Pui Ling Jor v MSY Computer Discount Centre Pty Ltd
[2023] FWC 872
•14 APRIL 2023
| [2023] FWC 872 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kai Hong Yuen; Pui Ling Jor
v
MSY Computer Discount Centre Pty Ltd
(U2022/12247; U2022/12255)
| COMMISSIONER MCKINNON | SYDNEY, 14 APRIL 2023 |
Application for an unfair dismissal remedy – compensation ordered
Mr Kai Hong Yuen and Ms Pui Ling Jor were employed by MSY Technology Pty Ltd from February 2019 and 20 December 2021 respectively. In June 2022, their employment transferred from MSY Technology Pty Ltd to MSY Computer Discount Centre Pty Ltd (MSY CDC). MSY CDC was subsequently sold to a business trading as “Umart”. Mr Yuen and Ms Jor were offered continuing employment with Umart but chose not to accept the offers of employment. Their employment came to an end when they were dismissed by reason of redundancy with effect from 10 December 2023.[1] On 23 December 2022, Mr Yuen and Ms Jor applied to the Commission for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act).
Mr Yuen and Ms Jor each completed the minimum employment period of 6 months with MSY CDC and its predecessor, MSY Technology Pty Ltd. They were covered by the General Retail Industry Award 2020 (the Award) and their annual earnings at the time of dismissal were below the high income threshold. Mr Yuen and Ms Jor are protected from unfair dismissal.
At the time of dismissal, MSY CDC had 44 employees and was not a small business employer. The dismissal could not have been consistent with the Small Business Fair Dismissal Code for that reason, but also because the Code does not apply to redundancies.
This decision is about whether the dismissals were cases of genuine redundancy; whether Mr Yuen and Ms Jor were unfairly dismissed; and the question of remedy.
In summary, the dismissals of Mr Yuen and Ms Jor were not cases of genuine redundancy. Mr Yuen and Ms Jor were unfairly dismissed by MSY CDC. Compensation is the appropriate remedy in each case and orders will issue separately. These are my reasons.
Relevant facts
On 18 November 2022, Mr Yuen was told that MSY CDC’s Fyshwick store, which he managed, needed to complete a full and accurate stock check as soon as possible as the owner of MSY CDC, Mr Andrew Shiau, would be doing a store inspection for all stores.
On a date between 18 and 25 November 2022, Mr Shiau and Mr Soon Yiap, the General Manager of MSY CDC, sent an email to all MSY stores reminding all staff to be punctual and to ensure that all stores were clean and tidy, with all products neat and in order.
On 25 November 2022, Mr Evan Casey, Chief Operating Officer of “Umart”, sent an introduction email to all MSY CDC store managers about an impending business “partnership” between MSY CDC and Umart. The email acknowledged that employees may have concerns and assured them that no employee would lose their role as part of the change. It invited them to raise any queries either through a feedback link or directly with “Peter”, the owner of Umart, or Mr Casey.
On 1 December 2022, Umart sent Mr Yuen and Ms Jor an email to arrange for their “onboarding” to Umart Holding Employment Pty Ltd, including through the signing of a new contract of employment.
On 2 and 3 December 2022, two Umart employees attended MSY CDC’s Fyshwick store to do a full stock check. They explained that Umart had bought MSY CDC from Mr Shiau and that Umart would manage the business in the future.
Between 4 and 8 December 2022, Mr Yuen and Ms Jor went through the new employment contract from Umart. They became concerned that the proposed terms and conditions of employment were unfair and less favourable than the arrangements they currently had in place. They sent an email to Mr Casey with their questions and concerns. They also did some research about their situation on the Fair Work Ombudsman’s website and made direct inquiries with the Ombudsman.
On the evening of 6 December 2022, Mr Casey replied to Mr Yuen and Ms Jor by email to advise that Umart would not force them to sign the proposed agreements. If they chose not to sign the contracts, they would not be offered employment with Umart and would need to speak to Mr Shiau about what that meant for their employment. They were advised that as the change of ownership was due to take effect on 10 December 2022, the proposed agreements would need to be signed before that time if they were to become employed by Umart.
On 7 and 8 December 2022, Mr Yuen contacted Mr Yiap and Jerry (NSW State Manager of MSY CDC) over the phone. He asked what the arrangement would be if they did not sign the agreements proposed by Umart. He was told that Mr Shiau had sold the whole business to Umart and the change in ownership was to be completed on 10 December 2022. This would be their last working day for MSY CDC, and they would be paid by MSY CDC until this date. MSY employees who had signed the new agreements would work for Umart on and from 12 December 2022. Those who did not sign the new agreements for whatever reason would be considered to have resigned from their employment and lose their jobs after 10 December 2022. Mr Yuen advised MSY CDC that this was not reasonable as neither he nor Ms Jor had resigned, and they could not be forced to resign.
On 9 December 2022, Mr Yuen emailed Mr Casey to advise that neither he nor Ms Jor would be signing the new contract and confidentiality agreement with Umart. He separately sent an email to Mr Shiau, on the advice of the Fair Work Ombudsman, confirming that neither he nor Ms Jor had resigned and seeking written notice of termination or payment instead of notice, as well as payment of accrued annual leave and redundancy pay. There was no response to this email.
The employment of Mr Yuen and Ms Jor ceased on 10 December 2022, which was their last working day. The following week, Mr Yuen and Ms Jor returned documents and keys to MSY CDC and did a final stock check.
Were the dismissals cases of genuine redundancy?
Did MSY CDC no longer require Mr Yuen and Ms Jor’s job to be performed because of changes in its operational requirements?
In my earlier decision in this matter, I found that MSY CDC no longer required the jobs of Mr Yuen and Ms Jor to be performed either by themselves or anyone else. I am satisfied that this was because of operational requirements, in the sense that upon the sale of business from MSY CDC to Umart, MSY CDC was no longer operating as an employer. Its operational requirements came to an end on 10 December 2022.
Failure to consult under the Award
A dismissal will not be a genuine redundancy for the purposes of the Act unless MSY CDC complied with its redundancy-related consultation obligations under the Award.[2]
Clause 34 of the Award applies if an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees. Clause 34 applied to the sale of the business to Umart, because it was likely to mean the end of employment with MSY CDC for all of its employees.
Under clause 34 of the Award, as soon as practicable after the decision to sell the business was made, MSY CDC was required to:
(a) give notice of the changes it had decided to make to all employees who may be affected by them and any of their representatives;
(b) discuss with affected employees the introduction of the changes, their likely effect on employees; and measures to avoid or reduce the adverse effects of proposed changes; and
(c) give affected employees written relevant information about the changes.
I find that MSY CDC did not comply with its obligations to consult about the redundancy with Mr Yuen and Ms Jor under clause 34 of the Award. It did not give them notice of the changes it had decided to make as soon as practicable after the decision to sell was made and it did not give them any relevant information in writing. MSY CDC only sought to discuss the effect of the changes on Mr Yuen and Ms Jor some weeks later when contacted for information directly by Mr Yuen and Ms Jor. While it is not clear precisely when the decision to sell the business was made, it must have been on or before 18 November 2022 when MSY CDC began taking steps towards the transition from MSY CDC to Umart. This began with a stock take and store audit. It must also have involved discussions behind the scenes between the two companies, which led to Umart sending the email to MSY CDC employees about the impending business “partnership” and the subsequent email about “onboarding” them to the new entity. To the extent that efforts were made to communicate about the sale of business with employees, for the most part these were made by Umart rather than MSY CDC.
Reasonable redeployment
A dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or that of one of its associated entities. In this case, I do not find that it would have been reasonable to redeploy Mr Yuen and Ms Jor within MSY CDC to another position in circumstances where MSY CDC ceased trading upon the transfer of its business to Umart. While alternative offers of employment were made to Mr Yuen and Ms Jor by Umart, there is no evidence that Umart is an associated entity of MSY CDC.
Not a case of genuine redundancy
As MSY CDC did not comply with its obligations to consult with Mr Yuen and Ms Jor under the Award about the sale of its business, and the related significant effect on opportunities for employment within the business, the dismissals were not genuine redundancies for the purposes of the Act.
Were the dismissals harsh, unjust or unreasonable?
Whether a dismissal was harsh, unjust or unreasonable depends on an assessment of all the relevant facts and circumstances, including those set out in section 387 of the Act. Those are considered in turn.
Was there a valid reason for the dismissal related to capacity or conduct, and was it notified to Mr Yuen and Ms Jor?
I find that there was a valid reason for the dismissal of Mr Yuen and Ms Jor on the basis that MSY CDC no longer required their roles to be performed by anyone, for the reasons given above. The reason was only notified to Mr Yuen and Ms Jor on 7 and 8 December 2022 when they were told that their employment would terminate upon sale of the business with effect from 10 December 2022. While the reason given by MSY CDC was that they would be deemed to have ‘resigned’ on this date, this was a wrong statement of the legal position.
Was there an opportunity to respond to any capacity or conduct related reason?
The reasons for dismissal did not relate to the capacity or conduct of Mr Yuen and Ms Jor.
Was there any unreasonable refusal to allow a support person to be present to assist at any discussions relating to dismissal?
There was no unreasonable refusal to allow Mr Yuen and Ms Jor to have a support person assist in discussions about the dismissal.
Was Mr Yuen and Ms Jor warned about relevant unsatisfactory performance?
The dismissals of Mr Yuen and Ms Jor were not related to unsatisfactory performance.
Degree to which the size of the employer’s business and any absence of dedicated human resources management specialists or expertise in the business would be likely to impact on procedures followed in effecting the dismissal
MSY CDC is not a small business employer, but there is no evidence that it had relevant human resources or other specialist expertise to assist with the process of making an employee redundant. Its misunderstanding as to the legal position in relation to redundancy suggests that either it did not have access to, or did not seek, relevant advice and support in connection with the transfer of business. This likely contributed to obvious deficiencies in the process adopted to make Mr Yuen and Ms Jor redundant, including the almost entire absence of any consultation by MSY CDC about the decision to sell its business and the likely effect of this decision on employees.
Other relevant matters
Mr Yuen and Ms Jor were not given notice of termination and Mr Yuen was not paid redundancy pay. While underpayment claims are beyond the scope of the unfair dismissal jurisdiction, failure to provide termination-related employment entitlements on termination in accordance with the Act is relevant to the fairness or otherwise of the dismissals.
Conclusion on the merits
I find that Mr Yuen and Ms Jor were unfairly dismissed. While there was a valid reason for dismissal, the dismissals were unjust because of the failure to recognise and provide the entitlement to notice of termination (and in relation to Mr Yuen, redundancy pay). The dismissals were also unreasonable because of the failure to engage in meaningful consultation with Mr Yuen and Ms Jor about the effect of the sale of the business on their employment. I cannot exclude the possibility that suitable alternative employment would have been accepted by Mr Yuen and Ms Jor had their concerns been addressed by MSY CDC in an open and timely way.
Compensation
Reinstatement is not an appropriate remedy in this case because MSY CDC is not currently trading. Compensation is the appropriate remedy for both Mr Yuen and Ms Jor.
Section 392(2) of the Act deals with how compensation is to be assessed in connection with an unfair dismissal. The established methodology is elaborated on in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc.[3]
Viability (s.392(2)(a))
There is no evidence that an order for compensation will materially affect the viability of MSY CDC. While it has ceased trading, MSY CDC appears to have access to funds to pay at least the employment entitlements of Mr Yuen and Ms Jor. No reduction in the amount of compensation is made because of any effect on the viability of MSY CDC.
Remuneration Mr Yuen and Ms Jor would have received, or would have been likely to receive, if they had not been dismissed (s.392(2)(c))
It is unlikely that Mr Yuen and Ms Jor would have remained in employment with MSY CDC for any longer than they did, as their dismissals coincided with the transfer of business from MSY CDC to Umart. The only additional remuneration they would have received but for their dismissals was payment instead of notice of termination. While Mr Yuen is separately entitled to redundancy pay, that is beyond the scope of this decision. Ms Jor has no entitlement to redundancy pay because her period of employment was less than 12 months.
Mr Yuen’s fortnightly pay was $1,857.00 gross. Ms Jor’s fortnightly pay was $1,753.50 gross. I find that Mr Yuen would have earned $3,077.97 gross (the equivalent of 3 week’s pay plus superannuation) had he not been dismissed without notice. Ms Jor would have earned $968.81 gross (the equivalent of 1 week’s pay plus superannuation).
Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f))
Mr Yuen and Ms Jor have not earned any remuneration in the period since dismissal.
Length of service (s.392(2)(b))
Mr Yuen’s period of service was more than 3 years, while Ms Jor’s period of service was slightly less than one year. No adjustment is made in relation to the assessment of compensation on this account.
Mitigation efforts (s.392(2)(d))
Mr Yuen and Ms Jor were both offered alternative employment with Umart, on terms and conditions that were substantially similar to their terms and conditions of employment with MSY CDC. I accept that in some respects the proposed terms and conditions of employment were less beneficial and this is why Mr Yuen and Ms Jor decided not to accept the offers. I do not accept the evidence of Mr Yiap that casual employment was also offered to Mr Yuen and Ms Jor by Umart, as the evidence is hearsay and is denied by Mr Yuen and Ms Jor.
Since the dismissal, Mr Yuen and Ms Jor have applied for 3-4 jobs without success. Mr Yuen has undertaken a short course of study in computer skills to improve his chances of finding another job. In the meantime, they are relying on their savings. On balance, no adjustment of the compensation amount will be made on this account.
Other matters (s.392(2)(g))
No adjustment of the amount of compensation is made for contingencies because of the known period since dismissal and the likelihood that little will change in the circumstances of Mr Yuen and Ms Jor between the date of hearing and decision.
Misconduct (s.392(3))
There is no evidence that misconduct was a contributing factor to the dismissal. No reduction in the amount of compensation is appropriate under section 392 of the Act.
Shock, Distress (s.392(4))
The amount of compensation does not include a component for shock, humiliation or distress.
Compensation cap (s.392(5)&(6))
The amounts of $3,077.97 gross and $968.81 gross are less than the compensation cap of 26 weeks’ pay in each case. No further adjustment of the amount is necessary.
Instalments (s.393)
No application was made by MSY CDC to pay any compensation awarded by instalments, and no such order will be made.
Conclusion on remedy
In my view, the compensation amounts of $3,077.97 gross for Mr Yuen and $968.81 gross for Ms Jor are neither excessive nor inadequate in the circumstances of this case.
For the reasons set out above, I am satisfied that a remedy of compensation in the respective amounts of $3,077.97 gross and $968.81 gross is appropriate in the circumstances of these cases. Orders [PR761056] and [PR761057] will issue to that effect.
COMMISSIONER
Appearances:
K Yuen and P Jor on their own behalf.
S Yiap for the respondent.
Hearing details:
2023.
Sydney (by video):
April 11.
[1] Yuen & Jor v MSY Computer Discount Centre Pty Ltd[2023] FWC 438.
[2] Fair Work Act 2009 (Cth), s.389(1)(b).
[3] [2013] FWCFB 431.
Printed by authority of the Commonwealth Government Printer
<PR761055>
0
2
0