Sotirios Kardaras v Ausform Projects Group Pty Ltd
[2024] FWC 2727
•1 OCTOBER 2024
| [2024] FWC 2727 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Sotirios Kardaras
v
Ausform Projects Group Pty Ltd
(U2024/5693)
| DEPUTY PRESIDENT MASSON | MELBOURNE, 1 OCTOBER 2024 |
Application for an unfair dismissal remedy – jurisdictional objections – whether dismissal consistent with small business fair dismissal code – whether dismissal a genuine redundancy – jurisdictional objections dismissed – merits determined – dismissal found not to be unfair – application dismissed.
On 20 May 2024, Mr Sotirios Kardaras (the Applicant) made an application to the Fair Work Commission (the Commission) under s 394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging he had been unfairly dismissed from his employment with Ausform Projects Group Pty Ltd (the Respondent) on 17 May 2024. The Respondent filed its Form F3 on 15 July 2024 and in doing so raised two jurisdictional objections, those being that the Applicant’s dismissal was consistent with the Small Business Fair Dismissal Code and/or was a case of genuine redundancy.
Following unsuccessful attempts by the Commission to arrange a conciliation conference of the parties, the matter was allocated to my Chambers and was listed for determinative conference/hearing on 30 September 2024 to determine the Respondent’s jurisdictional objections and the merits of the application. In advance of the hearing the Applicant filed his material in accordance with Directions issued by my Chambers. The Respondent failed to file any material or respond to email or telephone communication from my Chambers.
At the conference on 30 September 2024, the Applicant appeared and gave evidence. The Respondent advised via email on the morning of the proceeding that it would not be attending due to the company having been put into administration, evidence of which was furnished by way of an ASIC extract. I am consequently satisfied that the Respondent’s failure to file material or attend the proceedings was not due to it being unaware of the matter. I am further satisfied that the Respondent has been made aware of this matter, having filed a Form F3. It has had ample time and opportunity to respond to the application but has made a conscious decision not to do so. Consequently, I intend to treat the application as uncontested
Background and evidence
The background and evidence in this matter may be shortly stated. The Applicant commenced employment with the Respondent on 6 March 2023, and was initially engaged as a General Labourer on a fixed term contract[1] that expired on 6 September 2023, although his employment continued beyond that date. He was covered in his employment by the Building and Construction General On-site Award 2020[2] (the Award) and was at the time of his dismissal in receipt of a base hourly rate of $48.93[3], on top of which he was entitled to receive penalty rates for overtime, various site and other allowances and superannuation.
The Form F3 filed by the Respondent records that the Applicant was notified of his dismissal on or about 29 April 2024, that there were eight employees of the Respondent at that time and that the Applicant’s dismissal was due to a business downturn which led to the business’ cessation of trading on 17 May 2024. All employees were similarly dismissed at that time but according to the Form F3, they were informed several weeks prior to that date by on-site management. The assertions contained in the Form F3 were unable to be verified by way of evidence as the Respondent failed to file any material or appear at the proceedings.
The Applicant gave evidence that he was notified of his dismissal on 17 May 2024 without any prior notice, be that written or verbal, such dismissal taking effect on 17 May 2024. He further stated that the notice of immediate dismissal was provided to him and all of his work colleagues during their lunch break that day. The Applicant rejected claims made in the Respondent’s Form F3 that he was notified of his dismissal on 29 April 2024. He also stated that the Respondent failed to consult with him regarding his redundancy as required under the relevant clause of the Award. The Applicant did however accept that the Respondent ceased operations on or about 17 May 2024.
The Applicant stated that while he received a Separation Certificate[4] from the Respondent on 21 May 2024, there were a number of outstanding entitlements that had not been paid. In text message exchanges[5] with the Respondent’s Director, Dimitris Likopoulos, between 20 – 30 May 2024, the Applicant raised the claimed non-payment for three days work, 40 hours of accrued annual leave, 37 hours of rostered days off (RDOs) and $14,122 in outstanding superannuation contributions. Mr Likopoulos in his text message responses to the Applicant rejected there were any outstanding entitlements, a position that was maintained in the Form F3 employer response. The Applicant produced a bank statement[6] for the period from 1 March to 26 August 2024. The bank statement revealed that the last payment received by the Applicant from the Respondent was on 17 May 2024 of $1,579.08, that figure being consistent with the payslip dated 17 May 2024[7] which the Applicant states was the last payment he received from the Respondent.
In submissions in support of his claim that he had been unfairly dismissed, the Applicant identifies that he was entitled to receive various outstanding entitlements including; notice of termination or payment in lieu, payment of redundancy entitlements in accordance with the Act and Award, accrued annual leave, unpaid wages for work performed and payment for accrued RDOs. He states these entitlements were not paid to him on termination of employment.
The Applicant confirmed that following his dismissal on 17 May 2024 he secured new employment from 22 May 2024, from which date he has been employed on a full-time basis performing similar work, and receiving comparable wages to that he received while employed by the Respondent. The bank statement[8] produced by the Applicant confirmed his evidence that his weekly net pay received from his new employer was similar to that received from the Respondent prior to dismissal.
Has the Applicant been dismissed?
A threshold issue to determine is whether the Applicant has been dismissed from his employment. Section 386(1) of the Act provides that the Applicant has been dismissed if:
(a) the Applicant’s employment with the Respondent has been terminated on the Respondent’s initiative; or
(b) the Applicant has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by the Respondent.
Section 386(2) of the Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant. There was no dispute, and I find that the Applicant’s employment with the Respondent terminated at the initiative of the Respondent.
Initial matters
Under section 396 of the Act, the Commission is obliged to decide the following matters 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; and
(d) whether the dismissal was a case of genuine redundancy.
The Respondent in its Form F3 response has raised two jurisdictional objections to the unfair dismissal application. I turn firstly to those objections.
Whether dismissal consistent with the Small Business Fair Dismissal Code
The first objection raised by the Respondent in its Form F3 is that it was at the time of the Applicant’s dismissal a small business employer and complied with the Small Business Fair Dismissal Code (the Code). I am satisfied on the evidence that it is likely that the Respondent was a small business. This finding is based on the Applicant’s evidence, which I accept, that there were approximately eight staff employed by the Respondent at the time of the Applicant’s dismissal. There was no evidence before me that there were any associated entities that should be considered for the purpose of calculating the number of employees. It follows that the minimum employment period required to have been served by the Applicant was 12 months, which the Applicant met.
While having found that the Respondent is a small business, there is no evidence on which I can be satisfied that the Respondent believed on reasonable grounds that the Applicant’s conduct was sufficiently serious as to justify immediate dismissal. Nor is there any evidence before me that the Applicant was warned prior to his dismissal that he was at risk of being dismissed due to his conduct or capacity. It follows from these findings that the Respondent in dismissing the Applicant did not comply with Small Business Fair Dismissal Code.
Whether dismissal was a genuine redundancy
The further jurisdictional objection raised by the Respondent was that the Applicant’s dismissal was a ‘genuine redundancy.’ Section 389 of the Act, defines a genuine redundancy in the following terms:
“(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
There is no dispute that the Respondent no longer required the Applicant’s job to be performed by anyone for the simple reason that the business ceased operations on 17 May 2024. The Applicant and all of his colleagues employed by the Respondent were consequently dismissed on that day.
As earlier stated, the Applicant was covered in his employment by the Award which contains standard consultation provisions at clause 37. The Applicant’s unchallenged evidence, which I accept, is that employees were advised on 17 May 2024 of their immediate dismissal. Contentions to the contrary in the Respondent’s Form F3 were unsupported by any evidence and as such I am satisfied that none of the consultation steps set out at clause 37 of the Award were undertaken by the Respondent. Specifically, there was a failure of the Respondent to give notice to affected employees (and their representatives) of the major change, that being the cessation of business operations and loss of employment. Self-evidently, such notice was not provided in writing along with the necessary information on the nature of the change and expected effects. There were also no discussions with employees in relation to the ‘major change,’ the effects of the change and measures to mitigate those effects.
It follows from the foregoing that the Respondent failed to comply with its consultation obligations under clause 37 of the Award. Consequently, although the job performed by the Applicant was no longer required to be performed by anyone, the lack of consultation in accordance with the Respondent’s Award obligations means that the dismissal was not a genuine redundancy within the meaning of s 389(1) of the Act.
Summary on preliminary matters
Relevant to the determination of the preliminary matters, I am satisfied that;
- the Applicant was dismissed on 17 May 2024 and filed his unfair dismissal application on 20 May 2024, that latter date being within 21 days of the date of his dismissal;
- the Applicant was covered in his employment by the Building and Construction General On-site Award 2020;
- at the time of the Applicant’s dismissal, the Respondent employed approximately eight employees and is therefore a small business employer within the meaning of s 23 of the Act;
- the Applicant commenced employment with the Respondent on 6 March 2023 and at the time of his dismissal had been employed for a period of fourteen months, that period being more than the relevant minimum employment period of twelve months;
the Applicant’s dismissal was not consistent with the Small Business Fair Dismissal Code; and
the Applicant, while dismissed due to the Respondent no longer requiring the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Respondent’s enterprise, was not consulted in relation to his dismissal as required by clause 37 of the Award.
Having considered each of the initial matters, I am satisfied that the application was made within the required period in subsection 394(2), the Applicant was a person protected from unfair dismissal, the Small Business Fair Dismissal Code was not complied with, and the dismissal was not a genuine redundancy. I am now required to consider the merits of the application.
Was the dismissal harsh, unjust, or unreasonable?
Section 387 of the Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust, or unreasonable, the Commission 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.
Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct – s.387(a)?
In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”[9] and should not be “capricious, fanciful, spiteful or prejudiced[10].” However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it were in the position of the employer[11].
The Applicant was dismissed due to the Respondent’s cessations of business and was not dismissed for reasons related to his conduct or performance. It follows that this criteria is not relevant to my assessment of whether the dismissal was unfair.
Notification of the valid reason – s.387(b)
Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,[12] and in explicit[13], plain and clear terms[14]. Having found the dismissal of the Applicant was not related to his capacity or conduct and therefore did not constitute a valid reason for his dismissal, this criteria is similarly not relevant in the present circumstances.
Opportunity to respond to any reason related to capacity or conduct – s.387(c)
An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee’s employment.[15] As the dismissal was unrelated to the Applicant’s capacity or conduct, the criteria is similarly not relevant to my assessment of the fairness or otherwise of the dismissal.
Support person – s.387(d)
Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present. There was no meeting held to discuss the termination of the Applicant’s employment. Along with his colleagues, the Applicant was simply notified of his dismissal during his meal break on 17 May 2024. As such, this criteria is not relevant in the circumstances.
Warnings regarding unsatisfactory performance – s.387(e)
There is no evidence before me that the dismissal related to unsatisfactory performance. This factor is therefore not relevant in the circumstances.
Impact of the size of the Respondent on procedures followed – s.387(f)
The Respondent’s Form F3 - Employer Response indicates that at the time of the Applicant’s dismissal it employed 6 employees. There is no evidence before me that the Respondent organisation’s size impacted on the procedures followed by it in dismissing the Applicant. This factor weighs neutrally in my consideration.
Impact of absence of dedicated human resources management specialist/expertise on procedures followed – s.387(g)
While there is no evidence before me, it seems unlikely that the Respondent had access to the services of an in-house human resources specialist given the Respondent’s size. This factor weighs neutrally in my consideration.
Other relevant matters – s.387(h)
Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant. The matters that bear upon the fairness or otherwise of the Applicant’s dismissal largely fall for consideration under this criteria.
It is not contested that the Respondent ceased operations on or about 17 May 2024. The Applicant and his colleagues were all dismissed on that day with immediate effect. I have found there was a failure of the Respondent to consult with the Applicant in relation to his dismissal. Were the outcome of dismissal likely to have been different had consultation occurred, that would weigh strongly in favour of a finding of unfairness of the dismissal. However, it is clear enough that the outcome would not have been any different even if consultation had occurred as required by clause 37 of the Award. The Applicant and his colleagues would have only likely received some additional notice of the dismissal which would have still proceeded on 17 May 2024. It follows that the reason for the Applicant’s dismissal was that of the redundancy of his role. I am satisfied that reason for dismissal was in the circumstances sound and rational given the cessation of the Respondent’s operations.
In the circumstances of the present matter, I agree with and adopt the reasoning of Watson VP in Maswan, Jamil v Escada Textilvertrieb T/A ESCADA[16] where he said as follows;
[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.
The position of the Applicant was made redundant for reasons of the cessation of the Respondent’s operations, a point readily conceded by the Applicant. Consultation would not in my view have altered the outcome of the Applicant’s dismissal. Therefore, I conclude that the absence of consultation did not render the dismissal unfair. The fact that there was a sound reason for the dismissal weighs in favour of a finding that the dismissal was not harsh, unjust or unreasonable.
The further matter that requires consideration is that of the Applicant’s unpaid entitlements. The Applicant has provided a payslip and bank statement which I am satisfied establishes that the final pay he received was for a net amount of $1, 579.08 for the pay period 8-14 May 2024. The pay slip indicates that the Applicant had accrued annual leave and RDOs at that date totalling approximately 88 hours. There is no evidence before me that those entitlements were paid out or that the Applicant received payment in lieu of notice of two weeks’ pay, or that he received any redundancy entitlements that he was entitled to receive on termination. In fact, the Applicant’s bank statements indicate that he did not receive any payment for those entitlements on termination of employment.
The fact that the Applicant may have not received his full entitlements on dismissal is a matter that weighs in favour of a finding of harshness. However, as I explained to the Applicant during proceedings in this matter, an unfair dismissal application is not the means by which he is able to pursue and obtain payment of any outstanding entitlements. The fact that the Applicant is able to pursue those entitlements in a different jurisdiction lessens the weight I place on the non-payment of those entitlements in assessing the harshness of the dismissal. Simply put, the Applicant has avenues through which he may properly pursue his claims of wage underpayment.
Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust, or unreasonable?
Having considered each of the matters specified in s 387 of the Act, I have concluded that each of the s 387(a)-(g) criteria weigh neutrally in the circumstances of this matter. As to s 387(h), I accept that the non-payment of accrued leave and RDO entitlements, the statutory notice period and redundancy entitlements weigh in favour of a finding of harshness of the dismissal. However, as I have noted above, I lessen the weight I place on these matters in circumstances where the Applicant is entitled to properly pursue those entitlements in a court of competent jurisdiction.
The remaining matter to be weighed is the fact that the reason for the Applicant’s dismissal was that of the cessation of the Respondent’s operations which led to the Applicant’s and his colleagues’ redundancy. The fact there was a sound and rational reason for the Applicant’s dismissal weighs in favour of a finding that the dismissal was not unfair, to which finding I attach significant weight. Non-payment of statutory and other entitlements on termination of employment is a significant matter that weighs in favour of a finding of harshness and thereby unfairness of the dismissal. In the circumstances of this case, given the findings I have made regarding the reason for dismissal, the non-payment of entitlements is not of sufficient weight to displace the reason for the dismissal. In these circumstances I am not satisfied that the dismissal was harsh, unjust or unreasonable and therefore was not unfair.
If, however, I am wrong in my conclusion that the dismissal was not unfair, I would nonetheless decline to award reinstatement or compensation. That is because firstly, reinstatement would be impractical in circumstances where the business has ceased operations. Secondly, in calculating compensation, s 392(2)(c) of the Act requires that, in determining an amount of compensation, the Commission must consider ‘the remuneration that the person would have received … if the person had not been dismissed’. This requires an estimation of how long a person would have remained employed, but for the dismissal. In circumstances where the business ceased operations on 17 May 2024, the Applicant would not have remained employed beyond that date under any reasonable scenario. This is evident based on the similar treatment of all the Applicant’s colleagues. In applying the Sprigg[17] formula to the calculation of compensation, no compensation would be calculable given a likely finding that the Applicant would not have remained employed beyond 17 May 2024.
Conclusion
Not being satisfied that the dismissal was harsh, unjust, or unreasonable, I am not satisfied that the Applicant was unfairly dismissed within the meaning of s.385 of the Act.
The application is dismissed. An Order will be separately issued giving effect to my decision.
DEPUTY PRESIDENT
Appearances:
Mr S Kardaris for the Applicant
Hearing details:
2024.
Melbourne.
30 September.
[1] Exhibit A2, Employment Contract, dated 6 March 2023
[2] MA000020
[3] Exhibit A5, Payslip for pay weekly period ending 14 May 2024
[4] Exhibit A3, Separation Certificate, dated 21 May 2024
[5] Exhibit A4, Text message exchange between Applicant and Dimitris Likopoulos, dated 20-30 May 2024
[6] Exhibit A7, Bank Statement from 1 March – 26 August 2024
[7] Exhibit A5
[8] Exhibit A7
[9] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
[10] Ibid.
[11] Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
[12] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
[13] Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).
[14] Ibid.
[15] Crozier v Palazzo Corporation Pty Ltd t/a Noble Park Storage and Transport Print S5897 (AIRCFB, Ross VP, Acton SDP, Cribb C, 11 May 2000), [75].
[16] [2011] FWA 4239
[17] Sprigg v Paul’s Licensed Festival Supermarket, (1998) 88 IR 21
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