Samuel Agius v Allstates Automotive Transmissions Pty Ltd

[2011] FWA 26

[2011] FWA 26

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Samuel Agius
v
Allstates Automotive Transmissions Pty Ltd
(U2010/1165)

COMMISSIONER ROBERTS SYDNEY, 5 JANUARY 2011

Application for unfair dismissal remedy.

[1] This decision concerns an application lodged on 23 July 2010 by Mr Agius pursuant to s.394 of the Fair Work Act 2009 (the Act) in respect of the alleged unfair termination of his employment by Allstates Automotive Transmissions Pty Ltd (Allstates or the Company).

[2] The application was listed for conciliation on 12 August 2010 but the conciliation did not proceed as Allstates had been placed in liquidation on 22 July 2010. The appointed liquidator is Mr C Kokkinos of Worrells Solvency and Forensic Accountants (Worrells) and the liquidator advised that it refused to participate in any conciliation. Mr Agius’ employment had been terminated prior to the appointment of the liquidator.

[3] The application for relief was then set down before me in Sydney on 5 October 2010. Worrells, per Mr Kokkinos, did not attend the hearing, apparently relying on its letter of 28 July 2010 to Fair Work Australia in relation to the earlier proposed conciliation proceedings which, in part, said:

“I advise that I was appointed as liquidator of the above company on 22 July 2010. A copy ASIC Form 505 - Notification of Appointment is attached for your reference.

I note that the matter is listed for hearing on 12 August 2010 (Hearing). I advise that the Liquidators do not propose to attend, or be represented at the Hearing.

As you may be aware, pursuant to section 500(2) of the Corporations Act 2001 (Cth) (Act):

‘After the passing of the resolution for voluntary winding up no action or other civil proceeding is to be proceeded with or commenced against the company except by the leave of the Court and subject to such terms as the Court imposes.’

I consider that the Proceeding is stayed by virtue of section 500(2) of the Act unless and until the applicant obtains the leave of the Court to proceed with the action. Notwithstanding this, the claim by the applicant can only be addressed in the ordinary course of the liquidation in conjunction with other claims by priority creditors irrespective of whether the Proceeding continues.

I advise that the subject-matter of the Proceeding relates to events prior to my appointment as Liquidator. I had no direct or indirect involvement in the events precipitating the dispute between the company and the applicant and, therefore, am not in a position to respond to any of the allegations to be addressed at the Conciliation, which is scheduled to commence at 2:15pm on 12 August 2010. For this reason, the company will not be represented at the Conciliation.

Finally, I note that the applicant may be entitled to an advance of any outstanding employee entitlements pursuant to the General Employee Entitlements and Redundancy Scheme. I confirm that I have advised the applicant of the existence of the scheme.”

Background

[4] Mr Agius was first employed on 11 February 1991 by a business called Cygnet Engineering located at West Ryde, New South Wales, firstly as a Fitter and Machinist, and later as a Manager. According to Mr Agius: “Cygnet Engineering was a transmission component reconditioning department for Allstates Automotive Transmissions. We supplied them with reconditioned hard parts for their transmissions.” 1

[5] Apparently Cygnet was operated as an arm of Allstates Automotive Transmissions Pty Ltd based at Enfield, New South Wales. 2 In January 2009, the company employing Mr Agius was sold to an entity bearing the same name but with a different Australian Business Number.3 Mr Agius was guaranteed continuity of employment and it was stated that all of his accrued entitlements would be transferred to the new entity. It was further stated in writing that he would be employed pursuant to the Federal Vehicle Industry Award 2000.4

[6] Mr Agius tendered a copy of a letter terminating his employment dated 14 July 2010. 5 The letter said, in part:

“Termination of employment

Your employment was terminated on 28 June 2010 as per our letter dated 30 June 2010. Any entitlements due to you are will be offset against the wages due for the required notice period. We are currently reviewing your records to accurately determine the entitlements that may be owing to you and will advise you in due course. A separation certificate is attached.

Return of property

Can you please confirm that you have returned all tools, parts and/or equipment, any documents and any other assets of any description that belong to the company that you have removed from the premises at any time.

Undertakings

You must also provide your undertaking in writing that:

• You no longer have in your possession or control any property belonging to our company.

• You will not under any circumstances approach any customers, suppliers or employees of our company or its related businesses.

• You will not under any circumstance enter onto premises occupied by our company for any purpose without express written consent, such consent may be withheld at the company’s absolute discretion.

• You will not disclose any information which could be considered to be confidential in respect of the operations of our company and its related businesses.”

[7] Attached to the termination letter was an Employment Separation Certificate showing the date employment ceased as being 28 June 2010. The ground for termination was given as “misconduct” with the notation: “employee was otherwise employed whilst on long service leave.” The certificate also states that the “final gross payment” including leave and redundancy payments’ was “nil”.

[8] Mr Agius states that he did not receive any letter dated 30 June 2010 terminating his employment. He says that he returned to work on 7 July 2010 after being on leave, commenced work but later on the same day was told that he was “no longer needed and that correspondence regarding termination had been forwarded to me.” 6

Was the application filed within time?

[9] Having heard the evidence of Mr Agius and after paying regard to the written materials tendered at the hearing, it is my finding that the most likely effective date for the termination of Mr Agius’ employment was on or shortly after 14 July 2010. Accordingly, I find that Mr Agius’ application was lodged within the 14 day time limit prescribed in the Act.

Jurisidiction

[10] At the hearing I considered the correspondence from Mr Kokkinos (see paragraph 3 supra). At that time, I ruled that I had jurisdiction 7 to consider Mr Agius’ application and relied in so finding on the Decision of the Full Bench in G.W. Smith and ors v Trollope Silverwood & Beck Pty Ltd8

Evidence

[11] The only evidence given in proceedings was that of Mr Agius. I have relied on part of that evidence in setting out the Background section of this decision at paragraphs 4 to 8 supra. Additionally it was the evidence of Mr Agius that after he was told on 7 July 2010 that he was ‘no longer needed’ that he made attempts to contact the Director of the Company, without success: “They wouldn’t respond in any way.” 9 Mr Agius denied entering employment with a third party during his long service leave and said that he was not told on 7 July 2010 that he was being terminated for misconduct.10 Mr Agius went on to say that he was told in early November 2009 to take leave from 4 December 2009 to 5 February 2010. He was later told to take 13 weeks long service leave continuous with his previous leave and ending on 11 May 2010. In early May 2010 he spoke to a Director of the Company: “... and said to him that if he was agreeable I would use my remaining seven (7) weeks leave in order to assist my father in the renovations he was undertaking at his home. This was an unpaid position.”11 He then returned to work on 7 July 2010, started work but was sent home during the afternoon on that day.

[12] Attached to Mr Agius’ witness statement was an unsigned letter dated 31 August 2010 from Mr T Taylor, the former Warehouse Manager of the Company. That letter states:

“To whom it may concern,

In regards to the matter on the 7/7/2010 concerning Sam.

Sam turned up to work in the morning of this day and while I was at lunch I received a phone can [sic] from head office instructing me to send Sam home and that there was a letter that was to be delivered or should have been delivered in regards to his situation.

Regards

Trevor Taylor”

Conclusions and Findings

[13] The evidence from Mr Agius in this case was uncontradicted. My own assessment of the evidence given is that it was truthful in all material respects and I am satisfied that I can base my decision largely on the evidence given.

[14] There is nothing before me to support the allegation contained on the employment separation certificate that Mr Agius was guilty of misconduct. I respectfully agree with the following observations of the Full Bench in King v Freshmore (Vic) Pty Ltd 12:

“When a reason for a termination is based on the conduct of the employee, the Commission must, if it is an issue in the proceedings challenging the termination, determine whether the conduct occurred. The obligation to make such a determination flows from s.170CG(3)(a). The Commission must determine whether the alleged conduct took place and what it involved.

The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.”

[15] In Container Terminals Australia Limited v Toby 13, a Full Bench of the Australian Industrial Relations Commission said: “In our view, the consideration of whether there was a valid reason for termination is a separate issue from the determination of whether a termination was harsh, unjust or unreasonable…”14

[16] Northrop J in Selvachandran v Peteron Plastics Pty Ltd 15 said:

“In its context in s 170DE(1), the adjective "valid" should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly, ….”

[17] In Qantas Airways Ltd v Cornwall 16, the Full Court of the Federal Court said:

“The question is whether there was a valid reason. In general, conduct of that kind would plainly provide a valid reason. However, conduct is not committed in a vacuum, but in the course of the interaction of persons and circumstances, and the events which lead up to an action and those which accompany it may qualify or characterize the nature of the conduct involved.”

[18] In Edwards v Justice Giudice 17, Moore J said:

“The reason would be valid because the conduct occurred and justified termination. The reason might not be valid because the conduct did not occur or it did occur but did not justify termination.”

[19] Relying on the truthfulness of Mr Agius’ evidence, I find, on the balance of probabilities, that there was no valid reason for the termination of his employment based on any alleged act of misconduct.

[20] I now turn to the question of Mr Agius’ performance. Here, there is nothing to guide me beyond the fact that Mr Agius worked for the Company and its predecessor for a period of some 19 and a half years. In any event, no performance issue is raised in either the letter of termination dated 14 July 2010 or any document available to me. Likewise, there is no allegation of misconduct in the 14 July letter.

[21] I now turn to the question whether the dismissal of Mr Agius was harsh, unjust or unreasonable. Section 387 of the Act sets out the criteria for considering harshness etc. It provides:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”

[22] In Byrne v Australian Airlines 18, McHugh and Gummow JJ of the High Court said:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[23] The question of valid reason is dealt with above.

[24] There is nothing before me to show that Mr Agius was notified of the reason(s) for the termination of his employment and I find that he was not so notified.

[25] It is further clear on the materials and evidence that he was not given an opportunity to respond and I so find.

[26] Given the circumstances of the ending of the employment relationship, the question of Mr Agius having a support person present in discussions relating to the dismissal is not relevant and I so find.

[27] There is nothing before me to indicate that Mr Agius was warned about any unsatisfactory performance during his time with the Company and I so find.

[28] The size of the employer’s enterprise is unknown to me and this factor has therefore been neutral in my consideration.

[29] For the same reason given immediately above, the employment of dedicated human resources management specialists by the Company or the lack thereof has been a neutral consideration in my decision making.

[30] Section 390 of the Act provides:

“390 When FWA may order remedy for unfair dismissal

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

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

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

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

(b) FWA 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.”

[31] In the particular circumstances of this case, reinstatement would appear to be impossible and is not sought by Mr Agius. I therefore find that reinstatement is not an appropriate remedy.

[32] Where reinstatement is not ordered, the Tribunal may order the payment of monetary compensation. Subsection 392(2) of the Act sets out the criteria for deciding a suitable level of compensation:

“(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 FWA considers relevant.”

[33] In relation to subparagraph (a), as the Company is currently in liquidation this factor does not appear to be relevant and, in any event, I do not have the necessary information to hand to make such an assessment. In relation to subparagraph (b), I have taken into account the long duration of Mr Agius’ employment with the Company. In relation to subparagraph (c), I am satisfied that Mr Agius’ employment prospects with the Company were limited at the time of his dismissal and he would not have continued in the employ of the Company for a significant period. In relation to subparagraph (d), I do not have the information to allow me to make an assessment in relation to mitigation of loss. The same applies to an assessment under subparagraphs (e) and (f). In relation to subparagraph (g), I have taken into consideration the peremptory nature of the termination of employment, the apparent non-payment of accrued entitlements and the effect of the termination on the future employment prospects of Mr Agius.

[34] Subsection 392(3) of the Act provides that:

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

[35] In the case before me, I am not satisfied that misconduct occurred and this provision is therefore not relevant to my consideration.

[36] All in all, I find that the termination of Mr Agius’ employment was harsh, unjust and unreasonable and an order will be issued that the Company pay him a total of four weeks wages (less appropriate tax according to law) to be paid at the rate Mr Agius would have earned had he continued in employment on and from 7 July 2010. The alleged non-payment of accrued entitlements is not within the scope of this decision. Mr Agius is at liberty to contact the Fair Work Ombudsman to further pursue that issue.

[37] An order reflecting this decision is in PR505642.

COMMISSIONER

Appearances:

S Agius, the Applicant.

Hearing details:

2010.

Sydney:

October 5.

 1   Transcript PN90.

 2   Transcript PN93.

 3   See Exhibit Agius 5.

 4   See Exhibit Agius 4.

 5   Exihibit Agius 2.

 6   Exhibit Agius 1.

 7   Transcript PNs5-6.

 8   PR940508, 17 November 2003.

 9   Transcript PN38.

 10   Transcript PNs95-98.

 11   Exhibit Agius 1.

 12   Print S4213, 17 March 2000.

 13   Print S8434, 24 July 2000.

 14   Ibid at para 15.

 15 (1995) 62 IR 371 at 373.

 16 [1998] FCA 865.

 17 [1999] FCA 1836.

 18 (1995) 185 CLR 410.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR505641>