Samaka Sophia Ndege v World Gym Sunshine Pty Ltd

[2014] FWC 451

[2014] FWC 451

FAIR WORK COMMISSION

DECISION

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

Samaka Sophia Ndege
v
World Gym Sunshine Pty Ltd
(U2012/14920)

COMMISSIONER LEE MELBOURNE, 17 JANUARY 2014

Application for unfair dismissal remedy - remedy - compensation.

[1] On 12 November 2013, I issued a decision 1, in which I determined that Samaka Ndege (the Applicant) was a person protected from unfair dismissal and that her dismissal by World Gym Sunshine Pty Ltd (the Respondent), was harsh, unjust and unreasonable. This decision deals with a consideration of the remedy, if any, to apply.

[2] I determined in the 12 November 2013 decision, that reinstatement would not be appropriate and that the award of some amount of compensation was appropriate. While I had some information relevant to the criteria for determining compensation, I determined I did not have sufficient information to make a determination and therefore indicated in that decision that I would issue further directions for the filing of submissions relevant to issue of compensation only. Those directions were also issued on 12 November 2013. Both the Applicant and the Respondent filed additional material in accordance with the directions.

[3] What follows is a consideration of the appropriate of compensation to be awarded to the Applicant in this case. The relevant provisions of the Act pertaining to compensation remedy follows:

“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.

Note: subsection 392(5) indexed to $64,650 from 1 July 2013

(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.”

[4] I have already determined that the award of some amount of compensation is appropriate in this matter. 2

[5] In determining the amount of compensation, I must have regard to “all the circumstances of the case” including each of the paragraphs in s.392(2) of the Act as set out above. No one matter is paramount but regard must still be had to each of them. 3

[6] The general approach to the calculation of compensation was well set out by the Full Bench in Tabro Meat Pty Ltd v Kevin Heffernan 4 and I will follow that approach in determining this matter.

Section 392(2)(c) - the remuneration that the person would have received or would have been likely to receive, if the person had not been dismissed.

[7] The Applicant commenced employment with the Respondent on 29 August 2011. The Applicant’s hours of work and consequently her earnings, varied as she was a casual employee. Her contracted pay rate was $20.93 per hour for ordinary hours (Monday to Friday) and $21.10 per hour for work on a Saturday and Sunday. However, the pay slips submitted by the Respondent in compliance with an issued Order to Produce indicate that the Applicant was only paid that rate until October 2011, whereupon the payment inexplicably reverted to $20.16 per hour and then $20.27 per hour towards the end of the period of employment. There are also two pay periods (14/4//12-10/5/12) where the hourly rate reverts to $20.93 per hour. The Respondent submitted that the Applicant’s average earnings based on the pay slips were $276 per week but more likely she would have been paid $204 for a shift of one Saturday per week.

[8] The Respondent claims that the Applicant told him that “..she was going to have a Christmas holiday and go away do did not want to work over Christmas 2012” and further that as the Applicant was a casual no holiday pay was payable.

[9] The Applicant claims, “[a]s I was approaching the end of my academic semester in October 2012, I was anticipating more shifts from World Gym as the part and full time staff took their summer vacation/trips on their accumulated annual leave, which I was happy to do with my free schedule”. 5

[10] The Applicant provided a group certificate from World Gym Sunshine for the 2011-12 financial year as evidence of the actual remuneration earned by the Applicant during that financial year. The group certificate shows that the Applicant actually earned $14,620.00 for the period from 29 August 2011 (her commencement date) to 30 June 2012, a period of 10 months or approximately 44 weeks or 306 days. This demonstrates that the average amount of remuneration of the Applicant for the 10 month period was $1,462.00 per month or $332.27 per week.

[11] Given the variability of the hours of work, and consequently the remuneration of the Applicant I will use the average monthly earnings figure based on the previous earning of the Applicant of $1,462.00 per month. This amount will be used as the basis for calculating the amount of compensation to be awarded in this case.

[12] I have submissions from the Respondent as to how long it was expected the employment relationship would have continued were it not for the dismissal taking place as follows: “The applicant told me she was going to and is now living in USA so could not work here anyway”. 6

[13] The Applicant submitted that she had no intentions of leaving the Respondent as it was her, “main major source of income”, even after attending her university student exchange placement in 2013. The Applicant makes it clear in her submissions that she left Australia in July 2013 to participate in her student exchange program in the United States. 7 According to an email the Applicant sent to the Fair Work Commission on 12 July 2013, she departed Australia on 27 July 2013. It is also clear from an email sent to my chambers on 6 November 2013 that the Applicant remained in the United States of America until November 2013, and was then planning to go to Africa.

[14] I think it is reasonable to assume that, but for the dismissal, in all of the circumstances the employment relationship would have continued until 27 July 2013. At that time, the Applicant departed Australia to participate in her university exchange study program in the United States of America. There is no basis to the claim of the Applicant that this period would have constituted annual leave from the Respondent as the Applicant was at all times a casual and not entitled to annual leave. As the Applicant clearly departed Australia for a period of at least 5 months, there is no reasonable basis to conclude that she would have returned to work as a casual for the Respondent at that time. Accordingly, I determine that the time period between the date of dismissal and the likely end of the period of employment, the relevant period, is 292 days or 41.7 weeks.

[15] Accordingly, I calculate the remuneration that the Applicant would have received or would have been likely to receive, if her employment had not been terminated, at $332.27 x 41.7 weeks= $13,855.66 gross plus 9% superannuation.

Section 392(2)(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 section 392(2)(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

[16] As already discussed, the Applicant was working as casual employee for the Respondent. Her hours varied. The Applicant claims that she worked an average of 2 days per week but more frequently during the holiday period. 8 At the time she was dismissed, the Applicant was also working part time with Bevilles Jewellers. The Applicant submits that she sought extra shifts with Bevilles Jewellers after her dismissal by the Respondent with limited success due to Bevilles Jewellers recruiting 20 new staff members at around that time. The Applicant did however pick up an unspecified number of extra shifts at Bevilles Jewellers when other staff were absent on personal leave.

[17] The Applicant claims that it was difficult to obtain other employment during the period but that she did ultimately obtain additional employment with the Salmat Group in February 2013. The Applicant provided bank statements detailing the net payments that she received from both Salmat Group and Bevilles Jewellers for the relevant period.

[18] The amount of net payments received from Bevilles Jewellers during the relevant period was $15,283.53 and the amount of net payments received from Salmat Group during the relevant period was $7,641.00. As these are net amounts, it is necessary to take into account any taxation impacts. During the 2012-13 and the 2013-14 financial years the tax rate was nil for earnings below $18,200.00 and 19cents for each $1 over $18,200.00. There is a higher tax rate for amounts over $37,000.00.

[19] It is clear that the Applicant did not earn anything near that higher threshold. As the Applicant’s combined income exceeds the first tax threshold, the Applicant would have been liable to payment of taxation of approximately $898 on these amounts. 9

[20] This represents an effective tax rate of 3.9%. I will use this rate as the basis for allowing for the effect of taxation.

[21] In Ellawalla v Australian Postal Corporation 10, with respect to a precursor provision, the Full Bench stated that “[o]nly monies earned during the period from termination until the end of the anticipated period of employment are deducted”.

[22] It is appropriate to allow for all of the remuneration earned at Salmat Group to be deducted from any award of compensation, as this amount was earned in order to mitigate the loss of earnings for the Applicant due to her dismissal. However, it is not appropriate to allow for a deduction for all of the earnings from Bevilles Jewellers as this was regular employment that the Applicant was already undertaking while employed with the Respondent. To do so would be inconsistent with the objectives of an award of compensation, that of compensating the Applicant for what she has actually lost. 11 In that context, it is appropriate to deduct an amount from the amount earned at Bevilles Jewellers during the relevant period to account for the fact that the Applicant took on additional shifts there in order to mitigate her loss. I think it is appropriate to deduct 20% of the Applicants’ earnings from Bevilles Jewellers during the relevant period to account for the additional shifts worked. That amount is $3,056.60 net.

[23] Adding the amounts of $3,056.60 and $7,641.00 equals a total of $10,697.60. That amount needs to be inflated by an additional 3.9% to allow for taxation on the net amounts earned (an additional $417.21). This results in a total deduction amount of $11,114.81.

[24] Deducting this amount from $13,855.66 results in an amount of compensation of $2,740.85 gross plus 9% superannuation.

Section 392(2)(g) - any other matter that FWA considers relevant.

[25] The Applicant in her submission on compensation makes reference to claims for alleged underpayment of wages from the Respondent. This is not a matter that can form part of the consideration for compensation in this matter. Claims for underpayment need to be dealt with by a court of competent jurisdiction.

[26] Ordinarily a deduction for contingencies is appropriate. 12 A deduction for contingencies is appropriate in this case. Contingencies only apply to the anticipated period of employment. In this case, the anticipated period of employment is quite short and accordingly it is appropriate the amount deducted for contingencies should be at the lower end. While the percentage to be deducted for contingencies is a matter for judgement, I think that a deduction of 10% or $274.09 is appropriate in the circumstances of this matter.

[27] This results in a provisional amount of compensation of $2,466.76

[28] There are no other matters that are relevant to the determination of compensation other than ss.392(2)(a),(b) and (d), 392(3) and 392(5) of the Act. I will turn to those factors now.

Section 392(2)(a) - the effect of the order on the viability of the employer’s enterprise

[29] The Respondent submitted that “World Gym Sunshine has ceased trading and any adverse penalty will be untenable to meet”. 13 However, no evidence to support this claim is provided.

[30] The employer must “present evidence and/or argument as to the financial situation” of the business and “the likely effect that an order for compensation” will have on the viability of the business. 14 A mere submission that difficulties for the business will occur is not sufficient.15

[31] There is no evidence that the award for compensation will affect the viability of the Respondent. The claim of the Respondent that it has “ceased trading” is not supported by any evidence. The website for the business suggests in fact World Gym Sunshine continues to operate. In the circumstances, I do not think that a further deduction in the compensation is appropriate in the circumstances.

Section 392(2)(b) - the length of the persons service with the employer

[32] The Applicant was employed by the Respondent for approximately 13 months. The length of service is relatively short and there is a basis for reducing the amount of compensation awarded based on the Applicant’s length of service. Accordingly, I will deduct a further amount of 10% given the relatively short length of service. This leaves an amount of compensation of $2,220.00 gross plus 9% superannuation.

Section 392(2)(d) - the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[33] The Respondent submitted that the Applicant worked another job and was receiving other income and that there was still potential for the Applicant to work when she left the Respondent’s employment so the Applicant would not be losing any income.

[34] The Applicant submits that after her dismissal from the Respondent that she ‘…frantically started looking for another job and picked up shifts when staff members called in sick at my other part time job, Bevilles Jewellers”. 16

[35] The Applicant eventually secured additional employment with the Salmat Group in February 2013. I am satisfied the mitigation efforts of the Applicant are sufficient to exclude any further deduction from the quantum of $2,220.00 gross, plus 9% superannuation.

Misconduct (s.392(3))

[36] I have found that the Applicant was not dismissed for a valid reason and that no misconduct was in evidence. There is no basis to make a further deduction for misconduct.

Compensation Cap (s.392(5))

[37] As the amount of $2,220.00 plus 9% superannuation is less than the legislative compensation cap no further deduction for that reason is required.

Conclusion and order as to remedy

[38] I have found that reinstatement is not an appropriate remedy in this case. 17

[39] I find that compensation is appropriate.

[40] I am satisfied that an order for payment of compensation by the Respondent of $2,220.00 gross plus 9% superannuation less tax as required by law, to the Applicant in lieu of reinstatement is appropriate in all the circumstances of the case. It accords a fair go all round to both the Respondent and the Applicant.

[41] The compensation payment, less any required deduction in taxation, is to be made within 14 days of this decision. An order [PR546939] will be issued concurrently with this decision.

COMMISSIONER

Final written submissions:

Applicant, 14 November 2013

Respondent, 2 December 2013

 1   [2013] FWC 8434

 2   [2013] FWC 8434, [56]

 3   Tempo Services Limited v Klooger and Others, PR953337, [22]

 4   [2011] FWAFB 1080

 5   Applicant’s witness statement, filed 12 November 2013.

 6   Respondent’s submissions, filed 2 December 2013.

 7   Email from Applicant to the Fair Work Commission dated 12 July 2013

 8   Applicant’s witness statement, filed 12 November 2013.

 9   ($22924.53 - $18200= $4724.53.) ($4724.53x.19= $897.66)

 10   Print S5109

 11   Slifka v JW Sanders Pty Limited (1995) 67 IR 316 at 328, 329

 12   Slifka v JW Sanders Pty Limited (1995) 67 IR 316 at 328

 13   Respondent’s submissions, filed 2 December 2013

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

 15   K.Beams v BDRP Falconer Pty Ltd (unreported, AIRC, Hamilton DO, 28 March 2002), PR916075, [49]

 16   Applicant’s witness statement, filed 12 November 2013

 17   [2013] FWC 8434, [56]

Printed by authority of the Commonwealth Government Printer

<Price code C, PR546928>