Rudina Pekaj v Aamg Cleaning Group Pty Ltd

[2018] FWC 3401

[2018] FWC 3401

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Rudina Pekaj
v
AAMG Cleaning Group Pty Ltd
(U2018/1373)

COMMISSIONER HAMPTON SYDNEY, 6 JULY 2018

Application for relief from unfair dismissal – cleaner – previously found to be employee rather than subcontractor – whether dismissal unfair – alleged deficiencies in work performance and standard - alleged failure to give proper notice of absences – alleged failure to respond to request for the return of work keys - whether the concerns were raised with the applicant in a procedurally fair manner – work performance concerns demonstrated – valid reason for termination found – fair process for dismissal not followed – dismissal determined and conveyed in a cursory manner – dismissal unreasonable and accordingly unfair – compensation awarded – payment by instalments allowed.

1. What this decision is about

[1] Ms Rudina Pekaj has made an application under s.394 of the Fair Work Act 2009 (the FW Act) seeking a remedy for an alleged unfair dismissal. AAMG Cleaning Group Pty Ltd (AAMG) had engaged Ms Pekaj as a Commercial Cleaner between 7 April 2015 and 30 January 2018.

[2] AAMG initially raised a jurisdictional objection to the application and contended that Ms Pekaj was not an employee, but rather, engaged as a subcontractor.

[3] I conducted a Determinative Conference in relation to the jurisdictional objection and a decision was issued in respect of that matter on 14 May 2018 1 (the jurisdictional decision). I found that Ms Pekaj was an employee and as a result was eligible to bring an unfair dismissal application. This decision should also be read in conjunction with the jurisdictional decision.

[4] Following a Directions Conference on 22 May 2018, I have now conducted a further Determinative Conference to enable a final determination of the s.394 application to be made. This decision deals with the remaining aspects of the matter; being, whether Ms Pekaj’s dismissal was unfair, and if so, what, if any, remedy should be ordered by the Commission.

2. The cases advanced by the parties

[5] Ms Pekaj was supported by her partner, Mr Benfield, and each gave evidence. Ms Pekaj participated with the assistance of an Albanian Interpreter.

[6] Ms Pekaj contends that her dismissal via text message on 30 January 2018 was unfair on various grounds. Ms Pekaj submits that she had not received any previous written or other warnings about any misconduct, or unsatisfactory performance, and that she was dismissed without proper cause. Ms Pekaj also contends that she was subject to abuse and harassment during her employment and this led her to take two days of “personal leave” that may have contributed to her termination.

[7] Ms Pekaj further contends that the requests for the personal leave days were made within a reasonable timeframe and she was contacted to return some shopping centre keys whilst on that leave on 29 January 2018 and it was not reasonable to be interrupted in that manner.

[8] Ms Pekaj seeks compensation for the loss of wages from her dismissal on 30 January 2018 onwards, as she is yet to find alternate employment (other than a brief period of part-time work). Ms Pekaj also contends that she has been taking steps to reduce her losses by participating in active job seeking as required by Centrelink.

[9] Ms Pekaj does not wish to return to employment with AAMG due to what she describes as the treatment of her by its Managing Director.

[10] AAMG was represented (with permission and without objection) by Ms Baressi from Advantage Business Centre, the respondent’s accounting services provider. Ms Aurica Grecu, AAMG’s Managing Director, and Ms Ana-Maria Grecu, the daughter of the Managing Director who worked directly with Ms Pekaj from time to time, gave evidence in support of its position.

[11] AAMG contends that Ms Pekaj was not unfairly dismissed. It further contends that the reason for dismissal related to issues regarding the standard of Ms Pekaj’s cleaning work and complaints that were received from the clients in the shopping centre where the applicant performed cleaning duties. It submits that it had on numerous occasions advised Ms Pekaj of these deficiencies and had given her many opportunities to improve. It further contends that Ms Pekaj’s failure to give proper notice of her intended absences and to return the shopping centre keys to the business, when reasonably requested to enable other cleaners to lock up that centre, also provided justification to terminate her employment.

[12] AAMG denies the allegations of harassment, or that the termination was related to those allegations. AAMG further submits that it considered at the time that Ms Pekaj was engaged as a subcontractor and acted consistently with that understanding. However, it acknowledged that now that the Commission had determined that the relationship was employment, the proper process for a dismissal of an employee may not have necessarily been followed. Despite that acknowledgement, AAMG contends that it has acted fairly. I note that notwithstanding its views of the applicant, AAMG indicated in written submissions it may be willing to offer Ms Pekaj a term of employment with them for one to two hours of work per day. During proceedings, AAMG confirmed, in effect, that this was as a result of the former friendships that had existed rather than any form of concession.

[13] AAMG opposed any order for compensation and also contended that any such order could impact upon the viability of its business. By leave of the Commission, it supplied some supplementary material concerning its financial status after the Determinative Conference and both parties were given an opportunity to make supplementary submissions about that aspect.

3. Observations on the evidence

[14] In addition to the originating application, response documents and the material before the Commission as a result of the jurisdictional proceedings, the following additional written material is now before the Commission:

•  Written submissions of Ms Pekaj including attachments:

•  Various text messages (dated between 29 January 2018 and 19 February 2018);

•  Email from Mr Benfield dated 27 January 2018;

•  Job plan for the period between 7 May 2018 and 18 May 2018; and

•  Job plan for the period between 31 May 2018 and 30 November 2018. 2

•  Written submissions of AAMG including attachments:

•  Written correspondence from Centre Management dated 6 June 2018;

•  Written correspondence from Port Mall Newsagency dated 24 May 2018; and

•  Various text messages (dated 29 January 2018). 3

[15] As with the jurisdictional proceedings, to some extent, each of the witnesses provided opinions about the implications of their competing contentions. These are matters for the Commission itself to determine. In terms of the facts of the matter, there was considerable conflict between the evidence of Ms Pekaj on the one hand and Ms Aurica Grecu and Ms Ana-Maria Grecu on the other.

[16] In assessing the witness evidence, I make some allowance for the fact that for Ms Pekaj, English is not her first language, and it is reasonably apparent to me that she has limited ability to read and understand documents written in English and relies heavily upon others in that respect. Her oral comprehension is more advanced, and for the most part she was able to comfortably participate in the Determinative Conference without the direct assistance of an Interpreter. I note that at critical points in the conference where the detail of the disputed evidence was important, Ms Pekaj was (appropriately) directly assisted by the Interpreter.

[17] After taking the above factors into account, I was still left with the impression that Ms Pekaj was not always being completely open with the Commission and I have some continuing reservations about aspects of her evidence.

[18] Mr Benfield’s evidence was largely indirect (hearsay in nature) and related to what he had been informed by Ms Pekaj had occurred in the workplace. As a result, I have placed very little weight upon those aspects of his evidence.

[19] I found that Ms Aurica Grecu’s evidence at this Determinative Conference was influenced to a degree by her resentment of the application and what she considered to be the inappropriateness of this matter given her previous support of, and family’s friendship with, Ms Pekaj. This led to some exaggeration, but subject to that caveat, I do consider that in terms of the matters that Ms Aurica Grecu directly witnessed or participated in, she generally gave her evidence openly.

[20] I found that the evidence of Ms Ana-Maria Grecu was open and honest and I accept it without reservation.

[21] Where Ms Ana-Maria Grecu’s evidence of direct facts conflicts with that of Ms Pekaj, I generally prefer the evidence of Ms Ana-Maria Grecu.

[22] AAMG’s evidence also included some letters, confirming complaints about Ms Pekaj’s work, apparently written by shop proprietors operating in the shopping centre where Ms Pekaj performed cleaning duties. The letters appear to be genuine however, their authors did not give evidence and the views could not be tested. As a result, little weight can be afforded to that material. In any event, Ms Aurica Grecu and Ms Ana-Maria Grecu were able to give direct evidence about the applicant’s cleaning work and issues that arose in the workplace. For reasons outlined earlier, I have generally accepted that evidence.

[23] As with the jurisdictional proceedings, despite the best endeavours of the Commission, it is reasonably apparent that not all of the material and potential witness evidence that might shed some light upon the outstanding issues have been provided to the Commission. However, both parties have had ample opportunity to provide all of that material, including through a comprehensive directions conference and written directions, and via the subsequent supply of information about the statutory considerations that might be applied to the present task.

4. General findings of fact

[24] I will deal with some additional findings as they relate to the statutory considerations in due course. However, some broad context for those considerations is necessary based upon the evidence that is before the Commission.

[25] Some of this context is set out in the jurisdictional decision and I do not repeat all of that material here.

[26] AAMG conducts a commercial cleaning business, mainly servicing clients in retail shopping centres. It engages something in the order of 10 to 12 cleaners and generally treats them as subcontractors.

[27] Ms Pekaj has worked as a Cleaner originally in Melbourne and more recently in Adelaide. Initially, she worked in the business of a former boyfriend. In due course, when seeking assistance to gain employment in the Industry, Ms Pekaj obtained an ABN and has worked in the commercial cleaning industry in various capacities.

[28] Ms Pekaj worked at a number of locations for AAMG and generally worked set hours. However, there were variations in hours due to a range of factors including where Ms Pekaj was not available to work and where she completed extra shifts to fill in for other cleaners. Ms Pekaj was paid for each hour worked. The rate at the end of the relationship was $23.00 per hour and the payment made each month apparently reflected the different hours worked in that month.

[29] At the outset of the relationship, the hours were generally one and a half hours per working day. This increased with subsequent work allocations and by late 2017 Ms Pekaj started to work Monday to Friday from 10 am to 6 pm and on Saturdays from 10 am to 5 pm at a major shopping centre.⁴ The applicant generally had Sundays off, but had on one occasion worked every day for a period of two weeks to cover other cleaner’s shifts when they did not attend for work.⁵ The shifts were organised by Ms Ana-Maria Grecu who often also worked alongside Ms Pekaj and, in effect, acted as her Supervisor. This work was mainly performed at a suburban shopping centre.

[30] It is also the case that prior to the events that immediately led to this application, Ms Pekaj and Ms Ana-Maria Grecu were friends and Ms Pekaj lived with the Grecu’s for a period. I note this impacted upon the degree of formality in the working relationships and many of the interactions which occurred.

[31] I find that AAMG had legitimate concerns about Ms Pekaj’s work performance from time to time. This included concerns that some areas were not being cleaned and that some areas were not being cleaned properly and the awareness of this arose in part from the complaints received from the shopping centre or individual tenants. I also find that on numerous occasions, Ms Aurica Grecu raised those concerns with Ms Pekaj and demonstrated the required cleaning standards. This was all done informally and I find that Ms Aurica Grecu’s manner when doing so was direct and from time to time this caused Ms Pekaj to become distressed. I also find that Ms Ana-Maria Grecu provided personal comfort to Ms Pekaj, including by suggesting that she should ignore Ms Aurica Grecu’s manner, with commentary along the lines of “Mum was just angry”. However, I do not accept that Ms Ana-Maria Grecu told, or implied, that Ms Pekaj should ignore the substance of the concerns or the indications that she (the applicant) must improve.

[32] In the jurisdictional decision, I found, in effect, that Ms Pekaj was engaged as a casual employee.

[33] At the time of the events leading to the dismissal, AAMG (wrongly) considered that Ms Pekaj was a subcontractor and at least some of their dealings with the applicant reflected that understanding. AAMG generally expected its cleaners to provide sufficient notice of intended absences to enable it to arrange a replacement cleaner.

[34] The last day Ms Pekaj attended the workplace to perform her duties was Saturday 27 January 2018. Ms Pekaj left the workplace on that day following what she described as harassment from Ms Aurica Grecu. The evidence suggests that this was another example of Ms Aurica Grecu raising concerns about cleaning standards and related issues with Ms Pekaj. Later that day, Mr Benfield wrote an email complaint to AAMG in relation to the “abuse” allegedly suffered by Ms Pekaj. No response appears to have been provided to this complaint.

[35] The following day, Ms Pekaj contacted Ms Aurica Grecu by text message to request a personal leave day for Monday 29 January 2018. Ms Aurica Grecu responded that this was “no problem” but asked that Ms Pekaj leave the keys for the shopping centre with the morning Cleaner.

[36] Ms Pekaj did not respond to this request which prompted Ms Aurica Grecu sending a further text message on Monday asking that the keys be delivered to her, or that Ms Pekaj make contact with her, before 5 pm that day.

[37] Ms Pekaj did not return the keys and failed to respond to Ms Aurica Grecu before 5 pm. Later that night, Ms Pekaj sent a text message also requesting to take 30 January 2018 as a personal leave day. In response to this request, Ms Aurica Grecu sent a text message to Ms Pekaj advising that the company did not currently require her services and that her “subcontract” would end on 30 January 2018, but that if a position arose in the future she would contact her.

[38] In relation to the provision of the keys, it is clear that it should have been apparent to Ms Pekaj that holding the keys during her “leave” would be very inconvenient to AAMG. The employer only held two sets of keys and had two cleaning shifts working at different times of the day; with the early shift required to access the shopping centre with the keys and the later shift, required to secure the centre. As a result, there was no convenient handover of keys and a set was required by each shift. Ms Pekaj was aware that when she was to have a day off (and was not working with Ms Ana-Maria Grecu at the end of the shift prior to that day off – where the keys could be left with her) some arrangement for the keys to be provided to AAMG was necessary. In this case, Ms Pekaj ignored the request to provide the keys and did not respond at all. Whilst this occurred during her absence, in the particular circumstances evident here, the request from AAMG was not unreasonable. That is, although not working on the days in question, there was no reliable evidence that Ms Pekaj was unable to at least acknowledge the request or that doing so would have created any unreasonable burden upon her. Rather, Ms Pekaj simply ignored it until after her dismissal.

[39] AAMG did not raise its concerns about the alleged lack of notice of the leave or the non-cooperation with the return of the keys with Ms Pekaj as a potential basis to end the relationship prior to the dismissal and no meeting or process was conducted to permit the applicant to respond to any of the concerns relied upon at the time of dismissal.

[40] Ms Pekaj was dismissed without notice or pay in lieu thereof.

5. Was Ms Pekaj’s dismissal unfair within the meaning of the FW Act?

[41] Section 385 of the FW Act provides as follows:

“385 What is an unfair dismissal

(1) A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.”

[42] AAMG accepts that it dismissed Ms Pekaj. Although it may be a small business, 6 AAMG did not contend that the dismissal was consistent with the Small Business Fair Dismissal Code7 or that the termination was a genuine redundancy within the meaning of the FW Act. On that basis, Ms Pekaj’s dismissal will be unfair if it was harsh, unjust or unreasonable.

[43] The FW Act relevantly provides as follows:

“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 is 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.”

[44] It is clear that s.387 of the FW Act contemplates that an overall assessment as to the nature of the dismissal must be made by the Commission. In so doing, the FW Act sets out a number of considerations that must, where relevant, be weighed up in totality.

[45] It is convenient therefore to use the various provisions of s.387, with reference to the relevant circumstances, to outline my consideration of the matter.

Section 387(a) – whether there was a valid reason for the dismissal related to Ms Pekaj’s capacity or conduct (including its effect on the safety and welfare of other employees).

[46] Valid in this context is generally considered to be whether there was a sound, defensible or well-founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where each has rights, privileges, duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, common sense way to ensure that the employer and employee are each treated fairly.⁸

[47] It is also clear from the authorities that the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts before the Commission. That is, it is not enough for an employer to rely upon its reasonable belief that the termination was for a valid reason.⁹

[48] I have found that AAMG had legitimate concerns about Ms Pekaj’s work performance and these persisted over a long period of time. I also accept that there were complaints from clients arising from the standard of cleaning at the major shopping centre that could have led to concerns about the continuation of the major cleaning contract concerned. I also find on balance that AAMG’s concerns about Ms Pekaj’s work performance had increased in more recent times.

[49] In relation to the absences, given that Ms Pekaj was, in effect, a causal employee, she was entitled to be absent from work. Further, even noting the notional contractual status at the time, the concerns about the length of the notice were not valid given that the fact that the actual notification requirements, which purportedly applied to the contract Cleaners, were not formalised with the applicant. 10 I am satisfied that Ms Pekaj was not dismissed on the basis of the absences themselves. In any event, those absences, and the alleged lack of proper notice, do not form part of any valid reason for dismissal in this matter.

[50] In relation to the keys, Ms Pekaj’s lack of responsiveness to the employer’s request for these to be provided and the failure to at least make some contact in response was not appropriate in all of the circumstances evident here.

[51] When all factors are taken into account I consider that, largely based upon the legitimate work performance concerns, there was a valid reason for the dismissal of Ms Pekaj.

Section 387(b) – whether Ms Pekaj was notified of the reasons for dismissal

[52] This consideration requires the Commission to assess whether the applicant concerned was relevantly notified of the reasons leading to the dismissal before that decision was taken.¹¹

[53] There was informal discussion about the work performance concerns but there was no notification of the reasons for dismissal as contemplated by this provision. In particular, the issues associated with the absences and the keys were not notified to any time.

Section 387(c) – whether Ms Pekaj was given an opportunity to respond to any reason related to her capacity or conduct

[54] The process contemplated by the FW Act does not require any formality and is to be applied in a common sense way to ensure the employee has been treated fairly. This question becomes whether Ms Pekaj was aware of the precise nature of the employer’s concern about her conduct and had a reasonable opportunity to respond to these concerns.¹²

[55] Given that Ms Pekaj was not notified of the reasons for dismissal relating to her conduct as contemplated by s.387(b), and given all of the circumstances evident here, I am not satisfied that Ms Pekaj was given an opportunity to respond to any reason related to her capacity or conduct as contemplated by s.387(c) of the FW Act.

Section 387(d) – any unreasonable refusal by the respondent to allow Ms Pekaj a support person

[56] There were no meetings during which a request for a support person was made. Accordingly, this consideration is not relevant.

Section 387(e) – if the dismissal is related to unsatisfactory performance by Ms Pekaj – whether she has been warned about that unsatisfactory performance before the dismissal

[57] I do accept that Ms Pekaj was regularly informed about AAMG’s concerns about her work performance. This was not always undertaken in a constructive or appropriate manner but I do find that warnings of a sort were given.

[58] That is, as a result of the understanding about the nature of the relationship held by AMG at the time and the family friendships, these warnings were not provided with any formality or in a manner that one might expect with an employee.

Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

Section 387(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

[59] I will deal with these two considerations together.

[60] AAMG is a relatively small family-owned and conducted business and there were no dedicated human resource management specialists or expertise in the enterprise. This has impacted upon how the issues leading to the dismissal were handled in a number of ways.

[61] As a result, I have made a meaningful allowance for the circumstances of the employer when considering the manner and procedures adopted as part of the assessment of the overall fairness of the dismissal.

Section 387(h) - other matters considered to be relevant.

[62] Amongst other considerations, the Commission should consider the impact of the dismissal upon the applicant given all of the circumstances. This dismissal meant that Ms Pekaj lost her cleaning hours and related income.

[63] However, this loss and impact also needs to be considered in the context of the nature of the relationship. I have found that the employment was akin to casual work with some expectation of ongoing employment. Further, there were ongoing concerns about work performance and a decline in the working relationships, and this must also be taken into account.

Conclusions on merit

[64] As outlined earlier, the FW Act requires a global assessment having regard to the various relevant statutory considerations. In that context, procedural unfairness is an important consideration given the provisions of the FW Act but does not necessarily mean that the dismissal was unfair. This is reinforced by the objects relating to Part 3-2 Unfair Dismissal of the FW Act in s.381 which relevantly provides as follows:

“381 Object of the Part

… …

(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.

Note: The expression “fair go all round” was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.”

[65] As revealed in various decisions of the Commission (and the Court), each case must be considered in its own circumstances and it is appropriate, amongst other factors, to have regard to whether the procedural deficiencies made any difference to the fairness of the outcome.¹³ Further, for reasons outlined earlier, it is appropriate to take into account the nature of this relatively small business in assessing this matter.

[66] In this case, there was very little by way of procedural fairness. Although there was a valid reason for dismissal, Ms Pekaj did not have any opportunity to respond to some of the assumptions inherent in the decision to dismiss her. There was no meaningful discussion about some of those factors and in all of the circumstances including the consequences for Ms Pekaj, that omission in procedure was unfair. The cursory manner in which the decision to dismiss was made and communicated was also unreasonable.

[67] On balance, and given all of the statutory considerations, I am satisfied that the dismissal of Ms Pekaj was unreasonable. It was therefore unfair within the meaning of the FW Act.

6. Remedy

[68] Division 4 of Part 3-2 of the FW Act provides as follows:

Division 4—Remedies for unfair dismissal

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) the FWC may make the order only if the person has made an application under section 394.

(3) the FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

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), 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.

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. Disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”

[69] The prerequisites of ss.390(1) and (2) have been met in this case. Section 390 makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all of the circumstances. Ms Pekaj does not seek reinstatement and given all of the prevailing circumstances, and my findings more generally, I accept that reinstatement would be inappropriate.

[70] As a result, I need to consider whether compensation is appropriate, and if so, to what extent.

[71] A Full Bench in McCulloch v Calvary Health Care Adelaide¹⁴ (McCulloch) confirmed, in general terms, that the approach to the assessment of compensation as undertaken in cases such as Sprigg¹⁵ remains appropriate in that regard.

[72] Section 392(2) of the FW Act requires me to take into account all of the circumstances of the case including the factors that are listed in paragraphs (a) to (g). Without detracting from the overall assessment required by the FW Act,¹⁶ it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.

Section 392(2)(a) – The effect of the order on the viability of AAMG

[73] AAMG contended that any order for compensation would impact upon its viability. In support of that proposition, it provided some financial and business information in the form of statements from its Accountant, some extracts from its ledgers, an Australian Taxation Office (ATO) payments-by-instalment plan, and its taxation return for the year ending 30 June 2016. 17 No balance sheet or profit and loss statements were provided and this does limit the degree to which the detailed financial health of the business can be assessed. The material provided does detail a number of debts owed by AAMG in relation to its machinery and motor vehicles, as well as a debt owed to the ATO. There was also information provided which indicated the outstanding amounts owed (and more than 30 days overdue) to it from other companies for services rendered. The records also show that AAMG recorded a relatively moderate before tax profit for the 2016 financial year.

[74] Ms Pekaj contended, in effect, that the financial material was deficient and was not adequate to support the proposition that AAMG’s viability could be impacted by any compensation order.

[75] The concept of “viability” as used in this context requires, in effect, that the Commission take into account whether an order of compensation would alter the capacity for the respondent employer to continue trading in a viable manner. This is a reasonably high hurdle and something more than financial inconvenience or increased operating costs would be required for this consideration to lead to an adjustment of a compensation order otherwise arising from the other relevant statutory considerations. Evidence to support such a proposition is also required. 18

[76] In this case, although AAMG recorded a profit for the last financial year, this represents a small margin given the turnover and operating costs of the business. Further, the material indicates that Ms Grecu’s “salary” for conducting the business is to taken from the profit generated. AAMG has also provided details of its outstanding debt and amounts currently owed to it which, presumably as a result of earlier non-payment, has reduced cash flow for the business. The level of outstanding debts may not be unusual for a company of this nature, however the debt currently owed to the ATO does create an additional burden on cash flow. In relation to that debt, a monthly payment plan has been negotiated with the ATO.

[77] The extent of the compensation order that arises from the other statutory considerations is set out below. Based upon the limited material that is before the Commission, I am not satisfied that the proposed compensation order otherwise arising from these considerations will alter the viability of AAMG. That material also does not lead me to the view, when considered in the context of the other considerations and the circumstances of this case more generally, that an order for compensation would be inappropriate. However, the circumstances evident here do reveal a business where significant cash flow constraints exist and one where operating margins are relatively tight. This supports the notion that any order might be paid by instalments and I will return to this aspect shortly.

Section 392(2)(b) – The length of Ms Pekaj’s service with AAMG

[78] Ms Pekaj had approximately two years and 9 months service with AAMG. I have taken this factor into account.

Section 392(2)(c) – The remuneration Ms Pekaj would have received, or would have been likely to receive, if she had not been dismissed

[79] This involves in part a consideration of the likely duration of Ms Pekaj’s employment in the absence of what I have found to be an unfair dismissal. That is, the establishment of the anticipated period of employment.¹⁹

[80] Given my findings, it is evident that the proper course of action here would have been for AAMG to have put Ms Pekaj on notice that it was contemplating terminating her services in connection with her failure to return the keys, and the other factors leading to that consideration, including past work performance concerns, and given her an opportunity to respond and improve, before making an informed decision.

[81] In all of the evident circumstances it is reasonable to assess the compensation in this matter on the basis that the applicant would, on the balance of probabilities, have remained in employment for a further period of no more than three weeks. This projection is appropriate given the impact of the decline in the working relationship, the nature of the employment relationship as found by the Commission, and the context of what is a relatively small business. It is likely that the relationship would have ended with Ms Pekaj either being dismissed due to the ongoing performance concerns raised with her, or due to her unwillingness to continue as a result of the breakdown in the working relationships between her and AAMG.

[82] On the basis of the material provided to the Commission, Ms Pekaj was paid a rate of $23.00 per hour. Based upon her hours of work at the time of her dismissal this equates to a gross payment of $1,081 per week (rounded). Using that rate produces a lost remuneration figure of $3,243.

Section 392(2)(d) – The efforts of Ms Pekaj to mitigate the loss suffered by her because of the dismissal

[83] I accept that Ms Pekaj has made some efforts to mitigate her losses. Those efforts have been impacted by the applicant’s lack of a driver’s licence and the requirement in many cases for the capacity to attend various worksites as a Cleaner.

[84] Ms Pekaj is currently completing job seeking activities through a job provider established by Centrelink as a requirement of receiving her payments. This is supported by the evidence.

[85] The offer of work made by AAMG in its submissions (and subsequent rejection of that offer by Ms Pekaj) might be relevant in some circumstances, however given that I have determined that the relationship would have only remained for a further three weeks, the rejection of the recent offer should not reduce the amount of compensation.

[86] No discount to the amount of compensation is therefore warranted based upon this consideration.

Section 392(2)(e) – The amount of any remuneration earned by Ms Pekaj from employment or other work during the period between the dismissal and the making of the order for compensation

Section 392(2)(f) – The amount of any income reasonably likely to be so earned by Ms Pekaj during the period between the making of the order for compensation and the actual compensation

[87] Ms Pekaj has received approximately $900.00 from a brief period of part-time employment shortly after her dismissal. Apart from this income, Ms Pekaj has not received any other employment related income since her dismissal and was not in employment at the time of the hearing of this matter. 20

[88] The $900.00 is to be taken into account and deducted from the projected amount.

Section 392(2)(g) – Any other matter that the FWC considers relevant and the remaining statutory parameters

[89] There is no demonstrated misconduct that is appropriate to take into account as provided by s.392(3) of the FW Act.

[90] In accordance with s.392(4) of the FW Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

[91] As all of the projected period of employment, and the compensation contemplating losses in that context, has already occurred, I have made no specific allowance for future contingencies.

[92] The maximum compensation limit in this case is the lesser of 26 weeks remuneration ($28,106) or the statutory cap of $71,000.²¹ The amount of compensation that arises from my findings is less than that limit.

[93] The figures used for the calculation are expressed in gross terms and appropriate taxation is to be deducted from the final amount of compensation.

[94] The compensation amount confirmed below is also appropriate having regard to all of the particular circumstances of this matter and the Commission’s statutory charter to ensure that a “fair go all round” is accorded to both the employer and employee concerned. ²²

Conclusions on remedy

[95] After taking into account each of the relevant considerations, I find that compensation in lieu of reinstatement is appropriate in this matter. Further, I find that the compensation should be assessed and paid having regard to the factors outlined above.

[96] Given my findings, the projected remuneration loss should form the basis of the compensation in this matter. However, for reasons also outlined earlier, the earnings received from Ms Pekaj’s part-time employment following her dismissal ($900.00) should be deducted from the projected amount.

[97] I have not been persuaded that a compensation order of the magnitude being considered here is likely to effect the viability of AAMG’s business.

[98] Accordingly, I find that compensation in lieu of reinstatement should comprise a payment to Ms Pekaj by AAMG of $2,343.

[99] For reasons outlined earlier, the circumstances here are such that the compensation order should permit payment by instalments. The permitted instalments take account of the circumstances of AAMG, those of Ms Pekaj, who is not presently employed, and the program of payments applied when the relationship was on foot. I have determined that the instalments will involve three payments with the first of those commencing 14 days after this decision. Further, in the event that a payment is not made as required, which I do not anticipate, the full balance of the compensation order would become immediately due and payable.

7. Conclusions and orders

[100] I find that Ms Pekaj’s dismissal was unfair within the meaning of the FW Act.

[101] I have found that compensation is appropriate and the amount determined above is also appropriate in all of the circumstances.

[102] The payment of the compensation amount, less any required deduction of taxation, is to be made to Ms Pekaj by AAMG in three instalments commencing 14 days after this decision as confirmed in the Order²³ to be issued in conjunction with this decision.

COMMISSIONER

Appearances:

S Benfield with R Pekaj, the Applicant.

N Baressi of Advantage Business Centre, with permission, with Ms Aurica Grecu and Ms Ana-Maria Grecu for AAMG Cleaning Group Pty Ltd.

Determinative Conference details:

2018

Adelaide

14 June.

Final written submissions:

AAMG Cleaning Pty Ltd – 21 June 2018.

Ms Pekaj – 29 June 2018.

Printed by authority of the Commonwealth Government Printer

<PR607998>

 1   Rudina Pekaj v AAMG Cleaning Group Pty Ltd[2018] FWC 2348.

 2   Exhibit A4.

 3   Exhibit R7.

4 Jurisdictional transcript PN630 and PN634.

5 Jurisdictional transcript PN666.

 6 Section 388 of the FW Act.

 7   Confirmed during the course of the Determinative Conference.

8 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation (2004) 133 IR 458 and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation [2010] FWAFB 8868, at [36].

9 See Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1; King v Freshmore (Vic) Pty Ltd AIRCFB Print S4213 per Ross VP, Williams SDP, Hingley C, 17 March 2000; Edwards v Giudice (1999) 94 FCR 561; Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport AIRCFB Print S5897 per Ross VP, Acton SDP and Cribb C, 11 May 2000 and Rode v Burwood Mitsubishi AIRCFB Print R4471 per Ross VP, Polites SDP, Foggo C, 11 May 1999.

 10   The evidence in the preliminary proceedings was that no written contract was entered into with Ms Pekaj.

11 See Trimatic Management Services Pty Ltd v Daniel Bowley [2013] FWCFB 5160.

12 RMIT v Asher (2010) 194 IR 1. See also Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [75].

13 See Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport AIRCFB Print S5897 per Ross VP, Acton SDP and Cribb C, 11 May 2000 and Villani v Holcim (Australia) Pty Ltd [2011] FCAFC 155 as examples.

14 [2015] FWCFB 873.

15 Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431.

16 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446.

 17 I have not revealed the full details of the financial information provided given the public nature of this decision. Confidentiality orders were also made about this material under s.594 of the FW Act. I have however considered that detail in making this decision. I also note that AAMG provided some medical information about Ms Aurica Grecu that is beyond the scope of the present considerations.

 18   See D.A. Moore v Highpace Pty Ltd, Print Q0871 (AIRCFB, Boulton J, Watson SDP, Whelan C, 18 May 1998).

19 McCulloch v Calvary Health Care Adelaide[2015] FWCFB 873.

 20   It is not appropriate to deduct any social security payments made given that these may be refundable and apparently did not take place during the short period of projected employment. See Sprigg v Paul's Licensed Festival Supermarket, Print R0235 (AIRCFB, Munro J, Duncan DP, Jones C, 24 December 1998) [(1998) 88 IR 21] at 26.

21 Section 392(5) of the Act.

22 S.381(2) of the FW Act. See also Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].

23 PR607999.