Tha Chan v Hibiscus Chinese Takeaway and Cafe Food

[2017] FWC 4980

[2017] FWC 4980

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Tha Chan
v
Hibiscus Chinese Takeaway and Cafe Food
(U2017/2192)

COMMISSIONER WILSON MELBOURNE, 26 SEPTEMBER 2017

Unfair dismissal. Remedy – reinstatement not appropriate; compensation appropriate and ordered.

[1] This decision concerns the matter of compensation to be awarded to Ms Tha Chan, following an earlier finding by me that Ms Chan had been unfairly dismissed by her former employer, Hibiscus Chinese Takeaway and Café (Hibiscus). 1

[2] In summary, it was found in the earlier decision that Ms Chan had been dismissed at the initiative of her former employer notwithstanding his contention that she had resigned in order to relocate from Darwin to Melbourne to live with her son. Ms Chan’s last day of work for Hibiscus had been on 23 December 2016 when she and the owner of the business, Mr Matthew Leong went to a bank to withdraw money for her annual leave. Having withdrawn the money Ms Chan then proceeded on several week’s annual leave to Cambodia. When Ms Chan returned to Darwin and attended the workplace on 26 January 2017 she was told by Mr Leong’s mother that there was no work available and that the business was too quiet. She returned intermittently over the next few weeks to see if her job was available, but no work was offered.

[3] Both parties were afforded an opportunity to provide such further evidence as they wished in relation to the matter of remedy. A hearing on the question of suitable remedy for Ms Chan was convened by me on 23 August 2017.

[4] After consideration of the entirety of the material before the Commission, I find that reinstatement is not appropriate in all the circumstances and that an order for compensation is appropriate.

REMEDY

[5] The sections of the Fair Work Act (2009) (Act) dealing with remedy once a finding of unfair dismissal has been made are as follows;

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(2) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.”

“391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person

by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.”

Order to maintain continuity

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection

(1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.”

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(b) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(c) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(d) 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

(e) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

[6] Pursuant to subsection 390(3) of the Act an order for the payment of compensation to a person must not be made unless the Fair Work Commission “is satisfied that reinstatement of a person is inappropriate” and also that the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case.”

[7] Ms Chan submits that in all the circumstances it would be inappropriate to reinstate her. The owner of the Hibiscus Chinese Takeaway and Cafe, Mr Matthew Leong did not put anything before the Commission that would suggest that he supported reinstatement. Having observed the parties and their demeanour towards each other on two occasions now, I am also not of the view that reinstatement would be appropriate and that instead I should give consideration to an order for the payment of compensation.

[8] As a result, I turn to consider the quantum of compensation.

(a) the effect of the order on the viability of the employer’s enterprise

[9] There is no material of any significance before the Commission about the viability of the employer’s enterprise. Whilst Mr Leong was given an opportunity after the hearing on the matter of remedy, he chose not to provide any material to the Commission.

[10] Despite this circumstance the evidence before the Commission is that the business is not large. While the Commission considered the question of whether Ms Chan’s dismissal was consistent with the Small Business Fair Dismissal Code in the “merits” part of these proceedings, that was done in the absence of any direct evidence about the size of the business, as well as in the face of contentions by Ms Chan that Hibiscus was owned by Mr Leong’s family along with at least one other similar business.

[11] A consideration of the viability of the employer’s enterprise, and thereby potentially an adjustment to the amount of compensation to be awarded, is only for those occasions when there is cogent evidence before the Commission that will either allow or require an adjustment to be made. 2

(b) the length of the person’s service with the employer

[12] Ms Chan worked for Hibiscus between November 2006 and 26 January 2017, the date I have found in my merits decision was the date of dismissal. 3 She was therefore employed by Hibiscus for slightly more than 10 years. That period is acknowledged as a lengthy term of employment.

[13] It is noted generally in relation to orders for monetary compensation that payments in lieu of notice are also to be deducted in consideration of the length of service of an applicant, (also relevant to consideration of s.392(2)(g)). 4 For reason of the circumstances of Ms Chan’s dismissal, there was no payment in lieu of notice of termination of employment.

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[14] In matters in which compensation is a consideration, the Commission ordinarily makes an assessment of remuneration the employee lost through dismissal, which in turn requires a finding in relation to “anticipated period of employment”. The Full Bench of the Australian Industrial Relations Commission has observed the following in relation to these matters;

“[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

“. . . we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.”

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the “anticipated period of employment”. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the “anticipated period of employment” are deducted. An example may assist to illustrate the approach to be taken.”  5 (endnotes omitted)

[15] Ms Chan has submitted to the Commission that her earnings at the time of dismissal were based upon an hourly rate of $18.52 per week and that her average working hours were between 28.5 and 30 hours per week which equates to an annual salary range of between $27,447 and $28,891.

[16] The merits decision before me found that Ms Chan departed Darwin for Cambodia on 23 December 2016 and that shortly before that occurred she and Mr Leong had gone to a bank to obtain payment for her annual leave. She was due to be away until 26 January 2017. When she presented at the workplace on 26 January 2017 she was told by Mr Leong’s mother that there was not enough work for her and that the business was too quiet. She return to the workplace intermittently over the next few weeks to see if job was available, but no work was offered.

[17] Mr Leong’s evidence, which was not accepted by me in the original decision, was that Ms Chan had said to him words to the effect that she would not be returning after her annual leave since she was moving to Melbourne to live with her son.

[18] At the time of the hearing Ms Chan was 63 years of age.

[19] There is no evidence before the Commission that Ms Chan’s employment had been under threat prior to her leaving on her annual holidays. There had been no warnings or criticisms of her performance and no appreciable claims of underperformance were mentioned in the proceedings before me.

[20] The question of the anticipated period of employment is a particularly difficult issue in this matter. On the one hand the Applicant can point to her expectation of indefinite ongoing employment by Hibiscus. On the other hand the Respondent can point to an already long serving employee who was also ageing and was probably unlikely to continue in employment indefinitely, if that term were to mean several or many years of employment. The Respondent can also point to the words at least that was said to Ms Chan when she attended for work after she returned from holidays, initially on 26 January 2017 and then on several other locations as well, namely that there was no work available for Ms Chan to perform, with the potential implications that somehow her job had become redundant during her absence.

[21] Overall, it is my opinion based upon the limited evidence before me, as well as the assumption that any dismissal of Ms Chan by Hibiscus later than January 2017 would be in accordance with proper procedure, that Ms Chan’s employment would have continued for at least the six months of the maximum compensation period.

[22] There is no evidence before the Commission that there were tensions in the employment relationship such that it could be expected that Mr Leong would move to dismiss Ms Chan for reason of performance or misconduct. While it is possible that she may have been made redundant for genuine reasons when returning from work, there is no accepted evidence before me to that effect. The only evidence before me in relation to the question of redundancy is that which I have rejected as being the reasons for termination; namely the contention put to Ms Chan by Mr Leong’s mother on those occasions on after 26 January 2017 when Ms Chan was informed there was no work available for her. As a result, there is no cogent evidence before the Commission that would lead to the view that Ms Chan’s anticipated period of employment is to be measured only in weeks rather than months, or even that the number of months is measured in single numbers only.

[23] As result I set the anticipated period of employment at 26 weeks.

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[24] The evidence before the Commission is that Ms Chan has very limited English and speaks Khmer as her first language. She was 63 years of age at the time of the hearing. Her employment experience, in recent years at least, has been to work in a fast food cafe.

[25] As a result Ms Chan has had some difficulties obtaining other employment with her evidence being that to the date of the “remedy” hearing she has a managed only to obtain Centrelink payments and has had no other income to supplement her since becoming unemployed.

[26] Notwithstanding this situation there is no detailed evidence before the Commission about the efforts Ms Chan has taken to obtain employment elsewhere.

(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

[27] Ms Chan’s evidence is that the after becoming unemployed in January 2017 she has had no income other than her Centrelink payments.

[28] It is noted generally in relation to orders for monetary compensation, that workers’ compensation payments are deducted from such orders, but not social security payments. 6

(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

[29] Given that Ms Chan is currently unemployed and only in receipt of Centrelink payments there is no reasonable expectation that she may obtain other remuneration of any kind in the period between the making of the order of compensation and the actual compensation.

(g) any other matter that the FWC considers relevant.

[30] I am not aware of any other considerations which might be relevant to the order of compensation, and have considered all of the circumstances of the case in determining an appropriate remedy.

CONCLUSION AND ORDERS

[31] After consideration of the foregoing issues, I find that the Applicant was dismissed and that it was unfair within the meaning of the Act.

[32] I find that reinstatement is not an appropriate remedy in this case.

[33] I find that compensation is appropriate.

[34] The approach by the Fair Work Commission in these matters, and which I follow here, is to estimate the remuneration the employee would have received if they had not been dismissed (usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment); deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment; deduct an amount for contingencies; consider the impact of taxation and adjust the figure accordingly; and assess the figure against the compensation cap set by s.392(5). 7

[35] Since it is not relevant to Ms Chan’s circumstances there is to be no deduction made for misconduct. Further there is to be no deduction for contingencies, noting that a deduction for contingencies may not be appropriate in circumstances, such as this, where all of the anticipated period of employment has passed. 8

[36] I will base the calculation of compensation for Ms Chan on annual earnings of $28,000 per year which is near to the midpoint of the salary range referred to previously. In the absence of any precise information before me about the actual earnings of Ms Chan in the 26 weeks prior to her dismissal I will interpolate from the evidence before me that her earnings in the 26 week period were or would have been $14,000. In addition to that amount Ms Chan was also entitled to receive 9.5% superannuation contributions. The Commission’s order for compensation will therefore be for a payment of $14,000, with a further amount of 9.5% for the purposes of superannuation. My calculation of the amount payable is set out in the following table;

1. ESTIMATE THE AMOUNT THE EMPLOYEE WOULD HAVE RECEIVED OR WOULD HAVE BEEN LIKELY TO RECEIVE IF THE EMPLOYMENT HAD NOT BEEN TERMINATED,	26 weeks projected lost income 9	$14,000
9.5% Employer superannuation contribution on above	+ $1,330
Deduction for misconduct 10	$0
2. Deduct monies earned since termination,	$0
3. Deductions for contingencies,	$0
TOTAL	$15,330
4. Calculate any impact of taxation,	To be taxed according to law
5. Apply the legislative cap.”	The total does not exceed the compensation cap

[37] The total amount of $15,330 is equal to and does not exceed the compensation cap applying at the time of dismissal.

[38] An order requiring Hibiscus Chinese Takeaway and Cafe Food to pay to Ms Chan a total amount $15,330 taxed according to law, is issued in conjunction with this decision. The total will be ordered to be split between a payment directly to her, and a payment to her superannuation account, on her behalf.

[39] In accordance with this decision, $14,000, less taxation, is to be paid directly to Ms Chan, and $1,330 is to be paid to her superannuation account. The order will require the payments to be made within 14 days of the date of this decision.

COMMISSIONER

Appearances:

Ms T Spence, solicitor, for the Applicant.

Mr M Leong on behalf of the Respondent.

Hearing details:

2017.

Melbourne:

23 August.

 1   [2017] FWC 3467.

 2   See for example, D.A. Moore v Highpace Pty Ltd (1998) (unreported, Print Q0871).

 3   [2017] FWC 3467, [22].

 4   Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries[2016] FWCFB 7206 [34]; see also Bank of Sydney Ltd v Pasqualina Repici[2015] FWCFB 7939 [7].

 5   Ellawala v Australian Postal Corporation, AIRCFB (2000), Print S5109, at [33] and [34].

 6   Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, 29

 7   See Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, 32, and Ellawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109 [33].

 8   Bowden v Ottrey Homes (2013) 229 IR 6, [2013] FWCFB 431, [54]

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