Shaun Turton v Treblec Pty Ltd

[2013] FWC 1779

[2013] FWC 1779

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Shaun Turton
v
Treblec Pty Ltd
(U2012/11984)

COMMISSIONER RYAN MELBOURNE, 22 MARCH 2013

Termination of employment - application granted.

[1] An application for an unfair dismissal remedy was filed by the Applicant on 2 August 2012 in relation to his dismissal on 26 July 2012 from his employment with the Respondent.

[2] The Applicant commenced employment with the Respondent on 11 July 2011. As at the date of the dismissal of the Applicant the Respondent employed 4 employees.

[3] The Respondent filed an Employer’s Response to the Application on 14 August 2012 and alleged that the Applicant had engaged in conduct which warranted summary dismissal. The letter of termination posted to the Applicant on 26 July 2012 was in the following terms:

“26th July 2012

Shaun Turton

Dear Shaun,

Termination of your employment - 26th July 2012

I am writing to you about the termination of your employment with Treblec Pty Ltd.

Despite previous warnings your –

• Deliberate behaviour by you that is inconsistent with the continuation of your contract of employment.



• You refused to carry out lawful and reasonable instructions that are consistent with your contract of employment.



• Imminent risk to the reputation, of your employer's business in your continuous actions of operating your own personal business on company time.

Finally -

• Conduct in the course of your employment engaging in theft, and in the circumstances your continued employment would be unreasonable.

We consider that your actions constitute serious misconduct warranting summary dismissal.

You will be paid any accrued entitlements and outstanding remuneration, including superannuation, upon the return of all supplied company belongings.

Yours sincerely,

Minos Paterakis

Director

Treblec Pty Ltd”

[4] The Applicant denied that he had engaged in the conduct alleged.

[5] On 27 September 2012 the Respondent filed an Objection to the Application on the following grounds:

“1. The applicant was not unfairly dismissed as he was purchasing personal items on the Company account which is classified as misconduct and theft.

2. The unfair dismissal application is frivolous, vexatious and has no reasonable prospect of success.”

[6] On 19 October 2012 Mr Paterakis, a Director of the Respondent, filed material with the Commission which included both submissions and his witness statement (although it was not set out as a witness statement).

[7] The matter was listed for conference/hearing on 19 November 2012 to deal with the Respondent’s objections.

[8] On 13 November 2012 the Respondent went into liquidation. On 14 November 2012 Rigby Cooke, the Respondent’s legal representative, advised the Commission of this fact and intimated that the liquidator may appear at the conference/hearing on 19 November 2012. The Commission contacted Rigby Cooke on 14 November 2012 to ascertain details of the liquidator and the Commission then contacted by email Bent & Cougle Pty Ltd to ascertain their intentions. Bent & Cougle Pty Ltd contacted the Commission on 14 November 2012 to advise that they were the liquidators and would not be participating in the conference/hearing. The content of their letter is as follows:

“I refer to your email of today. I confirm that the abovenamed company was placed in liquidation on 13 November 2012 pursuant to the provisions of the Corporations Act relating to a creditors voluntary winding up and I am the liquidator. For your information section 500 of the Corporations Act provides that no action or other civil proceeding is to be proceeded with against a company in liquidation except by leave of the court. I do not propose to have the company represented at the hearing. Mr Turton is noted as a creditor and will be notified of the liquidation.”

[9] My associate, on my behalf, responded to Bent & Cougle Pty Ltd by email on 15 November 2012 at 9.44am in the following terms:

“Dear Mr Sutherland, thank you for your letter dated 14 November 2012. The Commissioner draws to your attention the decision of Jones C in 2012 FWA 9609 issued on 9 November 2012. The commissioner intends to proceed with the hearing but would appreciate your views as to the relevance of the above decision.”

[10] Bent & Cougle responded on 15 November 2012 by a letter attached to an email in the following terms:

“I refer to your email of today and note the decision of Jones C in 2012 FWA 9609 and advise as follows. In the matter heard by Jones C it appears the employee was unable to access gears as the company was not in liquidation. In this matter the company is in liquidation and Mr Turton will be able to pursue a claim with gears and the company is essentially without assets. Therefore unless there is some significant change in its position it will not be able to pay amount the commissioner may order.”

[11] The Commission proceeded with the conference/hearing on 19 November 2012 and at the conclusion of the conference/hearing I dismissed the Respondent’s Objection to the Application.

[12] At that point the file in this matter was returned to the Unfair Dismissals Team who issued a Notice of Listing and Directions on 14 December 2012 which set the matter down for 4 days of hearing in March 2013.

[13] On 18 December 2012 Bent & Cougle Pty Ltd advised the Commission that they would not be appearing at the hearings listed for March 2013.

[14] On 11 January 2013 the Applicant filed its submissions and witness statement in accordance with the Directions issued in December 2012. The Respondent was to file and serve its submissions and witness statements by 4 February 2013 but failed to do so. The CFMEU as representative for the Applicant made an application for Directions on Procedure.

[15] On 1 March 2013 the file was reallocated to me. I dealt with the application at a hearing on 6 March 2013 at which only the Applicant appeared. At that hearing the Applicant gave sworn evidence and adopted as his evidence his witness statement filed on 11 January 2013. At the conclusion of that hearing I advised the Applicant’s representative that if I was to get to a point in a decision in which I was required to consider the application of s.392 then I considered that I had insufficient material before me to do so. I gave the Applicant until close of business on 8 March 2013 to file any further material addressing s.392. The Applicant filed its further material on 13 March 2013.

Preliminary Matters

[16] Based upon material filed by the Respondent prior to the liquidation I am satisfied that the Applicant was dismissed by the Respondent and that the dismissal was not a case of a genuine redundancy. Based upon the material before me from both the Respondent and the Applicant I am satisfied that the Applicant was a person who was protected from unfair dismissal and that the application was made within the time required by s.394(2).

Is the Respondent a Small Business Employer?

[17] The Employer’s Response to Application for Unfair Dismissal Remedy (Form F3) filed by the Respondent on 14 August 2012 identified that the Respondent had 4 employees including the Applicant as at the time of the dismissal.

[18] However, the Form F3 contained contact details for Mr Minos Paterakis the Director of the Respondent which identified his email address as [email protected] which is the web address for Minos Structural Engineering Pty Ltd. On the face of the Form F3 there is a strong suggestion that the Respondent and Minos Structural Engineering Pty Ltd may be associated entities within the meaning of s.50AAA of the Corporations Act. The possibility of a connection between the Respondent and Minos Structural Engineering Pty Ltd was drawn to the attention of the Applicant at the hearing on 19 November 2012. At no stage has the Applicant made any submissions or presented any material suggesting that the two entities are associated entities or that the Respondent is not a small business employer.

[19] I conclude that the Respondent is a small business employer and therefore the Small Business Fair Dismissal Code applies in this matter.

Is the Dismissal consistent with the Small Business Fair Dismissal Code?

[20] Before considering the merits of the application in this matter I am required by s.396 to decide whether the dismissal was consistent with the Small Business Fair Dismissal Code.

The Small Business Fair Dismissal Code is as follows:

“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 the Fair Work Commission, 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.”

[21] In this matter the Respondent has alleged that the Applicant engaged in serious misconduct.

[22] The proper approach to be adopted by the Commission in relation to the Code as it applies to alleged serious misconduct was discussed in a decision of a Full Bench of the Commission in John Pinawin T/A RoseVi.Hair.Face.Body v Domingo 1 as follows:

“Small Business Fair Dismissal Code

[23] As s.396 requires the determination of this issue before considering the merits of the application more generally we consider this matter first. The Small Business Fair Dismissal Code contains the following reference to 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. .....”

[24] This test brings the position for small businesses into line with the test for unfairness applied by tribunals in the UK in misconduct cases. In the leading case of British Home Stores Ltd v Burchell, the Employment Appeal Tribunal held that:

“What the tribunal have to decide every time is, broadly expressed, whether the employer who discharged the employee on the ground of the misconduct in question (usually, though not necessarily, dishonest conduct) entertained a reasonable suspicion amounting to a belief in the guilt of the employee of that misconduct at that time. That is really stating shortly and compendiously what is in fact more than one element. First of all, there must be established by the employer the fact of that belief; that the employer did believe it. Secondly, that the employer had in his mind reasonable grounds upon which to sustain that belief. And thirdly, we think, that the employer, at the stage at which he formed that belief on those grounds, at any rate at the final stage at which he formed that belief on those grounds, had carried out as much investigation into the matter as was reasonable in all the circumstances of the case. It is the employer who manages to discharge the onus of demonstrating those three matters, we think, who must not be examined further.”

[25] There have been few decisions discussing the requirements of the relevant paragraph of the Small Business Fair Dismissal Code in Australia and no Full Bench cases. Commissioner Deegan in French v Lufra Investment expressed her conclusion on consistency with this part of the Small Business Fair Dismissal Code as follows:

“[41] The respondent appeared to argue that the applicant’s conduct was serious misconduct as it was “wilful and deliberate behaviour by an employee that is inconsistent with the contract of employment”. I am not satisfied that the applicant’s conduct in initially refusing to restore the shed to its former state or refusing to discuss the matter with Ms Holland some short time later was, in all the circumstances “wilful or deliberate behaviour” or in fact conduct so serious as to justify summary dismissal. I will expand on my reasons for reaching this conclusion in dealing with the matter of whether the dismissal was harsh, unjust or unreasonable. As summary dismissal was not warranted in this case the dismissal was inconsistent with the Code.”

[26] In our view this approach is not consistent with the requirements of the Small Business Fair Dismissal Code as it equates the test in the Code with a determination by the tribunal of whether summary dismissal was warranted.

[27] Deputy President Bartel in Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe said:

“[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant’s conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based.”

[28] Deputy President McCarthy in Harley v Rosecrest Asset Pty Ltd T/A Can Do International said:

“[8] For an employer to believe on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s.387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred.

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.”

[29] We believe that the approach and observations in these two decisions are correct. There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, 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. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.”

[23] In applying this test to the matter before it the Full Bench in John Pinawin T/A RoseVi.Hair.Face.Body v Domingo said:

“[38]Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well. They directly observed his behaviour. They believed that he had made lifestyle choices that involved drug-taking and this directly related to his capacity to perform his work. His work involved close personal dealings with clients. At the time they made their decision, Mr Domingo was hospitalised. They were conscientious in considering the grounds for summary dismissal in regulatory material available on the internet. In these unusual circumstances we are of the view that the employer, when considering Mr Domingo’s recent erratic and unusual behaviour, formed the belief that Mr Domingo had engaged in conduct that justified immediate dismissal on reasonable grounds. Our conclusion should not be seen as one that would necessarily be reached in all cases of out of hours misconduct or drug-taking.”

[24] The first aspect of the test laid down by the Full Bench is easily satisfied in the present matter. It is very clear that the Respondent “held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal”. It is the second aspect of the test namely, “whether that belief was based on reasonable grounds” which needs to be considered in the present matter.

[25] In the circumstances of the matter before me it is clear that the present case is not “a very unusual case”. Therefore as the Full Bench rightly found, “(n)ormally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee.” This certainly did not occur in the present matter.

[26] The material before the Commission in the present matter makes clear that the Respondent had a strong belief that the Applicant had stolen from the Respondent through the alleged purchase by the Applicant of cutting wheels and electrodes for his own benefit which were charged to the Respondent’s account with a supplier.

[27] In the present matter the Respondent did not carry out a reasonable investigation. In fact the material before me suggests that the Respondent did no more than look at the accounts and then draw the conclusion that the Applicant had engaged in theft. Given that there were two employees engaged in the work which involved the use of cutting wheels and electrodes any investigation by the Respondent would at the very least have required the Respondent to interview the other employee who needed to use cutting wheels and electrodes. This was not done. Nor did the Respondent put the allegation to the Applicant before dismissing him.

[28] Where, as in the present matter, an employee, as part of his normal duties, obtains goods from a regular supplier to the Respondent so as to continue to carry out his duties, then the employer needs to act with some caution before alleging theft. The Respondent came to the conclusion that theft had occurred because the Applicant obtained 100 cutting disks from the supplier in a single transaction. The Respondent concluded that as all 100 cutting disks would not be used immediately then the Applicant had obtained the disks for his own benefit. The Respondent did not, in any of the material filed with the Commission, suggest that that the Respondent sought to ascertain the physical whereabouts of the cutting disks nor that the Respondent had evidence that the cutting disks had been retained by the Applicant for his own benefit. The Applicant’s own evidence was that he purchased 100 cutting disks because they were cheaper when purchased in bulk and that cutting disks were in regular use and that the electrodes were purchased because the Applicant and his co-worker had used the electrodes on hand.

[29] I conclude that the Respondent did not have reasonable grounds for his belief that the Applicant had stolen from the Respondent.

[30] In addition to the allegation of theft the Respondent also alleged 3 other matters which the Respondent contended amounted to serious misconduct. In relation to each of these matters it is clear that the Respondent “held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal” but there is little before me which suggests that that belief was reasonably held in the sense discussed in John Pinawin T/A RoseVi.Hair.Face.Body v Domingo.

[31] I conclude that the dismissal was not consistent with the Small Business Fair Dismissal Code.

Was the Dismissal Harsh, Unjust or Unreasonable?

[32] Section 387 provides as follows:

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.

[33] In considering the criteria in s.387 I am required to consider each criteria which is relevant and only those criteria which are relevant (Sayer v Melsteel P/L 2 and Chubb Security Australia P/L v Thomas3).

[34] The level of satisfaction that I am required to have in relation to each relevant criteria under s.387 is that I be satisfied on the balance of probabilities.

Valid Reason

[35] The termination letter identifies 4 matters which the Respondent relied on as its reasons for dismissal.

[36] The first and second reasons for the dismissal were “Deliberate behaviour by you that is inconsistent with the continuation of your contract of employment” and “You refused to carry out lawful and reasonable instructions that are consistent with your contract of employment”. From the material filed by the Respondent it would appear that the basis for these two reasons are the following contentions:

• Shaun Turton was spoken to and warned on numerous occasions by myself and by my Site Foreman (Eddy Canik) to be punctual in his attendance to work.



• Shaun Turton was asked on many occasions to work reasonable overtime but never obliged as he was running his own business after hours.



• Shaun Turton frustrated his co-workers with his lack of enthusiasm, effort and performance on site as they felt they were carrying him. (They are all more than happy to testify that he was not a team player). 4

[37] The evidence of the Applicant, Exhibit A1, addressed the first and second reason for the dismissal in the following terms:

26. I can not reply in relation to the first dot point as there is no information of a specific complaint.

27. In relation to the second dot point, I deny that I ever refused to carry out a lawful direction.

28. I was never told of any specific circumstances where Treblec was concerned that I had refused to carry out lawful instructions.

[38] Additionally the Applicant 5 in Exhibit A1 did give evidence that addressed two of the contentions raised by the Respondent in his letter of 3 August 2012:

6. During my employment I felt that I was a valued employee and was never given any

written warnings.

7. I would generally work overtime for Treblec and I would have worked an average 45 hour week during my employment with them.

[39] Having considered the material before I am satisfied on a balance of probabilities that the contentions of the Respondent are not made out and that the first two reasons for the dismissal are neither sound, defensible nor well founded and are therefore not valid reasons for dismissal.

[40] The third reason for the dismissal was “Imminent risk to the reputation, of your employer's business in your continuous actions of operating your own personal business on company time”.

[41] The evidence of the Applicant is that he was conducting his own business outside work hours and that this was known to the Respondent. The evidence of the Applicant is that he did not engage in any activity in support of his own business whilst at work for the Respondent. The Respondent contended, but did not offer any supporting material, that the Applicant was making phone calls in support of the Applicant’s business on the Respondent’s paid time. Having considered the material before I am satisfied on the balance of probabilities that the alleged conduct did not occur. This reason does not constitute a valid reason for the dismissal.

[42] The last of the identified reasons for dismissal was “Conduct in the course of your employment engaging in theft, and in the circumstances your continued employment would be unreasonable”.

[43] It is clear from my analysis in relation to whether the dismissal was consistent with the Small Business Fair Dismissal Code that the allegation of theft cannot constitute a valid reason for dismissal in that it is not a sound, defensible or well founded reason for dismissal. 6 A mere allegation of theft does not constitute a sound reason for dismissal and in the present matter the Respondent alleged but had not established that theft occurred. The allegation of theft does not constitute a defensible reason for dismissal given the failure of the Respondent to investigate the allegation and the failure of the Respondent to put the allegation to the Applicant. The alleged theft does not constitute a well founded reason for dismissal given that at the time of the dismissal the Respondent could allege but not prove that theft occurred and where the Respondent had not investigated the alleged theft.

[44] The criteria in s.387(b), (c) and (d) are not relevant in this matter.

[45] The criteria in s.387(e) is relevant in that part of the reason for the dismissal related to alleged unsatisfactory performance. On the material before me I am satisfied on the balance of probabilities that the Applicant was not warned about the alleged unsatisfactory performance before the dismissal.

[46] The criteria in s.387(f) and (g) are both relevant. I am satisfied from the material before me that Mr Minos Paterakis, the Director of the Respondent, was personally handling all matters relating to the process to dismiss the Applicant. The Respondent is a small business apparently without any HRM specialists or expertise. From the material filed by the Respondent it appears that Mr Paterakis relied upon the Unfair Dismissal Guidelines appearing on the Fair Work Australia website at the time. Some allowance must be made for any deficiencies in the procedures followed by the Respondent in effecting the dismissal.

[47] I do not consider that there are any other matters which are relevant and which must be considered under the criteria in s.387(h).

[48] I have weighed all of the relevant criteria and on balance I am satisfied that the dismissal is harsh, unjust and unreasonable. Even small business employers without any HRM specialists or expertise are expected to act reasonably in relation to dismissals. In the present matter the Respondent failed to act reasonably by not investigating the matters which the Respondent alleged against the Applicant.

Remedy

[49] The Applicant in this matter does not seek reinstatement but does seek an order for compensation in the amount of $16,128.00.

[50] The relevant provisions of the Act are as follows:

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. Disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

Note: subsection 392(5) indexed to $61,650 from 1 July 2012

(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.

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.

[51] In the present matter where the Respondent has, since the dismissal, gone into liquidation an order for reinstatement under s.391(1) would be futile. Whilst the material before me suggests that there may be an associated entity to which the Applicant could be reinstated under s.391(1A) the material raise no more than a suggestion and is incapable of providing any basis for an order under s.391(1A). I am satisfied that an order for reinstatement is inappropriate.

[52] Compensation can only be ordered if the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case”.

[53] Factors which weigh in favour of an order for compensation being appropriate include:

• the fact that the dismissal was a summary dismissal without notice or payment in lieu of notice;



• the finding that the dismissal was tainted by a lack of investigation by the Respondent;



• the finding that none of the reasons for the dismissal had merit.

[54] The critical factor (but not the only factor) weighing against an order for compensation being appropriate is the fact that the Respondent has gone into liquidation and that there is a reasonable prospect that the Applicant will not get any benefit from an order for compensation.

[55] On balance and having considered all of the circumstances of the case I consider that an order for payment of compensation is appropriate.

[56] As noted earlier in this decision the Applicant filed with the Commission on 13 March 2013 submissions and material addressing the requirements of s.392 of the Act. Those submissions are as follows:

“2. We do not seek reinstatement, or an Order to maintain continuity and an Order to restore lost pay pursuant to section 391 of the Fair Work Act (the Act).

3. We seek that an order for the payment of compensation be made pursuant to section 392 of the Act.

4. We submit that the Order would have no impact on the viability of the employer’s enterprise, within the meaning of section 392 (2) (a).

5. We submit that the length of employment is a neutral factor within the meaning of section 392 (2) (b).

6. We submit that the remuneration that the Applicant would have received the pay rate of $32 per hour if he had remained employed by the Respondent.

7. We rely in this respect on the payslip attached, marked “Attachment A”.

8. Since being dismissed on July 26, the Respondent has been able to generate alternative employment.

9. To the end of 2012, the Applicant was able to secure alternative work as a contractor on 50 of 113 workdays.

10. As a contractor, he was paid an “all-in” rate that was the equivalent of his former rate.

11. We seek compensation for the income lost on the remaining 63 days.

12. We calculated that an amount of $16128 should be awarded being $32 per hour times 8 hours per day times 63 days.

13. The Applicant has demonstrated his efforts to mitigate his loss within the meaning of section 392 (2) (d) through both his extensive search for work and his success in attaining some alternative income.

14. There is no evidence before the Tribunal that the Applicant’s level of income would have reduced during the 26 weeks between his dismissal and 6/9/12, within the meaning of section 392 (2) (f).

15. Any other matter the Tribunal considers relevant within the meaning of section 392 (2) (g).

16. In light of the submissions above, and consistent with the decision of the Full Bench in T. Sprigg and Paul's Licensed Festival Supermarket, we seek an order for payment of $16,128 to the Applicant.”

[57] I approach the task of considering the criteria in s.392 having regard to the decision of a Full Bench in Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge 7.

Compensation amount and instalments

(i) The remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed (s.392(2)(c))

[58] As can be seen from the above submissions the Applicant makes no submission as to how long the Applicant would have remained in employment with the Respondent nor how much remuneration the Applicant would have received if the Applicant had not been dismissed.

[59] The fact that the Respondent went into liquidation on 13 November 2012 means that if the Applicant had not been dismissed the Applicant could not have remained in employment with the Respondent beyond 13 November 2012. The very fact that the Respondent went into liquidation on 13 November 2012 strongly suggests that had the Applicant not been dismissed on 26 July 2012 the Applicant would have been dismissed some time before 13 November 2012.

[60] I note that the evidence of the Applicant was that at the time of his dismissal he was working with another employee in a 2 man team on a site in Altona erecting a steel structure. (Exhibit A1, pns 8 and 9) The Applicant’s employment was covered by the Treblec Pty Ltd and the CFMEU Rigger/Steel Erector Enterprise Agreement 2011-2015 (the Agreement). Although the Applicant had been working for the Respondent for just over a year there is nothing to suggest that the nature of the work was such that the Applicant had expectations of long term employment with the Respondent. Rather the very nature of the work, rigging and steel erection in the construction industry, suggests that there is no certainty as to ongoing work. The Agreement incorporated several clauses from the National Building and Construction Industry Award 2000 and in particular clause 14 - Stand Down of Employees.

14. STAND-DOWN OF EMPLOYEES

14.1 Operators

14.1.1 An employer may deduct payment for any day the employee cannot be usefully employed because of any strike by the claimant organisation of employees or any other union or through any breakdown of machinery or any stoppage of work by any cause for which the employer cannot reasonably be held responsible.

14.1.2 Provided that where an employer orders employees not to work on any day because of the state of the weather, such orders shall not deprive the employees of their claim for payment under their weekly engagements, but if such employees cease work in any day because of the state of the weather without being ordered to do so they shall not be entitled to payment for time being so lost.

14.2 Tradespersons and labourers

The employer may deduct payment for any day upon which an employee cannot be usefully employed because of any strike by or participation in any strike by members of the union; or because of any strike by any members of the union employed by the employer; or because of any strike by or participation in any strike by another union, organisation or association or by any branch thereof, or by any members thereof who are employed by the employer; or because of any stoppage of work (other than for inclement weather within the allowance prescribed in clause 21 of this award) for any cause, including breakdown of machinery or failure or lack of power, for which cause the employer is not responsible.

[61] Clause 14.2 would apply to the Applicant and this clearly permits the Respondent to stand down the Applicant “because of any stoppage of work (other than for inclement weather within the allowance prescribed in clause 21 of this award) for any cause, including breakdown of machinery or failure or lack of power, for which cause the employer is not responsible”.

[62] I note that in Gloria Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge the Full Bench commented on the issue of “contingencies” as follows:

“[52] There has been some variation in cases as to when “contingencies” should be considered in determining an amount of compensation. For example in Sprigg and Ellawala “contingencies” were considered after both the remuneration the dismissed person would have received, or would have been likely to receive, if they had not been dismissed and the monies earned by them since termination had been considered. However, in Lockwood Security Products Pty Limited v Sulocki and Others a Full Bench of the AIRC, in consideration of the particular facts in the case, applied a contingency discount directly to the amount they estimated the dismissed person would have earned but for their dismissal, before making any other deductions.”

[63] The Full Bench in Lockwood Security Products Pty Limited v Sulocki and Others 8 said:

“[50] We point out in passing that it may be inappropriate to treat the amount the employee would have earned between the date of dismissal and the date of the trial as not being subject to any deduction for contingencies. The assessment should take account of the earnings the employee might have received had the employment not in fact been terminated. Even though it is informed to some extent by actual events, that assessment remains hypothetical. The position can be contrasted with the nature of the assessment required in a common law action for damages for personal injuries. In such cases the extent of the injury is known at the date of trial and no estimation of loss is required up to that point in time. In making the assessment required by s.170CH(7), however, an estimate is required because the amount should be calculated on the basis that the employment was never terminated. Cases such as this one demonstrate that where there is a likelihood that the employment would have been terminated within a short time in any event, some allowance should be made for that likelihood in assessing the amount to be deducted for contingencies unless that likelihood has been taken into account elsewhere in the assessment process.

[51] In deciding to make no allowance for contingencies for the period up to the hearing, the Commissioner relied upon the case of Slifka v JW Sanders Pty Limited. Slifka was referred to with apparent approval in both Shorten and Sprigg. Relevantly, the case concerned the calculation of compensation to be awarded pursuant to ss.170EE(2) and (3) of the Industrial Relations Act 1998. Section 170EE(3) required the Court to have regard to the sum which the applicant would have received or would have been likely to have received if the respondent had not terminated the employment. It was in that context that the Court decided that the amount the applicant had notionally lost between the date of termination and the date of the trial was clearly ascertainable and should not be discounted for contingencies. The Court was obviously of the view that the applicant's employment would have continued during that period, assuming the termination had never occurred. There could be no other basis for the decision. In this case, in contradistinction, there was a chance that the employment of each of the respondents might have been terminated for redundancy before the hearing took place. Furthermore we note that in Sprigg the Full Bench made a deduction for contingencies in respect of the whole of the period since termination, not just the period since the trial. We think that is also the more appropriate course in this case.”

[64] In the present matter I have not treated the concept of “contingencies” as a matter separate from my consideration of all matters relevant to a consideration of the criteria under s.392(2)(c). To the extent that may be “contingencies” they are merely part of the process of making a reasonably informed speculation as to what remuneration the Applicant would have received if he had not been dismissed. I adopt the words of the Full Bench said in Lockwood Security Products Pty Limited v Sulocki and Others “Even though it is informed to some extent by actual events, that assessment remains hypothetical.”

[65] Having considered all of the material before me and hypothesing an outcome I am prepared to accept that if the Applicant had not been dismissed he would have continued in employment for another 1 month and in that time the Applicant would have been paid a further gross amount of $4864.00 ($32 per hour X 38 hours per week X 4 weeks).

[66] What s.392(2)(c) requires is that the Commission must take into account “the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed”. In the present matter where I consider that the Applicant would only have been employed for another month the answer to the question posed by s.392(2)(c) appears to be in two parts:

Firstly, the remuneration that the Applicant would have received, or would have been likely to receive, from the Respondent if the Applicant had not been dismissed, and

Secondly, the remuneration that the Applicant would have received, or would have been likely to receive, from other sources if the Applicant had not been dismissed.

[67] The answer to the first part of the question is $4864.

[68] The answer to the second part of the question is provided from the evidence of the Applicant in relation to the amount he earnt after he was dismissed. The Applicant’s evidence was that he worked for 30 days in the 3 months following his dismissal. If the Applicant had continued to work for the Respondent for a further month then the Applicant would most likely have worked 20 days out of the next 2 months and would then have worked a further 20 days out of the next 23 days and a further 69 days up until 26 March 2013 (based upon the figures provided at paragraph 9 of the Applicant’s written submission on Remedy). This total of a further 109 days of work equates to a gross amount of $27,904 ($32 per hour X 8 hours X 109 days).

[69] The total amount of remuneration for the purposes of s.392(2)(c) is $32,768.

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

[70] I accept the submission of the Applicant in relation to the amount of paid work performed to the end of 2012, namely 50 days work. The Applicant did not provide any material as to how much remuneration he received for this work. I am prepared to apply the same hourly rate ($32) that the Applicant received from the Respondent to the work performed after the dismissal. In the absence of any other submission I would extrapolate that the Applicant has earnt since the end of 2012 and is likely to earn until any compensation is paid at the same rate (both as to days worked and hourly rate of pay) as between the date of dismissal and the end of 2012. I calculate that the amount earnt and likely to be earnt between the dismissal and the payment of compensation is $30,464 ($32 per hour X 8 hours X 119 days).

(iii) The amount of compensation that is appropriate

[71] As can be seen from the approach I have adopted in the above calculations the matters that must be considered under s.392(e) and (f) are also relevant to the calculation of the amount under s.392(2)(c). This leads to a simple calculation of the difference between the 2 amounts to arrive at a figure which is the appropriate amount of compensation in this matter. Therefore the appropriate amount of compensation is $2304 ($32768 - $30464 = $2304). As the $32 per hour rate which features both in the Applicant’s submission and evidence and in my calculations is a gross figure then the appropriate amount of compensation which I have determined is a gross amount and is to be taxed at whatever is the appropriate rate determined by the Australian Tax Office.

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

[72] I do not consider that there are any other matters that are relevant to the calculation of an amount of compensation.

[73] Having determined an appropriate amount of compensation no order can be made until each of the remaining criteria in ss.392(2)(a), (b) and (d), and each of the requirements of 392(3), (4) and (5) have been considered.

(v) Viability (s.392(2)(a))

[74] In the present matter no order for compensation can have any effect on the viability of the employer’s enterprise given that the Respondent has gone into liquidation. For whatever reason the Respondent or some other third party has determined that the Respondent’s enterprise is ended and the Respondent is to be liquidated. Any order for compensation will merely permit the Applicant to make a claim against the liquidator.

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

[75] The Applicant’s length of service with the Respondent was 1 year and 2 weeks. This length of service, whilst not overly long is of sufficient length that it does not in my view justify any alteration to the appropriate amount of compensation.

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

[76] I am satisfied on the evidence before me that the Applicant has made reasonable efforts to mitigate the loss suffered by him because of the dismissal. So much is clear from the number of days worked since the dismissal. I am satisfied that no alteration to the appropriate amount of compensation should be made

(viii) Misconduct (s.392(3))

[77] The issue of the alleged misconduct of the Applicant was clearly raised by the Respondent. However as the earlier discussion as to the Respondent’s Objection and as to the matters arising under s.387 make clear I am not satisfied that the Applicant engaged in misconduct. Therefore no alteration will be made to the appropriate amount of compensation.

(ix) Compensation cap (s.392(5))

[78] Since the amount of compensation of $2304 gross is less than the compensation cap in s.392(5) of the FW Act, I make no alteration to the appropriate amount of compensation.

(x) Instalments (s.393)

[79] There was no submission that any amount of compensation should be subject to payment by instalments and I make no order in this regard.

Conclusion

[80] An order that the Respondent pay to the Applicant an amount of $2304 gross and to be taxed at the appropriate rate will be issued separately.

COMMISSIONER

Appearances:

R. Wainwright and L. Jones, CFMEU, for the Applicant.

No appearance for the Respondent.

Hearing details:

2013.

Melbourne:

March 6.

 1   [2012] FWAFB 1359

 2   [2011] FWAFB 7498 at pns [14] and [20]

 3   Print S2679 at pn41

 4   Letter from the Respondent to the CFMEU sent 3 August 2012 in response to application for unfair dismissal remedy

 5   Exhibit A1

 6   Selvachandran v Peteron Plastics P/L (1995) 62 IR 371 at 373, Northrop J

 7   [2013] FWCFB 431

 8   PR908053

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