Nathaniel Garang v Byron Bay Superfoods Pty Ltd

[2017] FWC 2980

[2017] FWC 2980

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nathaniel Garang
v
Byron Bay Superfoods Pty Ltd
(U2016/11217)

VICE PRESIDENT HATCHER SYDNEY, 16 JUNE 2017

Application for relief from unfair dismissal – compensation.

[1] On 22 May 2017 I issued a decision 1 in this matter (first decision) in which I determined that the dismissal of Mr Nathaniel Garang by Byron Bay Superfoods Pty Ltd (Byron Bay Superfoods) was harsh, unjust and unreasonable, and by way of remedy I provisionally assessed the amount of compensation as $10,694.84, payable in four equal monthly instalments. I only made a provisional assessment because I was concerned that the parties, particularly Byron Bay Superfoods, had not adequately addressed the issue of the quantum of compensation at the determinative conference before me on 14 March 2017. In this respect I stated in the first decision:

“[89] At the end of the determinative conference I invited the parties to make submissions about compensation, in the event that I decided that the dismissal was unfair. To assist them in that task, I provided the parties with a copy of s.392, and drew their attention to the specified criteria for the assessment of compensation. Mr Owies only addressed s.392(2)(a) (that is, the viability of Byron Bay Superfoods), and did not address any other matter pertaining to compensation. Mr Garang was allowed to file a further written submission regarding compensation within seven days, and Byron Bay Superfoods was allowed to file a submission in reply within a further seven days. Mr Garang filed a submission which set out comprehensively the compensation which was claimed and the basis upon which it was calculated, but the reply submission from Byron Bay Superfoods merely re-agitated the merits of the case. I am concerned that Byron Bay Superfoods has not yet properly turned its mind to the issue of the assessment of compensation. I propose therefore to express my provisional views concerning compensation, and then allow the parties a further opportunity to provide written submissions in response before I make any final compensation order.”

[2] Parties were directed to file such written submissions within 7 days (that is, by 29 May 2017). On 23 May 2017 Byron Bay Superfoods lodged by email a submission (under the name of Mr Paul Owies) which did not address any aspect of the provisional calculation except in relation to the issue of the business’ viability. In this respect it was submitted:

● Byron Bay Superfoods had suffered a significant downturn in business because of the deletion of products nationally from Coles and Woolworths in mid-2016;

● the business had suffered a large loss in February-March 2016, due to a recall of product from Coles, which meant that the business owed approximately $120,000;

● this had put great pressure on the business and its ability to maintain its current staff, and “in order to fund Nathaniel we will need to close for 1 month”;

● it had come to light since the hearing that the product that was recalled was rolled incorrectly by Mr Garang in the first half of 2016, when he had not followed instructions from his supervisor Ms Crouch;

● the recall had serious repercussions on the business meeting its current obligations, and the business did not have the funds available for any compensation for Mr Garang; and

● these were “desperate times for a small Australian food manufacturer” and the payment to Mr Garang would place the business in serious economic difficulty.

[3] Attached to the submission were documents concerning the Coles recall. These included email exchanges between Coles managers and Mr Owies on 24 and 25 January 2017 concerning the defective products (which were underweight). In an email from Mr Owies on 25 January 2017 he said:

“The official dates that are in question for recall are the following.

1 September 2016, 19 October 2016 and 14 December 2016. These are the actual batches that have been weighed with a scale that is dedicated to 0.1g and that can truly reflect an issue on an individual bar. No other batches have been found to be incorrect using an appropriate scale.”

[4] In response to a newspaper article about the first decision, on 28 May 2017 Byron Bay Superfoods sent in two uninvited emails (under the name of Mr Owies) to the Commission which among other things addressed the financial viability of the business. In these emails it was contended among other things that:

● the comments in the newspaper article had severely affected the reputation of Byron Bay Superfoods and had brought the company “to our knees”, and this should be taken into account in awarding compensation;

● the business had made a substantial loss over the last quarter;

● “this week we have let go another couple of employees”;

● the business had borrowed over the last quarter to enable it to continue to operate, and was unable to borrow funds; and

● the business was “in advanced discussions with the receivers as we are unable to trade insolvent”.

[5] Attached to one of the emails was a profit and loss statement for the period February-April 2017. This showed that the business made an operating profit over that period of $53,147. However that was turned into a net loss of $40,435 because of expenses connected with the Coles recall totalling $98,878. 2 Those expenses consisted of payments to Coles of $24,909 in February 2017, $71,969 in March 2017 and $0 in April 2017.

[6] Mr Garang submitted that:

● he was content with the calculation of compensation in the first decision, but preferred to have the total amount payable within 14 or 28 days, since he was concerned that the amount ordered might not be paid;

● despite Mr Owies’ assertions, the business was still selling rolled products in Coles and Woolworths as at March and April 2017;

● Byron Bay Superfoods had recently purchased a new “large machine”;

● he remained in significant financial hardship;

● the allegation that he had caused the Coles recall was false, since Mr Owies’ email of 25 January 2017 showed the batch dates for the defective product were well after his dismissal;

● at least one of the workers who was allegedly “let go” had in fact resigned;

● the profit and loss statement showed that the payment to Coles for the recall had been made in two payments in February and March 2017 (totalling $97,000, not $120,000 as alleged), with no payment having been made in April, indicating that the recall payment had now been made in full; and

● the business was not in receivership.

[7] Mr Garang provided an ASIC search of Byron Bay Superfoods to demonstrate that the company was not in receivership. The ASIC search documents included a credit score for the company. It was rated at 685 out of a total of 850, which put it in the average/low risk range. The document stated in this respect: “Entity has acceptable creditworthiness. Extend terms with consideration. Entity has a 1.20% chance of failure within the next 12 months”. He also provided a letter from Patrick Tregellas dated 8 June 2016 which stated that he had resigned from his position as Warehouse Supervisor with Byron Bay Superfoods on 23 May 2017.

[8] There has been no further issue raised in respect of the provisional calculation of the amount of compensation in the first decision except in relation to the viability of Byron Bay Superfoods as a business. Accordingly I do not propose to revisit the calculation of that amount other than to further consider, pursuant to s.392(2), what effect an order for the amount of $10,694.84, payable in four equal monthly instalments, would have on the viability of the Byron Bay Superfoods business.

[9] I do not intend to take into account the newspaper article about which Mr Owies complained. Mr Garang was not responsible for the content of the article, and no evidence has been provided to support Mr Owies’ assertions concerning the supposed drastic consequences of the article. I will also not take into account Mr Owies’ allegation that he discovered after the hearing that the Coles product recall which occurred in January 2017 was Mr Garang’s fault. I agree with Mr Garang that Mr Owies’ email of 25 January 2017 appears to indicate that the product the subject of the recall was batched well after his dismissal. Even without that email, I do not accept as credible Mr Owies’ assertions concerning Mr Garang’s responsibility, and he has provided no evidence to support the allegation.

[10] In relation to the viability of the business, I make the following findings:

(1) The business is not in receivership. Mr Owies’ reference to being in advanced discussion “with the receivers” is inexplicable.

(2) The business has satisfactory creditworthiness.

(3) The business is running an underlying operating profit.

(4) The payment required to be made to Coles because of the product recall has caused financial difficulty for the business. However this difficulty appears to have been confined to payments which were made in February and March 2017, and put the business into net loss for the quarter. That is likely to have caused cash flow problems and required the business to borrow money. The evidence suggests that this was a one-off event which has not been fatal to the viability of the business.

(5) I do not accept Mr Owies’ assertion that the business was forced to lay off two employees in the week of 28 May 2017.

[11] Nothing advanced by the parties has persuaded me to depart from the provisional conclusion concerning compensation which I reached in the first decision. I am not persuaded that an order giving effect to that provisional conclusion will significantly affect the viability of the Byron Bay Superfoods business. The payment of the compensation amount in four monthly instalments will ameliorate any cash flow problems which the business may be suffering in the aftermath of the Coles recall.

[12] Accordingly I will order that Byron Bay Superfoods pay the following amounts (totalling $10,694.84) to Mr Garang:

(1) $2,673.71 on or before 30 June 2017;

(2) $2,673.71 on or before 30 July 2017;

(3) $2,673.71 on or before 30 August 2017; and

(4) $2,673.71 on or before 30 September 2017.

[13] A separate order will be issued to give effect to this decision.

VICE PRESIDENT

 1   [2017] FWC 2022

 2   It may also be noted from the statement that the large majority of the business’ revenue was derived from the sale of cold pressed products – cf. paras. [32]-[36] of the first decision.

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