Shu Lam Ho v Pend Investments Pty Ltd t/a Nader Jewellers

[2020] FWC 6179

[2020] FWC 6179

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 394—Unfair dismissal

Shu Lam Ho
v
Pend Investments Pty Ltd t/a Nader Jewellers
(U2020/7455)

DEPUTY PRESIDENT SAMS SYDNEY, 16 DECEMBER 2020

Application for an unfair dismissal remedy – summary dismissal – whether applicant engaged in gross misconduct – balance of probabilities – claims of refusing to comply with employer’s directions – refusal to leave premises – police called – applicant’s evidence as to warnings not accepted – respondent’s evidence believable and accepted – applicant has a history of non-cooperation and intimidating conduct – verbal warnings given – process of dismissal not perfect – summary dismissal justified – valid reason – procedural unfairness issues – dismissal procedurally unfair and therefore unreasonable – reinstatement not appropriate – compensation ordered.

BACKGROUND

[1] Mr Shu Lam ‘Sam’ Ho (the ‘applicant’), was employed by Pend Investments Pty Ltd t/a Nader Jewellers (the ‘respondent’) as a Jeweller from 19 June 2008, until his employment was terminated on 23 May 2020. At the time of his dismissal, the applicant was paid a gross salary of $1,223.00 per week and his employment was covered by the General Retail Industry Award 2010 (the ‘Award’).

[2] On 29 May 2020, the applicant filed an unfair dismissal application pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’), seeking a remedy from the Fair Work Commission (the ‘Commission’). In response to Question 3.2 of his application, the applicant contends that his dismissal was unfair, after he was ‘dragged out’ of the work premises, with no explanation or reason. The remedy sought is for ‘… my employer to understand that I have been unfairly dismissed and treated. I want my case to be fairly heard resulting with a fair outcome based on Australian employment law. Finally, I want my entitlements and payout to be fully paid.’

[3] The respondent was served with the application on 11 June 2020. In its Form F3 – Employer response - Mr Patrick Nader, a Manager of the respondent, confirmed the dates of the applicant’s employment and that it had no jurisdictional or other objections to the application. Mr Nader referred the Commission to a letter sent to the applicant which states as follows:

‘Dear Shu Lam,

Further to our discussion on 27/05/2020 and the subsequent altercation, this letter is to serve as written confirmation of the notice provided on 27/05/2020 of termination of your employment for gross misconduct, specifically a pattern of failure to follow lawful instructions.

As discussed, you have received many verbal warnings and instructions pertaining to the business's instructions for the correct construction of the jewellery. As discussed with you many times before, you cannot simply ignore these instructions and do things your own way. It was been made explicitly clear to you last time we spoke of this that if you failed to follow the instructions given to you by the business that your employment would be terminated, as there have been multiple 'last chances' given to you.

As you know on 27/05/2020 when you were again found to be not following the businesses instructions this resulted in the decision that was communicated to you that your employment would be terminated for gross misconduct effective immediately. As you are aware, there followed a disturbing incident wherein you refused to leave the premises and proceeded to yell and invade the personal space of myself stating "you can't fire me" and "you can't make me leave". As a result of your refusal to leave and your escalating aggression you were physically escorted from the building.

As you know, following this incident you proceeded to ·report to the Police and claim an assault on your person. It is understood that following myself presenting to the police station there have been no charges filed.

Given the nature of your gross misconduct the termination, as discussed, is effective from 27/05/2020 and summary in nature, as such you are not entitled to payment in lieu of notice or accrued Long Service Leave payment, however, the business has decided to process your long service leave payment, in a gesture of good will in what is a difficult job market. All accrued entitlements and unpaid wages up to termination date, will be processed without delay.

Regards
Tadros Nader
Managing Director’

[4] From what I can glean from the applicant’s materials, he is seeking the following:

(a) Redundancy pay: $20,791

(b) Sick leave for a hospitalisation in 2015: $2,446

(c) Long service leave: $12,692

(d) 4 weeks’ notice: $4,932

(e) unspecified compensation: Amount not identified

Approximate total: $40,811

[5] It must be immediately said that none of the matters in (a)-(d) above are orders that the Commission can make. They are underpayment claims which can only be pursued in a Court of competent jurisdiction. The only remedies available from a finding of unfair dismissal are reinstatement and payment for lost remuneration or compensation to a maximum of 26 weeks’ pay or half the amount of the high income threshold, whichever is the least. I will proceed on that basis.

[6] The matter was listed for a preliminary conciliation with a Commission Staff Conciliator on 30 June 2020, but was unable to be resolved and remitted to me for hearing. In accordance with my usual practice, a conference was convened prior to the first directions for the filing and service of materials. The conference held on 27 July 2020 was unsuccessful, and the matter proceeded to hearing on 10 September 2020, with the respondent filing its material first, as this was said to be a serious misconduct case; see: King v Freshmore (Vic) Pty Ltd [PR4213].

[7] On 6 August 2020, the applicant emailed my Chambers noting that the respondent had not provided any materials and had failed to comply with the Commission’s directions. My Chambers emailed the respondent requesting an explanation as to the failure to comply with directions. A reply from Mr Nader later that day said words to the effect that he had misread the directions and that the respondent would require an extension to be provided until 12 August 2020. Amended directions were issued to the parties in the afternoon of 6 August 2020.

[8] Despite my Chambers’ accommodation of the extension request made by Mr Nader, the respondent again failed to comply with directions. On 13 August 2020, the applicant emailed my Chambers noting that no materials had been provided on behalf of the respondent. On 14 August 2020, my Chambers emailed the respondent requesting an urgent explanation as to its non-compliance with directions. On 18 August 2020, my Chambers sent a further email to the respondent noting that no response had yet been provided as to the continued lateness of the filing of materials. A response was received from Mr Nader that day which stated that he had been away from work due to illness, although no evidence was provided to support this assertion. As a result, my Chambers advised the respondent by email that no further extension of time would be granted.

[9] On 1 September 2020, the applicant provided an outline of submissions, a number of statutory declarations made by himself, a statutory declaration made by Mr Vincent Churk Ming Ho (a long term friend of the applicant and fellow employee of the respondent from 2018-2020) and numerous documents, many of which were irrelevant for the purpose of this decision. On 3 September 2020, the applicant filed an amended outline of submissions. On 9 September 2020, Mr Nader provided materials on behalf of the respondent. These included statements from Ms Norma Nahiba Couzi, Ms Cathy Harb and Mr Patrick Nader, and various other attached documents. The hearing in the matter took place on 10 September 2020. As a result of the then prevailing COVID-19 protocols, the hearing was conducted via Microsoft Teams.

THE EVIDENCE

Case for the respondent

[10] The following persons provided evidence on behalf of the respondent:

•  Mr Roy Czub, National Operations Manager of EGroup Security – not required for cross examination;

•  Ms Norma Nahiba Couzi, employee of the respondent;

•  Mr Patrick Nader, General Manager of the respondent; and

•  Ms Cathy Harb, employee of the respondent.

Mr Roy Czub

[11] Mr Czub is the National Operations Manager of EGroup Security. The Group is responsible for security at Bankstown Centro, where the respondent’s premises are located. Annexed to Mr Czub’s statement was an email stating that Mr Czub had spoken to the security officer who attended Nader Jewellers on 23 May 2020, and that the officer had advised of the incident which took place that day, in the following terms:

•  ‘The Officer entered the back of Nader Jewellers and noticed Tadros Nader and an unknown male of Asian appearance having a discussion. The Asian male also appeared to be on the phone to an unknown person at this time.

•  After a few moments, the officer asked Tadros Nader and the Asian male why security had been called to the store.

•  Tadros Nader requested the Asian male leave the store.

•  The Asian male complied, stood up and was escorted out of the tenancy. The officer and the Asian male then had a discussion at the front of the tenancy where its was stated that a disagreement had occurred, but the Asian male stated he was on the phone to Patrick Nader and would sort it out

•  The Asian male then walked away as did the security officer’

[12] Mr Czub did not witness any of the events of 23 May 2020, and was not available for cross examination during the hearing. However, the above account reflects the common understanding of the call being made to have the applicant removed from the store and the attendance of security at the store.

Ms Norma Couzi

[13] In her statement, Ms Couzi said that she had been employed by the respondent for the past 12 years and has worked in all three retail stores operated by the respondent. Further, she said that she has worked with all the jewellers employed by the company. Ms Couzi believed that the applicant was by far the most difficult jeweller to work with and always has been. He can be very intimidating and defiant of instructions. She had spoken to him about his behaviour and that it is not his place to refuse directions or to argue. The applicant’s behaviour was often escalated to the owners of the business and she claimed that she witnessed many arguments between the applicant and the business owners. It was Ms Couzi’s evidence that the applicant’s insubordination has caused disruption to the flow of work and created unnecessary problems in the workplace.

[14] In cross examination, Ms Couzi was asked about whether she was related to Mr Nader. Ms Couzi’s answer was that it was well known that she was Mr Nader’s niece. Nevertheless, she confirmed her belief that the applicant was difficult to work with. When she was asked whether she had left the Bankstown store, as a result of having a disagreement or argument with Mr Nader, she denied this and said she had left for a while to be with her daughter, but came back after about four or five months.

Mr Patrick Nader

[15] Mr Nader is the General Manager of the family-owned jewellery business. In his role, he oversees the day to day operation of three retail stores, with duties ranging from ordering stock, design, sales, payroll, staff rostering and the business accounts. Mr Nader claimed that the applicant was terminated for gross misconduct. Further, he stated that the applicant had received many verbal warnings about his aggressive behaviour to the sales team, who had found him extremely difficult to work with.

[16] Mr Nader provided his version of the incident on 23 May 2020. He had received a phone call from the applicant who claimed that his father (Mr Tadros Nader) was ‘kicking him out’ of the store. Mr Nader stated that his response was that the applicant should leave the store and wait for a call back. Mr Nader rang his father at around 5:30pm that day and was told the applicant had been terminated for aggressive behaviour. His father directed him not to call the applicant back, but to arrange payment of the applicant’s outstanding entitlements. As a result of the direction from his father, Mr Nader had an accountant prepare payment of any outstanding entitlements owed to the applicant. A termination letter was also drafted by Mr Nader’s father and the accountant on that day.

[17] Mr Nader understood that, on 26 May 2020 at around 6:00pm, after receiving a phone call from a detective at Bankstown police station, his father presented at the Bankstown police station to answer questions regarding an alleged assault. Mr Nader believed that no further action was taken by the police.

[18] The next day, Mr Nader queried the applicant’s brother, who is also an employee of the respondent, as to the applicant’s postal address in order to mail the termination letter and final payments. Mr Nader said that on 3 June 2020, the applicant visited the respondent’s Parramatta store, where he had a brief conversation with the applicant and tried to provide him with his final payments and dismissal letter. However, the applicant refused to take them. The following day, Mr Nader arranged to have the documents sent by registered post. Around two weeks later, Mr Nader received the documents back from the post, as the unit number had been written incorrectly and the documents were undeliverable. The documents were resent.

[19] In cross examination, Mr Nader said that the reason for the termination of the applicant’s employment was both gross misconduct for aggressive behaviour and failure to comply with ‘working conditions’. In answer to a further question, he explained that failure to comply with ‘working conditions’ related to constant complaints made by the applicant about work he was assigned. Mr Nader conceded that the applicant had never been given any written warnings, but maintained there had been multiple verbal warnings.

[20] The applicant questioned Mr Nader on the effective date of his termination. Whilst the letter of termination specified that 27 May 2020 was the date of termination, the last day the applicant worked was 23 May 2020. In response, Mr Nader said that this was an error which likely occurred due to the letter being drafted on 27 May 2020.

[21] The applicant asked Mr Nader why no CCTV footage had been provided of the incident that took place on 23 May 2020. Mr Nader stated that his father was not familiar with how to operate the CCTV.

Ms Cathy Harb

[22] Ms Harb said that she had been employed with Nader Jewellers for around five years in a managerial capacity. Her role included directly working with, and instructing the applicant. Ms Harb stated that the applicant’s behaviour in the workplace had been unacceptable, including intimidating conduct and yelling at her. She had felt threatened by the applicant’s words and actions many times.

[23] On 23 May 2020, Ms Harb began the day instructing the applicant to complete the required work. He expressed disinterest in the instruction and insisted that the work could not be completed for a number of reasons, including him not having the required materials. However, the required materials were available and the owner, Mr Tadros Nader, was quick to ensure the applicant was equipped to complete his work.

[24] Not long after this, Ms Harb heard a heated discussion coming from the workshop. As the voices grew louder, it became clear that the applicant was arguing with Mr Tadros Nader. Customers were present in the store at this time. Ms Harb’s evidence was that Mr Nader then appeared from the workshop door with the applicant and insisted he leave the premises. As the applicant refused, security was called to remove him.

[25] In cross examination, the applicant asked Ms Harb about the events of 23 May 2020. She conceded that she was on the shop floor and could not see what unfolded in the back room. However, she was able to hear a very loud argument. She could not make out exactly what was said during the argument, because the door was closed and it was not clear. The applicant asked Ms Harb whether he was pushing Mr Nader, or whether Mr Nader was pushing him, when the workshop door opened. In reply, Ms Harb said that she did not see any pushing, rather she saw Mr Nader instructing the applicant to leave the store in a loud voice.

[26] In response to questions from me, Ms Harb said that she was present when two security guards arrived at the store to remove the applicant. Ms Harb said that after security arrived the applicant reluctantly left. However, there was no physical altercation.

Case for the applicant

[27] The applicant provided a witness statement which detailed the events of 23 May 2020. On that day, he began work at 10:00am in the workshop. He was completing work as usual until a salesperson provided him with a new job order. He advised the salesperson that there was not enough oxygen in the gas cylinder to complete the job.

[28] Around 12pm, Tadros Nader entered the workshop and provided the applicant with some gold to work with. He reported to Tadros Nader that the oxygen was very low. The applicant stated that he took his lunch break at 1pm as usual and by this point all the jobs were complete, except for the one provided to him that morning.

[29] The applicant returned to the workshop at around 1:30pm to find Tadros Nader fixing a watch. Tadros Nader yelled at him and asked why the watch was not repaired prior to his lunch break. It was the applicant’s evidence that he told Mr Nader that the watch had come in after he had left for his lunch break and that he had finished six or seven jobs that morning. At around 2:15pm, Tadros Nader returned to the workshop with a ring on his hand for repair. When he attempted to take the ring, Mr Nader held it very tight and began scolding him by saying ‘You sick? You not like, don't do it! You get out.’

[30] The applicant’s claimed that as he stood up to face Mr Nader, he kicked his right leg and pushed his chest with two hands, until he was pushed out of the workshop. He then called Patrick Nader to advise that he intended to call police. Patrick Nader told him that he should not call the police, but instead he should leave the store and await a call back.

[31] Two security guards arrived at the store. He told the security guards that his boss had assaulted him and showed the security guards a mark on his knee where Tadros Nader had kicked him. He left the store with the security. The applicant returned home and attempted to call Patrick Nader, but was unable to reach him. He then called David Nader (another son of Tadros Nader) and explained to him what had occurred. David Nader said he would contact his father. The applicant said that he sent David Nader a photo of the mark on his knee where he had been kicked. The applicant provided screenshots of a WhatsApp conversation to this effect.

[32] The applicant said he called the police on 26 June 2020 and filed a police report. He was never advised prior to filing the police report, that his employment had been terminated. He provided a copy of his statement to New South Wales Police, dated 26 May 2020.

[33] In cross examination, the applicant agreed that Mr Nader attempted to provide him with a dismissal letter and payments for accrued annual leave and long service leave when he visited the Parramatta store following his dismissal. He refused to accept them, because he did not agree with the dismissal and there was no payment for accrued sick leave.

[34] In response to a question from Mr Nader regarding any income earned following the dismissal, the applicant replied that the only payments he had received were Centrelink payments.

Mr Vincent Churk Ming Ho

[35] Mr Ho has known the applicant for over 20 years. They had been colleagues at Nader Jewellers for two years and had also worked together for another eight years in a different jewellery workshop in Sydney.

[36] Mr Ho’s evidence was that the applicant was an experienced, reliable, and skilled jewellery maker and a good colleague. He said the applicant is honest and a person who takes great pride in his job. Mr Ho claimed that Tadros Nader was bad-tempered and that he had witnessed him yell at staff.

[37] The respondent did not require Mr Ho for cross examination. In response to a question from me, the applicant confirmed that Mr Ho was not employed by the respondent on 23 May 2020 (and obviously was not a witness to the events that day).

SUBMISSIONS

For the respondent

[38] No written submissions were advanced by the respondent.

[39] In oral submissions,Mr Nader reiterated that the applicant had been given many verbal warnings over the years he worked for the respondent. He conceded that, as a family-run business, ‘we didn't do everything 100 per cent by the books’ regarding the dismissal and this would be rectified to ensure written warnings are provided to underperforming staff in the future.

[40] Mr Nader submitted that the applicant was not able to work at all with the respondent’s other employees. Mr Nader said that this unfortunately led to the applicant’s dismissal on 23 May 2020 for gross misconduct and aggressive behaviour towards his father.

For the applicant

[41] In the applicant’s written submissions, the applicant made reference to his poor English language skills and said that he prefers to have communications written down for him.

[42] The applicant submitted that he had never received any written or verbal warnings in his 12 years of service with the respondent. He believed it was only following his filing of the police report that he was advised of his dismissal.

[43] The applicant submitted that in order to justify the dismissal, the respondent had defamed his work performance, the quality of his work and his professional reputation. He submitted that only the CCTV footage would be able to show what occurred on 23 May 2020, because only Tadros Nader and himself were inside the workshop when the events in question occurred.

[44] In oral submissions,the applicant reiterated his submission that he had never received any warnings during his employment. He said that he had never engaged in inappropriate behaviour or conduct. The applicant again suggested that his dismissal was as a result of his filing of the police report.

CONSIDERATION

Preliminary remarks and findings on the evidence

[45] It is the applicant’s case that the real reason he was dismissed was because he had filed a Police complaint against Tadros Nader for alleged assault on 23 May 2020. He further claimed he had never received any written or verbal warnings for his alleged poor performance or conduct.

[46] While I accept there were no witnesses to the alleged assault in the workshop and no CCTV footage called for (if it exists for that section of the store), the facts were the applicant refused to leave the premises and security was called. Nevertheless, I accept when they arrived, he left peacefully, without incident.

[47] In some respects, the incident on 23 May 2020 was emblematic of what Mr Nader said was the applicant having been given numerous verbal warnings and Ms Harb’s evidence that in managing the applicant, his behaviour was unacceptable and she felt threatened by his intimidating conduct. She had also heard a loud argument in the workshop that day.

[48] I also accept Ms Couzi’s evidence that the applicant was very intimidating, defiant of instructions and she had witnessed many arguments between him and the owners. While I have had cause to comment in other cases that evidence from family members should be treated with some caution (see: Hardy v Aus North Refrigeration & Air Conditioning[2020] FWC 5549), the distinction here is that Ms Couzi had worked for the business for 12 years and had personally witnessed and testified to the applicant’s conduct.

[49] Moreover, the applicant’s refusal to leave the store when directed by Tadros Nader, plainly evident by security being called, is consistent with the overall evidence, that the applicant was, at best, a difficult, argumentative employee and at worst, an intimidating and uncooperative one, who would frequently refuse the employer’s reasonable and lawful directions.

[50] On the other hand, the applicant relied on a former colleague, Mr Ho who, in substance, provided a character reference for the applicant and was less than complimentary about Mr Tadros Nader. Character evidence from a friend and former work colleague, who was not a witness to the relevant incident, should be treated with some caution. I do so in respect to Mr Ho’s evidence.

[51] While the applicant insisted he had never received any written or verbal warnings, this claim is contrary to the respondent’s evidence. I prefer the respondent’s evidence in this respect.

[52] That said, it is understandable (though unwise) for a busy small family business (22 employees) without employment or HR expertise to be less than pristine in its employment practices. Mr Nader candidly conceded that the respondent’s handling of the dismissal was ‘not 100 per cent by the books’. Nevertheless, in my view, it would seem to be apparent that the applicant’s employment was unlikely to continue for much longer.

Statutory provisions and relevant authorities

[53] As neither party was represented, little attention was given to the statutory provisions relevant to this matter; let alone the authorities which have application to a case of this kind. It is, however, necessary for the Commission to deal with this matter in the proper statutory context.

[54] Before turning to the merits of the case, the Commission must deal with a number of preliminary matters under s 396 of the Act. That section reads:

396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

[55] Mr Ho’s unfair dismissal application was lodged on 29 May 2020. As he was dismissed on 23 May 2020, his application was lodged within the 21-day statutory time period set out in s 394(2) of the Act. Mr Ho is a person protected from unfair dismissal in that:

•  he had completed the minimum employment period set out in ss 382 and 383 of the Act, namely over 12 years; and

•  his remuneration was below the high income threshold in s.382(b)(ii) of the Act and he was otherwise employed under theAward.

[56] Section 385 of the Act sets out four jurisdictional prerequisites which must be satisfied in order for the Commission to find that a person has been unfairly dismissed. By the use of the conjunction ‘and’ joining subsections (a), (b), (c) and (d), it is clear that each of the four requirements must be satisfied for a person to be unfairly dismissed. The section is set out as follows:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[57] For present purposes, I am satisfied that the applicant was dismissed (sub-s (a)), that the Code does not apply (sub-s (c)) and his dismissal was not a case of genuine redundancy (sub-s (d)). The question of whether the applicant’s dismissal was ‘harsh, unjust or unreasonable’ is the remaining matter to be considered at this point.

Serious misconduct and the Act’s Regulations

[58] There is no doubt that this is a case involving allegations of serious misconduct. In this respect, it is helpful to refer to the Act’s meaning of serious misconduct where, at s 12, it says

12 The Dictionary

In this Act:

…

Serious misconduct has the meaning prescribed by the regulations.

[59] The regulations referred to are Regs 1.0.7(1), (2) & (3) of the Fair Work Regulations 2009, (the ‘Regulations’). They are expressed as follows:

1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious mand imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) for subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment. (my emphasis)

[60] Lucev J summarised the meaning of serious misconduct in Wintle v RUC Cementation Mining Contractors Pty Ltd (No.3) [2013] FCCA 694, at paragraphs [97]-[103], where His Honour said:

‘97. To define “serious misconduct” by reference to its “ordinary meaning” as is done in reg.1.07(1) of Div.2 of Part 1-2 of Ch.1 of the FW Regulations is not of particular assistance in determining whether or not the conduct for which the employee has been terminated is serious misconduct disentitling an employee to the minimum period of notice prescribed under the NES. That is because, both historically and in more modern times, courts have been wary of defining the extent of “misconduct” which justifies dismissal, and where they have attempted the task have made it clear that the misconduct must be sufficiently “serious” as to warrant non-continuation of the contract between employer and employee. Thus, the “ordinary meaning” definition of “serious misconduct” adds little, if anything, to the content of the meaning of “serious misconduct”.

98. In Clouston & Co Limited v Corry it was observed that there “is no fixed rule of law defining the degree of misconduct which would justify dismissal”.

99. In Laws v London Chronicle (Indicator Newspapers) Ltd it was observed that:

… if summary dismissal is claimed to be justifiable, the question must be whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service.

… one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is “wilful”: it does (in other words) connote a deliberate flouting of the essential contractual conditions.

100. In North v Television Corporation Ltd the Australian Industrial Court was called upon to consider the word “misconduct” as used in an industrial award covering journalists. In the joint judgment in North it was observed that:

It is of assistance to consider the expression “misconduct” by reference to subject matter to which it is related and the context in which it appears. The subject matter is the termination by one party against the will of another of a continuing contract of employment on the ground of breach of one of the terms of the contract. And the context is such as to indicate that certain breaches of a non-serious nature, some of which would be within the connotation of misconduct, are not regarded as grounds for termination. In such a situation it is reasonable to interpret the expression “misconduct” as referring to conduct so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment.

This situation would arise if there were conduct inconsistent with the fulfillment of the express or implied conditions of service. It is conduct of that kind which will justify dismissal at common law.

101. It was also observed in North by a single judge that although the conduct of the journalist concerned was “reprehensible” it fell short of misconduct justifying summary dismissal because it was an isolated incident which occurred “under [the] considerable strain” of preparing for a nightly news bulletin.

102. In Gera v Commonwealth Bank of Australia Ltd the employee’s Australian Workplace Agreement provided for termination without pay in lieu of notice for misconduct if the misconduct was serious. In that case it was observed that:

The use of the adjective “serious” imposes an additional requirement before the Bank can terminate employment without notice. Something more than mere misconduct is required.

103. In Gera the Court went on to find that there was no doubt that the sexual or indecent assault of a fellow employee was serious misconduct warranting summary termination without payment in lieu of notice, as it constituted a fundamental breach of an employee’s duty, particularly where the employee was a senior employee and mentor to the employee who had been assaulted.’ (footnotes omitted)

[61] Before leaving the general statutory provisions, I repeat the statutory instruction in s 381(2) of the Act to apply the principle of a ‘fair go all round’:

‘(2) The procedures and remedies referred to in paragraphs (1)(b) and (c) and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned’

Was the applicant’s dismissal ‘harsh, unjust or unreasonable’?

[62] Section 387 of the Act sets out each of the matters the Commission is required to take into account when determining this question. The section reads 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.

Whether there was a valid reason for the applicant’s dismissal (s 387(a))

[63] The meaning of valid reason in s 387(a) is drawn from the judgment of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 (‘Selvachandran’). This meaning has been considered and applied by members of the Commission and its predecessors for many years. For example, in Rode v Burwood Mitsubishi (Print [R4471]), a Full Bench of the then Australian Industrial Relations Commission (AIRC) discussed the meaning of valid reason in the context of the Workplace Relations Act 1996, citing Selvachandran. The following is an extract from the Full Bench’s decision at paragraph [17]:

‘[17] In relation to the meaning of “valid reason” the following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd are relevant:

“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 wellfounded; a valid reason’.

In its context in s 170DE(1), the adjective ‘valid’ should be given the meaning of sound, defensible or wellfounded. 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, when considering the construction and application of a s 170DC.”

[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).

[19] We agree with the appellant’s submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.’

See also: Nettleford v Kym Smoker Pty Ltd (1996) 69 IR 370.

[64] I am satisfied that the applicant had been given numerous verbal warnings about his conduct and behaviour and given numerous directions to perform his work as directed. His last refusal to comply with directions was his refusal to leave the store when directed to by Mr Tadros Nader. Further, I am satisfied that, in aggregate, the Applicant’s ongoing conduct was sufficiently serious to justify his summary dismissal. It was for a valid reason in the Selvachandran sense.

Procedural fairness

[65] Subsections 387 (b)-(g) are procedural fairness matters to be considered by the Commission in any unfair dismissal case, including when a finding of valid reason is made.

[66] To highlight the importance of procedural fairness issues, in unfair dismissal cases, I cite four authorities on the subject. In Crozier v Palazzo Corporation Pty Limited t/as Noble Storage and Transport (2000) 98 IR 137 (‘Crozier v Palazzo’), a Full Bench of the AIRC said at [73]:

‘As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment.’

[67] In Wadey v YMCA Canberra [1996] IRCA 568, Moore J made clear that an employer cannot merely pay ‘lip service’ to giving an employee an opportunity to respond to allegations concerning an employee’s conduct. His Honour said:

‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’

[68] Nevertheless, procedural fairness steps should be applied in a common sense and practical way. In Gibson v Bosmac Pty Ltd (1995) 60 IR 1 (‘Gibson’), Wilcox CJ said at [7]:

‘Ordinarily, before being dismissed for reasons related to conduct or performance, an employee must be made aware of the particular matters that are putting his or her job at risk and given an adequate opportunity of defence. However, I also pointed out that the section does not require any particular formality. It is intended to be applied in a practical, commonsense way so as to ensure that the affected employee is treated fairly. Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section.’

[69] It goes without saying that any issue(s) of procedural unfairness may not be of such significance as to outweigh the substantive reasons for an employee’s dismissal, particularly in cases of misconduct where the proven misconduct is of such gravity as to outweigh any other considerations such as age, length of service, employment record or contrition.

[70] In a recent decision of the Full Bench, the following principles were enunciated as to sub-ss 387(b) and (c) of the Act. In Bartlett v Ingleburn Bus Services Pty Ltd t/as Interline Bus Services[2020] FWCFB 6429, the Full Bench said at [19]:

‘[19] The relevant principles as to the meaning and application of s 387(b) and (c) are well-established. They may be summarised as follows:

(1) Each of the matters specified in s 387, including those in paragraphs (b) and (c), must be taken into account as matters of significance, to the extent that they are relevant to the particular case at hand, and given due weight.

(2) Proper consideration of s 387(b) requires a finding to be made as to whether the applicant has been notified of “that reason” – that is, the reason for dismissal relating to the capacity or conduct of the applicant found to be valid under s 387(a) – prior to the decision to dismiss being made

(3) Proper consideration of s 387(c) requires a finding to be made as to whether the applicant has been given a real opportunity to respond to the reason for dismissal. As a matter of logic, unless the applicant has been notified of the reason, it is difficult to envisage that it could be found that the applicant has been afforded an opportunity to respond to that reason.

(4) Once findings are made in relation to s 387(b) and (c), they may then be weighed together with the other matters required to be taken into account in order to form a conclusion as to whether the applicant’s dismissal was harsh, unjust or unreasonable. Where it is found that the applicant was not notified of the reasons for dismissal and/or was not given an opportunity to respond, a relevant consideration as to the weight to be assigned to this is whether this meant that the applicant was deprived of the possibility of a different outcome in terms of avoiding his or her dismissal’

Whether the person was notified of that reason (s 387(b))

[71] The applicant was summarily dismissed on 23 May 2020, but was not advised of this at the time. A termination letter was prepared on 27 May 2020. On the available evidence, it seems the earliest time the applicant was made aware of the termination letter was when he visited the respondent’s Parramatta store on 3 June 2020. At this time, Mr Nader attempted to provide him with the letter and his termination pay, however he refused to accept it. This means that the applicant was not notified of the reason for his dismissal for at least 11 days following the actual termination. This factor tells in favour of a finding of unfairness.

Whether the person was given an opportunity to respond to any reasons related to the conduct of the person (s 387(c))

[72] The applicant was provided with no opportunity to respond to the termination letter, dated 27 May 2020. This factor tells in favour of a finding of unfairness.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal (s 387(d))

[73] Given the applicant had no warning of his dismissal, he obviously had no opportunity to request to have a support person with him. It follows there was no refusal. This factor tells in favour of a finding of unfairness.

If the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal (s 387(e))

[74] I accept the applicant was verbally warned about his performance, but there was no evidence that he was warned that his employment was at risk. This does not reach the threshold required for a procedural fairness finding. Accordingly, this factor tells in favour of a finding of unfairness.

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 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 (ss 387(f) and (g))

[75] While I accept the respondent has no HR expertise in dealing with the circumstances it faced and a difficult employee, it is not a small business and might reasonably have been expected to have handled the applicant’s dismissal with greater care and attention to the statutory and industrial imperatives in such matters. Mr Nader candidly conceded the dismissal should have been handled better. I have taken this matter into account.

Any other matters the Commission considers relevant (s 387(h))

[76] This section provides the Commission with a broad remit to consider any matters it considers relevant when determining whether a dismissal is unfair. I have taken into account that the applicant has 12 years of service – a reasonably lengthy period of service.

[77] In weighing all the matters under s 387 of the Act, I am satisfied, albeit on a fine balance, that the applicant’s dismissal was procedurally unfair, and therefore unreasonable. I turn now to remedy.

Appropriate remedy

[78] Section 390 of the Act sets out the circumstances in which the Commission may make an order for reinstatement or compensation, with an emphasis on reinstatement. The section reads:

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.

[79] Section 392 reads 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.

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.

(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.

[80] Given the circumstances surrounding the applicant’s dismissal, and that he does not seek reinstatement, I am satisfied that reinstatement would be inappropriate. I turn then to compensation.

[81] The methodology to be adopted by the Commission in calculating compensation having regard for each of the matters set out in s 392 of the Act, (often referred to as the Sprigg formula), was considered by a Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. t/a Ottrey Lodge [2013] FWCFB 431 (‘Ottrey’); see also: Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21 (‘Sprigg’) and Ellawala v Australian Postal Corporation [1999] AIRC 1250. A Full Bench said in Balaclava Pastoral Co Pty Ltd ATF O’Connor-Fifoot Family Trust v Nurcombe [2017] FWCFB 429 (‘Balaclava’) at [42]- [43]:

‘[42] The correct approach to the assessment of compensation was summarised by the Full Bench in the recent decision in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries as follows (footnotes omitted):

“[16] The well-established approach to the assessment of compensation under s.392 of the FW Act, taking into account the matters specified in s.392(2), is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages. Under that approach, the first step to be taken in assessing compensation is to consider s.392(2)(c) - that is, to determine what the applicant would have received, or would have been likely to receive, if the person had not been dismissed. In Bowden 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’...’

[17] The identification of this starting point amount “necessarily involves assessments as to future events that will often be problematic” . Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies 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 in an amount that is considered appropriate having regard to all the circumstances of the case.”

[43] We would add to this that in quantifying compensation, it is necessary to set out with some precision the way in which the various matters required to be taken into account under s.392(2) (and s.392(3) if relevant), and the steps in the Sprigg formula, have been assessed and quantified. That is to say, the way in which a final compensation amount has been arrived at should be readily apparent and explicable from the reasons of the decision-maker.’ (footnotes omitted) (my emphasis)

[82] In adopting the above methodology, I make follow findings:

(a) As the respondent put no evidence as to the effect any order of compensation would have on the viability of its enterprise, I am satisfied that the order I intend to make would not have any deleterious impact on the respondent’s viability.

(b) The applicant had 12 years’ service with the respondent – a lengthy period of employment.

(c) It is notoriously difficult to speculate with any certainty, how long a period an unfairly dismissed employee would have continued in employment, but for their dismissal. In McCulloch v Calvary Health Care Adelaide [2015] FWCFB 873, the Full Bench of the Commission put it this way and said at [27]:

‘[27] We would also observe that, in our view, the evidence upon which the Commissioner relied was insufficient to sustain the inference that, but for the dismissal, the appellant would only have remained in employment for a further 8 weeks, at which time he would be summarily terminated. Implicit in the Commissioner’s finding is that the conduct which led to his dismissal (and which the Commissioner found did not constitute a valid reason for termination) would not only be repeated within a relatively short period of time but would in fact be repeated in a more serious form such as to constitute serious misconduct. While the task of determining an anticipated period of employment can be difficult, it must be done. In the context of this case it seems to us that the Commission would require cogent evidence to conclude that a person such as the appellant, who was dismissed without a valid reason, would only have worked another 8 weeks at which time he would have been summarily dismissed. The Commissioner’s s.392(2)(c) finding constitutes a significant error of fact, within the meaning of s400(2) of the Act.’

(d) Given the state of the employment relationship, I consider Mr Ho would not have had a reasonable expectation of more than another four weeks’ further employment, had the respondent adopted a fairer procedure for the applicant to be warned his employment was at risk. However, I doubt he would have corrected his behaviour. It is common ground that the applicant’s weekly salary was $1,233.00. Four weeks equates to $4,932.00.

[83] Given I have found that there was misconduct of the applicant, I will deduct 50% from the compensation on that score (s 392(3)). 

[84] The order I intend to make contains no component by way of compensation for shock, distress, humiliation or other analogous hurt (s 392(4)).

Compensation assessment

[85] The compensation cap is the lesser of the amount equivalent to the remuneration earned by the applicant in the 26 weeks immediately before her dismissal (s 392(6)) and half the high income threshold immediately before dismissal. The high income threshold is not relevant in this case.

[86] According to the Sprigg formula, and having regard to all the circumstances of this case; see: Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, the amount of compensation is $2,466.00. This amount is obviously below the cap of remuneration the applicant earnt in the 26 weeks prior to his dismissal. Accordingly, I propose to order an amount of compensation of $2,466.00.

CONCLUSION

[87] For the aforementioned reasons, I am satisfied the dismissal of the applicant by the respondent was ‘unreasonable’, within the meaning of s 387 of the Act. Finally, as mentioned earlier, s 381(2) of the Act is a significant and overreaching object of Part 3-2. It is expressed in these terms:

381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(a) to establish procedures for dealing with unfair dismissal that

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(b) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a "fair go all round" is accorded to both the employer and employee concerned.

Note: The expression "fair go all round" was used by Sheldon J in in re Loty and Holloway v Australian Workers' Union [1971] AR (NSW) 95.’

[88] In this matter, I am satisfied reinstatement is inappropriate and compensation in the amount of $2,466.00 is appropriate, having regard to all the circumstances of this case. I am satisfied that the remedy I have determined will ensure a ‘fair go all round’ is accorded to both the applicant and the respondent. The amount so ordered is subject to any deductions of appropriate taxation, according to law. The amount of compensation is to be paid to the applicant within 21 days of today. Orders giving effect to my conclusions will be published contemporaneously with this decision.

DEPUTY PRESIDENT

Appearances:

The applicant appeared for himself.

Mr P Nader appeared on behalf of the respondent.

Hearing details:

2020.

Sydney (via Microsoft Teams)

10 September

Printed by authority of the Commonwealth Government Printer

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