Ms Tamica Cardy v Local Trades Specialists Group Pty Ltd

[2018] FWC 3108

[2018] FWC 3108

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ms Tamica Cardy
v
Local Trades Specialists Group Pty Ltd
(U2017/13413)

DEPUTY PRESIDENT BEAUMONT PERTH, 31 MAY 2018

Application for an unfair dismissal remedy

[1] On 17 December 2017, Ms Tamica Cardy (Ms Cardy) made an application to the Fair Work Commission (the Commission) for a remedy in respect of her dismissal from Local Trades Specialists Group Pty Ltd T/A Local Trades (Local Trades). I issued a Decision 1 on 30 April 2018 in which I found that the dismissal of Ms Cardy by Local Trades unfair within the meaning of the Fair Work Act 2009 (Cth) (the Act).

[2] The Parties were directed to file any written submissions and other material they wished to rely upon regarding Division 4 of the Act within seven days from the date of the Decision. The matter was listed for a telephone Hearing regarding remedy on 17 May 2018. Local Trades was notified of both the directions and the Hearing but did not submit any submissions or material, and was absent for the Hearing.

[3] After consideration of the entirety of the material before the Commission, I have found that reinstatement is not appropriate in all the circumstances and that an order for compensation is appropriate. The amount of compensation ordered is $5,422.37.

Submissions and evidence of the Applicant

[4] Ms Cardy submitted that reinstatement under s.391 of the Fair Work Act 2009 (Cth) (the Act) would be an inappropriate remedy due to her having secured employment with another employer in February 2018. Ms Cardy expressed that she had no desire to leave her current employer to return to a job which she considered lacked security. Further, Ms Cardy observed that her position had been filled at Local Trades and that she had lost all trust and respect for Mr Tuna Altintas, Local Business and Success Partner (Mr Altintas), and Local Trades.

[5] Concerning compensation Ms Cardy sought an order for 12 weeks earnings amounting to $13,846.14 (gross), superannuation lost during the unfair dismissal period of $1,536.50, potential commissions, childcare fees for attendance at interviews, one week of annual leave that would have accumulated and fuel to attend interviews and court.

[6] Ms Cardy said from the date that she was dismissed on 5 December 2017, it had taken her 3 months to secure a new job notwithstanding her having applied for over 150 jobs. In addition to applying for jobs online she had provided her resume to businesses and emailed companies expressing an interest to work for them. To survive during the period Ms Cardy had borrowed money to pay rent and to continue to live.

[7] On 12 February 2018, Ms Cardy secured a new position that attracted remuneration of $55,000 per annum and required a working week of 35 hours. Ms Cardy had previously received at Local Trades $30.36 per hour and worked a 38 hour week.

REMEDY

[8] With regard to remedy, the Commission may make an order for reinstatement or compensation if the person was protected from unfair dismissal at the time of dismissal, they had been unfairly dismissed and had made an application under s.394 of the Act 2.

[9] Subsection 390(3) of the Act underscores the primacy of reinstatement as a remedy for an unfair dismissal. However, a decision of the Commission to order a person’s reinstatement is a discretionary decision 3. The payment of compensation to a person is also a discretionary decision, which is only exercisable if, amongst other things, the Commission is satisfied reinstatement of the person is inappropriate and the FWC considers a compensation order is appropriate in all the circumstances of the case4.

[10] Section 392 of the Act sets out the criteria to which regard must be had in determining any amount of compensation ordered.

[11] In determining the amount of compensation to be ordered, the Act provides:

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

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

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

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

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

(e)  the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

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

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

CONSIDERATION

Reinstatement

[12] I am satisfied that the Ms Cardy was relevantly protected from unfair dismissal, was unfairly dismissed and has made an application under s.394 of the Act 5.

[13] Ms Cardy does not seek reinstatement, submitting she has no desire to be re-employed by Local Trades.

[14] In all of the circumstances, including those that contributed to the dismissal and were traversed in the Decision, I am satisfied that it would be inappropriate to order the reinstatement of Ms Cardy in circumstances where she has obtained secure employment with another employer. To compel Ms Cardy to return back to work with Local Trades when she has gone to great lengths to find secure alternative employment would, in my view, impact on her ongoing job security and would negate the efforts Ms Cardy undertook to obtain such employment. Given Ms Cardy’s evidence it cannot be said that reinstatement is appropriate in the circumstances.

[15] I find an order for compensation is appropriate and will consider each of the criteria in s.392 of the Act to determine the quantum of the compensation.

Compensation

[16] The ‘Sprigg Formula’, derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket 6(Sprigg), is the well accepted approach for assessing the amount of compensation under ss.392(2) of the Act. The Full Bench in Gloria Bowden v Ottrey Homes and Cobram and District Retirement Villages Inc (t/as Ottrey Lodge)7 (Bowden) adopted the Sprigg Formula in the context of determining compensation under the Act.

[17] In Bowden the approach was described in the following way:

[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’... 8

[18] In Haigh v Bradken Resources 9, the Full Bench reaffirmed the principles set out within Sprigg, and in particular the steps needed to be taken in assessing compensation. The first of those steps is to estimate the amount the employee would have received, or would have been likely to receive if the employment had not been terminated; the second step being to deduct moneys earned since termination; the third being to make deductions for contingencies; fourth, to calculate any impact of taxation; and fifth, to apply the legislative cap10.

[19] The Full Bench in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries 11 stated:

The identification of this starting point amount ‘necessarily involves assessments as to future events that will often be problematic’ 12. Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of six months’ pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case.

[20] The notion of ‘taking into account’ a matter (such as those described in s.392 of the Act) connotes a genuine consideration of the relevant provision and the apportionment of the appropriate weight in the circumstances 13.

Remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

Anticipated period of employment

[21] Ms Cardy gave evidence to the Commission that her earnings at the time of dismissal were based upon an hourly rate of $30.36 per hour and that she worked 76 hrs per week. This equates to a weekly salary of $1,153.68 per week.

[22] Ms Cardy commenced with Local Trades as an Account Manager on 24 October 2016 and was dismissed on 5 December 2017, having worked out a notice period from 21 November 2017 until the date of dismissal. This amounted to 2 weeks’ notice.

[23] In the Hearing on 19 March 2018 and the subsequent Hearing regarding remedy on 17 May 2018, Local Trades did not tender any sworn evidence or make submissions. The Employer Response referred to a redundancy of the position held by Ms Cardy and that Local Trades was a small business employer. Had it been found that there was a redundancy of the position and that Local Trades was a small business employer then by virtue of ss.121(1)(b) of the Act, Local Trades would have been exempted from making a redundancy payment under s.119 of the Act. However, based on the evidence before the Commission that finding was not arrived at.

[24] The anticipated period of employment is a particularly difficult period to define in relation to this matter. On the one hand Ms Cardy can point to her expectation of indefinite ongoing employment by Local Trades given she was unaware of any performance or misconduct issues. On the other hand the Commission only has before it a seemingly hastily drafted Form F3 - Employer Response and an absence of any sworn evidence or submission. If it were to be believed that Local Trades was experiencing acute financial difficulties and was facing closure then this would likely have resulted in the discontinuation of the employment.

[25] Based upon the evidence before me, I have concluded that if it were the case that it was necessary for Local Trades to dismiss Ms Cardy for performance issues in accordance with proper procedure and accepting that it was not a small business employer, her employment would have continued for at least 8 weeks of the maximum compensation period.

[26] If the dismissal was necessitated because Ms Cardy’s job was no longer required, then arguably proper process would have included consultation 14 and consideration of redeployment opportunities. Further, an entitlement to redundancy pay would have arisen in the amount of 4 weeks’ pay in addition to the obligations of consultation and consideration of redeployment.

[27] Ms Cardy was firm in her evidence that there was no reference to performance or misconduct playing a part in her dismissal. This was mirrored in the Form F3 - Employer Response. Therefore, I am inclined to find that financial issues plaguing Local Trades may have contributed to the decision by Mr Altintas to bring the employment of Ms Cardy to an end and on that basis I am of the view that had proper processes been followed Ms Cardy would have remained in employment for at least 4 weeks.

Notice period

[28] Ms Cardy received approximately 2 weeks’ notice of her dismissal.

[29] The remuneration that the Applicant would have received or likely to have received would include payment for the period worked on notice, or the payment received in lieu of notice 15. Notice is payable at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum notice period16. While notice was provided and can be deducted from the length of service or otherwise considered under the anticipated period of employment, I have decided not to reduce the compensatory amount because of its provision. In light of the evidence there has, understandably, been a difficulty ascertaining the anticipated period of employment. As a consequence of ensuring fairness is afforded to both the employee and employer17, I have considered it appropriate not to take this step.

Paid – annual leave

[30] An employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work and accumulates from year to year.

[31] For the period 5 December 2017 until the end of the anticipated period of employment of 5 January 2018, there would have been an accrual of leave up until the end of the anticipated period of employment 18. In approximate terms this would have equated to 1.65 days of annual leave.

The effect of the order on the viability of the employer’s enterprise

[32] Local Trades did not provide evidence at either of the Hearings regarding the effect of the order on its viability. Therefore, I find this to be a neutral factor.

Length of the person’s service with the employer

[33] Ms Cardy had been in the employment with Local Trades from 24 October 2016 until 5 December 2017. This is a length of service that does not necessarily support the making of an order for compensation although it does not preclude it.

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

[34] I am satisfied that Ms Cardy has taken steps to mitigate her loss. I have therefore not reduced the amount of compensation ordered in this respect.

The amount of 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] Ms Cardy’s evidence is that after becoming unemployed on 5 December 2017 she secured an income on 12 February 2018 having obtained permanent employment. During the relevant period Ms Cardy had worked for approximately 15 weeks. This would amount to an approximate amount of $15,865.38 (gross) based on an hourly rate of $30.21 and a superannuation contribution of $1507.21, based on a percentage contribution of 9.5%.

[36] However, having found that the anticipated employment period was 4 weeks, ending on 5 January 2018 and observing that Ms Cardy did not commence in employment with her new employer until 12 February 2018, I have determined not to take this amount of remuneration into account. It follows that an amount will not be deducted from the compensatory amount.

Any amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation

[37] I am satisfied that Ms Cardy secured employment and that the amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation would amount to $1157.81 (gross), being one weeks’ pay inclusive of superannuation. Again, for reasons previously elucidated I am not minded to reduce the amount of compensation by the amount of $1157.81 given the anticipated employment period of 4 weeks.

Misconduct and shock, distress or humiliation

[38] I do not consider there has been any misconduct which would require me to reduce the amount of compensation. I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.

Compensatory cap

[39] The amount of compensation the Commission may order is capped. If the appropriate quantum of compensation initially assessed exceeds that cap then the Commission must reduce the amount to the amount of the cap.

[40] The Act stipulates that the compensation cap is the lesser of:

•  the amount of remuneration received by the person, or that he or she was entitled to receive (whichever is higher) in the 26 weeks before dismissal; and

•  half the amount of the high income threshold immediately before dismissal. 19

[41] The high income threshold is defined in s.333 of the Act as an amount prescribed by, or worked out in the manner prescribed by, the Regulations. Regulation 2.13 sets out the manner in which the high income threshold is to be worked out. The steps in Regulation 2.13(3), particularly Step 1 and Step 2, refer to ‘ordinary time earnings’. The Act defines ‘earnings’ such that they exclude contributions to a superannuation fund 20.

[42] Under ss.392(5) of the Act I am obliged to determine the amount worked out under ss.392(6) of the Act. The amount is calculated by reference to the ‘total amount of remuneration’ received by the person or to which the person was entitled (whichever is higher) for any period of employment with the employer during the 26 weeks immediately before dismissal. ‘Remuneration’ is not defined in the Act.

[43] Both ss.392(6) of the Act and ss.392(2) of the Act refer to ‘remuneration’ under Part 3-2.

[44] The meaning of ‘remuneration’ has been considered in various iterations of what is now the Act and with regard to differing legislative provisions. What appears clear from the decisions is that the term ‘remuneration’ has adopted a consistent meaning whereby superannuation is included.

[45] For the purpose of ss.392(5) of the Act, I am satisfied the amount is $30,318.72. I have considered that under Ms Cardy’s employment contract she was entitled to superannuation contributions at 9.5%.

Any other matter that the Commission considers relevant

[46] Ms Cardy drew attention to having to secure loans to assist her during the period of her unemployment. There was no evidence to support this contention and I am not satisfied that this has resulted in the loss of income.

[47] Further submissions were made that any amount ordered should consider commissions that otherwise would have been forthcoming had Ms Cardy remained in employment. While bonuses may be considered as forming part of the remuneration 21, in the circumstances of this particular matter I have concluded that the commissions referred to by Ms Cardy are contingent upon particular performance or event and are excluded.

CONCLUSION AND ORDERS

[48] After consideration of the foregoing issues, I find that Ms Cardy was dismissed and that it was unfair within the meaning of the Act.

[49] I find that reinstatement is not an appropriate remedy in this case and that compensation is appropriate. The calculation for compensation is set out in the following table.

Compensation	Calculation	Gross	Total Gross Amount
Anticipated employment period	4 weeks x 38 x $30.36 = $4614.72 Superannuation at 9.5% = $438.40	$4614.72	$5053.19 (inclusive superannuation)
Notice period	$0.00	$0.00
Annual leave	0.33 weeks = 1.6 days x 7.6 x $30.36 If paid out on termination would not attract superannuation	$369.18	$369.18
Deduct monies for misconduct	$0.00	$0.00	$0.00
Deduct monies earned since termination	$0.00	$0.00	$0.00
Deduction for contingencies	$0.00	$0.00
Calculate any impact of taxation	To be taxed according to law
Apply the compensation cap	Last six months amount of remuneration received by the Respondent $30,672.00 + (9.5% superannuation 2913.84) = $30,318.72 Half the amount of the high income threshold = $71,000	Cap applied
TOTAL	$5422.37

[50] The amount of $5422.37 less taxation at the appropriate rate is to be paid to Ms Cardy within seven days of the date of this Decision. An Order 22 to this effect will issue with this Decision.

[51] In determining the amount for the purpose of the order I have taken into account all of the circumstances of the case including the criteria set out in ss.392(2) of the Act. The total amount does not exceed the compensation cap applying at the time of dismissal.

DEPUTY PRESIDENT

Appearances:

Ms T Cardy, representing herself as the Applicant.

Hearing details:

2018

May 17

Perth.

 1   [2018] FWC 2034.

 2 ss.390(1) and (2) of the Act; Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey [2013] FWCFB 431 [15].

 3   Ellawala v Australian Postal Corporation, Print S5109 [24].

 4   Ibid[16].

 5 Section 390 of the Act.

 6 Print R0235, (1998) 88 IR 21.

 7   [2013] FWCFB 431.

 8   See also Ellawala v Australian Postal Corporation Print S5109 [34].

 9   [2014] FWCFB 236.

 10 Ibid [10].

 11   [2016] FWCFB 7206 [17].

 12   Smith, Arthur and Kimball, Brett v Moore Paragon Australia Ltd PR942856 [32].

 13   Ms Diane Lewis v Glendale RV Syndication Pty Ltd T/A Glendale Care Bundaberg [2014] FWC 1086.

 14   Clerks Private Sector Award 2010 cl 8.

 15   Mr Anthony Callahan v Graphic Impressions[2014] FWC 437 [106].

 16 Subsection 117(2)(a) of the Act.

 17 Section 381 of the Act.

 18   Mr Anthony Callahan v Graphic Impressions[2014] FWC 437 [118].

 19   Subsection 392(5) and (6).

 20 Subsection 332(2)(c) and (4) of the Act; Craig Ablett v Gemco Rail Pty Ltd [2010] FWA 8124.

 21   Shorten v Australian Meat Holdings (1996) 70 IR 360, 376.

 22   PR607614.

Printed by authority of the Commonwealth Government Printer

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