Sang Il Shim v Jmne Pty Ltd T/A Wooden Bowl Restaurant

[2010] FWA 8230

Note: An appeal pursuant to s.604 (C2010/5522) was lodged against this decision.

[2010] FWA 8230

FAIR WORK AUSTRALIA

DECISION

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

Sang Il Shim
v
JMNE Pty Ltd T/A Wooden Bowl Restaurant
(U2010/461)

COMMISSIONER CAMBRIDGE SYDNEY, 26 OCTOBER 2010

Unfair dismissal - whether applicant was dismissed or resigned - termination of employment on initiative of employer - related unsatisfactory employment practices - no deduction of taxation from wages - no payment of accrued annual leave entitlement - alleged demand for payment from employee to secure employer sponsored application for Australian residency - harsh, unreasonable and unjust dismissal – compensation Ordered.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009, (the Act). The application was lodged at Sydney on 22 March 2010. The application was made by the Liquor Hospitality & Miscellaneous Union, (the LHMU), on behalf of Sang Il Shim, (the applicant) and named the respondent employer as JMNE Pty Ltd trading as Wooden Bowl Restaurant, (the employer).

[2] The application indicated that the date of the applicant’s dismissal was 20 March 2010. Consequently the application was made within the 14 day time limit prescribed by subsection 394 (2) of the Act. Conciliation of the claim was unsuccessful and the matter proceeded to arbitration before Fair Work Australia (FWA) in a Hearing conducted in Sydney over four days, 4, 24 August, 15 September, and 1 October 2010.

[3] At the Hearing the applicant and his wife, Ms Jeongsuk Lee were called as witnesses to provide evidence in support of the claim. The employer was represented by lawyers who called three witnesses, Mr Yong Ku Kim, Mr Won Hee Lee and his wife, Ms Kyung Ja Lee. All witnesses gave evidence with the assistance of Korean language interpreters.

Factual Background

[4] The applicant had worked for the employer for two and a half years. The applicant worked as the Head Chef at the “Wooden Bowl” restaurant located in the Sydney suburb of Strathfield (the restaurant). The employer has approximately 10 employees.

[5] The applicant commenced employment in late September 2007. In about the second week of his employment the employer made arrangements to pay the applicant wages from which no taxation was deducted.

[6] Approximately one year later in September 2008, the employer advised the applicant that the amount of $6520.00 was owed as unpaid tax on earnings. In response to this advice the applicant untied his apron as a gesture of threatened resignation. At this point in time the restaurant operation was dependent upon the services of the applicant. Therefore in order avoid jeopardising the restaurant operation the employer did not pursue the matter of outstanding tax from wages paid to the applicant.

[7] The applicant's employment continued without apparent problem until a little over a year later when, in late 2009, the restaurant was issued with infringement notices from the local Municipal Council in respect to failure to meet food standards codes of practice. The employer successfully disputed the infringement fines but the matters were seen as a reflection upon the standard of operation of the restaurant which was broadly under the applicant's control and supervision.

[8] During the early part of 2010 the employment relationship became strained as the applicant was allegedly uncooperative and highly demanding of other employees. In addition the assistant chef, Mr Yong Ku Kim, complained to the employer about the applicant's general conduct including some criticisms of practices that the applicant had adopted in respect to cooking methods and techniques.

[9] On 8 March 2010 the applicant was on a scheduled day off work when the employer called the applicant into a meeting held in a coffee shop next door to the restaurant. The applicant and the owner of the restaurant, Mr Won Hee Lee (Mr Lee), had a discussion which was observed from a distance by Ms Kyung Ja Lee, the wife of Mr Lee. There was significant factual conflict about what was said between the two men during the meeting on 8 March.

[10] However, there was no dispute that during the meeting of 8 March the applicant handed the key to the restaurant to Mr Lee. The applicant performed no further work for the employer after handing the restaurant key to Mr Lee on 8 March.

[11] On the following day, 9 March, the applicant went to the restaurant and collected personal belongings and he also disposed of an amount of cooking sauce that he had previously prepared. On 19 March 2010 the applicant contacted Mr Lee and met with him outside the restaurant. Once again there was factual dispute about what was said between the two men during this exchange.

[12] On the next day, 20 March 2010, the respective wives of the two men, the applicant and Mr Lee, met and discussed the circumstances of the applicant's employment. During this discussion between the two women Ms Kyung Ja Lee gave the applicant's wife, (Ms Jeongsuk Lee), an envelope which contained $1000.00 in cash. This money was given as the basis for finalisation of the applicant's employment. There was no document accompanying the cash which explained the basis for any calculation made in respect of the final payment.

The Applicant’s Case

[13] Mr C Acev, from the LHMU, appeared for the applicant and submitted that during the meeting held on 8 March 2010 between the applicant and Mr Lee the applicant was directed to take an unspecified period of unpaid leave. According to Mr Acev, the reason that the employer directed the applicant onto unpaid leave related to the applicant's refusal to pay to the employer an amount that totalled $48,000.00.

[14] Mr Acev said that the employer had required that the applicant pay $18,000.00 in respect of taxation not deducted from wages, and a further figure of $30,000.00 as payment for securing sponsorship from the employer for an application in respect of Australian citizenship. This application has been referred to as ENS or Employer Nomination Scheme, a process formalised by the Migration Regulations 1994 made under the Migration Act 1958 (Cth).

[15] Mr Acev said that in response to the employer's direction to commence the unspecified period of unpaid leave, the applicant had reacted by removing the restaurant key from his key ring and giving it to Mr Lee. Mr Acev said that the return of the restaurant key was a practical measure and not a signal of any resignation from employment on the part of the applicant. Mr Acev submitted that the events of 8 March should be correctly interpreted as a sending away by the employer indefinitely and that in the absence of some subsequent conduct of the employer which clarified the employment position, that act of the employer effectively severed the employment relationship.

[16] Mr Acev said that after a period of about two weeks the applicant made contact with Mr Lee in an attempt to clarify the employment status. The clarification was subsequently provided when Ms Kyung Ja Lee gave the applicant's wife an envelope containing the final payment of $1000.00. Mr Acev submitted that when the termination of the employment was properly examined a “causal chain” involving the employers demand for money, the directive of the applicant onto unspecified and unpaid leave, and the subsequent finalisation reflected in the payment of $1000.00, would amount to a dismissal that was grossly unfair.

[17] Mr Acev made further submissions which strongly criticised the employer’s non-observance of statutory and legislative requirements. Mr Acev said that the employer had consciously breached obligations to deduct tax from the applicant's wages, and had breached various other requirements of relevant industrial instruments and other employment legislation.

[18] Mr Acev made further submissions which rejected any suggestion that the applicant had resigned from employment. In particular Mr Acev submitted that the subsequent conduct of the relevant Parties following the meeting between the applicant and Mr Lee on 8 March, supported the version of the discussion between the two men as suggested by the applicant rather than that provided by Mr Lee. Mr Acev said that the employer had taken no steps after the meeting of 8 March to finalise the applicant's employment and that it would have been logical to do so if the employer had believed that the applicant had resigned. Instead it was the applicant who, after a period of about two weeks, sought to clarify the employment situation.

[19] In summary, Mr Acev stated that the termination of the applicant's employment was at the initiative of the employer and that there was no valid reason for that dismissal. Mr Acev said that the alleged performance concerns that had been raised by the employer about the applicant could not constitute proper reason. Instead, the underlying motivation for the employer's decision to firstly send the applicant on unspecified and unpaid leave, and then secondly dismiss, related to the refusal of the applicant to pay the money demanded by the employer in respect to non-deducted tax and sponsorship for the ENS. Therefore according to Mr Acev, the dismissal of the applicant was harsh, unreasonable and unjust. Mr Acev said that in the circumstances there was little if any hope of resurrecting the employment relationship and therefore he urged FWA to make Orders for payment of compensation “to the maximum allowable”.

The Respondent’s Case

[20] Mr A Chee, barrister, who appeared on behalf of the employer, opened his submissions by stating that the employer was a small business for the purposes of the Act and therefore the matter had to be considered in appropriate context. Mr Chee submitted that there were two main issues for determination. Firstly, whether the employer terminated the applicant's employment or whether alternatively, the applicant had resigned. Secondly, if there was a dismissal of the applicant whether that dismissal amounted to an unfair dismissal.

[21] Mr Chee said that it was the employer's case that the applicant resigned on 8 March 2010. Mr Chee submitted that the version of the discussion between Mr Lee and the applicant on 8 March as deposed by Mr Lee should be preferred. Mr Chee said that the meeting of 8 March needed to be considered having regard for the work performance issues that had been raised with the applicant in the preceding months.

[22] Mr Chee made detailed submissions that addressed issues relating to the final payment of $1000.00 made to the applicant on 20 March. Mr Chee submitted that this payment needed to be considered having regard for the fact that all the Parties to the proceedings were Korean. Mr Chee submitted that “Koreans are simply not the selfish individualists that westerners often are.” 1 Mr Chee said that when the money was given to the applicant's wife, Ms Kyung Ja Lee said that she had put in extra money as a gift which was more than her husband deserved. Mr Chee submitted that this was a gift given to the applicant even though the applicant had resigned and not given two weeks’ notice as required.

[23] Mr Chee submitted that there should be no adverse inference drawn because of the short delay in making of this payment. Mr Chee said that the circumstances of the applicant's resignation were unorthodox and it was understandable that the employer had more pressing matters to attend to rather than finalising the payments to the applicant.

[24] Mr Chee also made submissions which challenged the allegation about the employers demand for money in respect of taxation and ENS. Mr Chee submitted that there was no direct evidence from the applicant about the alleged demand. Instead much of the evidence about the alleged demand came from the applicant's wife as hearsay. Further, Mr Chee stressed that the evidence from both Mr Lee and Ms Kyung Ja Lee flatly denied any suggestion of demand for money from the applicant. In addition, according to Mr Chee the allegation lacked plausibility because the applicant did not have sufficient English language skills to be able to be successful with any application for Australian residency.

[25] Mr Chee made further submissions about the detail of the conversation between the applicant and Mr Lee during the meeting of 8 March. Mr Chee said that the applicant had exhibited rash behaviour which was entirely consistent with the applicant providing his resignation when he handed the restaurant key to Mr Lee during the meeting of 8 March. In addition, Mr Chee mentioned that there was evidence that later on the evening of 8 March the applicant told the assistant chef, Mr Kim, that earlier that day he had resigned from employment at the restaurant.

[26] Mr Chee also stressed that the applicant's conduct on 9 March when he attended the restaurant and tipped out cooking sauces, was an action that was consistent with unambiguous termination of employment connected to the resignation that occurred the previous day. In particular, according to Mr Chee, the applicant's action in tipping out the sources was conduct that was consistent with there being no intention of returning to the workplace. Consequently the primary submission made by Mr Chee was that it was the applicant that terminated his own employment.

[27] Mr Chee made further alternative submissions that contemplated circumstances if FWA was to find that the employment relationship had been terminated at the initiative of the employer. In these submissions Mr Chee said that there was sufficient evidence of substantial inadequate work performance and unacceptable conduct which would provide valid reason for dismissal of the applicant. Mr Chee mentioned that the applicant had been warned following the infringement notices that had been issued to the restaurant in mid November 2009 and he had been further warned about objectionable aspects of his workplace behaviour during 2010.

[28] Consequently, according to Mr Chee if it was found that there was a termination of the applicant's employment at the initiative of the employer, the evidence of inadequate work performance and unacceptable workplace behaviour should provide valid reason for dismissal. Therefore Mr Chee submitted that the dismissal of the applicant should be held to have not been harsh, unreasonable or unjust.

[29] In summary, Mr Chee submitted that there was no termination of the applicant's employment at the initiative of the employer. Therefore the applicant was not a dismissed employee and the claim for unfair dismissal remedy should be dismissed. In the alternative if the applicant had been dismissed, Mr Chee submitted that there was valid reason for such dismissal and the dismissal was not harsh, unreasonable or unjust.

Consideration

[30] Section 385 of the Act stipulates that FWA must be satisfied that 4 cumulative elements are met in order to establish an unfair dismissal. These elements are:

(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.

[31] In this case there was challenge relating to those elements contained in subsections 385 (a), (b) and to a lesser extent, subsection 385 (c) of the Act. Specifically, the employer contended that the applicant had not been dismissed but had instead resigned from employment. Logically, this aspect as to whether the applicant was a dismissed person has required consideration and determination before the other elements of section 385 are contemplated.

[32] The provisions of subsection 386 (1) of the Act are central to any determination as to whether the applicant had been dismissed. Subsection 386 (1) of the Act is in the following terms:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[33] In this case there has been a requirement to determine significant factual conflicts relating to the discussion between the applicant and Mr Lee on 8 March 2010. On the one hand, the applicant asserted that during the meeting of 8 March, he was directed by Mr Lee on to a period of unspecified and unpaid leave. On the other hand, the evidence of Mr Lee was that in response to his enquiries as to whether the applicant was looking for other employment, the applicant handed Mr Lee the restaurant key and said words to the effect “Fine, cancel my 457 Visa I have other places to go to”. 2

[34] There were a range of factors which supported the respective, contested versions of the meeting of 8 March 2010.

[35] The applicant's version of the 8 March meeting was supported by a number of factors.

[36] Firstly, the meeting was initiated by the employer. The applicant was called into the meeting on his scheduled day off. If the meeting was called for the purpose of making the enquiries of the applicant as suggested by Mr Lee, these were matters of insufficient gravity to warrant calling the applicant into the meeting on a day off. These enquiries could have easily and conveniently been made at some time shortly after the commencement of the next working engagement of the applicant Alternatively, if Mr Lee was going to direct the applicant onto some form of leave and thereby bring employment and related matters to something of a crescendo, it would probably be better to do so at a time when the restaurant was not dependent upon the services of the applicant.

[37] Secondly, it has subsequently been confirmed that the applicant did not have alternative employment arranged and it was some 18 weeks after 8 March before he was able to obtain another job. This factor is particularly important because of the non-resident status of the applicant and the potential difficulties that loss of employment has in respect of retention of his section 457 Visa. The applicant would have been taking a great risk if he resigned without having first secured alternative employment.

[38] Thirdly, the employer took no action to finalise the applicant's employment after the alleged resignation of 8 March. It was the applicant who contacted Mr Lee on 19 March so as to clarify his employment circumstances. If the employer had genuinely believed that the actions of the applicant on 8 March, and perhaps also the following day, constituted resignation from employment, it would have been logical for the employer to have taken some steps to ensure proper finalisation of the employment. In such circumstances an employer might usually provide a letter to an employee confirming that their words and actions have been accepted as resignation and including any outstanding leave or other entitlements.

[39] Although the employment practices of the employer left much to be desired, there was no suggestion that the employer articulated that the basis for the payment of $1000.00 on the 20 March included that the employer had treated the applicant's actions on 8/9 March as resignation from employment. If the employer had genuinely believed that the applicant had resigned or abandoned his employment it would have been logical and reasonably simple to have unequivocally asserted that position both verbally and in writing at the time at which the employment was finalised on 20 March.

[40] Fourthly, there was an important incongruity between the evidence provided by Mr Lee about precisely what he said to the applicant on 8 March, and what he was quoted to have said to the applicant as set out in the employer's response to the application, Form F3.

[41] In annexure “A” to be employer's response dated 9 April 2010, paragraph 5 is in the following terms:

“5. On 8 March 2010, Mr Lee of the respondent invited the applicant to a cafe next door for coffee and said to the applicant words to the following effect:

Mr Lee: “Sang il, it seems like you are not enjoying working at my restaurant. Maybe it's time you go look for another job.” [Emphasis added]

[42] In the statement of Mr Lee filed with FWA on 19 July 2010, paragraph 10 is in the following terms:

“10. On 8 March 2010, the Respondent invited the Applicant to a cafe next door for a coffee and said to the Applicant followings effect [sic] in Korean language:

Mr Lee: “Sang Il, it seems like you are not enjoying working at my restaurant. Do you have any personal problems or are you looking for a new place to work?” [Emphasis added]

[43] During the Hearing, Mr Lee was unable to provide any satisfactory explanation for the small but significant change between the statement that the employer’s reply said that he made to the applicant as; “Maybe it's time you go look for another job” compared to his evidence of the question that he said he asked; “...are you looking for a new place to work?”

[44] There is of course significant difference between the statement, “Maybe it's time you go look for another job” and the question, “...are you looking for a new place to work?” The potential impact of the statement is that it can reasonably be treated to represent dismissal from employment whilst the question is relatively innocuous.

[45] The evidence that was provided by Mr Lee maintained the notion that he was merely questioning the applicant as opposed to the statement or directive attributed to him in the employer’s response. There was slight variation to the particular detail of the question that he said he put to the applicant. For instance, during examination in chief Mr Lee offered the following:

“THE INTERPRETER:   I asked, "Why are you behaving like that?  You don't want to work at my restaurant?"  That was my question to him.  So I said, "Are you looking for a job elsewhere?"  I also said, "Customers complain that the sauce is not suitable for food."  There were distinctive differences - that kind of complaint from the customers - and then when I said that, then he said, "Okay, you can just cancel the 457 visa," and he undid the keys and put it down and he just stood up.” 3

[46] Importantly, according to the evidence of Mr Lee, his questioning, in whatever particular version, prompted the applicant's resignation from employment involving the handing over of the restaurant key and the invitation to cancel his 457 Visa. Even allowing for some personality volatility and the alleged rash behaviour of the applicant on occasions including the event involving the previous threat to resign in 2008, it is difficult to believe that the applicant would hand over the restaurant key and invite cancellation of his Visa in response to some mild questioning about whether he was looking for other employment and perhaps some suggestion of customers complaints.

[47] Balanced against the applicant’s evidence, there were also various factors that supported the alternative version of the meeting of 8 March as contended by the employer.

[48] There was evidence from the testimony of Mr Kim that the applicant had spoken to him on the evening of 8 March and told him that he had resigned earlier that day. This alleged disclosure to Mr Kim that the applicant had resigned was alluded to in the submissions made on behalf of the employer by Mr Chee. 4

[49] The evidence about the applicant's alleged disclosure to Mr Kim that he had resigned on 8 March has needed to be treated with great caution. Unfortunately this evidence was not included in the statement made by Mr Kim and only emerged from his testimony during the Hearing. Consequently this potentially important evidence was never put to the applicant. (A manifest breach of the well established legal principle as applied in the case of Browne v Dunn 5).

[50] Further, it is important to examine the terminology that was used by Mr Kim when he was asked to recall what the applicant had said to him on the evening of 8 March. The following extract from the transcript of proceedings is the first mention that was made of the alleged disclosure to Mr Kim by the applicant.

“THE INTERPRETER:   I met Mr Shim at barbecue place called - yes.  He was fairly angry towards me and something like intimidation or threatening.  He said something like, "You have partnership visa and if you're working hours something like that, if I report you will be in trouble."

MR CHEE:   I'll just stop you there.  What, if anything, did he say about his own employment?

THE INTERPRETER:   He said he was unhappy so he stopped working.

MR CHEE:   Do you remember what words roughly he used?

THE INTERPRETER:   When we met in the evening he said, "I've stopped working.  I stopped working there.  I was going to report them.  If those people come out to check then you will be in trouble also because you are on partnership visa and it's better for you to stop working from there, and then if things go wrong then you can be assaulted also by me."  6

[51] The first noteworthy issue about this testimony from Mr Kim is that there is no mention of the word “resignation”. Mr Kim recounts that the applicant said that he had “stopped working” at the restaurant. He did not use words such as “resignation” or “quit” or similar words that connote that it was the applicant's decision to stop working at the restaurant. Even allowing for an understandable loss of some precision due to translation from the Korean language, it was curious that it was not until later during cross examination that Mr Kim agreed when it was put to him that the applicant had resigned.

[52] It is also relevant to appreciate that the applicant was clearly angry at the time that he had the discussion with Mr Kim. The level of angst that the applicant conveyed to Mr Kim would be unlikely to be present if he had resigned from employment as a calm and calculated response to some questioning from the employer.

[53] Further, it is of significant interest to note the following evidence given by Mr Kim in answer to questions about the applicant's alleged resignation:

“MR ACEVA:   He resigned?

THE INTERPRETER:   Yes.  When I had a phone call, he said that he just threw that job away.  Then I asked, "Why?"  He said because he was asked to have two weeks' break and he got annoyed and he got - he got annoyed so he stopped working.

MR ACEVA:   Can you put some dates, Mr Kim, to this information about Seoul Ria coming to your attention?  When did it occur?

THE INTERPRETER:   Mr Shim was continuously looking for work elsewhere.

MR ACEVA:   With respect, Mr Kim, that's not the question I asked you.  I asked if you were able to put a date or some time frame as to when you became aware of this information regarding the Seoul Ria application by Mr Shim?

THE INTERPRETER:   Are you asking the exact date or month?

MR ACEVA:   However best you can time frame it, Mr Kim.

THE INTERPRETER:   In any case it was before he stopped working.

MR ACEVA:   So this - with respect, the position is that Mr Shim stopped working in March?

THE INTERPRETER:   Yes.

MR ACEVA:   So are you saying Mr Shim resigned some time before March?

THE INTERPRETER:   Yes.

MR ACEVA:   How do you know that?

THE INTERPRETER:   Because he was continuously looking for jobs and in the process he was frustrated and then I thought he may have had some argument with the director.

MR ACEVA:   Mr Kim, I'll assist you, sir, by indicating that a conversation took place between Mr Shim and Mr Lee on 8 March.

THE INTERPRETER:   Mr Shim and - - -

MR ACEVA:   Mr Lee, occurred on 8 March 2010.

THE INTERPRETER:   Yes.

MR ACEVA:   Your immediate evidence just not five minutes ago was that Mr Shim went for a job a Seoul Ria, and to your knowledge resigned his position.

THE INTERPRETER:   Yes.

MR ACEVA:   Are you saying that occurred before 8 March?

THE INTERPRETER:   Now, he was investigating about Seoul Ria continuously before and then on 8 March 2010 in the afternoon I have received a phone call and he said over the phone he's stopped working there.  I thought it was rather strange so I rang the lady and then - I asked why and then I was just told that he just said that he stopped - he's stopping from working there.” 7[Emphasis added]

[54] This evidence is very interesting for two reasons. Mr Kim mentions that the applicant said that he “...threw that job away” but these are the only words that Mr Kim attributes to the applicant which are in any way suggestive of resignation. Later in his evidence Mr Kim returns to the repeated use of the words “... stopped working there”.

[55] Of greater significance however is that Mr Kim mentioned that the applicant said that he was required to take leave and that this had annoyed the applicant. Although Mr Kim mentions a period of two weeks leave, this evidence is broadly consistent with the applicant's evidence that he was directed onto unspecified and unpaid leave during the meeting held on 8 March.

[56] A further factor that was said to support a finding that the resignation of the applicant was given during the meeting of 8 March involved the applicant's conduct on the following morning. During the morning of 9 March the applicant went to the restaurant and tipped out a quantity of cooking sauces which he had previously prepared. These sauces were apparently the product of the applicant's culinary skills and experience.

[57] The disposal of the cooking sauces was submitted to be conduct that was inconsistent with any continuation of employment. The employer argued that the disposal of the cooking sauces confirmed that the applicant had resigned from his employment during the meeting of the previous day. It was advanced that if the applicant’s version of the meeting of 8 March was to be believed, then the applicant had been directed onto a period of leave and the disposal of the cooking sauces was an action that was entirely inconsistent with the continuation of the employment relationship, albeit on a period of leave. This proposition has some persuasive force.

[58] However, it is equally conceivable that the applicant treated the employer's directive to take leave as a repudiation of the employment. Normally, in the absence of some justifiable reason, a directive to take leave of any form without notice can be properly considered as unreasonable and precipitous conduct designed to bring the employment to an end. Particularly after some further consideration, the applicant could have concluded that the directive onto leave, in the circumstances, was tantamount to dismissal. On any analysis, the disposal of the cooking sauces was a clear act of retaliation against the employer and it can in no way be condoned or considered as appropriate behaviour.

[59] The disposal of the cooking sauces was unacceptable and regrettable behaviour. However it does introduce the question as to why the applicant would be so angry and seek to retaliate against the employer if he had resigned on the previous day in response to generally innocuous questioning from the employer?

[60] I have carefully evaluated the various factors that support and detract from the respective versions of the detail of the discussion between the applicant and Mr Lee on 8 March 2010. I have also had the benefit of observing the demeanour and other non-verbal characteristics of relevant witnesses when they gave testimony and at other times throughout the proceedings. There have been the usual difficulties associated with witnesses who provide evidence via language interpreters. Importantly in this instance, all witnesses provided testimony with the assistance of interpreters.

[61] Following a careful evaluation of the various issues that are relevant to the determination of the central factual conflict regarding the meeting of 8 March 2010, on balance and weight, I have determined to adopt a clear preference for the applicant’s version of that event over that provided by the evidence from the employer. In totality, the applicant’s version of the meeting of 8 March is more plausible and believable than that proffered by the employer. Further, importantly, the applicant’s version of the event is supported by some evidence adduced on behalf of the employer involving Mr Kim’s mention that the applicant had said that he was asked to take leave during the meeting.

[62] Consequently the termination of the applicant’s employment occurred on the initiative of the employer and thereby satisfied the provisions of subsection 386 (1) (a) of the Act. Therefore the first element of s.385 has been established in that the applicant was dismissed. It is necessary to consider the remaining elements that are relevant in this case.

[63] The employer was a small business and pursuant to s.388 of the Act the provisions of the Small Business Fair Dismissal Code (the Code) must be considered. The Code is in the following terms:

“Commencement

The Small Business Fair Dismissal Code comes into operation on 1 July 2009.

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[64] There was insufficient evidence to enable proper determination as to whether the termination of the applicant’s employment was a summary dismissal. The evidence of payment to the applicant of $1000.00 as some form of unspecified consideration in respect of the conclusion of the applicant's employment, appeared to characterise the dismissal as being other than summary in nature. However there was evidence that suggested that payment was made only up to the time of termination on 8 March 2010.

[65] The employer suggested that there was deterioration in the standard of the applicant’s work and relied in part, on the Municipal Council food standards infringement notices as evidence of inadequate work performance. There was also evidence that alleged that the applicant was overly authoritarian towards other staff and that he had been dismissive of customer complaints.

[66] There was no evidence of any clear warning to the applicant about any work performance or conduct issues. Similarly there was no evidence that the applicant was given “a reasonable chance to rectify” performance or conduct concerns of the employer.

[67] The evidence provided by Mr Lee included that on the two days before the meeting with the applicant on 8 March, his wife, Ms Kyung Ja Lee observed, inter alia, the applicant’s “...behaviour to other employees...” 8. Ms Kyung Ja Lee made certain conclusions about the applicant and reported her observations to Mr Lee. This information provided to Mr Lee from his wife, appeared to act as the stimulus for the meeting of 8 March. Consequently there could have been no opportunity for the applicant to rectify any of the conduct or performance issues observed by Ms Kyung Ja Lee on the two days before the meeting.

[68] The employer did not produce any checklist, memo, diary note or any other material that might have provided verification of a clear warning and reasonable chance to rectify any problem associated with the applicant’s work performance and or conduct.

[69] Consequently, when the circumstances of the dismissal are considered and evaluated against the terms contained in the Code, it is clear that the dismissal of the applicant was not consistent with the Code.

[70] The final relevant element of s.385 of the Act involved consideration as to whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria which FWA must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

(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.

Valid reason for the dismissal related to capacity or conduct

[71] It was submitted that if it was established that the applicant had been dismissed, then there was sufficient evidence of performance and conduct matters that would provide valid reason for the applicant’s dismissal. The performance and conduct issues were alleged to be the subject of verbal warnings given in about mid November 2009 and January 2010.

[72] An examination of the totality of the evidence of the alleged performance and conduct problems of the applicant has not provided a convincing basis to enable any factual confirmation of the alleged problems. Instead, there appeared to be something of a “scattergun” volley of alleged issues thrown into the evidence without any precision as to specific incidents or events.

[73] As an example, the statement of Mr Lee mentions; “poor standard of care in health, safety and hygiene in the kitchen”; “...ignorant and reckless to the rules and instructions given ...”; “...not complying with the required regulations...”; “...becoming more lazy and aggressive...”; “...poor standard and performances...” ; “...using poor quality ingredients...” ; “...being unreasonable and irritable...”. However there was no evidence upon which findings could be made so as to establish with any precision, a particular incident which involved conduct or other behaviours of the applicant consistent with the employer’s allegations.

[74] In fairness, the totality of the evidence did create a representation that the applicant was not the easiest person to work for. The applicant acknowledged that in the pressure of a busy restaurant kitchen he exercised direct and sometimes abrupt authority as Head Chef. These are traits often displayed in this particular workplace setting. In the absence of evidence upon which to establish any specific incidents where unacceptable levels of either poor performance or excessive behaviours were exhibited, the allegations made against the applicant could not represent valid reason for dismissal.

[75] Consequently there was not a valid reason for dismissal relating to the applicant’s capacity or conduct.

Notification of reason for dismissal

[76] In this instance there was no notification of dismissal. There was also an unfortunate paucity of documentation concerning the finalisation of the applicant’s employment.

Opportunity to respond to any reason related to capacity or conduct

[77] The direction by the employer to place the applicant onto leave during the meeting of 8 March was precipitous action that denied the applicant any opportunity to respond if there had been genuine issue in respect to the applicant’s capacity or conduct.

Unreasonable refusal to allow a support person to assist

[78] There was no evidence that the applicant was unreasonably refused permission to have a support person to assist. However there was no support person present at the meeting of 8 March.

Warning about unsatisfactory performance

[79] As mentioned in respect to the application of the Code, the employer did not provide any material which could have verified that the applicant was given any warning about unsatisfactory performance.

Size of enterprise likely to impact on procedures

[80] The Code has application in this instance. Notwithstanding the accommodation ordinarily provided to small size enterprises like the employer, the evidence in this case revealed disturbingly substandard employment practices that could not be condoned irrespective of the size of the enterprise.

Absence of management specialists or expertise likely to impact on procedures

[81] Although the employer had no dedicated employee relations staff there was evidence that it engaged accountants and consulted others in respect to its business operations. Consequently it was highly regrettable that it appeared that the employer consciously conducted certain substandard employment practices such as the non-deduction of payee taxation from wages. There were a variety of other employment practices that were touched upon during the proceedings which suggested that the employer may have operated contrary to relevant industrial instruments and other employment legislation.

Other relevant matters

[82] The applicant alleged that his dismissal was prompted by his refusal to pay the employer’s demand for $18,000.00 in respect of taxation, and a further figure of $30,000.00 as payment for securing sponsorship from the employer for an application in respect of Australian citizenship. As mentioned earlier, this application has been referred to as ENS or Employer Nomination Scheme.

[83] There was insufficient evidence presented in this matter to enable any conclusive findings in respect of this allegation. I am not sufficiently acquainted with the relevant migration legislation to understand whether a request or demand for payment to provide assistance with an ENS is acceptable, lawful conduct or not. However, the evidence in respect to the taxation issues would I believe, be likely to invite rectification.

[84] The evidence provided by Mr Lee appeared to confirm that the applicant took no annual leave during the period of his employment but that apparently he was paid at a higher rate in lieu of annual leave. 9 Although cashing out of annual leave may be permissible, the National Employment Standards require that a minimum annual leave balance must be retained. The $1000 payment made to the applicant upon termination did not include any amount in respect of annual leave entitlement. Further, the evidence of Ms Kyung Ja Lee was that all employees were paid “cash in hand” and that deduction of tax seemed to be optional.10

[85] Therefore, as mentioned during the proceedings, I shall direct that a copy of this Decision and the transcript of proceedings be drawn to the attention of, the Fair Work Ombudsman, the Investigations Branch of the Australian Taxation Office, and the Department of Immigration and Citizenship.

Conclusion

[86] The primary determination of this unfair dismissal claim has initially involved resolution of the issue as to whether the applicant was dismissed or if he resigned from his employment. This aspect of the determination has required settlement of directly conflicting evidence concerning the details of a meeting held between the applicant and the employer on 8 March 2010. Ultimately, as a consequence of the factual findings that have been made about the meeting of 8 March, I have determined that the applicant’s employment was terminated on the employer's initiative.

[87] The second aspect of determination of this matter has involved whether the employer had complied with the Small Business Fair Dismissal Code. In this regard, upon analysis, I have concluded that the dismissal of the applicant was not consistent with the Code.

[88] The final component of the primary determination has involved whether the dismissal of the applicant was harsh, unjust or unreasonable. Following an examination of the criteria set out in section 387 of the Act, I have concluded that the dismissal of the applicant was harsh, unjust and unreasonable.

Remedy

[89] The applicant has not sought reinstatement but rather compensation as remedy for his unfair dismissal. In the circumstances I am satisfied that reinstatement of the applicant would be inappropriate and that payment of compensation would represent an appropriate remedy.

[90] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that were established in the Full Bench Decision in Sprigg v Paul’s Licensed Festival Supermarket 11 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd 12.

[91] Firstly, I confirm that an Order of the payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[92] Secondly, in determining the amount of compensation that I Order I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[93] Specifically I note that there was no suggestion that any Order of compensation would have any particular impact on the viability of the employer's enterprise. The applicant had been employed for a period of about 2 years and 6 months. The applicant had made efforts to mitigate his loss and had obtained alternative employment on 15 July 2010. I accept the applicant's evidence about the amount of remuneration received in the alternative employment.

[94] Thirdly, the question of any misconduct that may have contributed to the employer's decision to dismiss the applicant must be considered. The evidence of the applicant's misconduct involving the disposal of the cooking sauces on 9 March, has earlier been mentioned as regrettable misbehaviour that should not be condoned. Consequently, although that misconduct did not contribute to the employer's decision to dismiss the applicant, I have included it as an additional relevant factor operating to reduce the amount of compensation that I am prepared to Order.

[95] Fourthly, the amount Ordered does not include any component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the applicant by the manner of the dismissal.

[96] Fifthly, the amount of compensation Ordered does not exceed the lesser of the total remuneration of the applicant for the period of his employment during the 26 weeks immediately before the dismissal, and half the amount of the high income threshold immediately before the dismissal.

[97] Consequently for the reasons outlined above, I have decided that an amount equal to 16 weeks remuneration calculated at the gross weekly figure as identified from the evidence of Ms Kyung Ja Lee 13 should be Ordered as compensation to the applicant. That amount is $25,600.00. Accordingly separate Orders [PR506064] providing for remedy in these terms will be issued.

COMMISSIONER

Appearances:

Mr. C. Acev (LHMU) for the Applicant.

Mr. A. Chee (Barrister) for the Respondent.

Hearing details:

Sydney - 4 August 2010

Sydney - 24 August 2010

Sydney - 15 September 2010

Sydney - 1 October 2010

 1   Transcript of proceedings (1 October 2010) @ PN2311.

 2   Exhibit 4 @ paragraph 11.

 3   Transcript of proceedings (24 August 2010) @ PN1587.

 4   Transcript of proceedings (1 October 2010) @ PN2363.

 5   Browne v Dunn (1894) 6 R 67.

 6   Transcript of proceedings (24 August 2010) @ PN780 > PN784.

 7   Transcript of proceedings (24 August 2010) @ PN1065 > PN1086.

 8   Exhibit 4 @ paragraph 9.

 9   Transcript of proceedings (15 September 2010) @ PN 1882.

 10   Transcript of proceedings (15 September 2010) @ PN 2211.

 11   Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 12   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

 13   Transcript of proceedings (15 September 2010) PN2157.

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<Price code C, PR503063>