Scott Fletcher v Precision Mechatronics Pty Ltd

[2014] FWC 1126

[2014] FWC 1126

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Scott Fletcher
v
Precision Mechatronics Pty Ltd
(U2013/12355)

COMMISSIONER MCKENNA SYDNEY, 11 MARCH 2014

Application for relief from unfair dismissal.

[1] Scott Fletcher (“the applicant”) has lodged an application for an unfair dismissal remedy concerning the termination of his employment with Precision Mechatronics Pty Ltd (“the respondent”). The application has been made pursuant to s.394 of the Fair Work Act 2009 (“the Act”).

[2] The applicant was employed by the respondent as a Control System Engineer, and had been so employed since about August 2009 when the company that had initially employed the applicant, namely Silverbrook Research Pty Limited, had split part of its business into the entity which is the respondent to these proceedings.

[3] Shortly stated, the respondent was encountering business difficulties. Over a period of months commencing from about February 2013, the respondent’s payment of remuneration to the applicant was irregular and the subject of delay beyond the intervals at which payment was supposed to be made; and payments for some periods were not made.

[4] The applicant continued working for the respondent notwithstanding the delays in payment or non-payment, or both. In the period immediately preceding the termination of employment, the respondent did not pay the applicant any remuneration for a period of approximately nine weeks, despite the applicant’s numerous requests for payment, including a written demand on 26 June 2013. The applicant did not receive a reply from the respondent to that letter.

[5] In the period following 28 June 2013, the respondent issued various written updates to staff, but the applicant still was not paid. The respondent’s failure to pay the applicant meant the applicant could not meet his financial commitments for his mortgage and, as a result, there was evidence indicating he had to sell his property.

[6] On 4 July 2013, the applicant decided he could no longer work for the respondent without being paid and with no assurance as to if or when he would ever be paid for his work. By letter dated 4 July 2013, the applicant gave the respondent two weeks’ notice that his last date of work would be 19 July 2013. The applicant’s letter in this regard read, in part:

“The reason for my decision is due the [sic] hardship I have endured over the past 6 months of not receiving consistent fortnightly payment from Precision Mechatronics. As at 4th July 2013, 12 months of superannuation, and 10 weeks of salary are outstanding.”

[7] The applicant deposed that he was forced to leave his employment because of the conduct of the respondent in failing to pay wages and entitlements to him. The applicant further deposed that if the respondent had paid the wages and entitlements, as it was obliged to, he would have remained ready, willing and able to perform his duties and responsibilities; and he would not have left his employment with the respondent. The applicant explained in his evidence he could not afford to continue to work for the respondent without being paid and with no certainty he would be paid for work he had already performed or for work he would perform in the future. At the time of preparing his statement pursuant to the directions in this matter, the applicant had not received his unpaid wages, accrued annual leave entitlements and contributions with respect to superannuation.

[8] The foregoing overview is based on the materials advanced in the applicant’s case. The respondent did not lodge any materials pursuant to the directions. The respondent’s solicitors lodged a Notice of Representative Ceasing to Act a number of days before the Arbitration Conference/Hearing that was listed before me. Endeavours by my office to contact the respondent after the respondent’s solicitors had ceased acting were unsuccessful. Further attempts to contact the respondent on the day of the listing, in circumstances where there was no appearance by or on behalf of the respondent, were similarly unsuccessful. In those circumstances, I decided to proceed to hear the application in the absence of the respondent. No communication was received by my office from the respondent following the scheduled listing in relation to the non-appearance.

Consideration

[9] On the material before me, I am satisfied the application was made within time and the applicant was a person protected from unfair dismissal. There were no issues that arose relevantly concerning consistency with the Small Business Fair Dismissal Code and whether the dismissal was a case of genuine redundancy.

[10] Section 386(1)(a) of the Act provides that a person has been dismissed if 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. In this case, the circumstances of the termination of employment formally comprised a resignation by the applicant. It may be accepted, nonetheless, considering the history of matters of non-payment of entitlements that led to the resignation, that the termination of employment was a dismissal within the meaning of the Act. That is, the termination of employment might be characterised, for instance, as a constructive dismissal or that the termination of employment was brought about by the applicant’s acceptance of the respondent’s repudiation of the contract of employment. Whichever type of characterisation is adopted, I accept that the applicant, within the meaning of s.386(1)(a) of the Act, effectively was forced to resign by the respondent’s conduct or course of conduct. The circumstances of this matter are distinguishable from those considered in Bruce v Fingal Glen Pty Ltd (in liq)[2013] FWCFB 5279, a case which turned on comparatively short delays in payment of wages.

[11] I turn now to the question of whether the dismissal was harsh, unjust or unreasonable. In that respect, s.387 of the Act requires consideration of certain matters, albeit few have direct relevance to the circumstances of this particular application. Nonetheless, to the extent those matters require consideration, they are addressed in the Act. In this regard, s.387 reads:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal 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.”

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)

[12] The respondent did not have a valid reason to dismiss the applicant for reasons related to the applicant’s capacity or conduct, including effects on safety and welfare.

Whether the person was notified of that reason

[13] This provision does not relevantly arise for consideration in relation to this application, as the dismissal did not stem from reasons related to the applicant’s capacity or conduct, including effects on safety and welfare.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[14] Again, this provision as to opportunity to respond does not relevantly arise for consideration because the dismissal was not related to the applicant’s capacity or conduct.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[15] To the extent this provision may relevantly arise, there was no evidence of any unreasonable refusal by the respondent to allow the applicant to have a support person present to assist at any discussions relating to dismissal.

If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[16] The circumstances of the dismissal did not relate to unsatisfactory performance.

The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; 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

[17] There was no evidence before the Commission as to these matters, albeit there was evidence that the applicant sent a letter to the respondent concerning payment to which the respondent did not reply.

[18] Having considered the evidence, I am satisfied the applicant has been unfairly dismissed; the dismissal, within the meaning of the Act, arising from an effectively forced resignation brought about by the respondent’s failure to pay the applicant’s entitlements, was harsh, unjust or unreasonable.

[19] I am satisfied that an order for reinstatement would be inappropriate in this matter and I am otherwise satisfied an order for payment of compensation is appropriate in all the circumstances of the case.

[20] In lieu of reinstatement, I have decided the applicant should have an order for compensation. Section 392 of the Act reads as follows as to orders for compensation:

“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.”

[21] I now consider the matters required to be considered concerning an order for compensation.

The effect of the order on the viability of the employer’s enterprise

[22] There was no evidence as to any effect the order would have on the viability of the respondent’s enterprise, albeit it may be inferred that in circumstances where entitlements were not paid to the applicant due to financial exigencies or incapacity to pay it might be anticipated the order may have an effect on such viability.

The length of the person’s service with the employer

[23] The applicant was employed by the respondent since July 2009 and with what appears to have been some form of related corporate entity since September 2007.

The remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[24] The remuneration the applicant would have received, or would have been likely to receive, but for the dismissal, would have, or, perhaps more accurately, should have, accorded with his proper entitlements to remuneration in his employment with the respondent.

The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[25] The applicant made efforts to mitigate the loss, by seeking and obtaining alternative employment.

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; 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

[26] There was evidence of the remuneration earned by the applicant from his alternative employment and I have taken that into account pursuant to s.392(2)(e) and s.392(2)(f) of the Act. The applicant now earns a lower amount of remuneration than he did in his employment with the respondent, albeit he is actually being paid such remuneration in his new employment.

Any other matter the Commission considers relevant

[27] The applicant was constrained by his contractual obligations not to work for any entity other than the respondent at a time while he continued to work for the respondent without payment of wages (apparently in a gesture to try to keep the business afloat while the respondent apparently attempted to, however described, to trade-out of its difficulties). I further note the circumstances of the non-payment of wages leading to the termination of employment meant the applicant had to sell his property.

[28] There was no misconduct by the applicant in this matter, and the order otherwise does not include any component by way of shock, distress or humiliation, or other analogous hurt, caused to the applicant.

Conclusion

[29] The applicant sought an order for compensation in the amount of ten thousand dollars ($10,000.00). Having considered the matters advanced by the applicant in the context of the statutory criteria, I am satisfied that the applicant has established a case for an unfair dismissal remedy by way of an order for compensation in the amount sought. An order to that effect has been issued in conjunction with this decision.

COMMISSIONER

Appearances:

S. Fletcher in person.

No appearance by or on behalf of the respondent.

Hearing details:

2014.

Sydney:

February, 3.

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<Price code C, PR547799>