Rajesh Dharanikota v AAA Filling and Food Pty Ltd

[2021] FWC 134

[2021] FWC 134

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Rajesh Dharanikota
v
AAA Filling And Food Pty Ltd
(U2020/12773)

COMMISSIONER YILMAZ MELBOURNE, 28 JANUARY 2021

Application for relief from unfair dismissal – minimum employment period – transfer of business.

[1] On 23 September 2020, Mr Rajesh Dharanikota made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging that he had been unfairly dismissed from his employment with AAA Filling and Food Pty Ltd (AAA). Mr Dharanikota was employed as a console operator at AAA, a Shell branded service station in Cohuna.

[2] AAA dispute that Mr Dharanikota’s application satisfies the requirement of minimum employment period. No other jurisdictional matters were raised pursuant to s.382 of the Fair Work Act 2009 (Cth) (the Act). Mr Dharanikota submits that he had satisfied the minimum employment period due to a transfer of business and that his prior service counts toward the minimum employment period. It is not in dispute that Mr Dharanikota’s employment was terminated on 4 September 2020, with the period of notice concluding on 15 September 2020.

[3] AAA submit the reason for the termination was that Mr Dharanikota asked for the termination of employment as AAA could not offer more than 16 hours per week and so that he could seek work with his prior employer in another town. Mr Dharanikota denies asking for his employment to be terminated. He submits his termination of employment occurred after he enquired why his hours of work were reduced.

[4] At the hearing, AAA called two witnesses:

•  Mr Jugraj Bhullar, Director; and

•  Mr Arun Sachdeva, Director.

[5] Mr Dharanikota gave witness evidence.

[6] The Respondent was granted leave to be legally represented by Mr Hargobind Singh Jholl.

[7] Employee Dismissal Claims represented Mr Dharanikota at the conciliation conference, but failed to attend the mention or arbitration, nor notified the Commission that it ceased to act for the Applicant. Consequently, the Applicant confirmed he would be self-represented after becoming aware that Employee Dismissal Claims required further payment in order for them to represent at the hearing.

Background

[8] Mr Dharanikota commenced employment with AAA on 28 May 2020 in the position of full-time console operator. AAA took ownership of the Shell branded site, and the staff employed by MG Group (Straya) Pty Ltd transferred their employment to AAA on 28 May 2020.

[9] Mr Dharanikota submits that he commenced employment with the previous owner of the business MG Group (Straya) Pty Ltd in August 2019. AAA submit there was no transfer of business and therefore no previous service with the former employer counted towards the minimum employment period.

[10] It is not in dispute that AAA is a small employer.

[11] After 1.5 months of employment with AAA, Mr Dharanikota was provided with a part-time letter of engagement. His hours of work on commencement with AAA continued for a few weeks at 38 hours, then dropped to 31.5 and 16 in the last two weeks of employment. Mr Dharanikota submits he did not accept the part-time offer of employment.

Submissions of the Applicant

[12] Mr Dharanikota gave witness evidence and submitted documentary evidence that he was offered full-time employment with AAA with continuing employment upon transfer of business. The email tendered which was written by Arun Sachdeva, Director stated:

“I’m writing in regards to the employee already working. I do recognising the service of current employees and will take them on the same hours what they are doing. As discussed the employee details are as follows:

1. Rajesh dharanikota

Full time

Total hours -38 week” 1

[13] Mr Dharanikota gave evidence that he enquired about his accrued entitlements after receipt of his first fortnightly pay, as the pay slip made no reference to entitlements transferred from his previous employer. 2 He stated that AAA advised that his previous employer was obligated to pay entitlements for his previous service.

[14] On 21 July 2020, Mr Dharanikota received by email a letter of engagement, backdated to 28 May 2020, that offered 16 hours per week part-time work. 3 The letter and its schedule confirms weekly pay, however, AAA paid fortnightly. Further, the letter makes reference to the relevant award, but does not name it, and states the engagement is part-time with 16 hours per week from 28 May 2020, yet Mr Dharanikota did not work 16 hours per week on commencement of employment. Mr Dharanikota objected to fortnightly pay and he submits his objection was ignored by AAA.4

[15] Mr Dharanikota queried the terms of the letter of engagement with a director and on 23 July 2020, Mr Bhullar responded that there was no difference to weekly or fortnightly pay and that even though the letter of engagement stated 16 hours, he would be offered more hours of work. 5

[16] Mr Dharanikota gave evidence that Mr Sachdeva, director contacted him via email as follows::

“On the following day July 24,2020 at 7.00pm I have received a call from Mr. Arun Sachdeva, he requested me and stated “ I will give you 16hrs on TFN and rest of the hours as cash payments because of my visa condition”. 6

[17] Mr Dharanikota submits he worked more than 16 hours per week:

“In the initial stages of my work with AAA filling and food pty ltd I used to get my full-time hours which were 38hrs/week until July 22,2020. After that, my hours got reduced to 31.5 hours/week without any prior notice.” 7

[18] On 27 August 2020 Mr Dharanikota received a JobKeeper nomination form. He responded to Mr Sachdeva that he was a temporary resident therefore was ineligible for JobKeeper.

[19] Mr Dharanikota in his witness statement refers to further correspondence on 4 September 2020, through WhatsApp about the shifts assigned to him, his displeasure at not being given morning shifts and reduction of working hours to 16 per week. Later, on the same day, a further message was received from Mr Sachdeva giving him 2 weeks’ notice of termination of employment. Copies of the messages were submitted in evidence. 8 While selective messages from Mr Sachdeva were deleted, the remaining WhatsApp messages show that Mr Dharanikota queried his hours and shifts immediately before his termination of employment on 4 September 2020.9

Submissions of the Respondent

[20] AAA submit that the directors took over the business commencing from 28 May 2020. It is further submitted that there was an understanding with Mr Dharanikota that he was employed on a part-time basis and that he would initially work 38 hours until the directors (who were new to the business) became familiar with the business.

[21] AAA submit that Mr Dharanikota worked variable hours at the initiative of AAA, 10 and at the hourly rate of $21.54.

[22] AAA submit that Mr Dharanikota approached Mr Sachdeva after his hours of work were reduced to 31.5 hours per week on 2 August 2020, where he was informed that “the business was slow” and the Company directors had to cover some shifts to keep the business afloat. It is submitted that Mr Dharanikota responded that he would seek further work from his prior employer who was operating a Caltex in Warracknabeal 11.

[23] AAA submit that Mr Dharanikota asked for his employment to be terminated and in September when business was impacted by COVID-19, it terminated his employment. 12 On 4 September 2020, AAA gave two weeks’ notice at 16 hours per week. It submits that Mr Dharanikota responded that he did not need to work the 16 hours as he had already obtained full-time work with his previous employer.13

[24] AAA provided no evidence to support their submissions other than witness evidence from the two directors. The directors gave conflicting evidence. Mr Bhullar submitted that Mr Dharanikota worked 16 hours per week as a part-time employee, while Mr Sachdeva submitted that Mr Dharanikota worked different hours per week as required by the business. Neither director provided evidence in relation to their jurisdictional objection concerning minimum employment period. There was no clear response to my questions regarding transmission of business (transfer) and potential continuity of employment, nor was any evidence tendered in support of submissions that there was no transfer of business.

[25] AAA did not challenge the evidence tendered by Mr Dharanikota.

Had Mr Dharanikota served the minimum employment period?

[26] Mr Dharanikota submits that he had served the minimum employment period because he commenced with the previous owner of the business in August 2019. Being a small business the minimum employment period is 12 months and therefore when his employment was terminated, Mr Dharanikota had served more than 12 months, provided that there is a connection between the old and new employer for the purposes of s.311 of the Act.

[27] Section 311 (1) of the Act provides:

311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer ) to another employer (the new employer ) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work ) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c) that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d) that relate to, or are used in connection with, the transferring work.

[28] Mr Dharanikota’s employment with his old employer was terminated and he commenced working in the same position of console operator with AAA immediately following the transfer of the business. The operation of the business was uninterupted by the transfer of ownership. There is no evidence to the contrary that assets were transferred relating to the work (including console, pumps, driveway, price boards and stock) and the site continued to trade as a Shell branded site. Witness evidence and text messages confirm the operation and work was substantially the same. The directors submit they were new to the business and relied on Mr Dharanikota to work full-time while they familiarised themselves with the business.

[29] Correspondence was sent from one of the AAA directors to the old employer and the two employees affected by the sale of the business, advising that employees would transfer with recognition of prior service. There was no evidence that AAA informed employees in writing prior to their commencement that the period of service with the old employer would not be recognised.

[30] A period of continuous service by the employee with the old employer counts towards the minimum employment period where the employee is a transferring employee. 14 The Respondent’s outline of argument: objections, provides no evidence of any interruptions to Mr Dharanikota’s service or any evidence in relation to the transfer of business that challenges the period of continuous employment.15 Therefore I find there is no evidence in support of the objection to jurisdiction on the basis of failure to comply with the minimum employment period as contended by AAA.

[31] Having considered each of the initial matters, I am required to consider the merits of the Applicant’s application.

Was the dismissal harsh, unjust or unreasonable?

[32] Section 387 of the Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, I 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 Commission considers relevant.

[33] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me. 16

Consideration

Was there a valid reason for the dismissal related to capacity or conduct?

[34] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well-founded.” 17 Further it is the role of the Commission to consider the employer’s reasoning to assess whether that reasoning is valid.18

[35] I find that AAA’s reason for termination of employment is not sound and defensible. The reason for the termination of employment given by AAA was that Mr Dharanikota asked to be terminated because it could not offer him the hours of work he wanted due to COVID-19. Mr Dharanikota challenged the submission that he asked to be terminated. Having had the benefit of witness evidence, I prefer the evidence of Mr Dharanikota that he did not ask to be terminated.

[36] Further I note the evidence of the messages between Mr Dharanikota and Mr Sachdeva relating to hours of work and rosters. On assessment of those messages, the termination of employment on the same day as Mr Dharanikota queried his reduced hours raises sufficient concern that there was a connection between the queries and the termination of employment. Even with select deleted WhatsApp messages from Mr Sachdeva, the evidence does not support the reasons given by AAA, rather the remaining messages support the contention as advanced by Mr Dharanikota, that is, that his employment was terminated after he enquired about his hours of work.

[37] I am satisfied that AAA did not have a sound, defensible and well-founded reason to dismiss Mr Dharanikota. I find this consideration does not weigh in AAA’s favour.

Was Mr Dharanikota notified of the valid reason?

[38] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment, 19 and in explicit20 and plain and clear terms.21

[39] I am satisfied that Mr Dharanikota was not notified of the reason for his dismissal prior to the termination of his employment. The termination of employment occurred via email on 4 September 2020 at 5.35pm, after an email at 4.26pm on the same day asking Mr Dharanikota how he would like to receive his pay slips in the future. The earlier email from AAA at 4.18pm responds to Mr Dharanikota’s query why his hours had been reduced to 16 per week that he sent at 2.31pm of the same day. The WhatsApp messages confirm that Mr Dharankota queried the reduced hours on 1 September after having worked 75 hours over the previous two weeks. Most messages sent from Mr Sachdeva from 1 to 4 September 2020 were deleted.

Was he given an opportunity to respond to any valid reason related to his capacity or conduct?

[40] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. AAA say Mr Dharanikota was not dismissed due to his capacity or conduct. Nevertheless, Mr Dharanikota was not provided with an opportunity to respond to the reason, and he further contends the real reason for his termination of employment was due to his queries regarding his rosters and hours of work. Having considered the reason and evidence relating to process, AAA’s process did not afford procedural fairness to Mr Dharanikota.

Did AAA unreasonably refuse to allow the Applicant to have a support person present?

[41] Mr Dharanikota was not denied the opportunity to bring along a support person, but he was not given any advance notice of his termination of employment to consider the relevance of a support person, and further the termination of employment occurred via email. Termination by email is always problematic for employers and often adds to the unfairness in the process. In this situation, the flaws in the process denied any opportunity for a support person had Mr Dharanikota considered it a relevant consideration.

Was he warned about unsatisfactory performance before the dismissal?

[42] AAA say Mr Dharanikota was not dismissed for performance.

[43] As already noted, Mr Dharanikota was involved in the lengthy and detailed process before the decision was made.

To what degree would the size of the enterprise and degree of human resource expertise be likely to impact on the procedures followed in effecting the dismissal?

[44] AAA is a small employer and is new to the business. Its lack of awareness of its basic employment obligations is concerning. The directors were unaware of their modern award obligations and this was demonstrated by their change to fortnightly pays without agreement with staff, the unilateral change to Mr Dharanikota’s hours of work and roster even though they maintained he was a part-time employee, the apparent failure to pay overtime or relevant award penalties and further the failure to comprehend the effects of a transfer of business on their obligations and employee entitlements. While the Commission is considerate of the impact of lack of resourcing for small employers, in this situation, the lack of awareness of its most basic legal obligations is of significant concern.

What other matters are relevant?

[45] Section 387(h) of the Act requires the Commission to take into account any other matters that the Commission considers relevant.

[46] Mr Dharanikota raised two issues for consideration, one being alleged underpayments and second his preference to not have termination of employment on his record. Neither of those two matters can be resolved with this decision. The termination of employment was at the initiative of AAA and that cannot be changed. Further Mr Dharanikota’s queries concerning alleged underpayment is not a matter for this Commission. Mr Dharanikota is not prevented from seeking redress through the Fair Work Ombudsman or the courts in relation to alleged underpayments.

[47] During the course of proceedings there was uncontested evidence that additional hours worked in excess of those agreed were paid in cash.

[48] AAA say that COVID-19 impacted their business substantially which was the reason for reducing Mr Dharanikota’s hours of work. However, no evidence of impact was presented for my consideration concerning remedy. I do note that AAA made brief submissions on remedy and calculated that the period between termination of employment to the hearing date, being a period of 13 weeks, Mr Dharanikota would have earned $4,480.32 gross. However, this was calculated on the assumption that Mr Dharanikota’s contract of employment provided for 16 hours per week. The last WhatsApp message regarding the roster from Mr Sachdeva referred to work on Monday 6.00am to 2.00pm and Tuesday 1.00pm to 9.30pm. The Tuesday shift would have attracted an afternoon shift loading, and the Monday shift most liley would have attracted overtime penalties. The submission by AAA regarding loss of earnings does not take into account any shift or overtime penalties.

Harsh, unjust or unreasonable?

[49] I have considered each matter specified in section 387 of the Act and in reaching my determination I have considered whether the dismissal was harsh, unjust or unreasonable. I have weighed up all of the circumstances of the case.

[50] I am satisfied that all of the circumstances weigh in favour of finding that the dismissal was harsh, unjust or unreasonable.

Remedy

[51] Mr Dharanikota had initially sought reinstatement and compensation for loss of wages, but having participated in a conciliation conference, a member assisted conciliation and an arbitration, he now only seeks compensation. I do not consider reinstatement a practicable remedy. In this matter, I consider that an order for compensation would be appropriate.

[52] In considering compensation I am required by Section 392(2) of the Act to consider the following:

“(2) In determining an amount for the purposes of an order under subsection (1), 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 FWC considers relevant.”

[53] No evidence was tendered by AAA regarding the impact of any order on the viability of the enterprise, but it did provide brief submissions that an order for compensation would affect its financial viability to continue to operate. I have taken into account the size of the enterprise and the stated impact of the COVID-19 pandemic on the business.

[54] Mr Dharanikota was an employee with a period of continuous service of some 13 months and his hours of work were reduced from 38 per week by AAA. However, when AAA reduced hours from 38 to 31.5 and Mr Dharanikota was advised that the reason was the impact of COVID-19 on trade, Mr Dharanokota accepted the explanation. The relevant extract of the WhatsApp messages is:

2/8/20, 4:17 pm - Arun Shell: Hell raj your shifts

2/8/20, 4:17 pm - Arun Shell: Monday-6 to 9:30

2/8/20, 4:17 pm - Arun Shell: Tuesday 6 to 2

2/8/20, 4:17 pm - Arun Shell: Wednesday 6 to 2

2/8/20, 4:29 pm - Rajesh Dharanikota: Bro 31.5hrs? Any reason bro?

2/8/20, 6:36 pm - Arun Shell: Beacuse this time is very quite for our store last week not good sale for company thatâ

€™s way company decided directors covering some shifts sorry for that but hope you understand thanks

2/8/20, 6:37 pm - Rajesh Dharanikota: Yup ok 22

[55] While Mr Dharanikota accepted the change to hours of work, I also accept the evidence that the parties agreed to payment of hours worked more than 31.5 would be paid as cash.

[56] Had the business not been affected by the pandemic and Mr Dharanikota not queried the changes to his roster and entitlements, he would have continued in employment for some time. AAA estimated the loss of wages over a 13 week period, which I adopt as the reasonable period that Mr Dharanikota would have continued in employment had he not been dismissed. Taking the same period of 13 weeks from dismissal to hearing date, Mr Dharanikota would have earned $8,820.63 gross, based on 31.5 hours work and not $4,480.32 as submitted by AAA.

[57] Mr Dharanikota gave evidence that he had not found alternative employment, while AAA contested this evidence. No evidence of alternative work was presented. Further, Mr Dharanikota provided no evidence of any effort to mitigate the loss. Consequently, I deduct 3 weeks in consideration. This leaves a figure of $6,785.10 gross.

[58] I make no deduction for misconduct as this consideration is not relevant.

[59] I have calculated a compensation figure of $6,785.10 gross, based on his weekly hours of 31.5 hours worked per week. This figure is to be paid to Mr Dharanikota within 7 days less applicable tax.

[60] Orders will be issued concurrently with this decision.

Conclusion

[61] Having considered all the relevant factors, I do consider the termination unfair and have considered the issue of remedy.

[62] For these reasons, I will issue an order separate to this decision.

COMMISSIONER

Appearances:

Mr R. Dharanikota for himself

Mr H.S Jholl for the Respondent

Hearing details:

2020
Melbourne (via Microsoft Teams)
18 December

Printed by authority of the Commonwealth Government Printer

<PR726118>

 1   Exhibit A2 - Staff transfer email dated 20 May 2020.

 2   Exhibit A1, Applicant’s witness statement and witness evidence.

 3   Exhibit A3, cover email and contract of employment.

 4   Exhibit A1, Applicant’s witness statement.

 5   Ibid.

 6   Ibid.

 7   Ibid.

 8   Exhibit A7, A8 and A9.

 9   Exhibit A8.

 10   Respondent’s outline of argument at 3c.

 11   Ibid.

 12   Ibid.

 13   Ibid.

 14 Ss. 311 and 22 of the Fair Work Act 2009.

 15   Respondent’s outline of argument: objections at section 2.

 16   Sayer v Melsteel Pty Ltd (2011) FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].

 17   Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371, 373.

 18   Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.

 19   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

 20   Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).

 21   Ibid.

 22   Exhibit A5.