Tara Davies v Hip Hop Pty Ltd T/A Hippity Hop Child Care

[2011] FWA 776

[2011] FWA 776

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Tara Davies
v
Hip Hop Pty Ltd T/A Hippity Hop Child Care
(U2010/9903)

COMMISSIONER RYAN MELBOURNE, 4 FEBRUARY 2011

Application for unfair dismissal - compensation.

[1] The Applicant was employed by Hippity Hop Child Care (the Respondent) as a Group Leader at the Respondent’s child care facility in Pakenham. The Applicant’s employment was terminated on 11 June 2010.

[2] The Applicant filed an application for unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act) on 22 June 2010 and identified the reason for dismissal as “Alleged breach of ‘no back biting’ policy”.

[3] Prior to a conciliation conference being held in relation to this application the Respondent filed an Employer’s Response, Form F3, on 13 July 2010. The Respondent raised a jurisdictional objection that it was a small business employer and the Applicant had been employed for less than 12 months.

[4] The jurisdictional challenge was listed for hearing on 27 August 2010 and directions were issued requiring the Respondent to file and serve its material by 13 August 2010.

[5] On 18 August 2010 the Respondent filed its material in relation to the jurisdictional challenge. The material filed included a new Form F3 which was dated 14 July 2010 (although it was conceded that this was created after that date) and which was significantly different from the Form F3 filed on 13 July 2010. Also included in the filed material was a letter of termination addressed to the Applicant and dated 12 August 2010.

[6] The hearing of the jurisdictional challenge was adjourned until 16 September 2010.

[7] The Respondent advised the Tribunal on 30 August 2010 that it would not proceed with its jurisdictional objection.

[8] The hearing of the substantive matter was relisted for 11 October 2010 and amended directions were issued to the parties.

[9] Both in its written submissions and in through the evidence of Ms Smith, one of the two principals of the Respondent, the Respondent contended that the Applicant was not dismissed by the Respondent but that the Applicant abandoned her employment.

Was the Applicant Dismissed - s.386

[10] The threshold issue which must be dealt with is whether there was in fact a dismissal of the Applicant.

[11] S.386(1) provides that:

“386 (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.”

[12] There are a number of exceptions provided for in subsection 386(2) but none are relevant to this matter.

[13] The Respondent created a Letter of Termination on the 12 August 2010 but this was created well after the termination of employment occurred and was created for the purpose of the Respondent filing material to support its jurisdictional objection.

[14] The primary contention of the Respondent was that the Applicant abandoned her employment by walking out of a meeting on the 11 June 2010. The Applicant acknowledged that she walked out of the meeting on the 11 June 2010 but contended that she did so on the basis that she had effectively been dismissed.

[15] The circumstances surrounding the meeting on the 11 June 2010 and why the Applicant walked out of that meeting need to be clearly identified as all are relevant to determining whether the Applicant was dismissed within the meaning of s.386(1) of the Act.

[16] An accurate picture of what happened on 11 June 2010 (and why) can be pieced together from the evidence of Ms Smith, Ms Hughes and the Applicant.

[17] However before considering the circumstances on the 11 June 2010 it is necessary to put that meeting in to context.

[18] The Respondent took over the operation of the child care centre in February 2010. The Respondent had a very clear policy against “back biting” and this policy had been drawn to the attention of staff who were clearly advised of the consequences that could flow from engaging in “back biting”. The policy itself did not define the term “back biting”. The evidence suggests that there was not a common understanding of the meaning of the term “back biting”.

[19] The Respondent’s policy on ‘backbiting’ was as follows:

“Back biting

Back biting is NOT TOLERATED at Hippity Hop Childcare; it is unacceptable and can lead to the breakdown of unity between staff within the centre, making it an unpleasant place to work. Any staff member caught back biting may result in immediate dismissal.”

[20] On the 11 June 2010 Ms Hughes, Director of the child care centre, and Ms Smith and Mr Baiocchi, the 2 principals of the Respondent, had meetings with some staff members at the child care centre and in those meetings certain allegations were made that the Applicant had engaged in “back biting”.

[21] Ms Hughes, Ms Smith and Mr Baiocchi decided to meet with the Applicant and put these allegations to her. Ms Smith said that the intention of a meeting was not to dismiss the Applicant but to put to her the allegation of backbiting and after hearing from the Applicant then decide whether dismissal or a lesser measure would be applied. The intention of the meeting was never made clear to the Applicant.

[22] The Applicant attended work between 3.30pm and 4.00pm on 11 June 2010. When she arrived for work the Applicant was approached by Ms Hughes and asked to come into a meeting for a chat. The Applicant went with Ms Hughes into an office. Already present in the room were Ms Smith and Mr Baiocchi.

[23] The Applicant was not invited to have a representative present.

[24] The meeting commenced with Ms Smith making a complimentary remark about the Applicant’s work since the Respondent took over the child care centre. Then Ms Smith made a remark about the Applicant’s work having deteriorated and also said “and some staff have found you intimidating”.

[25] Then it appears that several comments were made by Ms Smith in relation to “back biting”. Ms Smith said: “You know our policy on backbiting. We’ve had a number of reports that you have been doing it.” Ms Smith advised the Applicant that: "It has to stop. It's not allowed. We fired three girls at our last centre for backbiting".

[26] The Applicant asked either for details of who made the reports or details of what the Applicant was alleged to have said. There was some conflict in the evidence as to what the Applicant asked at this point of time.

[27] Ms Smith replied; “Unfortunately that would be a breach of confidentiality.” The Applicant asked: “So you are applying the policy in this case?” Ms Smith responded by either nodding or saying: “It pains me. Unfortunately - I don’t want to have to.” Again there was some conflict in the evidence on this point. At this point Ms Smith was clearly emotional.

[28] The Applicant who had also become emotional said either; “I am not going to sit here and listen to this.” Or “I have to go.” Again there is some conflict in the evidence on this point.

[29] The Applicant was quite emotional at this point of time and she left the meeting.

[30] Ms Smith understood that the Applicant believed she had been dismissed. Ms Smith presumed that by leaving the Applicant was admitting guilt.

[31] The Applicant on leaving the meeting went into another room and told the staff member present that she had just been sacked. The Applicant then proceeded to collect her personal belongings and then left the centre and to do so the Applicant had to walk past the office where Ms Hughes, Ms Smith and Mr Baiocchi were continuing to meet.

[32] Whilst the Applicant was collecting her belongings and leaving the premises the meeting between Ms Hughes, Ms Smith and Mr Baiocchi continued. They discussed what to tell staff and decided that they would tell staff that the Applicant had been dismissed for backbiting.

[33] No attempt was made by any of Ms Hughes, Ms Smith and Mr Baiocchi to call the Applicant back into the meeting or to advise her that she hadn’t been sacked.

[34] After the Applicant had left the premises Ms Hughes, Ms Smith and Mr Baiocchi then left the office and went and told the staff that the Applicant had been dismissed for “back biting”.

[35] Although the Respondent contends that the Applicant abandoned her employment the Respondent accepted that they knew the Applicant believed she had been dismissed and the Respondent specifically told staff that the Applicant had been dismissed. Further the Respondent concocted a letter of termination over a month after the termination in which they not only specifically stated that the Applicant was dismissed but in addition they advanced 3 reasons for the dismissal rather than the single reason given on 11 June 2010.

[36] The Respondents contention that the Applicant abandoned her employment is not sustainable given the way in which the Respondent conducted the meeting on 11 June 2010. By clearly stating to the Applicant that at a different child care centre Ms Smith had fired 3 staff for back biting and then making it clear to the Applicant that the Respondent was going to apply its policy on “back biting” this constituted a clear statement of intent to dismiss the Applicant if she had engaged in “back biting”. By not disclosing any information about the alleged backbiting the Respondent made it impossible for the Applicant to respond to the allegation. When the Applicant left the meeting the Respondent knew that the Applicant believed she had been sacked. This was an outcome that suited the Respondent and an outcome which was then reinforced by the Respondents further actions in telling other staff that the Applicant had been dismissed.

[37] Merely because neither of Ms Hughes, Ms Smith or Mr Baiocchi specifically uttered words of dismissal to the Applicant does not mean that the Respondent did not dismiss the Applicant. The termination of the Applicant’s employment only occurred because of actions and conduct initiated by the Respondent. I find that the Applicant’s employment with her employer has been terminated on the employer’s initiative.

Initial Matters To Be Considered - s.396

[38] Before considering the merits of the application I must decide the following 4 matters.

Was the application made within the period required by subsection 394(2)?

[39] The period prescribed by s.394(2) is 14 days. The termination of employment took effect on 11 June 2010 and the application was filed with the Tribunal on 22 June 2010. The application was filed within time.

Is the Applicant protected from Unfair Dismissal?

[40] The Applicant has been employed for more than the minimum employment period specified by s.383 and as affected by s.384 and the Applicant’s remuneration is less than the high income threshold. Therefore the Applicant is a person protected from unfair dismissal.

Was the Dismissal Consistent With the Small Business Unfair Dismissal Code?

[41] The Respondent relied upon the Small Business Unfair Dismissal Code (the Code) in its first Form F3. The submissions of the Respondent and the evidence of Ms Smith is sufficient for me to decide that the Respondent is a small business employer.

[42] The Code is as follows:

“Summary Dismissal

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

Other Dismissal

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

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

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

Procedural Matters

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

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, 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.”

[43] The Code permits a small business employer to initiate a dismissal without notice where there is serious misconduct. Guidance is given to small business employers as to what types of conduct are included within the term serious misconduct. The list includes “theft, fraud, violence and serious breaches of occupational health and safety procedures”. The list is not meant to be exhaustive. The very language of the Codewould make clear to any small business employer, including one unfamiliar with either the Fair Work Regulations approach to serious misconduct or the case law on serious misconduct, that on any objective or reasonable basis “back biting” would not appear to be in the same league as “theft, fraud, violence and serious breaches of occupational health and safety procedures”.

[44] Whilst the Respondent may regard “back biting” seriously and may regard it as warranting dismissal the very wording of the Code would suggest to the Respondent that “back biting” was not serious misconduct justifying instant dismissal but might well be conduct justifying dismissal with notice.

[45] Therefore in order to rely upon the Code the Respondent needs to show that in dismissing the Applicant the Respondent’s conduct met the criteria set out under Other Dismissals and Procedural Matters in the Code.

[46] From the evidence in this matter concerning the events on 11 June 2010 (as set out above) it is apparent that several of the elements of the Code have not been complied with.

[47] I determine that the dismissal was not consistent with the Small Business Unfair Dismissal Code.

Was the Dismissal a Case of Genuine Redundancy

[48] The Respondent by way of Final Submission conceded that there was no case of genuine redundancy in this matter.

Was the Dismissal Harsh, Unjust or Unreasonable - s.387?

[49] Section 387 is as follows:

“387 Criteria for considering harshness etc.

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

[50] I have taken into account each of the criteria set out in s.387.

Valid Reason

[51] The Applicant was accused on 11 June 2011 of back biting and was dismissed from her employment on the same day because of back biting. Does back biting constitute a sound defensible or well founded reason for terminating the Applicant’s employment.

[52] The Macquarie Dictionary defines “backbite” as follows: 1. To attack the character or reputation of secretly. 2. To speak evil of the absent; gossip.”

[53] The Respondent contends that “back biting” is the making of any negative comment about a person and behind their back.

[54] The Applicant admitted making negative comments about staff members but said that as such comments were true they weren’t “back biting”. 1 The comments were that one staff member was lazy and that another was not a competent carer.

[55] The negative comments made by the Applicant do not of themselves constitute a valid reason for dismissal.

[56] The Respondent’s policy on “back biting” is an extremely blunt instrument. Any instance of “back biting” committed by an employee would be a breach of the Respondent’s policy and make the employee liable to instant dismissal.

[57] The Respondent’s policy makes no distinction between malicious and untrue comments made behind a person’s back with the clear intention of destroying the persons reputation and comments made behind a person’s back which are true and which would not result in serious damage to the employees reputation.

[58] The very bluntness of the Respondent’s policy means that mere breach of the policy cannot constitute a valid reason for dismissal. The nature and intent and effect of the “back biting” need to be considered.

[59] In the present matter even though the comments made by the Applicant are, simpliciter, a breach of the Respondent’s “back biting” policy, those comments do not have the necessary odiousness attached to them to justify dismissal of the Applicant. The comments themselves and the fact that they constituted a breach of the Respondent’s “back biting” policy would have warranted some form of disciplinary action but clearly something well short of termination of employment.

[60] In the present matter the “back biting” by the Applicant does not constitute a valid reason for the dismissal of the Applicant.

Notification of the Reason

[61] The Applicant was notified of the reason for the dismissal at the meeting on 11 June 2010.

Opportunity to Respond

[62] The Applicant was not given the opportunity to respond to the reason for the dismissal before the effective dismissal occurred.

Unreasonable Refusal to have a support Person

[63] There was no unreasonable refusal by the Respondent to allow the Applicant to have a support person present. However, the Applicant was not permitted the opportunity to consider whether to have a support person present.

Unsatisfactory Performance

[64] The dismissal did not relate to any alleged unsatisfactory performance by the Applicant.

Size of the Employers Enterprise

[65] The Respondent is a small business operating only one child care centre. The very nature of the business would suggest that the Respondent is more focused on the needs of the children rather than on processes for dismissing employees. However the Respondent has the benefit of Mr Baiocchi who is the principal of 4 other child care centres.

Lack of HRM

[66] The Respondent does not have dedicated HRM specialists or expertise and this lack does have a real impact on an employer in understanding the more complex issues relating to termination of employment. However this is offset by the fact that both Ms Smith and Mr Baiocchi were able to adequately prosecute the Respondents case before Fair Work Australia.

Other Matters

[67] I have taken onto account all of the circumstances involving the lead up to and the conduct of the meeting of 11 June 2010.

[68] In particular I note the evidence of the Applicant that when she has complained to the Director of the centre about the conduct of an employee, who is the Directors sister, nothing was done even though the complaint directly related to the safety of children. Although the Respondent, both in submissions and through the evidence of Ms Smith, made clear that the Respondent expected staff to bring issues and complaints to management and not to “back bite”, the reality of the relations at the workplace leads me to conclude that the Respondent simply did not have in place measures to ensure this would happen. Ms Liz Hughes, the Director admitted that she had had a fairly heated argument with her sister Ms Shelley Hughes in front of the Applicant in the staff room. This argument then led Ms Shelley Hughes to take 2 days off work because she was stressed. Having considered the competing evidence of the Applicant and both Ms Liz Hughes and Ms Shelley Hughes I have concluded that Ms Liz Hughes gave evidence which glossed over any shortcomings of her sister and I conclude that Ms Liz Hughes acted to protect her sister even when valid complaints were made about Ms Shelley Hughes by the Applicant. In such circumstances I accept that it was difficult for the Applicant of any other staff member raising issues with Ms Liz Hughes where such issues involved Ms Shelley Hughes.

[69] Having taken into account all of the criteria of s.387 I determine that the dismissal of the Applicant was harsh, unjust or unreasonable.

Remedy - s.390

[70] The primary remedy provided for by the Fair Work Act is reinstatement. The possibility of compensation being paid as an alternative to reinstatement only arises if 2 preconditions are met. Firstly, FWA has to be satisfied that reinstatement is inappropriate and secondly that a payment of compensation is appropriate.

[71] The Applicant is not seeking reinstatement. In the present matter and having considered all of the circumstances of the matter I am of the considered view that reinstatement is inappropriate. The conduct of the Respondent on 11 June 2010 and subsequent to that date is such that it would be unreasonable to require the Applicant to resume employment with the Respondent.

[72] Having considered all of the circumstances of this matter I am of the considered view that it is appropriate to order a payment of compensation as the remedy in this matter.

Compensation - 392

[73] I determining the amount of compensation that should be ordered to be paid in this matter I am required to comply with the requirements of s.392 of the Act.

“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), FWA 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 FWA considers relevant.

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA 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 FWA 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 FWA 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.

[74] The Applicant has submitted that, consistent with the principles in the Sprigg case 2 and the approach adopted by the Full Bench in the appeal by Ellawalla3, the appropriate amount of compensation, is $21,138. I do not agree.

[75] I am of the view that had the dismissal not occurred then the Applicant would most likely have continued in her employment for at least 1 year. If the Applicant had been subject to reasonable disciplinary action in relation to the “back biting” there is nothing in the evidence which would support the Respondent’s contention that the Applicant “probably would have given notice soon after.” Whilst the Applicant has only been employed by the Respondent from 8 February 2010 until the date of dismissal 11 June 2010 the Applicant had worked at the same child care centre under the previous owner since 8 September 2008.

[76] The Applicant submitted that her weekly remuneration whilst employed with the Respondent was $813 and on this basis the amount she would have received had she not been dismissed was $42,276. This is the provisional amount of compensation.

[77] The Applicant has sought to mitigate her losses and to the period ending 28 September 2010 the Applicant earned remuneration of $6047.04. The Applicant had gained further employment and was earning a wage of $648 per week. From 29 September 2010 to 4 Feb 2011 I estimate that the Applicant would have earned a further $18000

[78] For contingencies I will reduce the provisional amount by 15% or $6341.

[79] I do not consider it appropriate to make any discount because the Applicant has only been employed with the Respondent for 4 months. This is because the length of employment of the Applicant with the Respondent and the previous owner of the child care centre is nearly 2 years and the Respondent in taking over the child care centre took on the existing employees.

[80] The Respondent has made no submission that a payment of compensation will affect the viability of the Respondents business.

[81] It is clear that misconduct by the Applicant (backbiting in contravention of the Respondents specific policy) contributed to the employer’s decision to dismiss the Applicant. I am obliged by s.392(3) to reduce the amount of compensation by an appropriate amount. The appropriate amount of reduction should be 20% or $8455.

[82] The amount of compensation is $42276 - ($18000 + $6341 + $8455) = $9480. This amount is less than the compensation cap worked out in accordance with s.392(6).

[83] I determine that the appropriate amount of compensation to be paid to the Applicant is $9480.

[84] An order will be issued separately.

COMMISSIONER

Appearances:

G. Dircks for the Applicant

F. Baiocchi and M. Smith for the Respondent

Hearing details:

2010
Melbourne
October 11

Final written submissions:

27 October 2010 for the Applicant
10 November 2010 for the Respondent

 1   Transcript of proceedings at PN85 - PN90 and PN433 - PN441

 2   Spriggv Paul's Licensed Festival Supermarket (1998) IR 21

 3   Ellawala v Australian Postal Corporation [Print S5109] (17 April 2000)

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<Price code C, PR506517>