Pedro Vannea v Royal Bay International Pty Ltd

[2014] FWC 6416

[2014] FWC 6416 Note: An appeal pursuant to s.604 (C2014/1823) was lodged against this decision - refer to Full Bench decision dated 16 October 2014 [[2014] FWC 7270] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Pedro Vannea
v
Royal Bay International Pty Ltd
(U2014/6909)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 18 SEPTEMBER 2014

Application for relief from unfair dismissal - employee or independent contractor - no valid reason for dismissal - serious deficiencies in termination process - reinstatement.

[1] This decision deals with an application made pursuant to s.394 of the Fair Work Act 2009 (the FW Act) by Mr Vannea on 30 April 2014. This application already has a somewhat tortured history and this decision may not resolve all of the issues associated with the work undertaken by Mr Vannea.

[2] Mr Vannea undertook chicken boning work at the Baiada Poultry Pty Ltd (Baiada) chicken processing plant at Wingfield, South Australia. His working arrangement was terminated on 28 December 2013. He subsequently lodged a s.394 application against Baiada. Baiada disagreed that it employed Mr Vannea and his application was ultimately withdrawn. Mr Vannea then lodged this application. After substantial difficulties in contacting Royal Bay International Pty Ltd (Royal Bay) I considered Mr Vannea's application in the context of the lodgement time on 13 June 2014. A Decision extending time for lodgement was issued on 27 June 2014. 1

[3] The application was the subject of a hearing before me on 1 September 2014. Following a directions conference on 23 July 2014, the parties agreed that this hearing should initially consider the Royal Bay position that it did not employ Mr Vannea and that he was an independent contractor, but would also enable the presentation of evidence about the merits of the application should my consideration of the merits become necessary.

[4] Directions to this effect were issued. Mr Vannea complied with those directions. Notwithstanding late compliance by Royal Bay, I have taken all of the material provided to me into account in considering the matter.

[5] In the hearing on 1 September 2014, Mr Vannea was represented by Mr Snowball of the National Union of Workers (the NUW). Royal Bay was represented by Mr Zhang, of counsel pursuant to a grant of permission under s.596(2)(a).

The Background

[6] Mr Vannea undertook chicken boning work at the Baiada Wingfield plant from 11 October 2011 to 28 December 2013. He generally worked day shift on weekdays but also undertook some weekend work. The basis for payments to him is not agreed but these payments related to his attendance and the quantity of work performed. Mr Vannea was generally advised of work requirements at the conclusion of a day’s work or by text message sent the night before he was requested to work. These messages were sent by his supervisor, Mr Chenda Bin. At least sometimes, a roster detailing his shifts was posted on a noticeboard. Payments were only made for time worked and Mr Vannea did not receive any form of leave payments.

[7] Royal Bay made payments to a bank account held in the name of a company established for Mr Vannea by an accountant arranged for him by Royal Bay. This Company, Pedro Vannea Pty Ltd was later changed by that same accountant to a form of family trust but payments continued to be made to a bank account operated in the name of Pedro Vannea Pty Ltd. Mr Vannea was unable to differentiate between his “ownership” of the company and the Trust later established by the accountant arranged by Mr Bin.

[8] The termination of the work arrangement applicable to Mr Vannea was effected by text message and followed a number of absences from work on the part of Mr Vannea and his rejection of two Saturday work requests.

The Submissions

[9] Mr Vannea asserts that he was a casual employee and was a person protected from unfair dismissal. He asserts that his employment termination lacked a valid reason and was procedurally unfair. He seeks reinstatement with the payment of lost income or, in the alternative, an amount of compensation in lieu of reinstatement.

[10] Royal Bay asserts that, while it employed 15 employees at the time of the termination of Mr Vannea's work arrangement, it did not have an employment relationship with him. In the alternative, Royal Bay asserts that any termination of Mr Vannea's employment was neither harsh, unjust nor unreasonable.

The Evidence

[11] Mr Vannea's evidence went to the work arrangement he had with Royal Bay, and to the circumstances of the termination of that arrangement. He detailed the nature of the work he undertook and supervisory arrangements. His evidence went to the operation of his company, Pedro Vannea Pty Ltd and to the family trust arranged by the accountant to whom he was referred by Royal Bay. His evidence went to the effects of the termination of the work arrangement on him and his subsequent efforts to mitigate his losses.

[12] Mr Lin is the Manager of Royal Bay. His evidence went to the operations of that company in various Baiada plants and its general use of contractors in undertaking those functions. His evidence went to the way in which these arrangements were organised, including the provision to contractors of payment information which was, as a matter of convenience, sometimes referred to as a payslip. Mr Lin asserted that persons undertaking work could elect to be employees or subcontractors. He advised that written contracts were not prepared because the subcontractors were too lazy for this. I did not find Mr Lin to be a creditable or particularly believable witness.

[13] Mr Bin is a Production Co-ordinator for Royal Bay. His evidence went to his job, which involves the organisation of persons to undertake chicken boning work for Baiada. Mr Bin's evidence was that the boners who undertook work for Royal Bay were engaged as subcontractors but that some 15 other persons, undertaking different work, were regarded as employees. Mr Bin's evidence went to the work undertaken by Mr Vannea and to his concerns about his work attendance and performance. He detailed the actions he took to address this, culminating in the termination of that work arrangement. Mr Bin confirmed that he referred subcontractor boners, including Mr Vannea, to his accountant to arrange corporate entities. Mr Bin was as unimpressive a witness as Mr Lin.

[14] It is also appropriate that I repeat the correspondence referenced in my decision to extend time for lodgement of the application where I stated: 2

“Mr Snowball advised that, on 25 June 2014, the Respondent had forwarded to him a letter which was purportedly from Chenda Bin. This letter has been provided to me. It states:

“To whom it may concern,

This letter states the reasons of Pedro Venear’s work suspension from Baiada Poultry Ltd. for poor work performance.

Pedro Venear started on 5.11.12 and was originally placed on night shift. In the 10.6.2013 he was moved to day shift after too many complaints from the night shift supervisor, Hean Chou, about his frequent lateness and in some shifts sleeping on premises even when he was required to work. It was agreed by Hean and I that he be moved to day shift where other supervisors and I may keep an eye on him.

From June 2013 Pedro’s work punctuality and reliability started to decrease. It is required that employees come to work 10 minutes early, or if they are ill and unable to work that they must give at least 2-3 hours’ notice in advanced so I can organise a replacement. Pedro did not follow these requirements and it seemed he was taking advantage of my lenience as I only replied ‘Ok’. Excuses such as: not setting the alarm, having a headache and being late due to personal errands were becoming unacceptable. When he arrived at work I always discussed with him that it was unsatisfactory to arrive late and that he needed to organize his time better and be more punctual.

Aside from arriving to work late, Pedro did not practice safe food handling. His actions saw him throwing pieces of chicken fat at other employees which he was warned to do not so. I recall Pedro leaving the work premises numerous times for breaks for two to three hours at a time in which case I always had to call him to come back to work. During my time working with Pedro he was always asking to leave work early due to personal problems or feeling ill. This was also a reoccurring issue which confirmed him to be more unreliable and unfit to work. His actions showed me that Pedro seemed to have a very disinterested attitude towards work and his profession.

All through November 2013 despite repeated warnings from myself Pedro’s work performance and punctuality did not improve. I concluded that he was an unreliable employee and that his work performance did not meet the company’s standards at the time. As a consequence of his poor work performance on 28th December 2013, it was my decision to stop giving him shifts until further notice. I did not in any way terminate or dismiss his employment with Baiada Poultry Ltd.

Regards,

Chenda Bin.””

Initial Issues

[15] Section 396 requires that, before considering the merits of Mr Vannea's evidence, I must address various specified initial issues. Royal Bay has agreed that, at the time of the termination of Mr Vannea's work arrangement, it employed 15 employees. Accordingly, the only relevant initial issue goes to whether Mr Vannea was a person protected from unfair dismissal.

[16] I have initially considered this issue. I have done so, taking into account all of the evidence before me.

[17] Section 382 states:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Note: High income threshold indexed to $133,000 from 1 July 2014”

[18] The immediate issue then goes to whether Mr Vannea was an employee for the purposes of this section. In this regard I am required to apply the common law considerations to this question.

[19] Considerations of employment indicia have been a regular requirement of the Fair Work Commission (FWC) and other Tribunals for many years.

[20] While I have taken into account the broad range of decisions dealing with this issue, as a matter of convenience I have particularly applied the considerations detailed in Abdalla v Viewdaze. 3 In that matter a Full Bench of the Australian Industrial Relations Commission stated:

“34 Following Hollis v Vabu , the state of the law governing the determination of whether an individual is an employee or an independent contractor may be summarised as follows:

(1) Whether a worker is an employee or an independent contractor turns on whether the relationship to which the contract between the worker and the putative employer gives rise is a relationship where the contract between the parties is to be characterised as a contract of service or a contract for the provision of services. The ultimate question will always be whether the worker is the servant of another in that other's business, or whether the worker carries on a trade or business on his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own. This question is answered by considering the totality of the relationship.

(2) The nature of the work performed and the manner in which it is performed must always be considered. This will always be relevant to the identification of relevant “indicia” and the relative weight to be assigned to various “indicia” and may often be relevant to the construction of ambiguous terms in the contract.

(3) The terms and terminology of the contract are always important and must be considered. However, in so doing, it should be borne in mind that parties cannot alter the true nature of their relationship by putting a different label on it. In particular, an express term that the worker is an independent contractor cannot take effect according to its terms if it contradicts the effect of the terms of the contract as a whole: that is, the parties cannot deem the relationship between themselves to be something it is not. Similarly, subsequent conduct of the parties may demonstrate that relationship has a character contrary to the terms of the contract. If, after considering all other matters, the relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity by the very agreement itself which they make with one another.

(4) Consideration should then be given to the various “indicia” identified in Brodribb and the other authorities bearing in mind that no list of indicia is to be regarded as comprehensive and the weight to be given to particular indicia will vary according to the circumstances. Where a consideration of the “indicia” points one way or overwhelmingly one way so as to yield a clear result, the determination should be in accordance with that result. For ease of reference we have collected the following list of “indicia”:

• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place of work, hours of work and the like

Control of this sort is indicative of a relationship of employment. The absence of such control or the right to exercise control is indicative of independent contract. While control of this sort is a significant factor it is not by itself determinative. In particular, the absence of control over the way in which work is performed is not a strong indicator that a worker is an independent contractor where their work involves a high degree of skill and expertise. On the other hand, where there is a high level of control over the way in which work is performed and the worker is presented to the world at large as a representative of the business then this weighs significantly in favour of the worker being an employee.

“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions.

[B]ut in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty Ltd v Federal Commissioner of Taxation , a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”

• Whether the worker performs work for others (or has a genuine and practical entitlement to do so) The right to the exclusive services of the person engaged is characteristic of the employment relationship. On the other hand, if the individual also works for others (or the genuine and practical entitlement to do so) then this suggests independent contract.

• Whether the worker has a separate place of work and/or advertises his or her services to the world at large

• Whether the worker provides and maintains significant tools or equipment

Where the worker's investment in capital equipment is substantial and a substantial degree of skill or training is required to use or operate that equipment the worker will be an independent contractor in the absence of overwhelming indications to the contrary.

• Whether the work can be delegated or subcontracted

If the worker is contractually entitled to delegate the work to others (without reference to the putative employer) then this is a strong indicator that the worker is an independent contractor. This is because a contract of service (as distinct from a contract for services) is personal in nature: it is a contract for the supply of the services of the worker personally.

• Whether the putative employer has the right to suspend or dismiss the person engaged

• Whether the putative employer presents the worker to the world at large as an emanation of the business

Typically, this will arise because the worker is required to wear the livery of the putative employer.

• Whether income tax is deducted from remuneration paid to the worker

• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks

Employees tend to be paid a periodic wage or salary. Independent contractors tend to be paid by reference to completion of tasks. Obviously, in the modern economy this distinction has reduced relevance.

• Whether the worker is provided with paid holidays or sick leave

• Whether the work involves a profession, trade or distinct calling on the part of the person engaged

Such persons tend to be engaged as independent contractors rather than as employees.

• Whether the worker creates goodwill or saleable assets in the course of his or her work

• Whether the worker spends a significant portion of his remuneration on business expenses

This list is not exhaustive. Features of the relationship in a particular case which do not appear in this list may nevertheless be relevant to a determination of the ultimate question.

(5) If the indicia point both ways and do not yield a clear result the determination should be guided primarily by whether it can be said that, viewed as a practical matter, the individual in question was or was not running his or her own business or enterprise with independence in the conduct of his or her operations as distinct from operating as a representative of another business with little or no independence in the conduct of his or her operations.

(6) If the result is still uncertain then the determination should be guided by “matters which are expressive of the fundamental concerns underlying the doctrine of vicarious liability” including the “notions” referred to in [41] and [42] of Hollis v Vabu.”

[21] The evidence before me is overwhelmingly indicative of an employment relationship. The nature of the chicken boning work undertaken by Mr Vannea is consistent with work which would generally be performed by employees. There is no written contract between the parties and the evidence of both Mr Vannea and Mr Bin is consistent with an employment relationship. For example, Mr Bin gave Mr Vannea "warnings" about his attendance record.

[22] Whilst I have noted that payments were made to the company owned and operated by Mr Vannea, this cannot be taken to define that relationship. Indeed, for the reasons that I have detailed in the following paragraphs, I consider that the alleged independent contracting arrangement is very much an employment relationship.

[23] In terms of the indicia to be considered, Royal Bay exercised control over when, where and the manner in which Mr Vannea undertook his work. This indicator is consistent with employment. Mr Vannea worked solely for Royal Bay. There is no indication that he was, or understood that he was able to work for anyone else. He undertook that work at the Baiada workplace and the work could not be performed elsewhere. It was work generally undertaken at times specified by Royal Bay, or, by Baiada. Again, that is indicative of employment. Mr Vannea provided his own knives. Given that occupation I regard these as tools of his trade. Knives are not of a magnitude that they indicate an independent contracting arrangement. Mr Vannea performed that work at the direction of Mr Bin.

[24] Royal Bay regarded itself as able to dismiss or refuse to offer Mr Vannea further employment. Royal Bay did not deduct tax from payments made to Mr Vannea. In this respect I have concluded that this reflected a commercial decision made by Royal Bay, but it cannot be taken to redefine the nature of the relationship which existed in reality. I have noted that GST payments were made and that GST obligations were apparently arranged for Mr Vannea by the accountant to whom he was referred by Mr Bin. I note that Mr Vannea was paid fortnightly with one week's pay in arrears.

[25] Mr Vannea was provided with Baiada clothing and was required to wear that clothing. He was paid depending on the work he worked, although it appears clear that he was expected to achieve specified rates of work in a given time consistent with the generally accepted concept of piece work. While he was not paid holidays or sick leave, I have taken this to be consistent with a regular casual employment relationship. 4 I have concluded that Mr Vannea was a skilled and experienced chicken boner but do not consider that occupation to be generally consistent with independent contracting arrangements.

[26] It is abundantly clear that neither Mr Vannea nor his company generated goodwill in the normal sense. Mr Vannea purchased a car through a loan arrangement with a finance company but I am satisfied that this was arranged primarily by the financier. That car was used for personal purposes.

[27] Mr Vannea’s business had an ABN but did not have an invoice system and he was provided with payments referenced as "payslips" which confirmed the quantity of work he had undertaken.

[28] I have concluded that Mr Vannea was an employee of Royal Bay who was paid, by arrangements established by Royal Bay, through a company. He was not provided with paid leave and was paid only when he worked. He worked on a regular basis such that he was a regular casual employee.

[29] Section 388 states:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[30] The evidence before me confirms the regular nature of Mr Vannea's employment and indeed the termination of employment advice is consistent with this. Mr Vannea had completed the requisite minimum employment period.

[31] The FW Act establishes obligations on employers and, potentially on other persons, which might include Baiada. This decision may have implications under other legislation for Mr Vannea, Baiada and Royal Bay. However, although a copy of this decision will be provided to Baiada as well as the parties, it is neither necessary nor appropriate that I delve into anything other than the issue of whether Mr Vannea was a person protected from unfair dismissal and the character of that dismissal.

[32] For the reasons set out above I consider that Mr Vannea was a person protected from unfair dismissal in that he was a regular casual employee and had completed the requisite minimum employment period. His employment history and the expectations of Royal Bay meant that he had a reasonable basis upon which he could understand that regular employment relationship would continue.

The Merits of the application

[33] Before considering the factors set out in s.387 of the FW Act I have detailed my findings about certain of the disputed circumstances relative to Mr Vannea's dismissal.

[34] I have already observed that Mr Vannea was a regular casual employee. His evidence 5 confirmed the arrangements adopted by Royal Bay to advise him of their work expectations.

Mr Snowball: And who would decide what hours you were working each day?

Mr Vannea: Chenda.

Mr Snowball: So Chenda would tell you what time you stared work each day?

Mr Vannea: Yes.

Mr Snowball: Yep, so how would he tell you this?

Mr Vannea: He send me by message on the phone, what time I start.

Mr Snowball: OK, alright. So Chenda would tell you when you were allowed to go home?

Mr Vannea: Yes, Chenda.

Mr Snowball: Alright, could you change the hours of work if you wanted to?

Mr Vannea: No, can’t change.

Mr Snowball: So how many hours would you normally work in a day?

Mr Vannea: Sometimes 6, sometimes 8, 10, depending on (unclear).

Mr Snowball: OK, and how many days a week would you usually work.

Mr Vannea: Five.

Mr Snowball: You’d work five days a week?

Mr Vannea: Five days a weeks, sometimes Saturday, but not really.

[35] I have accepted the evidence of Mr Vannea that he did not generally work on Saturdays, but that he was sometimes specifically asked to do so.

[36] Mr Vannea's evidence and that of Mr Bin confirms that Mr Vannea was absent from work on at least some weekdays in the month prior to his dismissal. 6The evidence7 is that he declined to work on two Saturdays. I have accepted Mr Vannea's evidence8 this related to an injury at work which he did not report because of his fear that this could have repercussions on his continued employment.

[37] I have concluded that Mr Bin dismissed Mr Vannea by text message on 28 December 2013. This message stated: 9

“Guess you don’t care about your job it’s been 2 Saturdays you been away without notice. So from now on you are no longer needed at work, we will give you a call if you are needed in the future. thanks for your hard work."

[38] I have concluded that this advice represented advice of the effective termination of his employment.

[39] Section 387 states:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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 the FWC considers relevant.”

[40] I have considered each of these factors in the context of all of the evidence before me.

Valid Reason

[41] Notwithstanding that subsequent legislative changes have separately specified factors which were previously embedded in the concept of a valid reason I have applied the approach set out by Northrop J in Selvachandran v Peterson Plastics Pty Ltd 10.

[42] I do not consider that Mr Vannea's rejection of the two Saturday work offers represented a valid reason for the termination of his employment. I am satisfied that Saturday work was not established as a precondition for the work he undertook and that as a casual employee, he had the capacity to decline that work. In any event I am satisfied that the injury Mr Vannea incurred represented a reasonable basis upon which he was able to decline to work on one of those days.

[43] I am also satisfied that the second advice to Mr Vannea to work on Saturday 28 December 2013 was given to him so late on 27 December 2014 that his decision not to work on the following day was clearly understandable. In this respect I am not satisfied that Mr Bin's evidence that earlier advice of this work requirement was in fact given to him.

[44] I do not consider that Mr Vannea's absences prior to mid December 2013 represented a valid reason for the termination of his employment. In this respect I am satisfied that these generally reflected genuine illnesses or situations where Mr Vannea was entitled to be reticent about the nature of his absence as a consequence of the degree of control exercised by Royal Bay. I am unable to conclude that, in any event, that Mr Vannea's absences represented unauthorised absences. The nature of his employment was that of a regular casual employee. Notwithstanding this, the two Saturday absences may have necessitated a warning, but I am not satisfied that, in these circumstances, they warranted termination of employment.

[45] The evidence of Mr Bin was that his decision to terminate the arrangement with Mr Vannea was impacted by his assessment that he was unreliable, and that he lied a lot. 11 Mr Bin also said that a verbal warning he gave to Mr Vannea at a time he did not specify, that throwing chicken fat at other workers12 was a further factor he considered in the termination decision. None of these assertions have been established to me as factors which could be regarded as a valid reason for the subsequent termination of Mr Vannea's employment on 28 December 2013.

[46] Consequently, I am not satisfied that there was a valid reason for the termination of Mr Vannea's employment.

Explanation of the reason

[47] While the text advice of the termination of his employment provided to Mr Vannea on 28 December 2013 referred to his two Saturday absences, I consider that Mr Bin took into account a range of other factors in making that decision. His evidence supports this in a number of respects. For example, he stated: 13

Mr Snowball: What was the reason for Mr Vannea’s termination?

Mr Bin: It was the lack of turning up, the lack of motivation to work, basically he did not care about his job, normal people would have a job and they would care about it. They would turn up on time, they would want to make some money, but he didn’t have no motivation, he didn’t care about working no more, he was at work to sit outside, watch TV most of the time and that’s what he did most of the time, as you can see his chicken numbers weren’t that high, cause he didn’t really care about his job.

Mr Snowball: So, hold on, he was watching too much TV in the lunchroom, he took long breaks, he was late to work, what do you mean by he had no motivation?

Mr Bin: He didn’t seem like he wanted to work.

Mr Snowball: OK, didn’t seem like he wanted to work. So you said his numbers were down. Was there an issue with his actual speed of work?

Mr Bin: Nah, speed was (unclear). I’m under pressure to get jobs done.

Mr Snowball: So was speed an issue, sorry??

Mr Bin: Nah, he can cut fast if he wants, he’s alright.

[48] Further, Mr Bin said: 14

Mr Snowball: So when you sent that text message, you are saying that you thought that Pedro Vannea would come back and talk to you about it.

Mr Bin: Yeah, and I would give him the real reason why and I would tell him why I got rid of him.

Mr Snowball: So after you dismissed him, it was up to Mr Vannea to come and ask you for the reasons?

Mr Bin: We actually spoke after this as well. Like we saw each other and we spoke normally and he seemed fine with it.

Mr Snowball: But your position is that it was up to Mr Vannea to come and speak to you about the reasons. Is that right?

Mr Bin: Yeah, the thing is he had to come back to pick up his knife. I would have approached him anyway.

Mr Snowball: Alright. .... so if Mr Vannea had have come and talked to you about this and explained look there was something bad happened and I couldn’t come to work, would it have been fine for him to come back?

Mr Bin: No, I would have explained why I got rid of him and what he’s been doing and he should understand already what he’s been doing.

[49] Consequently I have concluded that Mr Vannea was not told the full reasons for the termination of his employment. This must be regarded as an indicator of unfairness.

Opportunity to respond

[50] Mr Vannea was not given an opportunity to respond to the proposed termination of his employment. That termination decision was made by Mr Bin and was simply communicated to him by text message. Text messages may have been the common method of communication, but it deprived Mr Vannea of the opportunity to have any input into Mr Bin's considerations prior to the employment termination decision being made.

[51] Again, the absence of any capacity to respond is an indicator of unfairness.

Refusal to allow access to a support person

[52] The Royal Bay assertion that Mr Vannea did not request a support person is as correct as it is trite. He did not request a support person because he was not aware that Mr Bin was intent on dismissing him on 28 December 2013 until he received that text message.

Warnings relative to unsatisfactory work performance

[53] I accept that, on a number of occasions Mr Bin warned Mr Vannea relative to attendance issues. I am unable to reconcile these warnings with Mr Vannea’s asserted status as a subcontractor. Even more particularly, I am unable to reconcile them with the decision to terminate Mr Vannea’s employment which followed his decision not to work on two Saturdays. I am not satisfied that the evidence establishes that Saturday work of this nature was compulsory or that the circumstances under which Mr Vannea was advised of that work requirement provided him with adequate notice of it.

Size of the Employers enterprise-impact on procedures

[54] Royal Bay may only consider itself to be a relatively small employer. However, even on its own evidence 15 it appears to be a substantial operation which is heavily dependent on so called contracting arrangements. Its procedures relating to employment and contracting arrangements appear to be ad hoc and opportunistic.

Absence of human resource management specialists or expertise

[55] I have taken into account that Royal Bay does not appear to have any in-house human resource management specialists and there is nothing before me which indicates that expertise was available or sought in this matter. Indeed, had Royal Bay obtained such advice it may well have disclosed significant issues associated with the contracting arrangements applicable to persons such as Mr Vannea. I have concluded that Royal Bay deliberately adopted those contracting arrangements as distinct from employment practices.

Any other matter considered relevant

[56] I have taken into account that Mr Vannea has limited English language skills and limited understanding of Australian workplace arrangements and standards. I have concluded that Mr Vannea understood that contracting arrangements were mandatory arrangements which were preconditions for the work he undertook. In this respect Mr Lin’s evidence that subcontractors were given a choice to be employees or subcontractors is inconsistent with that of Mr Bin who advised that all of the boners working at the Baiada Wingfield plant were subcontractors.

Conclusion - harsh, unjust or unreasonable

[57] I have concluded that Mr Vannea was an employee whose employment was terminated by Royal Bay. That termination of employment was harsh, unjust and unreasonable. It lacked a valid reason and occurred in a procedurally unfair and harsh manner. It occurred in a circumstance where Royal Bay mis-represented the very nature of the relationship it had with Mr Vannea.

Remedy

[58] In these circumstances s.390 establishes that the FWC may order a remedy. The primary remedy is that of reinstatement. An order for compensation can only be considered if the FWC is satisfied that reinstatement is inappropriate and that compensation is appropriate.

[59] Section 391 deals with reinstatement in the following terms:

“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 the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC 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.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”

[60] Mr Vannea seeks reinstatement. Royal Bay asserts that reinstatement is impractical on the basis that it considered Mr Vannea to be unreliable and lacking in commitment. The Royal Bay position in this regard is that: 16

“Reinstatement is impractical. The Respondent considered the Applicable unreliable without commitment. Restatement will put the Respondent into a unpredictable position - whether the Respondent may rely on the production of the Applicant in order to fulfil its obligations to Baiada as a subcontractor.” (sic)

[61] Royal Bay referred me to the often cited decision in Perkins v Grace Worldwide (Aust) Pty Ltd 17. That decision addressed the practicality of reinstatement in the context of the workplace relations legislative regime that then applied. Notwithstanding that the FW Act now refers to reinstatement in terms of what is appropriate, whereas the concept in 1997 was based on practicality, I consider that approach remains apposite. In Perkins the Court stated:18

“Trust and confidence is a necessary ingredient in any employment relationship. That is why the law imports into employment contracts an implied promise by the employer not to damage or destroy the relationship of trust and confidence between the parties, without reasonable cause: see Burazin v Blacktown City Guardian Pty Limited (Wilcox CJ, von Doussa and Marshall JJ, 13 December 1996, not yet reported). The implication is not confined to employers, it extends to employees: see for example Blyth Chemicals Ltd v Bushell [1933] HCA 8; (1933) 49 CLR 66 at 81-2 and North v Television Corporation Ltd (1976) 11 ALR 599 at 609. So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.

At the same time, it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee’s employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court’s finding on that question in the resolution of an application under Division 3 of Part VIA of the Act.

If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of a loss of confidence in the employee.

Each case must be decided on its own merits. There may be cases where any ripple on the surface of the employment relationship will destroy its viability. For example the life of the employer, or some other person or persons, might depend on the reliability of the terminated employee, and the employer has a reasonable doubt about that reliability. There may be a case where there is a question about the discretion of an employee who is required to handle highly confidential information. But those are relatively uncommon situations. In most cases, the employment relationship is capable of withstanding some friction and doubts. Trust and confidence are concepts of degree. It is rare for any human being to have total trust in another. What is important in the employment relationship is that there be sufficient trust to make the relationship viable and productive. Whether that standard is reached in any particular case must depend upon the circumstances of the particular case. And in assessing that question, it is appropriate to consider the rationality of any attitude taken by a party.

It may be difficult or embarrassing for an employer to be required to re-employ a person the employer believed to have been guilty of wrongdoing. The requirement may cause inconvenience to the employer. But if there is such a requirement, it will be because the employee's employment was earlier terminated without a valid reason or without extending procedural fairness to the employee. The problems will be of the employer's own making. If the employer is of even average fair-mindedness, they are likely to prove short-lived. Problems such as this do not necessarily indicate such a loss of confidence as to make the restoration of the employment relationship impracticable.”

[62] I have applied this approach. I am not satisfied that Mr Vannea’s actions or behaviour mean that the relationship cannot be re-established, albeit as a clear employment relationship. In reaching this conclusion I have concluded that Royal Bay management should be capable of operating an employment arrangement with Mr Vannea. There is nothing before me that indicates that the boner position has been abolished or substantively changed.

[63] I am satisfied that Mr Vannea should be reappointed to the position of boner which he held prior to the termination of his employment. That position involves minimum remuneration established by the relevant industrial instrument. To the extent that this means that Royal Bay will need to apply a different arrangement to Mr Vannea to that which applies to other boners, this is a matter for Royal Bay.

[64] Consistent with s.391(2), I consider it that it is appropriate for the continuity of Mr Vannea’s employment to be maintained. This appears to me to be consistent with the circumstances of his employment and my findings about his dismissal.

[65] Pursuant to s.391(3), I consider that an order to restore Mr Vannea’s lost pay between the termination of his employment and his reinstatement is appropriate. Again, that appears to be consistent with my findings in this matter. I consider that the payments made to Mr Vannea cannot be less than the minimums specified in the relevant industrial instrument. To the extent that the parties are unable to agree on the amount involved, leave is reserved for this matter to be referred back to me. The application of an appropriate industrial instrument to Mr Vannea’s earlier employment may also need to be a matter considered in another jurisdiction or in discussions between the parties. In reaching a conclusion in relation to s.391(3), I have taken into account Mr Vannea’s evidence that he has not obtained alternative employment since being dismissed and have concluded that he is unlikely to do so. In this respect I have noted that he has borrowed monies and have concluded that his skills and language difficulties have made alternative employment difficult.

[66] An Order (PR555454) giving effect to this decision will be issued.

SENIOR DEPUTY PRESIDENT

Appearances:

A Snowball NUW representing the Applicant.

A Zhang counsel representing the Respondent.

Hearing details:

2014.

Adelaide:

September 1.

 1   [2014] FWC 4270

 2   [2014] FWC 4270, para [11]

 3 (2003) 122 IR 215

 4   Transcript Sound Recording, 1 September 2014, 10:48 am

 5   Transcript Sound Recording, 1 September 2014, 10:49:46 am - 10:50:59 am

 6   Exhibit V3, paras 31 - 39

 7   Exhibit V3, paras 35 - 29

 8   Exhibit V2, paras 35 and 36

 9   Exhibit V3, Appendix A

 10 (1995) 62 IR 371 at 373

 11   Transcript Sound Recording, 1 September 2014, 3.20 pm

 12   Exhibit R6, para 6

 13   Transcript Sound Recording, 1 September 2014, 3:42:20 pm - 3:43:25 pm

 14   Transcript Sound Recording, 1 September 2014, 3:41:41 pm - 3:42:18 pm

 15   see, for example the evidence of Mr Lin, Transcript Sound Recording, 1 September 2014, 2.30 pm

 16   Exhibit R2, para 27

 17 (1997) 72 IR 186

 18 (1997) 72 IR 186, Whether reinstatement was impracticable (ii) Principles

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