relevant

[37] I make no deduction for contingencies as I do not see them as being relevant in the circumstances where the period of anticipated employment is certain and for a short period.

[38] Section 392(3) of the Act provides as follows:

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

[39] I discern in the evidence some relatively low level misconduct on the part of the Applicant (arising from the manner in which she abruptly left work in an emotional state late in the afternoon of 11 December 2012 an hour or so earlier and her failure to provide handover information), but I see no reason to discount the Applicant’s compensation as a consequence.

[40] Section 392(4) of the Act provides as follows:

Shock, distress etc. Disregarded

(4) The amount ordered by FWA 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.

[41] My order for compensation makes no allowance for the above proscribed matters or considerations.

[42] Section 392(5) of the Act provides as follows:

Compensation cap

(5) The amount ordered by FWA 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.

[43] Section 392(6) of the Act provides as follows:

(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.

[44] The order that I propose to make is unaffected by the operation of the statutory cap as cited.

[45] Section 393 of the Act provides as follows:

393 Monetary orders may be in instalments

To avoid doubt, an order by FWA under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.

[46] The Respondent has made no application in the course of these proceedings to pay any amount I may order to be paid as compensation in instalments.

CONCLUSION IN RELATION TO REMEDY

[47] I order that the Applicant be paid the amount she would ordinarily have been paid, inclusive of superannuation, for the period 11 December 2012 - 20 December 2012 (inclusive).

[48] This amount must be paid to the Applicant to her usual account within 7 working days of the date of this decision (22 April 2013).

[49] Though it is unrelated to the order that I have made above, I note that the materials in these proceedings show that the Applicant’s entitlements at the time of her effective dismissal were calculated on the basis that the Respondent was entitled to withhold 100 hours of her accrued salary because the Applicant was believed to have abandoned her employment.

[50] Given my findings above and in the prior decision, the Applicant cannot be taken to have repudiated her employment and, instead, the Applicant’s employment ceased because the Respondent dismissed her at its own initiative. It follows that there appears to have been no authority to so deduct a component of the Applicant’s salary when she was paid her entitlements upon being discharged from the Respondent’s employment.

[51] The Applicant may seek the advice of the Fair Work Ombudsman or a legal representative in relation to the recovery of such monies in the event the Respondent does not pay her due salary entitlements in full.

SENIOR DEPUTY PRESIDENT

Appearances:

Ms M. Lyons, Applicant

Mr B. Taylor, for the Respondent

Hearing details:

2013

16 April

Mackay

 1   [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012).

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