Shane Berger v United Crib Block Construction Pty Ltd

[2017] FWC 450

[2017] FWC 450

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Shane Berger
v
United Crib Block Construction Pty Ltd
(U2016/8892)

DEPUTY PRESIDENT BULL PERTH, 16 MARCH 2017

Application for relief from unfair dismissal. Alleged conflict of interest, no valid reason, reinstatement not sought compensation awarded.

[1] On 16 August 2016, Mr Shane Berger, (the applicant) made an application to the Fair Work Commission (the Commission) seeking relief for unfair dismissal under s.394 of the Fair Work Act 2009 (the Act). Mr Berger’s employment had been terminated by United Crib Block Construction Pty Ltd (the respondent) on 2 August 2016, due to the respondent’s view that the applicant had a conflict of interest and that his ability to perform safely on site may be compromised.

[2] The application seeks compensation for lost wages as a result of being unfairly dismissed.

[3] A telephone directions conference was held before me on 28 October 2016, at which the parties agreed that the matter be listed for hearing on 5 December 2016. The respondent was also directed to file a response to the application, having not already done so.

[4] On the morning of 5 December 2017, Mr George Bouhoutsos, a director of the respondent, telephoned the Commission to advise that he had to attend to an urgent family matter and was unable to attend the hearing that day. Mr Bouhoutsos was asked to put into writing the reason he was unable to attend the hearing at such late notice.

[5] Mr Bouhoutsos sent an email advising that he had to attend a religious ceremony which had been scheduled on the same day, and had not realised this would conflict with the listed hearing time.

[6] The Commission wrote to the parties seeking their availability to attend a hearing on a 12 or 14 December 2016, however Mr Bouhoutsos advised the Commission that he would be unable to attend on that day and his next availability would not be until February 2017.

[7] The applicant was provided an opportunity to respond to the request of Mr Bouhoutsos to delay hearing of the matter until February 2017. The applicant’s response was that he had already been inconvenienced by the late cancellation of the hearing on one occasion, that the respondent had made no serious attempt to resolve the matter without the need for a hearing, and that he was experiencing serious financial difficulty and wanted the matter heard before Christmas. The applicant expressed that he would be willing to make a further attempt to settle the matter, with the assistance of the Commission.

[8] Telephone conciliation occurred with the Commission on 19 December 2016; however the matter could not be settled.

[9] The matter was then listed for hearing on 3 January 2017. Mr Bouhoutsos subsequently advised the Commission that he would be unable to attend hearing on the date listed, as he would be overseas at that time.

[10] The matter was eventually heard on 13 January 2017. Both parties were self-represented.

Applicant’s submissions

[11] The applicant’s case is advanced on the basis that the termination of his employment was unfair because it was based on a possibility and a series of incorrect assumptions made by the respondent, without the applicant being afforded the opportunity to respond to the alleged incorrect assumptions. The applicant does not accept that any conflict of interest was in existence at the time of his termination.

[12] The applicant submitted that the idea to commence his own business was not impending, as suggested in the termination letter he received, but that it was a longer term plan, of at least three to six months or longer.  1

[13] To the extent that there were any issues with the applicant’s performance at work, or with his attitude or work ethic, the applicant submits that he was not given warnings about this, nor given an opportunity to make the changes required to address any issues. 2

[14] The applicant’s submission is that on 29 July 2016, he engaged in an “off the cuff” discussion with Mr Bouhoutsos, and shared his intention to, at some time, purchase a truck and dog 3 and start a business of his own, doing supply and delivery of materials such as dirt and woodchip. It was submitted this would not create a conflict of interest because that is not the work the respondent engages in.4

Evidence of Shane Berger

[15] The applicant commenced employment with the respondent on 30 October 2014, 5 as a leading hand.6 Mr Berger provided a witness statement7, gave evidence and was subject to cross examination by Mr Bouhoutsos.

[16] Mr Berger stated he was a loyal employee who worked hard during his two years with the employer, evidenced by the promotions and the pay rise that he received during that period. 8

[17] For the last couple of months before the termination, Mr Berger said that he began to struggle at work. He said that this was due to other employees “slacking off”, causing him to have to work harder to get his work done. He said that he had spoken to a production manager about it, and had said something to Mr Bouhoutsos, but it was like “water off a duck’s back.” 9

[18] As a result, the applicant says that he was not enjoying his work, and it was during this period that he began to think about purchasing a truck and trailer in order to work for himself. 10 He said that he had mentioned this to one or two other employees.11

[19] On 29 July 2016, he telephoned Mr Bouhoutsos and advised that he had plans to, at some stage, start a business of his own in the civil field, and that he wanted to purchase his own truck and trailer and not to make any long term plans for him within the company. 12 The applicant states that there was no indication by Mr Bouhoutsos that this may create a conflict of interest.13

[20] The applicant said that the phone call was cordial and amicable, and he felt supported by Mr Bouhoutsos. 14

[21] On 2 August 2016, while driving home from work, the applicant received an email, referring to an attached notice. He pulled over and read the email. The notice was a letter of termination, in the following terms:

“Dear Shane,

With your impending endeavour to commence your own business within the industry, we believe that this will lead to a conflict of interest between United Crib Blocks Construction and your forthcoming company. We anticipate that your ability to perform effectively and safely on site may be compromised with a consequential detrimental effect on morale and cohesion of fellow personnel within UCBC.

It is with due consideration that we provide you with this notice of termination with your last day of employment being today 2^nd August 2016.

In relation to the company properties entrusted to you during your employment with UCBC, please ensure that the company vehicle along with any miscellaneous items under your care be returned to the Minto Site by close of business this Wednesday 3^rd August 2016.

Should further information or clarification be required, please do not hesitate to contact George Bouhoutsos to further discuss on this matter (sic).

Thank you.

Yours Sincerely,

Management ] Human Resources
United Crib Blocks Construction”  15

[22] Mr Berger stated that he couldn’t understand how it was fair or just that he was terminated after he showed initiative by making a “courtesy phone call” to his employer to provide him with advance notice of his future work aspirations. 16 He said that nothing was raised by Mr Bouhoutsos about there being a conflict of interest or about the implications of his intention to start a business, either during the earlier phone call with Mr Bouhoutsos or afterwards.

[23] The applicant was insistent in giving his evidence and in cross examination that he did not give Mr Bouhoutsos a definite time frame for starting his own venture. The applicant stated that he told Mr Bouhoutsos that it was a “long term plan”, after which Mr Bouhoutsos asked for an indication of time. 17 Under cross examination the applicant agreed that when asked for this information, he stated ‘I’m not sure’ and that he told Mr Bouhoutsos during the phone conversation that it could be three months, or six months.18

[24] In cross examination Mr Berger stated that he told Mr Bouhoutsos:

“If we are in the middle of a job and there’s 10 weeks to go to the end of the job, I will give you 10 weeks’ notice. I’m not going to leave you in the middle of a job.” 19

[25] The applicant telephoned the respondent immediately after reading the termination letter on his mobile phone and states that Mr Bouhoutsos said that his hand had been forced after the 29 July conversation, and that he had no choice but to let Mr Berger go. 20

[26] The applicant stated that when he asked Mr Bouhoutsos what the termination was really about, Mr Bouhoutsos said it was because of a conflict of interest, despite the applicant explaining that the work he intended to do was different to the services offered by the respondent. 21

[27] Mr Berger stated that he was unsure of whether he would be eligible to obtain a business loan and had no idea about how to start a business when he had the conversation with Mr Bouhoutsos. 22

[28] The applicant stated that he had spoken with his father about two weeks prior to being terminated about his idea of starting a business of his own, an idea that his father supported and encouraged. He said that he and his father had already started looking at some vehicles, prior to the termination, although they had not seen anything that they could afford. 23

[29] Mr Berger states that he had not looked at any trucks and had given Mr Bouhoutsos and undertaking that if and when he decided to leave he would let Mr Bouhoutsos know. 24

[30] When the applicant was terminated, he said his father suggested they start a company together immediately, and he would purchase the truck and dog. Together they found a truck the applicant’s father could afford to buy and this was purchased around the end of August. In the beginning of September, the applicant’s father financed the purchase of an excavator and a bobcat to broaden the services that the company could offer. The applicant said that he was forced into moving very quickly to start the company after he was terminated, although that had not been his intention. 25

[31] The applicant has not sought work with another company since his termination because he has been trying to get business for the company. He gave evidence that the company has not made any money, and that to date he has not drawn a wage and is financially supported by his father. 26

[32] The applicant states that the business poses no conflict with that of the respondent because the target markets are entirely different. The respondent is in the business of building retaining walls and does some hire work, whereas the applicant’s business does supply and delivery of materials. 27 The applicant stated that he had not approached any of the respondent’s clients, and that even if he did it would not be a conflict because it would not be to take work away from the respondent. Mr Berger advised that he did not contact Simmons Civil, the one client of their business that was also a client of the respondent, but had been approached by a school friend who contracts for them to help out as he ‘couldn’t make the job’.28

[33] Following the termination, the applicant states that his marriage suffered from financial strain cause by the loss of income which was used to support his wife and her four children. The marriage subsequently broke down and the applicant is now living with his father. 29

Evidence of Raymond Berger

[34] Mr Raymond Berger, the applicant’s father, gave evidence and was cross examined by Mr Bouhoutsos.

[35] Mr Berger senior stated that his son had spoken to him a few months before they established their company about purchasing a truck and working for himself. Mr Berger said that when his son raised the idea of starting a business, his son was unsure about when he wanted to do this. 30

[36] Mr Berger senior said that when his son was terminated he saw this as an opportunity for him and his son to start the business straight away. Mr Berger senior borrowed a sum of money from his mother, which was to form part of his inheritance, and with that, they started the company. 31

[37] Mr Berger’s evidence was that he was currently on six months long service leave from his job and that the company was registered on 3 September 2016. Mr Berger senior stated that the company ‘does civil work and hauls dirt’ with Mr Berger senior driving the trucks and his son operating the machines. 32

[38] Mr Berger senior gave evidence that he has no experience in the civil business, so he relies on his son to obtain work for the business. 33

[39] In cross examination, Mr Berger senior was asked to provide the names of clients that the new business has done work for. Mr Berger senior provided the names of six clients, one of which was also a client of the respondent. 34

Evidence of Kristen Maloney

[40] Kristen Maloney is the applicant’s counsellor. Ms Maloney provided the Commission with a letter advising her opinion of the applicant’s mental health and the impact of the termination on the applicant. 35 Ms Maloney provided oral evidence. The respondent did not require Ms Maloney for cross examination.

[41] Ms Maloney stated that the applicant had suffered from depression prior to the termination, and that in her opinion, the applicant was in no state to start up a company when he did. 36

Respondent’s submissions

[42] The respondent is said by Mr Bouhoutsos to be a small family business operating in the civil and commercial sector within the building industry. The respondent states that it employs 15 to 20 employees. 37 The company designs, supplies, installs and certifies retaining wall systems. The respondent also provides haulage and machinery hire for industrial, residential and residential projects. Mr Bouhoutsos is a Director of the company and described his role as very hands on, working alongside his employees in all aspects of the business.38

[43] The respondent denies that the applicant was unfairly dismissed, stating that in the circumstances it faced, the respondent acted fairly and justly.

[44] Mr Bouhoutsos stated that although the applicant had very little experience in civil work when he commenced, he received two promotions during his period of employment. The company invested in the applicant obtaining a truck licence to increase his value to the company, and subsequently the applicant received a pay rise. The company also utilised the applicant’s skills as a fitter and welder. 39

[45] The respondent submitted that the applicant’s stated intention to start a haulage business gave rise to a ‘real potential conflict of interest’, and the possibility of the applicant targeting the respondent’s current clients to promote his business, while still working for the respondent. The respondent submitted that it was both a possibility and a reality that the applicant was promoting conflicting business interests whilst still an employee of the respondent. 40

[46] The respondent submitted, while not the primary business service of the company, hiring trucks for haulage and providing haulage services is a component of the overall business service provided and that whilst employed the applicant had driven trucks for the purpose of hauling on occasions. This, it put, is evidence of a real potential conflict of interest which gave rise to circumstances in which it was not unreasonable for the respondent to terminate the applicant’s employment. 41

[47] The respondent relied on the applicant starting a business and performing work for a client of the company as evidence of the reality of that conflict. Further, the applicant’s company purchased machinery which has extended the business interests of that company to excavation work, which forms part of the respondent’s core business activities. 42

[48] The respondent put that it was acting in anticipation of this conflict, and further, of the possibility of the applicant’s diminished ability to perform safely and effectively on site. The respondent said if this were to occur, it may have a detrimental effect on the morale and cohesion of its employees. The respondent formed the view that it was in the best interests of the company to terminate the applicant’s employment. 43

[49] The respondent also submitted that the applicant’s employment was not terminated, but that there was a ‘cessation of the contract between the applicant and respondent,’ 44 and that by paying four weeks in lieu of notice and the applicant’s accrued entitlements, the respondent had acted fairly and justly.45

Evidence of George Bouhoutsos

[50] Mr Bouhoutsos stated that during the period of the applicant’s employment, the company had invested a lot of time and money into the applicant in order to increase his value to the company. He said that the company had long term plans for the applicant. 46

[51] Mr Bouhoutsos said that in early 2016, there were some performance and disciplinary issues with the applicant and that ‘verbal and written warnings were supplied to Shane.’ 47

[52] On 29 July 2016, when he heard from the applicant of his intention to start his own business, Mr Bouhoutsos formed the view that:

“I think Shane’s mind had already sort of left the company.” 48

[53] He further stated:

“… once an employee has got it in his mind that, you know, he’s going to commence his own business, it’s really hard to be concentrating on someone else’s interests.” 49

[54] This was said to be a safety concern:

“Like, obviously, when you come – our job is very dangerous. You do have to be in full concentration pretty much the whole day. I know we have family issues and whatever, but once we come up to – once we come to work we have to put all those things aside and concentrate on what we are doing. I thought Shane wasn’t in the position of doing that and it was a safety issue as well. When you are not concentrating, that’s when accidents happen.” 50

[55] Mr Bouhoutsos’ view was that when an employee is prepared to tell an employer that they are thinking of starting their own business, they had obviously made plans or inquiries with regard to that business. Mr Bouhoutsos advised the Commission that he drafted the applicant’s termination letter. 51

[56] Mr Bouhoutsos explained that supervisors within the business, including the applicant, have direct access to the clients and the employees of clients and that they establish relationships. That being the case the applicant was in a position to approach the company’s clients, although he was not aware that he had done so. 52

[57] Mr Bouhoutsos stated he had heard from other employees prior to 29 July that the applicant was telling them that he wanted to start his own business. At one point, Mr Bouhoutsos stated that the applicant had spoken to ‘a lot of our employees’, later stating that it was about three or four employees. 53 He said that he had heard this about four or five weeks prior to the termination but that he did not raise it with the applicant because he was aware that it may be a rumour, and he wanted to hear it from the applicant.54

[58] In his written statement Mr Bouhoutsos stated that he had also heard from sources that the applicant was promoting himself and his new business on the company’s time and money. 55 No witnesses were called, or other evidence produced to substantiate that this was a fact, and not rumour.

[59] Mr Bouhoutsos could not recall the applicant telling him during the telephone conversation of 29 July that it might be three to six months before he started his business, although he acknowledged that this may have been said. 56 In Mr Bouhoutsos’ recollection, the applicant had only said that he was not sure when he would start his business. Mr Bouhoutsos said that, having no time frame that he could reply upon, he had to make a decision in the interests of the company. Mr Bouhoutsos stated that he told the applicant that once he started his own business he may be able to engage his company if they needed extra machinery or trucks.57

Consideration

[60] In considering whether the dismissal was harsh, unjust or unreasonable, the Commission must take into account the factors under s.387 of the Act which state:

“(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.”

[61] I now turn to consider these factors:

(a) Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct (including its effect on the safety and welfare of other employees)?

[62] The term ‘valid reason’ was considered by Northrop J in Selvachandran v. Petron Plastics Pty Ltd 58, in relation to s.170DE of the Industrial Relations Act 1988. Northrop J stated:

“Section 170DE(1) refers to ‘a valid reason, or valid reasons’, but the Act does not give a meaning to those phrases or the adjective `valid’. A reference to dictionaries shows that the word `valid’ has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: `2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.’ In the Macquarie Dictionary the relevant meaning is `sound, just or well founded; a valid reason.’

In its context in s 170DE(1), the adjective `valid’ should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must `be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of a s 170DC.”

[63] The holding of the word ‘valid’, as meaning sound, defensible or well founded continues to be applied by this Tribunal.

[64] It is not in dispute that the reason for the termination was a conflict of interest; in particular Mr Bouhoutsos was concerned that the applicant could approach his clients while still employed with the respondent. Mr Berger does not agree that such a conflict existed, which goes to the heart of whether the reason for the dismissal was valid.

[65] The applicant says that the conflict of interest which the termination was predicated upon was nothing more than a possibility and from that possibility flowed flawed assumptions about the his ability to work safely and effectively should he remain in the employ of the respondent.

[66] A conflict of interest (pecuniary or otherwise) arises where an employee’s non-work related activities may unduly influence decisions and conflict with the proper performance of an employee’s duties, or are simply incompatible with the impartial fulfilment their duties.

[67] In Blyth Chemicals Ltd v Bushnell 59 Dixon and McTeirnan JJ’s stated that:

“Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal … [b]ut the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises … the burden of proving a justification is upon the appellant; it is for it to obtain the necessary findings to establish misconduct”. 60

[68] Their Honours also drew attention to the danger of drawing adverse inferences where the conduct in question was capable of an innocent construction. 61 .

[69] There is an obligation on all employees to avoid conflicts of interest between their personal interests and those of their employer. In Digital Pulse v Harris Pty Limited 62 in an aspect of his judgment, Palmer J summarised the general law principles applicable to the duty of an employee to his or her employer in the following way:

“20 An employee has a duty to act in the interests of the employer with good faith and fidelity. That duty is implied in every contract of employment if it is not otherwise imposed by an express term. In addition, the duty is imposed upon every employee by the law of fiduciaries, the relationship of employer and employee being recognised as a paradigmatic fiduciary relationship.

21 The obligations imposed by the duty are not coterminous with the employee’s normal working hours: they govern all the activities of the employee, whenever undertaken, which are within the sphere of the employer’s business operations and which could materially affect the employer’s business interests. Whether a particular activity could materially affect the employer’s business interests is a question of fact and degree.

22 The duty of loyalty requires that an employee not place himself or herself in a position in which the employee’s own interest in a transaction within the sphere of the employer’s business operations conflicts with the employee’s duty to act solely in the employer’s interest in relation to that transaction. A fortiori, an employee may not take for himself or herself an opportunity within the sphere of the employee’s business operations without the employer’s fully informed consent.”

[70] In Consolidated Paper Industries Pty Ltd v Matthews 63, Newnes M provided a summary of the fiduciary duties an employee owes to their employer in cases of an employee establishing their own business:

“[60] An employee during the period of his employment must act in the employer’s best interest and not in pursuit of his own interests: Wessex Dairies Ltd v Smith [1935] 2 KB 80; Faccenda Chicken Ltd v Fowler & Ors [1986] 1 All ER 617. Except in special circumstances, however, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer: Faccenda at 625, Wessex Dairies at 89. But during the term of his employment an employee must not solicit customers for a future time when the employment has ceased and the employee has established his own business: Wessex Dairies Ltd v Smith (above), Independent Corporate Services Ltd v Stevens [2002] WASC 280. An employee is not, however, prohibited during his employment from making preparations for setting up a business when the employment ends. What steps by the employee will be permissible will depend upon the circumstances, but such activities may extend to the issue of circulars, finding business premises and hiring employees: Robb v Green [1895] 2 QB 1; Independent Management Resources Pty Ltd v Brown [1987] VR. 605. But the duty of loyalty of an employee will be breached if the employee engages in unfair or wrongful acts detrimental to the employer’s business, such as deferring fulfilment of orders in anticipation of filling them himself, or developing the capacity to copy his employer’s products with a view to appropriating for himself his employer’s market, or recruiting the employer’s staff for the new business, or taking copies of or memorising customer lists or other confidential information of the employer, or engaging in significant work to set up the business in his employer’s time: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; McPherson’s Ltd v Tate (1993) 35 AILR 225; Blythe Chemicals Ltd v Bushnell (1933) 49 CLR 66; WA Fork Truck Distributors Pty Ltd v Jones & Ors [2003] WASC 102.”

(My underline)

[71] The respondent stated that there was a real possibility of a conflict of interest if the applicant remained employed by the respondent because the applicant may act in pursuit of his own interests and not those of the employer, which in turn posed a safety concern for the respondent. 64

[72] Despite the submissions of the respondent, no evidence was put before the Commission that the applicant had placed himself in a position where his own interests would conflict with his duty to act in his employer’s interests, nor was it shown that the applicant seized upon or had any opportunities within the sphere of his employer’s operations to further his own interests which were prejudicial to the employer.

[73] The respondent appeared to be of the view that having terminated the employment contract by providing payment in lieu of notice and the payment of accrued entitlements to the applicant he had discharged his obligations under the employment contract and the question of fairness of that action was no longer an issue. This approach ignores the restraints placed on such action by the Act under Part 3-2 of the Act – Unfair Dismissal.

[74] Prima facie the businesses of the applicant and the respondent are concerned with providing separate and distinct services. The respondent is in the business of providing retaining wall systems and to a lesser extent plant hire. 65 In the applicant’s own words their business is in carting dirt to and from sites.66 They do not build retaining walls or hire out equipment. The two businesses operate contiguously.

[75] There is no obvious conflict of interest between the two businesses; Mr Bouhoutsos could not satisfactorily point to where a genuine conflict existed. Mr Bouhoutsos’ own evidence was that he was aware of the applicant’s intentions four or five weeks before being told by Mr Berger himself. During this period he did not consider the perceived conflict serious enough to take any action. On having been told by Mr Berger of his future aspirations he did not raise the issue of a conflict of interest with him, but sent a letter of termination by email some days later citing a conflict of interest as a reason for the termination.

[76] The letter of termination also stated the applicant’s ability to perform effectively and safely on site may be compromised with a consequential detrimental effect on morale and cohesion of employees. Mr Bouhoutsos did not present any evidence to support this assertions; he was the only person to provide evidence for the respondent.

[77] In this matter the applicant has attempted to be upfront with his employer about his future business intentions so as to not cause the respondent any undue costs and inconvenience.

[78] An employee is entitled to plan for a working life outside that of their current employer if they choose; it is unrealistic to expect that this does not occur. On the other hand an employer is entitled to protect their business interests where an employee’s prospective future aspirations conflict with that of the existing employer. However in this case no such conflict was established before the Commission.

[79] 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) could include the applicant becoming a safety risk and affecting staff morale. The respondent’s reliance on the applicant becoming a safety risk and affecting staff morale failed to be demonstrated as a genuine concern.

[80] For the above reasons I am not satisfied that a valid reason existed for the applicant’s termination of employment.

(b) Was the person notified of that reason?

[81] The Applicant was notified of the reason for his termination in an email which he received outside working hours on his mobile phone while travelling home from work. The notification of the reason for termination was provided at the same time the termination became effective.

(c) Was the person given an opportunity to respond to any reason related to the capacity or conduct of the person?

[82] The letter of termination stated that should Mr Berger require further information or clarification he should contact Mr Bouhoutsos. This invitation was not an opportunity to discuss the concerns that Mr Bouhoutsos had with Mr Berger as the decision to terminate had already been made effective that day. Mr Berger had no opportunity to discuss the respondent’s concerns prior to his termination on 2 August 2016. Following advice to Mr Bouhoutsos on 29 July 2016 of his possible future intentions, Mr Berger was given no reason to be concerned that his immediate employment with the respondent was in jeopardy.

(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

[83] As there were no discussions relating to the dismissal prior to the termination, this issue did not arise.

(e) If the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal.

[84] During the hearing there was some reference to warnings regarding Mr Berger’s performance however they are unrelated to the reasons for termination provided by the respondent.

(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.

[85] Mr Bouhoutsos advised that he was the human resources representative amongst other roles he carried out for the respondent. It would appear that the respondent suffered from a lack of professional expertise in this area which has led to a number of procedural failings, which may have been excused had there been a valid reason for the dismissal.

(h) Any other matters that the Commission considers relevant

[86] All relevant considerations have been addressed above.

Finding

[87] Having found that there was no valid reason for the applicant’s termination of employment and having considered all other factors under s.392(3) of the Act, I find that the applicant was unfairly dismissed.

Remedy
[88] Section 390(3) of the Act only allows the Commission to order the payment of compensation where the Commission is satisfied that reinstatement is inappropriate and the payment of compensation is appropriate in all the circumstances.

[89] No party sought reinstatement as a remedy in this action and I accept that reinstatement is not appropriate in this matter.

[90] Section 392 of the Act relevantly provides as follows:

“392 Remedy - compensation

Compensation
(1) An order for the payment of compensation to a person must be an order that the person's employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer's enterprise; and
(b) the length of the person's service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.

…
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.

[91] The approach to the assessment of compensation under s.392 of the Act, taking into account the matters specified in s.392(2), is to adopt the approach” in Sprigg v Paul Licensed Festival Supermarket. 67 This approach was further articulated in the context of the current Act in Bowden v Ottrey Homes Cobram and District Retirement Villages.68

[92] The first step to be taken is to consider s.392(2)(c), to determine what the applicant would have received, or would have been likely to receive, if the applicant had not been dismissed. In Bowden, citing Ellawala v Australian Corporation 69,this was described in the following way:

“[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’...” 70

[93] Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including income earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of six months’ pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case. 71

[94] In this case, the applicant’s evidence was that he was struggling with depression and felt that he needed to look for a less stressful position. 72 Mr Berger’s evidence was that he could have left his employment in three to six months. Having heard the evidence of both the applicant and his father I consider that it was probable that Mr Berger would have remained in employment for a further period of three months.

Remuneration that would have been received if the dismissal had not occurred (s.392(2)(c))

[95] At the time of termination Mr Berger was earning a base salary of $90,000 plus superannuation of $8,550. 73 This salary would have continued to have been received during the three month period discussed above.

Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f)

[96] Mr Berger advised that he hadn’t been receiving any income since starting the business with his father. 74 After paying the business debts he was unable to draw a wage.

Mitigation efforts (s.392(2)(d))

[97] Mr Berger was dismissed as a result of stating his intention to start his own business, and following his dismissal his efforts were solely directed to this objective.

Length of service (s.392(2)(b))

[98] Mr Berger had been employed for approximately two years prior to his dismissal.

Viability (s.392(2)(a)) and Instalments (s.393)

[99] There was no submission from the respondent regarding incapacity to pay the loss sought by the applicant or that it should be paid in installments.

Misconduct (s.392(3))

[100] Mr Berger was not dismissed due to misconduct.

Other matters (s.392(2)(g))

[101] Mr Berger received payment of four weeks’ wages, albeit not in a single payment following his termination. It is appropriate that this amount be deducted from any compensation order.

Compensation cap (s.392(5))

[102] Having assessed Mr Berger’s immediate loss as three months’ salary, this amount less his termination payment (not including accrued leave) is under the compensation cap.

Conclusion

[103] The amount of compensation to be awarded is eight week’s wages less deduction of any tax as required by law. Mr Berger’s wages are shown in the termination payment calculation tendered in the proceedings.

[104] A separate order will be issued giving effect to this conclusion.

DEPUTY PRESIDENT

Appearances:

Mr S Berger on his own behalf

Mr G Bouhoutsos on behalf of United Crib Block Construction Pty Ltd

Hearing details

2017

13 January

 1   Form F2 at 3.2

 2   Applicant’s Submissions, 15 November 2016

 3   A dog trailer is towed behind the lead trailer of a road train combination, or a rigid truck

 4   Exhibit A1, Witness Statement of Shane Berger

 5   PN179 Although the application states 30 July 2014

 6   Exhibit A2, Employment Agreement

 7   Exhibit A1

 8   PN162, PN282

 9   PN216

 10   PN216

 11   PN356

 12   PN219

 13   Exhibit A1

 14   Exhibit A1

 15   Exhibit A3, 2 August 2016, Notice of Termination

 16   PN672

 17   PN216

 18   PN327-PN329

 19   PN331

 20   Exhibit A1, PN240

 21   PN248-PN250

 22   Exhibit A1, PN406

 23   PN259-261

 24   Email of 14 November 2016

 25   PN406, PN 261-264

 26   PN258

 27   PN248

 28   PN570, PN248

 29   PN254-258

 30   PN425

 31   PN424

 32   PN438, PN435, PN436, PN457

 33   PN437

 34   PN461

 35   Exhibit A5, 9 November 2016, Letter from ANSA Counselling

 36   PN495

 37   A small business employer under the Act engages less than 15 employees at the relevant time

 38   Exhibit R2, 21 December 2016, Witness Statement of George Bouhoutsos

 39   Exhibit R2

 40   Exhibit R1, 13 January 2017, Outline of Respondent’s submissions

 41   Exhibit R1

 42   Exhibit R1

 43   Exhibit R1

 44   Exhibit R1, PN366

 45   Exhibit R1, The notice payment was not paid in advance but in instalments PN242

 46   Exhibit R2

 47   Exhibit R2

 48   PN547

 49   PN555

 50   PN547

 51   PN660

 52   PN553

 53   PN629-PN633

 54   PN638

 55   Exhibit R2

 56   PN618

 57   PN60

 58 (1995) 62 IR 371 at 373

 59   [1933] HCA 8; (1933) 49 CLR 66

 60   (1933) 49 CLR 66 at 83

 61   (1933) 49 CLR 66 at 82

 62 [2002] NSWSC 33

 63 [2004] WASC 161

 64   Exhibit R1

 65   See respondent’s web site

 66   PN248

 67 Print R0235, (1998) 88 IR 21

 68   [2013] FWCFB 431; 229 IR 6

 69   Ellawala v Australian Postal Corporation, Print 55109

 70   [2013] FWCFB 431 at [24]

 71   Smith v Moore Paragon Australia Ltd PR942856, [2004] AIRC 57; (2004) 130 IR 446 at [32]

 72 F2 Application form at 3.2

 73   Exhibit R3

 74   PN40, PN92

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