Samuel O'Leary v Huntsman Hotel Pty Ltd T/A the Archer Hotel
[2018] FWC 7281
•29 NOVEMBER 2018
| [2018] FWC 7281 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Samuel O’Leary
v
Huntsman Hotel Pty Ltd T/A the Archer Hotel
(U2018/6876)
| Commissioner Platt | ADELAIDE, 29 NOVEMBER 2018 |
Application for an unfair dismissal remedy – no valid reason – procedural deficiencies – dismissal harsh, unjust and unreasonable – reinstatement not sought – compensation ordered.
Summary
On 4 July 2018, Mr Samuel O’Leary (the Applicant) lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) seeking a remedy for an alleged unfair dismissal by Huntsman Hotel Pty Ltd T/A the Archer Hotel (the Respondent) which took effect on 20 June 2018.
On 7 August 2018, the Respondent filed a Form F3 Employer response which contended Mr O’Leary commenced employment on 13 March 2017 and was dismissed on 20 June 2018. The Respondent contended that at the time of the dismissal they employed 17 persons and did not raise any jurisdictional objections. The reasons for the dismissal were advised as the disclosure of confidential information to a fellow employee, threatening legal action against a stakeholder of the Respondent and misappropriation of funds by way of firewood purchases and the use of petty cash to pay for beverage purchases.
A Conciliation Conference was unable to be conducted and the matter was allocated to my Chambers on 3 August 2018.
A Directions Hearing was conducted on 9 August 2018. Directions were issued requiring the parties to file and serve an outline of their submissions, witness statements and any documents and the Hearing was scheduled for 10 and 11 September 2018.
On 6 and 7 September 2018, I made a decision[1] in relation to procedural matters. The effect of my procedural decision was that the Hearing would be conducted on the dates previously listed and that I refused to receive material that had not been submitted by the Respondent on time, but the Respondent would be at liberty to cross-examine the Applicant’s witnesses and make submissions.
The Respondent appealed against this decision and a stay Hearing was conducted by Deputy President Gostencnik on the morning of 10 September 2018. Deputy President Gostencnik declined to issue a stay and his reasons were published[2]. As at the time this decision was issued I am not aware of any outcome of the appeal.
Permission had previously been granted to both parties pursuant to s.596(2) of the Act.
Recusal Application
At the commencement of the Hearing Ms Gray submitted that I should disqualify myself on the basis of apprehended bias as a result of:
· I had made a factual finding in my procedural decision that the Respondent had engaged in contemptuous behaviour. As a result, this finding gave rise to an apprehension of bias such that a fair minded lay-observer might reasonably apprehend that I may not bring an impartial and unprejudiced mind to the resolution of this matter;
· The extent to which the submissions put by the Respondent were questioned at the Hearing on Friday 7 September 2018 and the difficulty in presenting those submissions; and
· The decision that the Respondent would be required to proceed to trial without the ability to present its witness statements, which was procedurally unfair and demonstrated legal unreasonableness, and was a decision that no reasonable decision maker would make.[3]
The Respondent referred me to Johnson v Johnson [2000] 174 ALR 655, Minister for Immigration and Multicultural Affairs v Jia [2001] 178 ALR 421 and Southern Equities Corporation Limited (in liquidation) v Arthur Andersen & Co. [2001] SCAC 58.
The application for recusal was opposed by the Applicant.[4] The Applicant submitted that the observation made about the Respondent’s contemptuous behaviour did not meet the relevant threshold, the circumstances in which the Hearing was conducted on Friday 7 September 2018 was not a reason that supports an application for apprehended bias, and any lack of procedural fairness resulting from the rejection of the statements was self-induced by the Respondent.[5]
I advised the parties that whilst I had described the Respondent’s conduct (in failing to provide their material in accordance with the Directions, not seeking an extension of time and not providing any reason for the failure to comply with Directions) as contemptuous, I had not found the Respondent to be in contempt.
Whilst the Respondent may disagree with my procedural decision, it is a much bigger step to suggest that as a result of making that decision I may not bring an impartial and unprejudiced mind to the issue of merit.
The test in respect of an application of this nature is well established. The test is whether a fair minded lay-observer would have a reasonable apprehension that the decision maker might not bring an impartial and unprejudiced mind to the proceedings with respect to a matter which is a live and significant issue in the proceedings. I am not satisfied on the basis of what has been put that the test is satisfied. I do not consider that a fair minded lay-observer would, on the basis of the procedural decision I have made, have a reasonable apprehension that I would not bring an impartial and unprejudiced mind to the substantive matters.
Mr O’Leary’s Evidence
The Applicant, Mr Samuel O’Leary submitted a statement (including attachments)[6] and gave evidence.
The Respondent opposed the leading of further evidence in chief from Mr O’Leary as a result of it being denied the opportunity to present oral evidence. I refused this application. As I discussed in my procedural decision any lack of procedural fairness which arose as a result of the unexplained failure of the Respondent to comply with the Directions to lodge material was self-inflicted. There was no plausible reason advanced as to why further examination in chief should not be permitted.
Mr O’Leary’s evidence is summarised as follows, and broken up into topics for convenience:
Employment as Venue Manager and responsibilities
· In late 2015 Mr O’Leary commenced employment with the BMG as a full time Operations Manager. The Bloody Mary Group (BMG) managed the Saracen’s Head Hotel, Pirie and Co., the Grace (now called Stone’s Throw) and the Respondent.
· In September 2017 BMG determined to make the Operations Manager role redundant and Mr O’Leary was moved to a Venue Manager role at the Saracen’s Head Hotel.
· On 13 March 2017 Mr O’Leary commenced working as a full time ongoing Venue Manager at the Respondent on a salary of $75,000.00 per annum plus superannuation and a vehicle allowance of $20,000.00 per annum. There was no written contract of employment and no written job description or duty statement. Mr O’Leary gave evidence that he was the most senior person employed at the Respondent,[7] and was responsible for the day to day management of the Respondent, rostering of staff, disciplining staff, purchasing goods (but not negotiating supplier contracts), liquor and food, stocktakes and the general operation of the business.[8]
Work performance
· Mr O’Leary contended that he was not subject to performance appraisals, but had communications with Mr Matt Mitchell (Director) and/or Brett Viney (Director) about wage costs and the need to contain same.
· Mr O’Leary agreed that he had received an email[9] from Mr Mitchell dated 12 December 2017 concerning the lack of an up to date stocktake, and that Mr Mitchell had raised the frequency of the stocktakes with him once or twice.
· Mr O’Leary acknowledged that he had received an email from Mr Mitchell dated 19 December 2017 about variances on the stocktake of up to $9,000.00. Mr O’Leary did not take this as a criticism of his performance but just that there was an issue with the stock that needed to be followed up.
· Mr O’Leary received some information as to revenue and costs of the Respondent but did not recall being counselled over the Respondent’s performance.[10] Mr O’Leary attributed shortfalls to matters outside his control like the weather and sporting fixture results. Mr O’Leary stated he knew that the Respondent was not “going very well”. [11] It was suggested to Mr O’Leary that the Respondent was losing money between March 2017 and June 2018. Mr O’Leary advised he was not provided with the information that would allow him to determine that.[12]
· Mr O’Leary disputed that the email correspondence from Mr Mitchell in March 2018 (Exhibit R7) concerning the wages bill, represented performance counselling. Mr O’Leary accepted that on some occasions he was over on the wages and “didn’t get it right”[13].
· It was put to Mr O’Leary that the information contained in Exhibit R8 drew his attention to matters that were over budget. Mr O’Leary accepted that on occasions an expense might be high on a given week but over the month it would even out. Mr O’Leary disputed that he was consistently over budget.[14] Mr O’Leary accepted that the communication from Mr Mitchell dated 16 May 2018[15] was an example of when he was advised he was over budget on staff wages. Mr O’Leary accepted there were occasions when he did not get the staffing level right.[16]
· Mr O’Leary contended that at the time of his dismissal the Respondent was performing strongly and its figures were significantly better than the previous year.
Work attendance
· The payroll function was managed by BMG. The hours worked by staff were recorded on computer program called “WageLoch”, where staff would log on and off using a biometric device. Mr O’Leary gave evidence that this system would regularly require a reset which he would perform in the morning on his arrival.[17]
· It was suggested that Mr O’Leary had made numerous manual entries as to his starting and finishing times, and that this was evidence that he was derelict in his duties.[18] Mr O’Leary explained the manual entries by reference to the need to regularly reset the WageLoch system.
· Mr O’Leary agreed that he had received an email from Mr Anderson (Operations Manager, BMG) dated 11 December 2017 and 5 April 2018 about the need for staff to use Wageloch to log on and off.
· As to his personal Wageloch logins, Mr O’Leary contended that he was engaged on a salary, was not paid by the hour or overtime, that no issues in respect of his attendance was never raised with him as an issue.[19]
Directorship
· In early 2016 Mr O’Leary (as sole director of Samuel O’Leary Investments Pty Ltd as Trustee for the O’Leary Investments Trust) was invited to become a Director of the Huntsman Hotel Unit Trust that operated the leasehold at the Respondent. The unit trust shares were distributed between Mr Viney, Mr Mitchell, Mr Darren White, Mr Peter Morrison and Mr O’Leary. Huntsman Hotel Pty Ltd was the Unit Trust Trustee.
· Mr O’Leary was a Director of the Huntsman Hotel Pty Ltd along with Mr Viney, Mr Mitchell and Mr White.
· Mr O’Leary contended that his employment and Directorship were independent of each other.
· In October 2016 Mr O’Leary as a Director invested $50,000.00 into the business in order to renovate the Respondent.[20]
· Mr O’Leary (as a Director) had concerns about agreements made between Mr Viney and Mr Mitchell with suppliers of liquor and about how the $50,000.00 “reno tip in” was being used.
· In the period between October 2016 and 20 June 2018, Mr O’Leary (as a Director) raised a number of issues in relation to the conduct and decisions of the Huntsman Hotel’s board. Mr O’Leary sought information from the board, engaged legal representation to assist him in this process, and was subsequently provided with some information.
· The differences of opinion between Mr O’Leary and the other Directors about how the Respondent was being managed grew over time as a result of disputes about a range of issues including the payment of management fees, entering to supply agreements which he contended adversely impacted upon the Respondent’s cost base and resulted in rebates flowing to BMG. Mr O’Leary used Austin Legal to prosecute his concerns as a Director.
· Mr O’Leary corresponded with an entity which had purportedly entered into a supply agreement with BMG seeking a copy of the Agreement[21].
· In late May 2018 Mr O’Leary offered to resign from his employment as part of a resolution in respect to his role as a Director.[22]
· On 20 June 2018 a board meeting resolved to remove Mr O’Leary as a Director.
Breach of Confidentiality
· In March 2018, Mr O’Leary sought the assistance of Mr Tom Austin, who in addition to being a lawyer was a casual employee of the Respondent.
· Mr O’Leary had some informal discussions with Mr Austin whilst Mr Austin was an employee of the Respondent.[23] Mr O’Leary contended that as these conversations did not occur on the Hotel premises, this would not be a breach of any confidentiality obligations.[24]
· The formal engagement of Mr Austin occurred after his resignation as a casual employee on 29 May 2018.[25]
Unauthorised purchases
· Mr O’Leary gave evidence that he purchased some wood for his personal use and put an IOU in the till. This occurred on a number of occasions.
· Mr O’Leary said the use of IOU’s was a common practice and was used by employees to pay for meals and liquor, with a subsequent deduction from their pay.
· It was suggested that Mr O’Leary did not arrange for the deduction of his IOU from his pay, a position that was disputed by him.
Termination meeting
· On 14 June 2018 Mr Mitchell advised Mr O’Leary that a board meeting would be held. It was agreed that the meeting would be conducted on 20 June 2018.
· The meeting commenced at 8:00am with Mr Mitchell and Mr O’Leary attending the meeting personally, and Mr Viney and Mr White attending the meeting by phone.
· Mr O’Leary provided an audio recording of the meeting (made by consent) and a transcript of the meeting. The topics discussed included; the hotel performance, commercial agreements entered into about the supply of wine, communications with Austin Legal and a concern that Mr Austin was an employee of the hotel at the time, and an allegation that Mr O’Leary’s actions represented gross misconduct.
· A motion to terminate Mr O’Leary’s employment was carried.
· A motion was then put to remove Mr O’Leary as a Director which was also carried.
· When the Respondent filed its Form F3 Response, it included an unsigned termination letter on ‘The Archer’ letterhead, dated 16 July 2018 which asserted that an investigation had found that Mr O’Leary had “divulged sensitive information on the running of the company to external parties”, had failed to deduct leave from his pay, continually failing to scan both in and out of the premises, misappropriated company funds by purchasing wood for personal use and that there were unauthorised reimbursements for beverages purchased at the Lion Hotel. The termination was effective 20 June 2018 with notice to be paid in lieu. Mr O’Leary gave evidence that he had not previously received that letter.
Remedy
Mr O’Leary’s pre-dismissal earnings were $95,000.00 per annum or $1,826.91 per week. Mr O’Leary does not seek reinstatement having obtained alternative employment on 31 July 2018. His earnings in the new role are $215.37 per week less than his employment with the Respondent.[26]
Mr Austin’s Evidence
Mr Thomas Austin submitted a statement[27] and gave evidence. Mr Austin’s evidence is summarised as follows:
· Mr Austin was admitted to practice as a lawyer on 23 July 2013 and worked as a sole practitioner.
· Mr Austin had known Mr O’Leary since high school and approached him looking for casual work in mid-January 2018. He commenced working as a bartender and waiter at the Stones Throw and the Respondent.
· In March 2018 Mr O’Leary asked Mr Austin (in his capacity as a lawyer) to review a Unit Holder Agreement for the Huntsman Hotel Pty Ltd and some preliminary advice was provided.
· Mr Austin ceased working for the Respondent and/or Stones Throw on or about 14 May 2018 with his employment formally ceasing on 29 May 2018.
· On 29 May 2018 Mr Austin provided Mr O’Leary with legal advice having resigned as a causal employee before the advice was provided.
As a result of the procedural decision I refused to accept witness statements from the Respondent which had not been filed in accordance with the Directions. I received a number of exhibits which were put to Mr O’Leary during cross-examination and he gave evidence that he had authored or previously seen those documents. Applications by the Respondent to tender documents that where not within the knowledge of Mr O’Leary were refused. I made a confidentiality order pursuant to s.594 in relation to Exhibit R13 (which was a supply Agreement between BMG and Carlton & United Breweries) on the basis of commercial sensitivity.
Submissions
Mr O’Leary submitted that his role as an employee was distinct from that as a Director, that there was not a sound, defensible or well-founded reason for the dismissal and an almost total denial of procedural fairness during his “ambushing” at the meeting on 20 June 2018. Mr O’Leary submitted that his conversation with Mr Austin was in his capacity as a Director and his disclosure was subject to Mr Austin’s duty of confidentiality as a lawyer. Mr O’Leary had explained the reasons for manual entries in the Wageloch system, his reasons for not conducting weekly stocktakes and that the sanction of dismissal was harsh, unjust or unreasonable. Mr O’Leary submitted he would have continued in employment for a further period of 6 months.
The Respondent submitted that the employment relationship had irretrievably broken down and that Mr O’Leary had disclosed confidential information to Mr Austin. The Respondent submitted I should be cautious in accepting Mr O’Leary’s evidence. The Respondent contended that Mr O’Leary’s summary dismissal was not harsh, unjust or unreasonable.
Factual Findings
It was raised during closing submission, that the Respondent may be a small business as defined in s.23 of the Act. This jurisdictional issue was not raised in the Employer’s Form F3, and not ventilated previously in any formal way. The onus rests upon the Respondent on this topic. The evidence before me does not satisfy me that the Respondent was a small business at the time of termination as defined in s.23 of the Act.
I find that Mr O’Leary is protected from unfair dismissal, pursuant to s.382 of the Act.
I find that Mr O’Leary’s relationship with Mr Viney and Mr Mitchell in the period leading up to the dismissal was acrimonious.
I find that Mr O’Leary’s communications with the Bloody Mary Group, the board and entities with whom BMG or the board had entered into agreements with concerning the provision of goods and/or services to the Respondent, was made in his capacity as a Director. It appears to me that Mr O’Leary’s enquiries were broadly consistent with his obligations as a Director. I do not believe it is appropriate to attribute this conduct to Mr O’Leary’s role as an employee.
From the material before me, I am not convinced that there was a requirement for Mr O’Leary to log on and off the WageLoch system. He was not paid based upon the hours that he worked and the communications in respect of the WageLoch system appear to have been directed towards compliance of level employees who were engaged and paid on an hourly rate.
I accept that there were occasions where too many staff were engaged by Mr O’Leary, however I accept Mr O’Leary’s explanation that it was difficult to accurately forecast the Respondent’s custom, and external factors such as the weather or the conduct of outside sporting events could impact on level of staff required.
There is insufficient information before me to find that the Respondent’s budget performance (including labour expenses) was such that Mr O’Leary could be said to have been guilty of incompetence.
The Respondent alleges that Mr O’Leary misappropriated funds by the purchase of fire wood for his own use. I accept that Mr O’Leary ordered firewood for his personal use, paid for it from the Respondent’s funds and placed an IOU in the till. On the evidence before me the use of IOUs was a common practice. I am not persuaded that Mr O’Leary’s conduct can be properly described as misappropriation.
I find that Mr O’Leary had a conversation with Mr Austin about his dispute with the board as a Director whilst Mr Austin was an employee of the Respondent. This is a breach of confidentiality for the period in which Mr Austin was also an employee, and is not explained by the location of the discussion being “off the premises.” However Mr Austin had a duty of confidentiality as a lawyer and there is no suggestion that this obligation was breached or had an adverse impact on Mr Austin’s employment with the Hotel. I find that the breach occurred in a single event and was minor.
I am not convinced that Mr O’Leary’s conduct or performance was such that it could properly be described ‘gross misconduct’, such that notice of termination was not required.
Was the dismissal harsh, unjust or unreasonable?
Pursuant to s.387 of the Act, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account:
“387 Criteria for considering harshness etc.
(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 FWC considers relevant.”
Valid reason - s.387(a)
Notwithstanding its formulation under a different legislative environment, I have adopted the definition of a valid reason set out by Northrop J in Selvachandran v Peteron Plastics Pty Ltd[28] which requires the reason for termination to be “sound, defensible or well founded.”
Whilst I have found Mr O‘Leary breached his obligation of confidentiality, the circumstances suggest that it is a technical breach, with no impact on the confidentiality of the information or the employment relationship of Mr Austin. In these circumstances I do not find this conduct is a valid reason for the dismissal.
None of the other allegations represent a valid reason for dismissal as a result of either having not been proved, or not being related to the performance of the employment contract.
I find that that there was no valid reason to dismiss Mr O’Leary.
Notification of valid reason - s.387(b)
Mr O’Leary was dismissed at a board meeting on 20 June 2018. The board resolved to terminate Mr O’Leary appointment as Director and as an employee. The meeting discussed in a limited way the hotel performance, the appropriateness of Mr O’Leary contacting Treasury Wines, the provision of legal advice by Mr Austin and the provision of information by Mr O’Leary to Mr Austin whilst he was an employee of the Respondent. I accept that Mr O’Leary was notified of these matters.
Opportunity to respond - s.387(c)
The Applicant was requested to attend a board meeting for which no agenda was published. The Applicant was not advised of any intention to discuss his conduct or performance as an employee. Mr O’Leary was ambushed and this limited his opportunity to respond to the allegations.
Any unreasonable refusal by the employer to allow Mr O’Leary to have a support person present to assist at any discussions relating to dismissal - s.387(d)
Mr O’Leary did not seek a support person, but the manner in which the meeting was conducted prevented him from seeking the attendance of a support person.
Warnings relative to unsatisfactory performance - s.387(e)
There were no prior warnings regarding unsatisfactory performance. Whilst I accept comments had been made to Mr O’Leary concerning operational issues, these communications were not in a form that would be regarded as a warning concerning unsatisfactory performance.
Size of the employer’s enterprise and absence of dedicated human resources support - ss.387(g) and (f)
The Respondent does not have a dedicated human resource support. I have taken this into account when reviewing the procedural deficiencies identified.
Other matters considered relevant - s.387(h)
The Applicant was in the unusual position of being a Director and an employee. At the time of the dismissal a protracted dispute between the Applicant (as a Director) and other Directors of the Respondent came to a head. I have taken into account the Applicant’s conduct as a Director and how that would have impacted on the employment relationship.
Conclusion
The Explanatory Memorandum to the Act[29] explains the approach of the Commission in considering the elements of section 387:
“FWA must consider all of the above factors in totality. It is intended that FWA will weigh up all the factors in coming to a decision about whether a dismissal was harsh, unjust or unreasonable and no factor alone will necessarily be determinative.”
In Byrne and Frew v Australian Airlines Pty Ltd,[30] the following observations made by McHugh and Gummow JJ are relevant to my conclusion:
“It may be that the termination is harsh but not 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.”
Having considered each of the factors detailed in s.387 of the Act, I have concluded that the termination of Mr O’Leary’s employment was harsh, unjust and unreasonable.
Remedy
The relevant provisions of Division 4 of Part 3-2 of the Act state:
“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.
…
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.”
The prerequisites contained in ss.390(1) and (2) of the Act have been met in this case.
Mr O’Leary has secured other employment and does not seek reinstatement. I am satisfied that reinstatement is not appropriate in this case.
Section 390 of the Act 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 the circumstances.
I now turn to whether compensation in lieu of reinstatement is appropriate.
A Full Bench in McCulloch v Calvary Health Care Adelaide[31] confirmed, in general terms, that the approach to the assessment of compensation as undertaken in cases such as Sprigg v Paul’s Licensed Festival Supermarket[32] remains appropriate.
Section 392(2) of the Act requires the Commission 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 Act,[33] it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.
The effect of the order on the viability of the employer - s.392(2)(a)
Whilst it was suggested that the Respondent was not performing well financially in November 2017, there is was no submission that any award of compensation would affect the viability of the employer.
The length of service with the employer - s.392(2)(b)
Mr O’Leary was employed for a one year and 3 months.
The remuneration that would have been received, or would have been likely to receive, if he had not been dismissed - s.392(2)(c)
In determining how long Mr O’Leary would have remained employed but for the dismissal I have considered the following:
· Whilst the Respondent expressed some concerns about operational matters Mr O’Leary role had not been the subject of any formal performance discussions. It was open for the Respondent to commence performance management discussions with Mr O’Leary which may have resulted in dismissal after being given an opportunity to improve or Mr O’Leary may have satisfactorily addressed the employment issues.
· As a Director, Mr O’Leary was embroiled in a serious acrimonious dispute with the other Directors. I accept that the working relationship of Mr O’Leary was being significantly impacted by the board dispute, and in time this would have adversely impacted on the continuing working relationship.
· Mr O’Leary had suggested (as part of settlement arrangement in respect of his claims against the Hotel as a Director) that he would resign.
· It is also possible that absent a settlement agreement, Mr O’Leary frustrations with the Board’s management could have resulted in his resignation as an employee.
In the circumstances, I believe it is reasonable to assess compensation in this matter on the basis that Mr O’Leary would have continued to work for a period of 12 weeks (including notice) had he not been dismissed.
The efforts to mitigate the loss suffered by him because of the dismissal - s.392(d)
Mr O’Leary has secured alternative employment 6 weeks after the dismissal. No deduction arises as a result of a failure to mitigate the loss.
Remuneration earned during the period between the dismissal and the making of the order for compensation and the amount of any income likely to be earned during the period between the making of the order for compensation and the actual compensation - ss.392(e) and (f)
Mr O’Leary earnt $1,611.54 per week from 31 July 2018.
Any other matter that the FWC considers relevant and the remaining statutory parameters - s.392(g)
I have been advised after the conclusion of the Hearing that the Respondent is now in administration. I have no other information as to the Respondent’s financial position.
Deduction for Misconduct - s.392(3)
Having considered the evidence and my findings, I do not believe it is appropriate to make any deduction for misconduct.
In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.
The maximum compensation limit in this case would be the lesser of 26 weeks remuneration or half the high income threshold immediately before the dismissal.[34] The amount of compensation awarded is less than this limit.
Taxation is to be paid on the amount determined.
I believe that the compensation detailed below is appropriate having regard to all of the circumstances of this matter and the considerations specified by the Act.[35]
I award compensation in the amount of $12,253.68 gross, which represents the amount Mr O’Leary would have been paid if he had continued to work for a period of 12 weeks (following the dismissal subtracting the post dismissal income which related to that period).
An Order[36] reflecting this decision will be issued.
COMMISSIONER
Appearances:
A Wells of counsel on behalf of the Applicant.
R Gray of counsel on behalf of the Respondent.
Hearing details:
2017.
Adelaide:
10 September.
<PR702715>
[1] Samuel O’Leary v The Respondent T/A Huntsman Hotel[2018] FWC 5670 (procedural decision).
[2] The Respondent T/A Huntsman Hotel v Samuel O’Leary [2018] FWC 5824.
[3] PN9-18.
[4] PN31.
[5] PN31-35.
[6] Exhibit A1.
[7] PN421.
[8] PN195-199, 234-XXX.
[9] Exhibit R1.
[10] PN879-880.
[11] PN450-451.
[12] PN458-479.
[13] PN1172.
[14] PN1148-1152.
[15] Exhibit R9.
[16] PN1172.
[17] PN200-201, PN250-258, PN526-533 and Exhibit R3.
[18] PN565.
[19] PN566-575.
[20] PN644.
[21] Exhibit R12.
[22] PN637-646.
[23] PN677682.
[24] PN685-692.
[25] PN683.
[26] PN228-233.
[27] Exhibit A2.
[28](1995) 62 IR 371 at 373.
[29] Explanatory Memorandum to the Fair Work Bill 2008.
[30] Byrne and Frew v Australian Airlines Pty Ltd [1995] HCA 24.
[31] [2015] FWCFB 873.
[32] (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431.
[33] Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446.
[34] Section 392(5) of the Act.
[35] Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].
[36] PR702716.
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