Tahidul Alam v Lowie's Garage Pty Ltd T/A Ideal Automotive

[2020] FWC 4052

[2020] FWC 4052

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Tahidul Alam
v
Lowie’s Garage Pty Ltd T/A Ideal Automotive
(U2020/1883)

COMMISSIONER MCKENNA SYDNEY, 7 AUGUST 2020

Application for an unfair dismissal remedy.

[1] Tahidul Alam (“the applicant”) has made an application pursuant to s.394 of the Fair Work Act 2009 (“the Act”) in which he seeks an unfair dismissal remedy concerning his dismissal by Lowie’s Garage Pty Ltd trading as Ideal Automotive (“the respondent” or “the business”). In the Form F2 - Unfair dismissal application, the applicant identified that the outcome he was seeking was compensation for unfair dismissal, and compensation for certain other matters which are beyond jurisdiction (unpaid overtime payments and compensation for “mental abuse and threats resulting in anxiety and depression”).

[2] The applicant initially had legal representation, but later self-represented. The respondent was legally represented throughout the proceedings. Despite endeavours to assist the parties to reach a settlement in relation to the application, including a member-assisted conciliation by a different member of the Commission, following the filing and service of the parties’ materials, resolution was not reached.

Background

[3] The applicant formerly was employed by the respondent as a Senior Mechanic and Office Manager, under a signed employment agreement dated 1 May 2017. Separately from his employment by the respondent, the applicant and Steven Lo, who is the sole director of the respondent, were also business partners in the small garage’s operations through a shareholder agreement dated 2 July 2018 (in which Mr Lo is the majority shareholder). In the time since the application was lodged, the respondent has ceased operations at its former Fairfield East premises due to a significant downturn in business, for reasons including Covid-19-related factors. There is uncertainty about whether the business will continue to operate in any capacity in the future.

[4] The applicant contends, in effect, that the dismissal came about as a result of commercial/shareholder disputation between himself and Mr Lo rather than for any other properly-based reason; and that there was also a denial of procedural fairness concerning the matters outlined in the letter advising of the reasons for the dismissal – being reasons which were, in any event, disputed, denied or otherwise sought to be differently contextualised by the applicant. The applicant also raised in his submissions the fact that the dismissal did not occur immediately around the time the circumstances arose which later were to be relied on by the respondent in connection with the dismissal in mid-January 2020. The commercial/shareholder disagreement between the applicant and Mr Lo remained unresolved at the time of the dismissal and it also was unresolved when the matter proceeded to hearing before me.

[5] At the time of the dismissal, the respondent had four employees. As to the application for an unfair dismissal remedy before the Commission, the respondent relied on the Small Business Fair Dismissal Code (“the Code”) in relation to the decision to dismiss the applicant.

[6] The letter advising of the dismissal relevantly alleged (among other allegations) the following matters:

•  Misappropriation or alternatively unauthorised payments of the respondent’s money, without prior notification or authorisation by Mr Lo concerning:

- a payment of $450 to the applicant’s private lawyer;

- a payment by the applicant to himself of $2,370; and

- the removal of $45,000 from the company’s account for a purported deposit on the purchase of property, which had not occurred, and the failure to return that money on demand.

•  Breaches of clause 8 (Obligations) of the employment contract, relevantly including among other alleged matters, the applicant approaching employees and informing them of his concerns as to the future of the business and asking them to leave the company to work with the applicant.

[7] The letter advising of the termination addressed a range of other matters, including, but not limited to, matters concerning company takeover and the shareholder agreement.

[8] At the time the decision to dismiss was made, the applicant was absent from work under cover of a medical certificate for the period 7-19 January 2020 (correspondence in evidence indicates that the applicant’s advice in such respects was that the illness was “work related stress and respiratory ailments, which happened as a result of relentless and unlawful mental torture, threats, trauma and bullying orchestrated by [Mr Lo] as soon as I started voicing my rights as a shareholder of the Company”). The termination of employment letter advised that the dismissal would be effected on two weeks’ notice commencing 20 January 2020, with a payment in lieu, less certain deductions, to be deposited in the applicant’s account on or about 20 January 2020. The letter further advised that the respondent would advise the relevant authorities of the termination of the applicant’s employment and the termination of the sponsorship agreement. The letter concluded with advice to the applicant that arrangements should be made by him with Mr Lo to “collect your courtesy cars, tools and other equipment belonging to you and to return any Company property”.

[9] The allegation concerning the amount of $45,000 was not pressed in the proceedings before me (and so I will not further consider that matter), albeit it featured in other correspondence which went to a proposed settlement of the shareholder dispute. A range of other matters in the dismissal letter similarly were not otherwise relied on. Matters were, however, pressed concerning the allegedly unauthorised payment of $450 to a lawyer from the respondent’s funds, the applicant making a payment to himself of $2,370 from the respondent’s funds, and the allegations as to his allegedly inappropriate approach to another employee (or employees).

[10] It is not in dispute that the applicant made a payment of $450 to a lawyer, kept for himself (I shall use that neutral terminology, or similar, in this decision) an amount of $2,370 from monies the applicant received on behalf of the business and that he held a conversation with an employee about, among other matters, “the business going South”.

Small Business Fair Dismissal Code

[11] Section 385 of the Act identifies four matters, each of which the Commission must be satisfied as to in finding find that a person has been unfairly dismissed. Those four matters are 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.”

[12] As to those preliminary matters, there were no issues, and I otherwise find, that the application was made within time; the applicant was a person protected from unfair dismissal; and the dismissal did not involve a case of genuine redundancy. As I have noted, the Code was relied upon by the respondent. It reads as follows:

“Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[13] Some of the difficulties concerning the proper application of the Code were canvassed by a Full Bench of the Commission in Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264 (“Thrash”); and some such difficulties arise here. That is, the dismissal was effected with a payment in lieu of notice to the applicant albeit in circumstances which otherwise turned on contentions by the respondent as to earlier serious misconduct justifying summary dismissal. Peculiarly, given the nature of the dismissal-related allegations, the respondent also provided a letter of reference to the applicant in connection with the termination of employment. Mr Lo explained in his evidence that he had provided the reference on the basis of legal advice he should do so, so the applicant could obtain employment elsewhere and notwithstanding his view the applicant had engaged in serious misconduct.

[14] Section 12 of the Act defines “serious misconduct” as having “the meaning prescribed by the regulations”, and reg.1.07 of the Fair Work Regulations 2009 provides the following meaning:

“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 and 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.

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.”

The allegations

[15] The applicant maintains that the allegations made by the respondent were “concocted and manufactured” with a view to dismissing him, on “baseless allegations”, in retaliation for the business-related and/or shareholder-related disagreements between himself and Mr Lo. I turn to the relevant matters.

The amount of $2,370 retained by the applicant

[16] It is common ground that, in the course of his employment, the applicant received money from a client in respect of goods and/or services provided to the client by the business. As to that money, the applicant explained in his oral evidence that he took/kept $2,370 of that money for himself “against the investment return” (i.e. under the shareholder agreement). Mr Lo is the sole director and majority shareholder of the respondent. The applicant did not seek any authority from his employer, Mr Lo, in such respects concerning the $2,370. Rather, after this had been done, the applicant subsequently (somewhat peremptorily) sent a Whatsapp message to Mr Lo on 4 January 2020 informing him what he had done.

[17] The applicant seemed in his evidence to proceed on the basis that (notwithstanding the shareholder dispute) he had an unquestionable shareholder-related entitlement to deal with the money of the business in this way and unilaterally to decide to keep this amount of $2,370 for himself. The applicant also seemed firmly to hold the view that the after-the-event messaging of advice thereto to Mr Lo somehow regularised his actions. While it may be the case that the applicant had, on previous occasions, provided after-the event information to Mr Lo about payments he had made (certainly to suppliers, and perhaps even to himself), the parties were by then in sharp disagreement about a range of matters concerning the business and also in sharp dispute concerning the shareholder agreement. It may well be the case that the applicant did have some shareholder-related entitlement (albeit all that is known from the evidence is that the parties were in dispute about the shareholder agreement). But even if it was the case that there was some investment return due to the applicant, that would not give any proper basis for the applicant to determine to direct to himself money – being money belonging to the business which he received from a client in the course of his employment with respect to payment to the business for goods and/or services. The applicant just took $2,370 of the money in question for himself and this was, objectively considered within the relationship of an employer and its employee, a matter of serious misconduct.

Conversation with an employee of the company

[18] There was contest on the evidence and in the submissions in the cases for the applicant and the respondent, and different characterisations of matters, about a conversation between the applicant and a former employee of the respondent named Fred Burgess. The evidence by Mr Burgess indicated, in effect, that the applicant had approached him to air concerns about the business and to seek to have him depart his employment with the respondent potentially so as to work elsewhere in a competitor business or a proposed competitor business. Despite suggestions that Mr Lo and Mr Burgess had a friendship outside the employment relationship (and that Mr Burgess’s evidence should be considered accordingly), the evidence did not lead to a conclusion that any such friendship existed let alone one which would lead Mr Burgess to engage in conduct (to which I will return) of a nature alleged in the applicant’s case.

[19] It may be noted that the applicant initially agreed in his cross-examination that the conversation was largely as set out in the statement of Mr Burgess. Having agreed that the conversation was largely as set out by Mr Burgess, the applicant otherwise separately cavilled with aspects of what had been recounted by Mr Burgess; and the applicant further separately suggested that the entire conversation was “miscomprehended” by Mr Burgess. There was only hearsay concerning a second employee, being an apprentice who did not give evidence in the proceedings; the hearsay evidence suggested the apprentice had not only been approached by the applicant but that he was willing to leave the respondent’s employment following his conversation with the applicant. As it was hearsay, matters can be taken no higher than that.

[20] The evidence by Mr Burgess was short, matter-of-fact and unembroidered as to the conversation in question. I prefer and accept the evidence of Mr Bugess to the extent of the relevant competing evidence or characterisations of the applicant. In such respects, I have also considered the evidence of a former employee of the respondent named Khrishant Sagar about alleged approaches to him as outlined in his evidence. The effect of Mr Sagar’s evidence was that Mr Burgess, together with Mr Lo, had approached him with a view to developing what were, in effect, false allegations about the applicant. I do not accept that Mr Burgess was involved in any such approach to Mr Sagar. As certain objective evidence comprising text messages directly contradicted aspects of the evidence and/or recollections of Mr Sagar (being evidence which suggested, for example, that Mr Lo had declined to offer further work to Mr Sagar after he, so the evidence further suggested, refused to cooperate in developing false allegations concerning the applicant), I consider that his evidence about other matters must be treated with considerable caution as to recollection and/or reliability.

[21] So as to contextualise matters, it may be noted the approach by the applicant to Mr Burgess occurred at a time coinciding with the significant disagreement between the applicant and Mr Lo about matters including the shareholder-related dispute. Relevantly, Mr Burgess considered the conversation unwelcome; he informed Mr Lo about the conversation that had unfolded with the applicant. Mr Burgess also provided a written statement to Mr Lo outlining his conversation with the applicant, which was in evidence. The submissions for the respondent contended this conversation amounted to “undermining” the business.

The payment of $450 for legal services

[22] Given my conclusion about the applicant retaining $2,370 for himself and the earlier conversation between the applicant and Mr Burgess, it is unnecessary to further consider in detail the disputed payment for legal services provided by Muhammad Zreika of MNH Legal other than to say that my consideration of the matter has been informed by the evidence of Mr Zreika as to his dealings with both the applicant and Mr Lo. While there was dispute about this particular payment of $450, the evidence was, in the end, inconclusive given matters including, but not limited to, Mr Zreika’s evidence as to his own understanding of the basis upon which he was acting in this particular instance (in addition to the earlier instances) and given what appears to have been the comparative informality of the dealings between Mr Zreika, the applicant and Mr Lo in connection with legal services.

[23] It was the evidence of the applicant that the purposes of the engagement of Mr Zreika were, for example, “to change [Mr Lo’s] mind” (about the shareholder agreement) and to “make him settle”; this, at least the evidence of the applicant indicated, was his perception of the purposes of the engagement. I do not suggest these were the purposes of the legal services in fact provided by Mr Zreika, but, on the evidence, that was the applicant’s own understanding of the legal services in question. The applicant paid Mr Zreika from the respondent’s funds, although Mr Lo’s evidence was that he informed the applicant “I am not paying for this”. The applicant characterised the payment as, in effect, being within his ostensible authority and akin to paying “a supplier”, but the amount at least appears to have been paid against Mr Lo’s advice or instruction albeit in relation to a conference in which Mr Lo participated.

Consideration

[24] As to the evidence concerning the applicant keeping for himself $2,370 of the respondent’s money received from a client and in connection with his conversation with Mr Burgess, it is apposite to reproduce what was said by the Full Bench in Thrash:

“[39]To be clear, nothing stated above is to be taken as suggesting that in relation to such a dismissal it is necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal not to be unfair. As was explained in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [[2012] FWAFB 1359, (2012) 219 IR 128]:

“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”

[40]Whether the employer had “reasonable grounds” for the relevant belief is of course to be determined objectively.

[41]In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:

(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.

[42]In this case, Mr Ryman’s dismissal occurred with immediate effect - that is, without the provision of any actual notice - on the ground of serious misconduct. The fact that he was paid an amount said to be in lieu of notice, or that the dismissal occurred some days after the conduct to which it related, does not alter the position in this respect. His dismissal therefore fell to be considered under the “Summary dismissal” section of the Code in accordance with the Pinawin principles. …”.

[25] The respondent submitted it is clear from the evidence that Mr Lo believed the applicant to be approaching employees seeking to test their loyalty to the applicant and to take steps to establish his own enterprise separate from that of the respondent business. The respondent’s submissions continued that Mr Lo held his belief as a result of what Mr Burgess had reported to him about the conversation with the applicant; and there were at least two instances of the applicant “taking or making payments” from the respondent’s funds without authorisation to do so, as evidenced by financial transaction records and the applicant’s own Whatsapp message to Mr Lo. The respondent submitted, and I accept, that the question of reasonably held belief is therefore “easily satisfied”.

[26] That the applicant had no entitlement as an employee unilaterally to retain for himself an amount of $2,370 received from a client with respect to the provision of goods and/or services by the business, which he considered otherwise to be his minority shareholder-related entitlement “against the investment return”, is self-evident. The matter of the conversation the applicant initiated with Mr Burgess might not, in and of itself, have properly-grounded a dismissal on the basis of serious misconduct (given the conversation was premised on what might occur if the business failed or was failing, that is, “if the business went South”), the conversation arose in the context of the sharp disagreement between the applicant and Mr Lo about potential restructuring of the business, other business-related disagreements and shareholder-related disagreements. For example, it at least seems the applicant was concerned about Mr Lo bringing another person (identified only as “Oddy”, being Mr Lo’s partner) into the business and, as the applicant put it, “taking my position”. Mr Lo considered the conversation between the applicant and Mr Burgess in effect involved “enticing” the departure of employees from a business which had only four employees (that is, the departure of Mr Burgess and the apprentice in connection with whatever it was that the applicant potentially was contemplating in, for example, his post-respondent employment or business venture).

[27] Whether the employer had reasonable grounds for the relevant belief is, as noted in Thrash, “of course to be determined objectively”. Given the (uncontested) evidence as to the applicant’s unauthorised retention of $2,370 and, separately, my conclusion concerning the applicant’s conversation with Mr Burgess, I consider the respondent, in the person of Mr Lo as director, had objective reasonable grounds for his belief about the applicant’s conduct constituting serious misconduct.

Conclusion

[28] The termination of the applicant’s employment was consistent with the Code. The termination, therefore, was not an unfair dismissal with the result it is unnecessary to consider other elements of an unfair dismissal. In consequence, the applicant’s application for an unfair dismissal remedy is dismissed and an order dismissing the application will issue in conjunction with these reasons.

[29] The proceedings are concluded.

COMMISSIONER

Appearances:

T Alam, on his own behalf.
C Deckers, solicitor, on behalf of Lowie’s Garage Pty Ltd T/A Ideal Automotive.

Hearing details:

2020.
Sydney (by telephone):
June 24.

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