Ms Mingjie Zhou v Laurent Bakery Pty Ltd

[2021] FWC 2128

[2021] FWC 2128

FAIR WORK COMMISSION

DECISION

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

Ms Mingjie Zhou
v
Laurent Bakery Pty Ltd
(U2020/13302)

DEPUTY PRESIDENT YOUNG MELBOURNE, 19 APRIL 2021

Application for an unfair dismissal remedy - dismissal found to be unfair - reinstatement not appropriate – compensation ordered.

[1] On 7 October 2020, Ms Mingjie Zhou made an application to the Fair Work Commission under section 394 of the Fair Work Act 2009 (Cth) (Act) for a remedy, alleging that she had been unfairly dismissed from her employment with Laurent Bakery Pty Ltd (Laurent). The matter was subsequently programmed and was heard on 14 January 2021.

[2] In a decision issued on 11 March 2021 1 (Decision) I found that Ms Zhou was unfairly dismissed within the meaning of section 385 of the Act. I determined that reinstatement would be inappropriate. However, there was insufficient material before me at the hearing to determine the question of compensation.2 Consequently, directions were issued to the parties on 15 March 2021.

[3] Ms Zhou filed submissions in accordance with the directions on 22 March 2021. Laurent filed submissions in accordance with the directions on 29 March 2021.

[4] A hearing in relation to the question of compensation was held on 16 April 2021. Mr Hone appeared on behalf of Ms Zhou and Mr Fuimaono-Page, Victorian Chamber of Commerce and Industry, appeared on behalf of Laurent.

Remedy

[5] The statutory framework within which the question of remedy must be determined is clear. Section 390 provides that the Commission may order a person’s reinstatement or the payment of compensation, subject to the jurisdictional conditions in section 390(1) being met. However, the Commission must not order the payment of compensation to a person unless it is satisfied that reinstatement is inappropriate, and the Commission considers payment of compensation is appropriate in all the circumstances (section 390(3)). I have already determined that it would be inappropriate to order that Ms Zhou be reinstated. I have also already determined that this is a case in which an order for compensation in lieu of reinstatement is appropriate. 3

[6] Compensation is intended to provide a person who has been unfairly dismissed with reparation for losses reasonably attributable to the unfair dismissal. The amount of compensation ordered by the Commission must not include a component for shock, distress or humiliation, or other analogous hurt, caused to the person by the dismissal (section 394(4)). In determining the amount, all the circumstances are to be taken into account, including those prescribed by section 392(2) of the Act. The ‘Sprigg’ 4 formula is to be applied to arrive at an appropriate amount.5 If this yields a figure that is excessive or inadequate, then the considerations in section 392(2) may be revisited.

[7] Laurent submits that the COVID-19 Pandemic has had a crippling financial effect on its enterprise, however, ultimately concedes that an order for compensation would be unlikely to significantly affect the viability of Laurent’s enterprise 6 (section 392(2)(a).

[8] The length of Ms Zhou’s service is approximately eight months (section 392(2)(b)). Her service is therefore of relatively short duration. However, I do not consider this in and of itself supports a conclusion that no compensation or be ordered.

[9] Section 392(2)(c) provides that the Commission must take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. Ms Zhou’s evidence was that she anticipated remaining in employment with Laurent for at least 5 years. 7 At hearing Ms Zhou contended that she would have remained in employment with Laurent for a period of 6 months or longer. She submitted that the purported second period of probationary employment entered into on 24 August 2020 is supportive of this and provides a “bed rock” for such a conclusion. Laurent contends that Ms Zhou would not have remained in employment for more than a further two weeks.8 I agree that Ms Zhou’s employment would not have continued for any significant period of time had she not been dismissed on 22 September 2020. Firstly, there was evidence of significant performance shortcomings and errors made by Ms Zhou. Secondly, even after these performance concerns were raised with Ms Zhou she continued to make errors on a regular basis. Her poor performance was therefore ongoing and sustained. Thirdly, despite being warned that her performance was unsatisfactory and continuing to make regular errors which were brought to her attention, Ms Zhou failed to grasp that her performance was unsatisfactory and considered that her performance was improving. Fourthly, Ms Zhou failed to acknowledge that it was her incorrect data entry that led to the Stock Loss Error which I have previously found was a significant and serious error. In those circumstances I consider that Zhou’s performance shortcomings would have continued and it is likely that she would have been dismissed in a relatively short period of time.

[10]  In my view, it is reasonable to estimate that Ms Zhou would have continued in her employment with Laurent for a further 4 weeks.

[11] Based on this, I will consider the calculation of compensation following the methodology in Sprigg. First, there is the question of the estimated remuneration that Ms Zhou would have received had she not been dismissed. Ms Zhou agreed at hearing that her gross weekly salary earnings during her employment with Laurent were $1,317.18. Gross earnings for the estimated four weeks of further employment therefore gives a total of $5,268.72, excluding superannuation.

[12] Next, it is necessary to deduct monies earned by Ms Zhou since her dismissal until the anticipated end of her employment with Laurent. The termination letter provided to Ms Zhou provides that she was paid 1 week’s pay in lieu of notice. There is no evidence before the Commission as to the quantum of the notice payment made to Ms Zhou however, on the basis of Ms Zhou’s uncontested gross weekly salary earnings are as set out above in paragraph [11], this is a gross amount of $1,317.18. This should be deducted from the above total of $5,268.72, leaving a gross amount of $3,951.54, excluding superannuation.

[13] Ms Zhou’s evidence at hearing was that she had recently secured employment in a supply chain role (New Role) and had commenced employment in the New Role on 12 April 2021. Although subject to some contradiction, her evidence at hearing was, ultimately, that the gross salary for the New Role was $68,000 per annum, exclusive of superannuation. There was no documentary evidence before the Commission as to the gross weekly earnings for the New Role, however, on the basis of an annual gross salary of $68,000, gross weekly earnings are $1,307.69. Accordingly, I consider that Ms Zhou will earn income in the period between the dismissal and the making of the order for compensation of one week’s gross salary being a gross amount of $1,307.69. Given Ms Zhou commencement in the New Role, she will also earn a further one week’s gross salary between the making of the order and the actual compensation, being a further gross amount of $1,307.69. Accordingly, a deduction for earnings and future earnings of the gross amount of $2,615.38 is required to be made (section 392(2)(e) and (f)). This is to be deducted from the subtotal set out in paragraph [12] above, leaving a gross amount of $1,336.16, excluding superannuation.

[14] Ms Zhou’s evidence was that she applied for in excess of 10 roles and attended 6 interviews before securing the New Role. Whilst I consider that such efforts over a period of slightly in excess of 6 months may perhaps, ordinarily, indicate that Ms Zhou did not take reasonable steps to mitigate her loss and that greater efforts on Ms Zhou’s behalf may have led to alternative employment being secured at an earlier time, I have taken into consideration that Victoria remained in lockdown and under COVID-19 restrictions for a substantial portion of that time. Accordingly, in all the circumstances, I consider that Ms Zhou took reasonable steps to mitigate her loss and no reduction on this account ought be made.

[15] Then there is the question of a percentage deduction for contingencies and vicissitudes of life. These principles were summarised in Roos v Winnaa Pty Ltd. 9 A deduction for contingencies applies a discount to an assessment of future economic loss so as to account for future unknown matters which might adversely affect earning capacity. Such a deduction is usually applied after the assessment of the period for which the employee would have remained employed. It applies to any future estimate of loss of earnings. Further, given the short period of anticipated employment, in the present circumstances I do not consider it appropriate that a deduction for contingencies be made.

[16] I have considered the impact of taxation on the gross amount however it is not necessary for me to specify a post-tax amount.

[17] Section 392(3) of the Act states that if the Commission is satisfied that the misconduct of a person contributed to the employer’s decision to dismiss the person, the Commission must reduce the amount it would otherwise order under s 392(1) by an appropriate amount on account of the misconduct. There is no evidence of misconduct by Ms Zhou and accordingly, no deduction on this account is made.

[18] For the reasons earlier given, I am satisfied in the circumstances that a remedy should be ordered, but that reinstatement is inappropriate. I am satisfied that compensation is appropriate in the circumstances of this case. I will order compensation in the amount of $1,336.16 plus superannuation, with deduction of any taxation required by law, to be paid by Laurent to Ms Zhou within 7 days of the date of this decision.

[19] An order giving effect to this decision is separately issued in PR728745.

[20] Liberty is granted to seek a variation to the order if there is a dispute as to:

•  the amount of payment in lieu of notice of termination paid to Ms Zhou;

•  the gross weekly earnings applicable to the New Role;

•  the impact the gross weekly earnings applicable to the New Role or the amount of notice in lieu of termination paid to Ms Zhou, has on the compensation figure set out in paragraph [18] above.

DEPUTY PRESIDENT

Appearances:

Mr I Hone of Hone Legal for the Applicant
Mr T Fuimaono-Page of the Victorian Chamber of Commerce & Industry for the Respondent

Hearing details:

2021
16 April
Melbourne

Printed by authority of the Commonwealth Government Printer

<PR728744>

 1   Zhou v Laurent Bakery Pty Ltd[2021] FWC 1340.

 2 Ibid at [59].

 3 Ibid at [59].

 4   Sprigg v Paul’s Licensed Festival Supermarket (AIRCFB, Print R0235, Munro J, Duncan DP, Jones C, 24 December 1998) at para. 35, [(1998) 88 IR 21].

 5   See Ellawala v Australian Postal Corporation (AIRCFB, Print S5109, 17 April 2000) at [33]; and see Bowden v Ottrey Homes Cobram and District Retirement Villages Inc.[2013] FWCFB 431.

 6   Respondent’s compensation submissions dated 29 March 2021 at [10-11].

 7 Witness Statement of Mingji Zhou dated 15 March 2021 at [5].

 8 Respondent’s compensation submissions dated 29 March 2021 at [27].

 9   [2018] FWC 3568.