Pipe Hunter Pty Ltd T/A Pipe Hunter v Mr Daniel Mahony and Mr Anthony Russell
[2013] FWCFB 4852
•23 JULY 2013
[2013] FWCFB 4852 |
FAIR WORK COMMISSION |
REASONS FOR DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Mr Daniel Mahony and Mr Anthony Russell
(C2013/750)
VICE PRESIDENT WATSON | |
SENIOR DEPUTY PRESIDENT DRAKE | |
COMMISSIONER JOHNS | SYDNEY, 23 JULY 2013 |
Appeal against decision [[2013] FWC 2621] and order [PR536140] of Commissioner Blair at Melbourne on 1 May 2013 in matter numbers U2012/13437 and U2012/13438 - permission to appeal - Fair Work Act 2009 - ss. 387, 394, 400, 604.
Introduction
[1] These reasons for decision concern an application for permission to appeal by Pipe Hunter Pty Ltd T/A Pipe Hunter (Pipe Hunter) pursuant to s.604 of the Fair Work Act 2009 (the Act)against a decision of Commissioner Blair of 1 May 2013. A decision in this appeal was given in transcript on 18 July 2013 granting permission to appeal, allowing the appeal and quashing the decision of the Commissioner. The Full Bench indicated that reasons would be published at a later date.
[2] The Notice of Appeal was lodged on 21 May 2013. Directions were issued by the Commission, and the matter was listed for hearing on 18 July 2013. At the hearing, Mr J Tracey of counsel appeared for Pipe Hunter, and Mr J McKenna of counsel appeared for Mr Mahony and Mr Russell.
Background
[3] The original decision dealt with two applications for unfair dismissal remedy, made by Mr Mahony and Mr Russell pursuant to s.394 of the Act. Commissioner Blair dealt with the two applications concurrently, as both Mr Mahony and Mr Russell were dismissed for alleged serious misconduct arising out of the registration of a business which would potentially compete with Pipe Hunter. Pipe Hunter alleged that the applicants approached another employee with the intention of poaching him, and that they attempted to obtain products from a supplier used by Pipe Hunter in spite of an exclusive supply arrangement between the supplier and Pipe Hunter.
[4] Mr Mahony and Mr Russell admitted creating a separate business, and that in future they intended to operate under the new business name. However, they submitted that the business was originally created as part of Mr Russell’s business studies at TAFE, which involved him making a business plan.
[5] The Commissioner found in favour of Mr Mahony and Mr Russell. In his decision, the Commissioner concluded:
“[32] In the Commission’s view there was no valid reason for the termination of their employment. The only thing that Mr Russell and Mr Mahony did was register a company on 9 September 2012. Both employees were terminated on 12 September 2012 based upon some assumption by the Respondent, the registration of a company name three days earlier warranted summary termination.
[33] The Commission has already made comment in relation to the assertion that the Applicants tried to poach Mr Fisher during the conversations with Mr Russell and Mr Mahony.
[34] Again, in referring back to the recording, the Commission is inclined to believe that the version of events as outlined by the Applicants more accurately reflects the tenor of the conversation with Mr Hunter.
[35] The Commission has not been provided with any proof that would indicate that Mr Mahony or Mr Russell had deliberately set out to undermine the business of the Respondent, nor has there been any proof provided that Mr Mahony and Mr Russell had tried to entice existing clients of the Respondent to leave the Respondent and provide work to the new established business.
[36] Mr Russell, in the recorded conversation with the Respondent, made the comment that “this whole thing has been blown out of proportion”. The Commission would concur with that comment.
[37] Regarding the conversation with Mr Hunter, the Commission does accept that the question of supplying materials was raised but not to the extent that Mr Hunter asserts. It would make sense that such a question would be raised given that there are a small number of suppliers of such materials, and at some point in the future the applicants intended to work for their own business.
[38] Having found that there was no valid reason for the termination of each of the Applicants, the Commission now turns its mind to remedy. Reinstatement is not being sought by either applicant but an amount of compensation in the order of 16 weeks is being sought by each of the Applicants.”
[6] After considering the factors in the Act regarding compensation for unfair dismissal, the Commissioner awarded both Mr Mahony and Mr Russell compensation of 16 weeks’ pay.
Legislation
[7] Remedies in unfair dismissal matters can only be provided if the Commission finds that the employee has been unfairly dismissed: s.390. Section 385 of the Act provides that a person has been unfairly dismissed if the termination was harsh, unjust or unreasonable. Section 387 provides:
“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.”
[8] In exercising its powers in unfair dismissal matters the Commission needs to have regard to the objects of the relevant part of the Act. These are expressed in s381 as follows:
“381 Object of this Part
(1) The object of this Part is:
(a) to establish a framework for dealing with unfair dismissal that balances:
(i) the needs of business (including small business); and
(ii) the needs of employees; and
(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees; and
(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.”
[9] The current appeal is made pursuant to s.604 of the Act.
[10] Section 400 of the Act provides further requirements for appeals in relation to unfair dismissal matters:
“400 Appeal rights
(1) Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.”
Grounds of appeal
[11] Pipe Hunter appeals the decision of Commissioner Blair on numerous grounds. At the hearing, submissions were sought by the Full Bench on ground 16 of the Notice of Appeal. Ground 16 contends that the Commissioner erred in failing to take into account relevant considerations set out in s.387(b)-(h) of the Act.
The proper exercise of the discretion under s.387
[12] At the outset of the hearing of the matter before the Commissioner, the Commissioner made some introductory comments concerning the task he was required to exercise under the Act. Included in his comments was the following:
“If I find there is no valid reason I don’t have to determine harsh, unjust and unreasonable. I just simply determine remedy....” 1
[13] The task of the Commission in determining whether a dismissal is harsh, unjust or unreasonable under the current Act and its predecessor provisions has been considered by courts and tribunals on numerous occasions. In ALH Group Pty Ltd trading as the Royal Exchange Hotel v Mulhall 2, a Full Bench of the Australian Industrial Relations Commission said the following in relation to the predecessor provision of s.387:
“Each of the paragraphs (a) to (d) of s.170CG(3) requires the Commission to have regard to “whether” a circumstance existed. Whether it existed must then be taken into account, considered and given due weight as a fundamental element in determining whether the termination was harsh, unjust or unreasonable. A consequence of this construction of s.170CG(3) is that the Commission is obliged to make a finding in respect of each of the circumstances specified in ss.170CG(3)(a) to (d) in so far as each of these paragraphs is relevant to the factual circumstances of a particular case.” 3
[14] Similar comments were made by a Full Bench in Smith and others v Moore Paragon Australia Ltd 4 and by the Federal Court of Australia in Edwards v Justice Giudice and others5. Ever since that clear line of authority the necessary approach has been clear and unambiguous.
[15] The Commissioner did not follow that approach. As he foreshadowed at the commencement of the hearing, once he determined that a valid reason did not exist he proceeded to immediately consider the remedy to be ordered. In our view there was a failure to consider the criteria in s.387 and a failure to make a finding on whether the termination was harsh, unjust or unreasonable by properly taking into account all of the relevant factors required to be taken into account under the Act. We are not satisfied that the Commissioner addressed the relevant questions and applied them in accordance with the objects of the relevant part of the Act. It may be a rare case that the absence of a valid reason for termination can nevertheless be a fair dismissal, but the obligation to exercise the discretion in accordance with the provisions of the Act and the authorities remains.
[16] We find that the Commissioner did not exercise the discretion required by the Act. As the error is of a fundamental nature and the appeal raises important issues of the proper exercise of the Commission’s powers we consider that there is public interest in granting permission to appeal. We granted permission to appeal, allowed the appeal, and quashed the decision of the Commissioner. On 18 July 2013 we remitted the matter to Commissioner Johns to be reheard later that day. However, after further conciliation before Senior Deputy President Drake the matter was settled by agreement of the parties.
VICE PRESIDENT WATSON
Appearances:
Mr J Tracey, of counsel, for Pipe Hunter Pty Ltd T/A Pipe Hunter
Mr J McKenna, of counsel, for Mr Daniel Mahony and Mr Anthony Russell
Hearing details:
2013.
Melbourne.
July.
18
1 Transcript, 6 March 2013 at PN26.
2 [2002] AIRC 329
3 [2002] AIRC 329 at [51]
4 [2002] AIRC 317
5 [1999] FCA 1836.
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