Nicky Birkill v Pea in a Pod Pty Ltd

[2020] FWC 3196

[2020] FWC 3196

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nicky Birkill
v
Pea in a Pod Pty Ltd
(U2019/10623)

COMMISSIONER BISSETT MELBOURNE, 23 JUNE 2020

Application for an unfair dismissal remedy.

[1] On 28 April 2020 I issued a decision 1 (Merits Decision) in which I found that Ms Nicky Birkill (Applicant) had been unfairly dismissed from her employment with Pea in a Pod Pty Ltd (Respondent). In that decision I indicated that the Applicant did not seek reinstatement and that I would take further submissions and evidence in relation to the remedy of compensation.

[2] In accordance with the directions issued by me the Applicant and the Respondent filed submissions. The matter was subject to hearing on 9 June 2020 by telephone.

[3] Whilst the Applicant provided some information in relation to her Workcover matter on request following the conclusion of proceedings, she also provided some notes taken by her of a conversation she had with Mr Gibson. This material was filed by the Applicant after the application had been adjourned and my decision reserved. She did not indicate that she intended or wished to file these notes. In any event I do not consider them highly probative of the matter I need to determine and have not taken them into account.

[4] Section 392 of the FW Act states:

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.

[5] I have considered each of these matters below.

THE EFFECT OF THE ORDER ON THE VIABILITY OF THE RESPONDENT (s.392(2)(a))

[6] Mrs Jenny Birkill is the Applicant’s mother and the owner of Pea in a Pod Pty Ltd.

[7] Mrs Birkill filed two witness statements 2 in these remedy proceedings. She gave evidence that the litigation of the unfair dismissal application has placed financial strain on the business in terms of legal fees spent defending the claim.

[8] Mrs Birkill attached to her witness statement correspondence from her bookkeeper, Ms Sarah Singleton, 3 who indicated that legal fees spent in relation to the application for unfair dismissal to date amount to $55,000. Mrs Birkill said in her evidence that she is paying this off over a period of time. She denied the claim of the Applicant that her husband has paid the Respondent’s legal fees for this matter.

[9] Ms Singleton also said in her correspondence that Mrs Birkill is in negotiations to reduce her rent for the business and is enrolled in the JobKeeper program established by the Government as a result of the COVID-19 pandemic. Ms Singleton also said that there has been a significant downturn in the business as a result of COVID-19.

[10] Mrs Birkill said that total sales for the Respondent are down on last year (year to date) and while she is pessimistic about the remainder of the year she hopes for sales in the order of $900,000-$1 million for the full financial year.

[11] Mrs Birkill said that she has a loan account to the business in the order of $1 million. She has made no demand on the business for repayment of the loan as she knows that the Respondent cannot afford to repay the amount of the debt. She said that she is not in a personal financial position to provide a sum of $55,000 to the business to meet the Applicant’s claim of compensation of 6 months’ salary. The business does not otherwise have the funds to make such a payment.

[12] Mr Noel Gibson is the accountant for the Respondent and an advisor to the business and Mrs Birkill. He filed a witness statement in these remedy proceedings. 4

[13] His evidence is that, on selling the Grey Street property, Mrs Birkill paid out the bank loan on the business but that the business now owed a debt to Mrs Birkill – that is, she became the principal creditor instead of the bank. This “loan” to the business by Mrs Birkill is drawn against by Mrs Birkill for her personal expenses in lieu of drawing a wage from the business. The business currently owes Mrs Birkill $1 million. Mr Gibson said that the business is sustaining a loss and would not be able to meet current liabilities without the loan from Mrs Birkill.

[14] Mr Gibson said that the interest on credit cards is a business expense as are the legal fees associated with this application.

[15] Mr Gibson gave evidence in relation to the profit and loss statement of the Respondent. 5 He said that, excluding the legal fees owed by the Respondent the loss this financial year of the business is in the order of $30,000. He said that is a small loss on a turnover of $800,000.

[16] Mr Gibson agreed that he did have a discussion with the Applicant in October 2019 but denies the Applicant’s version of that conversation.

[17] The Applicant filed two witness statements in the remedy proceedings. 6

[18] In her second statement the Applicant said that “[b]ased on my knowledge of the respondent’s operations and my experience, the business appears profitable once you remove the likely personal expenses, the credit card interest and the one-off legal fees from the profit and loss statement.” Further, she said that she had been advised by her father that he had funded the Respondent’s legal costs in the unfair dismissal matter.

[19] The Applicant said that the Respondent had cash at hand of over $46,000 as evidenced by the profit and loss statement attached to Mrs Birkill’s statement.

[20] The Applicant accepted that an award of $55,000 would be an impost on the Respondent but said that, given she was unfairly dismissed, and the Respondent is trading in a reasonable position this could be met by the Respondent. The Applicant submits that I should infer that Mrs Birkill, as the sole Director of the business, could provide any funds to the business necessary to meet the cost of any compensation I should order.

Consideration

[21] I generally prefer the evidence of Mr Gibson and Mrs Birkill to that of the Applicant in relation to the financial position of the Respondent. Their evidence is supported by the profit and loss statement and balance sheet for the Respondent provided in the proceedings. The Applicant’s evidence is speculative and relies on me accepting that the Respondent is in a sound financial position based on ignoring debts of the business.

[22] I accept that the Respondent’s losses at the end of April were over $91,000. That $55,000 of this is attributable to the legal costs for the Respondent of these proceedings does not make that loss any less. That is a cost to the Respondent yet to be paid. It does appear however that the Respondent is looking at sales for this financial year not substantially down on those achieved in the last financial year.

[23] Whilst this issue took some time during the hearing, given my findings below I am satisfied that the order I intend to issue will not affect the viability of the Respondent’s business.

LENGTH OF SERVICE WITH THE RESPONDENT (s.392(2)(b))

[24] The Applicant was employed with the Respondent for 12 years at the time her employment was terminated. For the last 12 months of this period she was on leave in receipt of workers compensation payments.

THE REMUNERATION THE APPLICANT WOULD HAVE RECEIVED, OR WOULD HAVE BEEN LIKELY TO RECEIVE, HAD SHE NOT BEEN DISMISSED (s.392(2)(c))

[25] To determine lost remuneration it is necessary to determine how long the Applicant would have remained employed by the Respondent had her employment not been terminated.

[26] The Applicant submits that, had her employment not been terminated and given the senior nature of the position she occupied, she would have remained employed for a further two years.

[27] The Applicant submits that her remuneration at the time her employment was terminated was $109,075 per annum consisting of a salary of $100,000 plus the value of a car provided to her by the Respondent that was for both business and personal use.

[28] The Respondent submits that future employment (and hence remuneration) would have been limited given the highly damaged relationship between the Applicant and Mrs Birkill. This toxic relationship had developed over a period of time and infected both the personal and working relationships.

[29] The Respondent relies on the evidence of the Applicant in the merits hearing that she would not be able to return to work if “things weren’t going to change” 7. Further, when asked what changes her mother would need to make the Applicant replied:

---The operations of the business. I felt that - gosh, there's a lot I could say about that. Let me think about that question. The operations needed a lot of attention, and as did the management of the business. I felt that crucial decisions that the business needed to make were left too long and then cause a lot on the business. I wanted my personal issues addressed, that I could not work the hours I was working, and I needed an assistant that wouldn't leave, because they were paid a decent salary, so they would actually stay, and of course a succession plan. I wanted that to be in place, because I had worked so many hours for so many years on a promise that the business would become mine - not mine, half mine 8.

[30] Further, the Respondent says that, at the time of her dismissal, the Applicant was stipulating that she could only work a limited number of hours per week and that any work performed had to be away from the business. In addition, it submits that the Applicant is challenging the Workcover decision and that, to do so, she must be of the view that she does not have the capacity to return to work.

[31] Taking these matters into account the Respondent says that, at most the Applicant would have remained employed for a further four weeks for at most 12 hours per week.

Consideration

[32] In the Merits Decision I set out the apparent agreement reached between the Applicant and Mrs Birkill in October 2015 in relation to succession and ownership of the Respondent business and a subsequent follow up on this (and work issues) in February 2016. It became evident in the merits hearing that, from this time in October 2015, there was a general deterioration in both the personal (the Applicant is the daughter of Mrs Birkill) and employment relationship of the Applicant and Mrs Birkill.

[33] In 2018 the Applicant made a claim for workers’ compensation which was accepted. In August 2019 the Applicant corresponded with Mrs Birkill regarding a return to work. The tone of this communication was, to put it at its best, hostile, noting that this all occurred prior to the Applicant being aware that Mrs Birkill may have been considering termination of her employment.

[34] The communication of the Applicant to Mrs Birkill is set out in the Merits Decision as follows:

[10]  On 10 August 2019 the Applicant emailed Mrs Birkill and advised that her most recent Independent Medical Examination assessment (although not provided to the Commission) indicated she could work 12 hours per week spread across 3 days. She asked for an indication of the duties she should undertake and stated that she would be working from home.  The Applicant followed this up with another email on 12 August 2019.

[11]  On 12 August 2019 the Applicant also sent a text message to Mrs Birkill in which she said:

Please arrange 12 hours of work per week for me starting this week. Preferably off site so I don’t have to see you. Thanks.

If that’s too much you’ll have to fire me.

I am sure you have had lengthy chats with Brett about all of this too. Thanks for choosing money over your daughter. You won’t see me again.

[12]  On 16 August 2019 the Applicant sent a further text message to Mrs Birkill in which she said:

I’ve emailed you a few times requesting 9-12 hours of work per week. Are you able to respond? There is lots I can do from home: website Copywriting, google analytics reporting, research etc. Is this still available to me? Or have you made me redundant? Either way I need an answer as soon as possible. Thank you 

[13]  On 25 August 2019 the Applicant and Mrs Birkill met in a park in East Melbourne. The Applicant’s evidence is that the discussion was primarily about sorting out the share issue outlined in the October proposal. 

[14]  At 1.50pm on 25 August 2019 the Applicant sent a further text message to the Mrs Birkill which said “Shame on you mum. Shame on you” and a further text at 6.53pm which read:

You may as well cancel my health insurance because I won’t be able to complete my therapy now. All I wanted was to get well. You should be ashamed of yourself.

[15]  The following day on 26 August 2019 the Applicant again emailed Mrs Birkill indicating she had yet to receive any reply as to the status of her employment and again advising she could work “3-4 hours per day for 2-3 days”. 9

[footnotes omitted]

[35] I concluded as follows in the Merits Decision:

[104]  I have taken into account the actions and demands of the Applicant on Mrs Birkill in attempting to resolve the impasse over the October proposal and the tone of her text messages when she sought to return to work in August 2018. The text messages showed little respect for the person who ran the business she sought to return to work for. Her attempts to resolve the October proposal appear to have got out of hand with Mrs Birkill’s son (the Applicant’s brother) calling the Applicant and warning her to stop calling their mother. This conversation apparently occurred after over 15 phone calls were made by the Applicant to Mrs Birkill in one day.

[36] There is nothing in the messages from the Applicant to Mrs Birkill that suggests a long term employment relationship would have been established had the Applicant returned to work and her employment not been terminated. It is not apparent that the Applicant has addressed this apparent disconnect between my findings and her view of how long she would have remained employed by the Respondent had her employment not been terminated in her submission as to the appropriate remedy.

[37] Further, there is nothing in the text messages sent by the Applicant to Mrs Birkill to suggest that there would have been any agreement on the basis on which the Applicant would return to work.

[38] I have taken into account the evidence of the Applicant in the merits hearing that, whilst absent on workers’ compensation, she had come into the office on occasions “partly to try and see my mother, as I had lost communication with her” 10 and that she does “remember saying [to Bridget Radomski] that if things weren't going to change, I wouldn't be able to come back, meaning in context things needed to change.”11

[39] At the time of her attempts to return to work the Applicant was capable, on her own evidence, of working no more than 12 hours per week. Whilst I accept that the Applicant envisaged a gradual increase in her hours, it is not clear when she would have, or in fact did, receive clearance to return to work on a fulltime basis.

[40] Given the evidence before the Commission in the Merits Decision I cannot accept the Applicant’s submissions that she would have returned to work for a period of two years. The evidence and my findings in the Merits Decision, extracted above, belie such an outcome.

[41] For the reasons set out in the Merits Decision based on the evidence that was before me, I am satisfied that the Applicant would have returned to work for a period of 2 months at the most. Given the nature of the personal and employment relationship between the Applicant and Mrs Birkill, I cannot comprehend of a circumstance where the employment relationship could have continued for any extended period of time. The relationship between the Applicant and Mrs Birkill had collapsed well before the Applicant sought to return to work and was not caused by the decision of Mrs Birkill to dismiss the Applicant. The collapse of the relationship prior to the attempt of the Applicant to return to work supports my conclusion as to how long the Applicant would have remained employed had she returned to work.

[42] The basis on which the employment relationship might have ended had the Applicant not been unfairly dismissed when she was cannot be known, and any attempt to guess at it would be purely speculative. I make no assumptions as to how the relationship would have eventually ended but just that it would have done so and relatively soon after the Applicant’s return to work.

[43] I note the submissions of the Respondent that the Applicant was challenging the decision of Workcover to cease payments to her. It is not apparent from the Workcover correspondence 12 whether the Applicant was challenging the cessation of weekly payments or the failure to pay for some medical treatments. Given the limited time I consider the Applicant would have remained employed I have not further considered this matter. Had I considered the period of employment longer a much more detailed consideration of the review being undertaken by Workcover would be relevant.

[44] At the time her employment was terminated the Applicant provided advice that she could only work 12 hours per week. I do not consider that she would have been limited to 12 hours per week for the 2 months I consider she would have remained in employment. The Applicant’s evidence was that she was looking to build her hours up “slowly” to full-time hours. 13 Having started at 12 hours per week it is difficult to see the Applicant having achieved full time hours within a month but I will accept that she would have been at full time hours at the end of the first month with an average of 15 hours per week (allowing for the increase in hours over the month) in the first month at work.

[45] I would note that, apart from the evidence of the Applicant that she could only commence 12 hours per week and slowly increase to full time hours, there is no evidence before me that assists in determining how long this process would take. My estimates may, in such circumstances, be considered generous but there is little evidence, beyond that given in the merits hearing, to work on. It might be considered, on the basis of correspondence from her treating psychiatrist to the Accident Compensation Conciliation Service in November 2019 14 that this is a generous estimate but I have taken into account that this assessment was made after the Applicant’s employment was terminated and the assessment may have been affected by that event.

[46] I accept the Applicant’s submissions that her annual remuneration was $109,075.00 plus compulsory superannuation. I am satisfied that the value of the car provided to her should be included in her remuneration. Her annual remuneration equates to $55.20 per hour plus compulsory superannuation.

[47] The lost remuneration of the applicant is therefore $3,588 (for the month working an average of 15 hours per week) plus $9089.60 being one months’ salary at full time hours.

[48] The remuneration the Applicant would have earned had her employment not been terminated is therefore $12,677.60.

[49] I have not deducted any amount from this for contingencies as there is no evidence that the Applicant would not have worked in the period in question. In any event the limitation on her hours of work has been taken into account in determining her lost remuneration from the Respondent.

EFFORTS OF THE APPLICANT TO MITIGATE THE LOSS SUFFERED (s.392(2)(d))

[50] I am satisfied that the Applicant did make efforts to mitigate her loss she has suffered. Her evidence, which I accept, is that she has sought and taken on work where she could and has also worked to establish her own business in the trade she knows best.

REMUNERATION EARNED BY THE APPLICANT DURING THE PERIOD BETWEEN THE DISMISSAL AND THE MAKING OF THE ORDER FOR COMPENSATION (s.392(2)(e) & (f))

[51] The Applicant gave evidence, and it was not disputed, that in the period since her dismissal she has earned:

•  $1,100 in September;

•  $2,250 in October; and

•  $1,750 in November.

[52] The Applicant also gave evidence that the business she set up (iD Your Brand) has earned $6,300.

[53] The Applicant was paid, on termination of her employment, 4 weeks’ pay in lieu of notice of $7,692.31. There was some dispute as to how the payment in lieu of notice should be treated. The Respondent says it should be considered remuneration while the Applicant submits that it should be ignored as it was not money “earned” but rather the payment of a statutory entitlement.

[54] I consider that pay in lieu of notice is remuneration. It is wages owing to the employee for work that would have been performed during the period of notice in circumstances where the employer decides such work is not required to be performed. That the employer decides to forgo the labour associated with the payment is fully at the employer’s discretion. 15 There is no right of an employee to such a payment in lieu of the notice period (although there is a right to the payment of notice) if the employer would have them work.

ANY OTHER MATTER THAT THE FWC CONSIDERS RELEVANT (s.392(2)(f))

[55] In considering the remuneration earned by the Applicant I have only taken into account what the Applicant earned in that period I consider she would have remained employed by the Respondent had her employment not been terminated – that is until 31 October 2019. For this reason I have not considered the amount earned by her in November of $1,750.

[56] I have also not taken into account the amount earned by the Applicant’s business. As is evident in this case, the earnings of a business and those of its owner do not necessarily align.

REDUCTION FOR MISCONDUCT (s.39(3))

[57] No deduction has been made for misconduct.

SHOCK, DISTRESS etc (s.392(4))

[58] No amount has been included for shock or distress associated with the dismissal.

COMPENSATION CAP (s.392(5))

[59] The amount I have decided to award the Applicant does not exceed the compensation cap.

CONCLUSION AS TO REMEDY

[60] Taking into account all of those matters set out above the Applicant’s lost remuneration is that amount she would have earned had she remained employed by the Respondent for the 2 months less other remuneration earned by her.

[61] The remuneration earned by the Applicant in the period I consider she would have remained employed, taking into account my reasons for not including all remuneration, is ($1,100 + $2,250 + $7,692.31=) $11,042.31. Her lost remuneration as a result of her dismissal is therefore ($12,677.60 - $11,042.31=) $1,635.29.

[62] I therefore consider the amount of $1,635.29 plus statutory superannuation paid into the Applicant’s superannuation account be awarded to the Applicant in lieu of reinstatement. An order 16 to this effect will be issued with this decision. That order will require that the amount be paid within 14 days of the date of issue of the order.

[63] In the circumstances of this case and the collapsed personal and employment relationship of the parties I consider the amount awarded appropriate.

COMMISSIONER

Appearances:

J. D’Abaco of counsel for the Applicant.

J. Hooper of counsel for the Respondent.

Hearing details:

2020.
Melbourne by telephone.
June 9.

Printed by authority of the Commonwealth Government Printer

<PR720303>

 1   [2020] FWC 2027.

 2   Exhibit R7 and exhibit R8

 3   Exhibit R7, annexure JB1.

 4   Exhibit R6.

 5   Exhibit R7, annexure JB3.

 6   Exhibit A19 and exhibit A20.

 7   PN1297.

 8   PN1301.

 9   [2020] FWC 2027.

 10   Transcript PN1297.

 11   Ibid.

 12   Exhibit R7, annexure JB5.

 13   Transcript PN1363, PN1444, PN1465.

 14   Filed by the Applicant following the hearing on request of the Commission.

 15   Fair Work Act 2009, section 117.

 16   PR720304.