Shannon Martin v Porskar Pty Ltd as the Trustee for the Doug James Family Trust
[2022] FWC 2598
•11 OCTOBER 2022
| [2022] FWC 2598 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Shannon Martin
v
Porskar Pty Ltd as the Trustee for the Doug James Family Trust
(U2022/6803)
| DEPUTY PRESIDENT BEAUMONT | PERTH, 11 OCTOBER 2022 |
Application for an unfair dismissal remedy
Issues in dispute and conclusion
Mr Shannon Martin made an application for unfair dismissal under s 394 of the Fair Work Act 2009 (Cth) (the Act) having been dismissed by Porskar Pty Ltd As the Trustee for the Doug James Family Trust (Storage Town). It is uncontentious that Storage Town is a small business employer within the meaning of s 23 of the Act and has raised a jurisdictional objection to Mr Martin’s application on the basis it complied with the Small Business Fair Dismissal Code (the Code).
For some time, Mr Douglas James, managing director of the company, has operated the business. Come March 2019, Mr Martin was employed to assume responsibility for the day to day running of Storage Town. He resided at the premises of the business as the caretaker, attended to clients using the storage facilities, and performed day to day business transactions such as the receipt of monies, payment of service providers and the like. To enable Mr Martin to perform his duties, Storage Town provided him with access to its bank account and Mr Martin was allowed to perform banking transactions including the ability to transfer funds from Storage Town’s bank accounts.
Storage Town contended that it had complied with the Code when it dismissed Mr Martin, after it identified in bank statements that Mr Martin had overpaid himself his wages. Neither party was represented by a paid agent or legal representative.
In light of Storage Town’s jurisdictional objection to the application several issues arose for consideration; namely:
a)was there compliance with the Code on the basis Storage Town had reasonable grounds for forming the belief that Mr Martin had engaged in misconduct of a serious nature which justified immediate dismissal;
b)if found that there was non-compliance with the Code, did it remain the case that Mr Martin’s dismissal was neither harsh, unjust nor unreasonable; and
c)if established that the dismissal was unfair, what remedy was appropriate.
I have concluded that Storage Town complied with the Code when it terminated Mr Martin’s employment having formed a belief on reasonable grounds that Mr Martin’s conduct was sufficiently serious to justify immediate dismissal.[1] It therefore proved unnecessary to consider subparagraphs (b) and (c).
As I have concluded that Storage Town dismissed Mr Martin ‘without notice or warning’ because it ‘believed on reasonable grounds’ that his conduct was ‘sufficiently serious to justify immediate dismissal’, it follows that Mr Martin was not unfairly dismissed and his application for an unfair dismissal remedy is therefore dismissed. My reasons follow.
Background
Mr Martin and Storage Town both filed evidence in preparation for the proceedings. Mr Martin did not call any other witnesses, and Storage Town initially relied upon the evidence of Mr James, Mr James’ daughter Ms Sharni James, and the Respondent’s accountant, a Mr Brett Owens.
However, during the hearing it became evident that Mr James and Ms Sharni James were unaware of how some of the documents relied upon by the Respondent came into existence. It was therefore necessary to have Mr Bradley Andrews sworn in, given it was apparent he assisted Storage Town in the preparation of materials for the hearing.
Returning to the evidence of Mr Martin, in his Form F2 he gave evidence that his wages were roughly $23.80 per hour culminating in $904.50 (gross) per week.[2] It appeared uncontroversial that the parties accepted he was paid on a weekly basis. It also appeared uncontroversial that payments were made by Storage Town to the Child Support Agency on behalf of Mr Martin. However, it was unclear from the evidence who had arranged for the child support payments to be made to the Agency.
Mr James gave evidence that since March 2019, Mr Martin had worked for Storage Town on a full-time basis, with free fully furnished accommodation, power and utilities.[3] It is not apparent that there was a written employment contract between Mr Martin and the Respondent.
Mr James explained that in early June 2022, he had embarked on a holiday and had taken his new laptop computer with him.[4] Whilst professing to be computer illiterate, Mr James said whilst he was away he checked his internet banking and noticed that spasmodic wages were being drawn by Mr Martin.[5] Mr James noticed that Mr Martin had paid himself a weeks’ wages seven times in May and seven times in April.[6] According to Mr James this was in excess of the weekly wages that Mr Martin was authorised to transfer to himself.
Mr James stated that it was very clear to him that something was wrong, so he decided that when he returned to work on 14 June 2022 he would look into the problem.[7]
However, on 8 June 2022, Mr James received a text from Ms Nicky Francis who was purported to be Mr Martin’s girlfriend. Ms Francis had written to Mr James informing him, amongst other matters, that she was not going to work at Storage Town anymore as Mr Martin ‘has lost the plot or something and hasn’t been treating me very nice…’.[8]
Mr James said that because of Ms Francis’ text, he came back to work three days earlier on 11 June 2022, and informed Mr Martin that he would be at work the next day on Sunday, 12 June 2022.
On arriving to work on the Sunday morning, Mr James said that he manually went through his bank statements. At approximately 11:45am his daughter, Ms Sharni James, and her boyfriend turned up unexpectedly.[9] As they were ‘computer capable’ they helped Mr James download and filter the bank statement to show only Mr Martin’s wages.[10]
Mr James said that with him reviewing the bank statements manually and his daughter and her boyfriend doing it electronically, they both came up with approximately the same amount of overpayment. Mr James stated that Mr Martin had overpaid himself and Ms Francis approximately $20,000.00, starting from around April/May 2021.[11] Mr James said that it was then that he decided he would dismiss Mr Martin instantly for gross misconduct,[12] noting that he had made the decision to go to work on 13 June 2022 and ‘front Shannon’ for the purpose of asking about $600 which had been taken from the safe and about the excessive overpayments of his wages.[13]
Ms Sharni James gave evidence that on 12 June 2022 she called in to see her Dad, Mr James, with her partner at the time.[14] Ms Sharni James said that Mr James was concerned about Mr Martin, as Mr Martin’s partner Nicky had messaged Mr James informing him about Mr Martin’s unusual behaviour.[15] Ms Sharni James said that that on checking the work bank account online she noticed there were random wage payments and there seemed to be more than there should have been. Ms Sharni James said she filtered the statement, printed it off and took it home to check.[16] Ms Sharni James said that after checking the statement, she called Mr James and worked out there was about $20,000.00 extra in wages paid.[17] Whilst a spreadsheet was provided at page 121 of the Digital Hearing Book that outlined the additional wage payments made, it was evident that this document was not the document generated by Ms Sharni James on the night when she checked Storage Town’s bank account. On this evidential point, Mr Andrews gave evidence that he had prepared the spreadsheet in July 2022, to show what it was that Ms Sharni James would have seen on the night of 12 June 2022.
The document was accepted into evidence. Whilst appreciative that the document at page 121 of the Digital Hearing Book was not the spreadsheet generated by Ms Sharni James on 12 June 2022, it appeared uncontroversial that the data on the spread sheet had been extracted by Mr Andrews from the bank account used by Storage Town at the Bendigo Bank. That document included debits in the amount of $785.00. It further appeared that the frequency of those debits to ‘S Martin (Wage)’ was more frequent than every seven days or weekly, the document evincing payments on 11 June, 5 June, 30 May, 26 May, 21 May, 17 May, 13 May, 7 May, 3 May, 28 April , 24 April, 19 April, 14 April and so on (dates bolded being those highlighted in green at page 121 of the Digital Hearing Book).
Storage Town had highlighted wage payments to Mr Martin on the document at page 121 of the Digital Hearing Book that it considered were additional wage payments in green, noting that those payments had not been included on Storage Town’s payroll system. Mr Andrews clarified that if one considered the additional payments highlighted in green and compared them to the spreadsheet attached to the Witness Statement of Mr Owen, it could be observed that the highlighted wage payments aligned with those payments that Mr Owen had identified as not having been entered on the payroll system.
At this juncture it is relevant to note that neither party was familiar with the Commission’s hearing processes, and whilst Mr Martin declined to cross examine any of the Respondent’s witnesses for the most part, the cross examination by Storage Town was equally futile. In my view, it was appropriate to provide Mr Martin with the opportunity to respond to the spreadsheet located at page 121 of the Digital Hearing Book and the spreadsheet compiled by Mr Owen commencing at page 126 of the Digital Hearing Book.
In response to the spreadsheet located at page 121 of the Digital Hearing Book, Mr Martin said that he did not understand how ‘that’s happened’, presumedly the additional wage payments. Mr Martin added that obviously he was under a lot of stress, noting that he was already working the one side when he started off with Storage Town, and then it opened up two sides resulting in him running the whole lot on his own, as Mr James was always on holidays. By way of further explanation, Mr Martin said that he was also doing the accounting and training with Ms Francis. He continued that it was possible that he could have read the page through more than once at some stage and not realised it, or that Ms Francis had made the additional payments. Mr Martin added that other than the explanation he had provided he could not otherwise explain the additional payments.
Mr James confirmed that he went into work on 13 June 2022 to confront Mr Martin, first, about the $600.00 and the excessive overpayments of his wages and second, to ask Mr Martin to hand over all keys, wage book and payroll documentation.[18] Mr James said that he was also going to tell Mr Martin to grab his stuff and dog, and move out.[19]
On confronting Mr Martin, Mr James said that Mr Martin informed him that he did not know where the wage book was, he admitted he had overpaid himself and asked if he could work it off, to which Mr James said no, and Mr James informed him that there would be a police investigation, he was to hand over his keys, take his small personal possessions and leave right now. Mr James said he told Martin that he could move his stuff out in the coming days.[20]
Having dismissed Mr Martin, Mr James said that he rang his accountant, Mr Owen, informed him of Mr Martin’s dismissal and authorised Mr Owen to begin an investigation of his own to support what he knew to be true.[21]
Mr Owen gave evidence that after telephone contact with Mr James on 17 June 2022, his office arranged for access to the accounting records of Storage Town for the period 1 July 2021 up to 17 June 2022.[22] Mr Owen said his firm reviewed, checked and reconciled the payment records and payroll records, the result being that there were payments made (instigated by Mr Martin) that were more than his agreed entitlement.[23] Mr Owen stated that the additional payments were easily identifiable as when a reconciliation of the payroll records was undertaken, the payments were not entered or included – as was demonstrated in the spreadsheet at page 126 of the Digital Hearing Book.
Agreed matters
I am satisfied that Mr Martin was protected from unfair dismissal,[24] such that his application was made within the required period as prescribed in s 394(2) of the Act and he earned less than the high-income threshold. It was not contested by the parties that the dismissal was by way of genuine redundancy.[25]
Having considered the evidence, I am satisfied that Storage Town is a small business employer as defined in s 23 of the Act, and that the Code applied to the dismissal. Neither party advanced an argument to the contrary.
Was Storage Town compliant with the Code at the time of Mr Martin’s dismissal?
4.1Legislative framework
Section 396 of the Act provides that before considering the merits of an unfair dismissal application, the Commission must determine some other initial matters. Those initial matters include whether the unfair dismissal application was made within the period required by s 394(2), and whether Mr Martin was protected from unfair dismissal – both of which have been addressed. However, another initial matter is whether Mr Martin’s dismissal was consistent with the Code, a consideration which we will shortly turn to. The final initial matter is not relevant in the circumstances given no party pressed that the dismissal was by way of redundancy (genuine or not).
A person has not been unfairly dismissed where the dismissal is consistent with the Code. It is useful to set out s 388 of the Act:
388 The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small
Business Fair Dismissal Code.
(2) A person’s dismissal was consistent with the Small Business Fair
Dismissal Code if:
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Small Business Fair
Dismissal Code in relation to the dismissal.
The Code is only relevant if the employer is a small business as defined in s 23 of theAct.
The Code provides:
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.
The ‘Summary Dismissal’ section of the Code clearly applies to dismissals that have ‘immediate effect’ as that term is understood by reference to the decision in Ms Li Li Chen v Australian Catering Solutions Pty Ltd T/A Hearty Health,[26] and are not dismissals on notice.[27] As explained in JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services (Ryman), an immediate dismissal includes a dismissal with a payment in lieu of notice which is intended to have immediate effect.[28]
In Ryman, the Full Bench provided a useful synopsis of the proper approach to the construction and application of the Summary Dismissal aspect of the Code and its interaction with Regulation 1.07 of the Fair Work Regulations 2009 (Cth) (the Regulations).[29]
In Ryman, the Full Bench considered the meaning of ‘summary dismissal’ and said that it referred to a dismissal without notice arising from ‘a breach of an essential term of the employment contract, a serious breach of a non-essential term of the contract, or conduct manifesting an intention not to be bound by the contract in the future on the part of the employee’.[30]
However, it is not the case that under the Code the Commission must be satisfied that serious misconduct was the basis for the dismissal.[31] Rather, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal and one must also consider whether that belief was based on reasonable grounds.[32] This element, which has been described as the second element,[33] incorporates the concept that the employer has carried out a reasonable investigation into the matter.[34] It is not necessary to determine whether the employer was correct in the belief that it held.[35] Whether the employer had ‘reasonable grounds’ for the relevant belief is of course to be determined objectively.[36]
The focus on ‘serious misconduct’ must be taken as identifying the subject matter and it appears to be accepted that this term gleans its meaning from s 12 of the Act and thereafter regulation 1.07 of the Regulations.[37]
In applying these requirements, I must also have regard to the procedural matters highlighted within the Code.
If an applicant’s dismissal was consistent with the Code, it cannot be considered unfair within the meaning of the Act.
4.2Consideration
Mr James purports that he dismissed Mr Martin because Mr Martin had overpaid himself. It further appears that part of the reason for Mr Martin’s dismissal was that on returning to the business on 12 June 2022, Mr James observed that $600.00 had gone missing from the safe.
Turning first to the issue of the missing $600.00. At the hearing, Mr James gave evidence that on arriving back to work three days earlier than planned he went to the safe and noticed that an envelope which should have had $900.00 in it, only had $300.00 in it. Hand written on the envelope was that $600.00 was a loan to ‘Nikki’. Mr James said that he had not given Mr Martin any authority to take cash out of an envelope, but Mr Martin had taken the cash out and the envelope said that Mr Martin had lent it to ‘Nikki’. Mr James said that when he questioned Mr Martin about the $600.00, Mr Martin responded that ‘we’, presumedly ‘Nikki’ and him, thought that they would probably have it back before Mr James returned to work (three days later).
Mr Martin gave evidence about how the $600.00 came to be missing from the safe and why also, his handwriting was on an envelope in which the $600.00 had previously been secured in. Mr Martin said that he did write on the envelope that Nikki had borrowed the money, but that he did not tell her that she could and that he wrote on the envelope because as the manager of Storage Town he had to. It is open to infer from Mr Martin’s evidence that considered himself accountable for recording where the $600.00 had gone but not necessarily for being accountable for the Storage Town staff member removing the monies.
Mr James purported that in a telephone call with ‘Nikki’ she had informed him that she had only received $500.00 and that she would pay it back – which, Mr James said, had not occurred. It is apparent from Mr James’ evidence that the inference is open that Mr Martin pocketed $100.00 of the $600.00. However, in the absence of calling ‘Nikki’ to give evidence, and noting that the parties were informed how to compel witnesses to attend to give evidence, and noting that the evidence is hearsay, I am not content to attribute any weight to Mr James’ evidence in this respect.
Based on the evidence before Mr James at the time of Mr Martin’s dismissal it is not clear that Mr Martin had loaned or otherwise authorised ‘Nikki’ to take the $600.00. Mr Martin’s evidence is that ‘Nikki’ took the monies and he recorded where the monies had gone. While I do consider it a shortcoming of Mr Martin’s conduct that he did not inform Mr James immediately of the missing $600, or that ‘Nikki’ had taken such funds, Mr James did not rely upon such omission in forming the belief that Mr Martin’s conduct was sufficiently grave to justify immediate dismissal. Mr James’ belief was that Mr Martin had authorised Nikki to take the $600.00.
Having considered the evidence with respect to the missing $600.00, I am not satisfied it supports making a finding that Mr James held a reasonable belief that Mr Martin had engaged in serious misconduct with respect to the missing $600.00 for the above reasons.
However, with regard to the additional wage payments that were made to Mr Martin, I am satisfied, based on the evidence before me, that before notifying Mr Martin of his dismissal on 13 June 2022, Mr James had conducted a reasonable investigation into the additional payments and that there was as such a reasonable basis for a belief being held that Mr Martin had engaged in serious misconduct.
Clearly, Storage Town cannot refer me to a breach of a non-existent code of conduct or a relevant policy, given that the evidence filed was even absent a written employment contract. Presumedly, the contract of employment was premised upon an oral agreement of the parties – and as evinced in the Form F2 that oral agreement provided for the payment of weekly wages in the gross amount of $904.50 (gross) per week.[38] Further, the evidence before me supports a finding that at the time the additional wage payments were made, with seven wage payments to Mr Martin having been made in April and May 2022, Mr Martin was responsible for administering the payroll.
Before Mr James put forward the allegations of misconduct to Mr Martin on 13 June 2022, he had identified an anomaly in the wage payments to Mr Martin via a review of Storage Town’s Bendigo bank account. He had also asked his daughter Ms Sharni James to double check whether there was, or was not, the ‘spasmodic’ payment of wages to Mr Martin in the online banking record, and after having conducted his own review of the bank account online statement and received the feedback of his daughter which confirmed his concerns, he proceeded to provide Mr Martin with the opportunity to respond to the allegation.
It was Mr James’ evidence that on 13 June 2022 Mr Martin conceded to having made the overpayments and thereafter requested to pay back the amounts. At hearing, Mr Martin provided, in my view, an unpersuasive narrative as to how it was that he had overpaid himself. It is of course not necessary for me to conclude that Mr Martin engaged in the alleged serious misconduct. The assessment of the Commission centres on whether Mr James believed on reasonable grounds that Mr Martin’s conduct was sufficiently serious to justify immediate dismissal.
Serious misconduct as understood in the Code, takes its meaning from regulation 1.07 of the Regulations and in doing so includes wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract. The notion of wilful or deliberate behaviour amounting to serious misconduct is conduct which strikes at the heart of the employment relationship. That notion has been considered in several well-known authorities, which were well traversed in the decision of Emma Horan v Tren Trading Pty Ltd t/a Dubbo Early Learning Centre.[39] I do not intend to repeat the authorities at length, but rely simply on the precepts that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions,[40] and such misconduct must at least have the quality that it is ‘wilful’: it connotes a deliberate flouting of the essential contractual conditions.[41]
I have concluded that the evidence before Mr James at the time he dismissed Mr Martin, gave rise to a reasonable basis for a belief that Mr Martin had purposefully overpaid his entitlement to wages in April and May 2022, despite his knowledge of what his agreed weekly wage was. The subject matter of the misconduct, that is the payment of additional wages, is of sufficient gravity to constitute serious misconduct. That is conduct which consisted of a deliberate flouting of the essential contractual conditions – to follow a lawful and reasonable instruction to pay a weekly wage.
There is the lingering question of whether the instruction that Mr Martin administer payroll was reasonable in all the circumstances. However, the context of this matter is all important. Storage Town was by any standard a small business run by a managing director who himself had admitted his shortcomings regarding technology, with a preference to retain a paper-based wages book. After a period of working for Storage Town, Mr James had placed his trust in Mr Martin to assume responsibility for the day to day running of Storage Town. Mr Martin, in his own words, said he was a manager and caretaker responsible for office receipts, payroll, new contracts, emails, phone calls and banking.[42] The payroll in this instance does not, on the evidence, appear to have extended beyond the payment of one or two employees. As such, in the circumstances of this matter, I do not consider that the instruction provided to Mr Martin to administer payroll fell outside the scope of constituting a lawful and reasonable instruction.
I am therefore satisfied that at the time of dismissal, Storage Town held a reasonable belief that Mr Martin’s conduct was sufficiently serious to justify immediate dismissal and the belief was based on reasonable grounds. Consequently, and as previously noted, Mr Martin’s unfair dismissal application is dismissed. An Order to that effect is published concurrently with this decision.[43]
DEPUTY PRESIDENT
Appearances:
Mr S. Martin for himself;
Mr D. James on behalf of the Respondent.
Hearing details:
2022
Perth (via Microsoft Teams)
October 4.
Final written submissions:
Applicant: 31 August 2022
Respondent: 14 September 2022
[1] Fair Work Act 2009 (Cth) s 396(c) (the Act).
[2] Form F2 Digital Hearing Book 18.
[3] Witness Statement of Douglas James Digital Hearing Book 154.
[4] Ibid.
[5] Ibid.
[6] Ibid.
[7] Ibid.
[8] Ibid 155.
[9] Ibid.
[10] Ibid.
[11] Ibid.
[12] Ibid.
[13] Ibid.
[14] Witness Statement of Sharni James Digital Hearing Book 135.
[15] Ibid.
[16] Ibid.
[17] Ibid.
[18] Witness Statement of Douglas James Digital Hearing Book 156.
[19] Ibid.
[20] Ibid.
[21] Ibid.
[22] Witness Statement of Mr Brett Charles Owen Digital Hearing Book pg. 124.
[23] Ibid.
[24] The Act (n 1) s 382.
[25] Ibid.
[26] [2017] FWC 3930 [62]-[64].
[27] JeremyRyman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264, [36] (Ryman).
[28] Ibid [32].
[29] Ibid [37]-[38]
[30] Ibid [27].
[31] Ibid [39]; Grandbridge Limited v Mrs Diane Wiburd[2017] FWCFB 6732, [28] (Grandbridge).
[32] John Pinawin t/a RoseVi.Hair.Face.Body v Edwin Domingo [2012] FWAFB 1359 (Pinawin).
[33] Ibid [29].
[34] Ibid; cited in Ryman (n 27) [39] and referred to in Grandbridge (n 31) [28].
[35] Pinawin (n 32) [29].
[36] Ryman (n 27) [40].
[37] Grandbridge (n 31) [28]; Ibid [37].
[38] Form F2 Digital Hearing Book 18.
[39] [2019] FWC 3249.
[40] North v Television Corporation Ltd (1976) 11 ALR 599, 616.
[41] Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, 288.
[42] Form F2 Digital Hearing Book 18.
[43] PR746251.
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