Sophie Ward v Dartone Pty Ltd T/A the Tudor Box Hill

[2015] FWC 8977

[2015] FWC 8977

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Sophie Ward
v
Dartone Pty Ltd T/A The Tudor Box Hill
(U2015/626)

DEPUTY PRESIDENT KOVACIC CANBERRA, 30 DECEMBER 2015

Application for relief from unfair dismissal – harsh, unjust or unreasonable.

[1] Ms Sophie Ward (the Applicant) lodged an application under s.394 of the Fair Work Act 2009 (the Act) which was received by the Fair Work Commission (the Commission) on 15 February 2015 alleging that the termination of her employment by Dartone Pty Ltd T/A The Tudor Box Hill (Dartone – the Respondent) on 30 January 2015 was harsh, unjust and unreasonable.

[2] The application was heard on 3 June 2015. At the hearing, Ms Ward appeared on her own behalf, while Mr Tony Pelosi, a Director of Dartone, appeared on behalf of the Respondent.

[3] For the reasons set out below, I have found that Ms Ward’s termination was harsh, unjust and unreasonable, that reinstatement is not appropriate and that compensation of $9,702.16 less applicable tax plus superannuation should be paid to Ms Ward by Dartone within 21 days of this decision. An order to that effect will be issued in conjunction with this decision.

Background

[4] Ms Ward commenced employment with Dartone on 14 February 2014 as a Receptionist/Events Planner Coordinator.

[5] In late October 2014 Ms Ward raised with Dartone issues regarding her pay. In short, she considered that her wage was not sufficient to cover her living expenses and sought to discuss that with management. In her application, Ms Ward stated that she was advised that nothing could be done and that she accepted this decision. Ms Ward further stated that she subsequently continued to work diligently and effectively and fulfil all the requirements of her position.

[6] On 13 November 2014 Ms Ward sent an email to Mr Mark Pelosi, the Manager of Dartone. The email read as follows:

“Dear Mark,

I am writing to you to clarify our conversation on Thursday, 30th October 2014 regarding my salary.

On that day I shared with you my concerns about the low wages paid in this role and the impact this has on my ability to meet my basic needs. During this conversation, you indicated that you were not in a position to increase my salary and I have accepted that. I also indicated that, in light of this, I will need to consider my future at The Tudor.

Your actions since that time of advertising my position, interviewing for a replacement and reducing my shifts lead me to believe that you think I have resigned. I want to be very clear that I have not resigned from my position as Receptionist/Events Coordinator/Waitress at The Tudor Box Hill. It is my expectation that I continue in employment with you under the same terms and conditions that have been agreed and in place for the last 9 months, that is, full-time averaging 40 hours per week. You have confirmed on many occasions that you are very satisfied with my performance and have no concerns about my ability to perform in the role.

Should I wish to resign from my position at some time in the future I will provide you with appropriate notice in writing, as required under the Award.

I hope to continue to have a very positive working relationship with you and would be happy to discuss any concerns or queries you have about my employment.”

[7] Mr Mark Pelosi responded the following morning stating “Of course you will continue to be employed under the same terms and conditions as current. We look forward to continuing to work with you.”

[8] On 30 January 2015 Ms Ward was advised by Mr Tony Pelosi that she was no longer required as an employee at The Tudor and that her employment was being terminated effective immediately.

Ms Ward’s case

[9] In her written and oral submissions, Ms Ward set out the series of events leading up to her dismissal on 30 January 2015 in terms consistent with the background set out above. Ms Ward submitted that her dismissal was unfair because:

• she was given no warnings or any indication from management that they had any concerns about her performance or conduct throughout her employment at The Tudor;



• she was not given a reason for her dismissal;



• she was not asked if she had anything to say in response to her dismissal;



• her position was not redundant as another person had been employed to perform the duties she had been undertaking at The Tudor;



• at the time she was dismissed there were two other vacant positions for which she was qualified and to which she could have been redeployed;



• she was not given the opportunity to apply for or be considered for those positions; and



• there were no reasonable grounds given for her dismissal.

[10] As to remedy, Ms Ward did not seek reinstatement. Ms Ward calculated that she would have earned $12,687.44 had she remained in employment until the end of May 2015, with this amount to be reduced by the $3,395.37 she earned in May 2015 from casual employment. This resulted in a total of $9,292.07. In addition, Ms Ward sought an amount of $5,091.89 to rectify alleged underpayments.

Dartone’s case

[11] Dartone submitted that Ms Ward had stated on 30 October 2014 that she wanted to finish her employment with the Respondent and find other work and that on 30 January 2015, Mr Tony Pelosi fulfilled this request. At the hearing, Mr Tony Pelosi submitted that Ms Ward had verbally resigned on 30 October 2014 because she was looking for more pay and/or hours of work. Mr Pelosi further submitted that Dartone had tried to be fair to Ms Ward and continued to employ her for a further three months to allow her to look for alternative employment.

[12] In response to questions from the Commission as to the basis for considering that Ms Ward had resigned given her email of 13 November 2014 to Mr Mark Pelosi, Mr Tony Pelosi referred to the second paragraph of that email which concluded with the words “I will need to consider my position at The Tudor.” Mr Pelosi submitted that he interpreted those words to be a resignation, adding that Ms Ward could have given notice at any time resulting in problems for Dartone given the time it takes to advertise, recruit and train someone to undertake the role performed by Ms Ward.

[13] As to remedy, Mr Pelosi submitted that reinstatement was inappropriate as Dartone had employed someone else to fill Ms Ward’s former role. While Mr Pelosi did not dispute Ms Ward’s calculation regarding the amount she would have earned had she remained employed by Dartone, he did submit that Ms Ward could have found similar employment in the industry almost immediately without any problem.

The statutory framework

[14] The Commission exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 of the Act. In this case there is no contest that Ms Ward is a person who is protected from unfair dismissal pursuant to s.382 of the Act. In the context of this matter, the relevant provisions of the Act are ss. 385, 386 and 387 which provide as follows:

“385 What is an unfair dismissal

A person has been unfairly dismissed if 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.

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:

(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, 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 FWC considers relevant.”

[15] As noted above, Dartone contended that Ms Ward had verbally resigned on 30 October 2014.Ms Ward contends that she did not resign but was dismissed. As such, s.385(a) of the Act is relevant. Ms Ward contends that her termination was harsh, unjust and unreasonable, so s.385(b) is relevant. It was not submitted that Dartone is a small business employer as defined in the Act. Accordingly, s.385(c) is not relevant. The termination was not a case of redundancy, so s.385(d) does not apply. Therefore, in determining whether Ms Ward was unfairly dismissed, I must first consider whether she was dismissed as per s.385(a) and, if so, determine whether the dismissal was harsh, unjust or unreasonable as per s.385(b).

Was Ms Ward dismissed?

[16] Dartone contended that Ms Ward had verbally resigned on 30 October 2014. To support that view Mr Tony Pelosi relied heavily on Ms Ward’s previously mentioned email of 13 November 2014 in which she stated “I will need to consider my position at The Tudor.” However, that contention is not supported by the material before the Commission. Key in that regard is the same email that is relied upon by Mr Pelosi. That email states in very clear and unambiguous terms that:

“Your actions … lead me to believe that you think I have resigned. I want to be very clear that I have not resigned from my position as Receptionist/Events Coordinator/Waitress at The Tudor Box Hill.” (Underlining added)

[17] Mr Mark Pelosi’s response of 14 November 2014 in which he indicated that Dartone looked forward to continuing to work with Ms Ward does not suggest that Dartone considered Ms Ward to have resigned. Had it done so, one might have reasonably expected some additional words along the lines of “until your resignation takes effect” or “while you continue to work here.”

[18] Further, the fact that Ms Ward continued to work for another three months until her employment ceased on 30 January 2014 and that her employment only ceased when Mr Tony Pelosi advised her on that day that she was no longer required does not support a finding that Ms Ward resigned.

[19] For all these reasons, I find that Ms Ward did not resign but was terminated on 30 January 2015 as per s.386(1)(a) of the Act, i.e. at the initiative of Dartone. Accordingly, I now need to consider whether Ms Ward’s dismissal was harsh, unjust or unreasonable.

Was the dismissal harsh, unjust or unreasonable?

[20] In considering whether a dismissal was harsh, unjust or unreasonable, the Act requires the Commission to have regard to the criteria set out in s.387. I will now address these criteria.

(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)

[21] In Rode v Burwood Mitsubishi (Rode’s Case) 1a Full Bench of the then Australian Industrial Relations Commission (AIRC) canvassed the meaning of valid reason in the context of the relevant provisions of the Workplace Relations Act 1996 citing Selvachandran v Peteron Plastics Pty Ltd2 The following is an extract from the Full Bench’s decision in Rode’s Case:

“[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.”

[22] The only reason relied upon by Dartone for dismissing Ms Ward was that it considered that she had resigned on 30 October 2014. For the reasons set out above, I have found that Ms Ward did not resign but was terminated at Dartone’s initiative. In circumstances where there were no issues with Ms Ward’s performance and drawing on the language in Selvachandran, the reason relied upon by Dartone is not “sound, defensible or wellfounded.”

[23] This does not support a finding that there was a valid reason for Ms Ward’s dismissal. As such, this factor strongly favours Ms Ward.

(b) Whether the person was notified of that reason

[24] A Full Bench of the then Australian Industrial Relations Commission in Crozier v Palazzo Corporation Pty Ltd 3 when considering this factor in the context of appeal against an unfair dismissal decision made under the Workplace Relations Act 1996 stated:

“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. Much like shutting the stable door after the horse has bolted.”

[25] As mentioned above, Ms Ward submitted that she was not given a reason for her dismissal. This was not disputed by Mr Pelosi. This supports a finding that Ms Ward was not notified of the reason for her dismissal.

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

[26] Ms Ward’s conduct in foreshadowing that she will need to consider her position with Dartone appears to have been the sole consideration in Dartone’s decision to dismiss Ms Ward. Beyond that no concerns were raised regarding Ms Ward’s conduct.

[27] Based on the material before the Commission, Dartone did not discuss its interpretation of Ms Ward’s email of 13 November 2014 with her at any stage up to and including at the time of her dismissal. Had it done so, events may have taken a completely different course. Further, I note that there is nothing untoward or unusual in an employee looking for better employment opportunities, nor is it in this case conduct warranting dismissal.

[28] Again, I consider that this factor favours Ms Ward.

(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

[29] As Ms Ward was in effect summarily dismissed, there was no discussion relating to her dismissal. Accordingly, there was no scope for a support person to be involved. Given the nature of the dismissal, I consider this factor to be a neutral consideration.

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

[30] Ms Wardwas not dismissed as a result of unsatisfactory performance. Accordingly, this factor is not a relevant consideration.

(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

(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

[31] Neither Ms Ward nor Mr Pelosi made any submissions on this factor. However in Dartone’s Form F 3 – Employer Response to Unfair Dismissal Application it stated that it employed 30 persons at the time Ms Ward was dismissed 4.At the hearing Mr Pelosi indicated that he had appeared before the Commission on several previous occasions in respect of unfair dismissal applications. Based on the material before the Commission, it appears that Mr Pelosi has little awareness of the provisions of the Act relating to termination of employment. Further, I do not consider that this can be attributed either entirely or in large part to the size of Dartone’s business. Accordingly, I consider this factor to be a neutral consideration.

(h) Any other matters that FWC considers relevant

[32] Neither Ms Ward nor Mr Pelosi pointed to any other matters which they considered the Commission should take into account.

[33] I therefore find that there are no other relevant considerations.

Conclusion regarding whether Ms Ward’s dismissal was harsh, unjust or unreasonable

[34] Drawing on the above analysis, I find that the factors that favour a finding that Ms Ward’s dismissal was harsh, unjust and unreasonable are that there was not a valid reason for Ms Ward’s dismissal, that Ms Ward was not notified of the reason for her dismissal and as a result was not given an opportunity to respond to those reasons and that there are no other relevant considerations. The remaining factors in s.387 are either neutral considerations or not relevant in this case. Significantly, there are no factors which support a finding that Ms Ward’s dismissal was not harsh, unjust and unreasonable.

[35] Against that background, and for all these reasons outlined above, I consider that Ms Ward’s dismissal was harsh, unjust and unreasonable. I turn now to consider the issue of remedy.

Remedy

[36] As noted at paragraph [10] above, Ms Ward did not seek reinstatement. Similarly, Mr Pelosi considered that reinstatement was inappropriate as Dartone had employed someone to fill Ms Ward’s former position.

[37] Section 318 of the Act sets out the object of Part 3-2 of the Act, providing at ss.318(1)(c) that an object of Part 3-2 is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.”

[38] Given that Ms Ward’s former position is now filled by someone else and that Ms Ward had found casual employment elsewhere I do not consider reinstatement appropriate in this case.

[39] Section 390 of the Act deals with when the Commission may order a remedy for unfair dismissal and provides at ss.390(3):

“(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.”

[40] The criteria relevant to the deciding of the amount of compensation are set out in s.392(2) of the Act.

Remuneration that would have been received (s.392(2)(c))

[41] As previously noted, a key issue in this case was Ms Ward’s desire to pursue better employment opportunities so that she could earn more money to better meet her living expenses. In those circumstances, I consider that Ms Ward would have been unlikely to remain with Dartone for an extended period of time. This view is supported by the material provided to the Commission by Ms Ward regarding the steps she had taken since her dismissal to find alternative work. Of particular note, that material indicates that in late January 2015 and prior to her dismissal, Ms Ward was already applying for other jobs.

[42] As noted above, Mr Pelosi submitted that Ms Ward could have found similar employment in the industry almost immediately without any problem. However, this is not borne out by the material before the Commission which shows that Ms Ward was unable to secure casual employment until May 2015 despite submitting numerous job applications.

[43] Against that background, I consider that a reasonable expectation was that Ms Ward would have continued to work for Dartone for a further period of three months, i.e. until 1 May 2015 a period of 13 weeks.

[44] Ms Ward submitted that her hourly rate of pay under the relevant modern award at the time of her dismissal was $19.64 per hour. Based on a 38 hour week, this equates to $746.32 per week less applicable tax and over a 13 week period amounts to a total of $9,702.16 less applicable tax. In addition, superannuation payments would have been payable on this amount.

[45] Accordingly, I consider that had Ms Ward not been terminated, a reasonable expectation was that she would have been likely to receive another 13 weeks’ pay plus superannuation. This equates to an amount of $9,702.16 less applicable tax plus superannuation.

Remuneration earned (s.392(2)(e))

[46] Ms Ward submitted that she had found casual employment from 3 May 2015, which is outside the period that I consider she would have had reasonable expectation of continuing employment. Accordingly, no deduction is necessary based on her earnings in that casual employment. At the hearing Ms Ward submitted that she had received $2,659 in social security payments. Consistent with the decision in Sprigg v Paul’s Licensed Supermarket 5 social security payments are not deducted. Accordingly, no deduction on this ground is warranted.

Income reasonably likely to be earned (s.392(2)(f))

[47] I consider that no deduction on this ground is warranted.

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

[1] There are no other matters that I consider relevant to take into account in the determination of an amount of compensation in lieu of reinstatement for Ms Ward, apart from those in ss.392(2)(a), (b) and (d), s.392(3) and s.392(5) of the Act to which I now turn.

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

[2] Mr Pelosi made no submission at the hearing that the amount of compensation sought by Ms Ward (see paragraph [10] above) would affect the viability of the Respondent’s enterprise. I therefore consider this issue to be a neutral consideration.

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

[3] Ms Ward was employed by Dartone for just under twelve months. Given the circumstances in this matter, I do not consider that Ms Ward’s relatively short period of service provides a basis for reducing the proposed amount of compensation.

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

[4] Ms Ward provided material to the Commission which demonstrated that she had been actively applying for jobs following her dismissal (and before her dismissal). Accordingly, I am satisfied that Ms Ward made appropriate mitigation efforts. As mentioned above, Mr Pelosi submitted that Ms Ward could have found similar employment in the industry almost immediately without any problem. However, Mr Pelosi did not provide any material to substantiate that assertion. Further, the assertion is not supported by the material provided by Ms Ward regarding the various jobs she applied for following her dismissal.

[5] I therefore consider that no deduction on this ground is warranted.

Misconduct (s.392(3))

[6] Misconduct was not a factor in Ms Ward’s termination. As a result, there is no basis to reduce the proposed compensation amount on account of misconduct.

Compensation cap (s.392(5))

[7] The proposed amount of compensation of $9,702.16 less applicable tax plus superannuation is less than the compensation cap for Ms Ward as per s.392(5) of the Act.

Conclusion

[8] For the reasons outlined above, I consider Ms Ward’s termination was harsh, unjust and unreasonable. As to remedy, I do not consider reinstatement appropriate and propose an amount of compensation of $9,702.16 less applicable tax plus superannuation to be paid within 21 days of this decision. An order to that effect will be issued in conjunction with this decision.

Appearances:

S. Ward on her own behalf

A. Pelosi for Dartone Pty Ltd T/A The Tudor Box Hill

Hearing details:

2015.

Melbourne:

June 3.

 1   Print R4471

 2 (1995) 62 IR 371

 3 (2000) 98 IR 137 at paragraph 73

 4   Form F3 at Item 1.7

 5 (1998) 88 IR 22 at 26

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