Theo Tzaros v Metro Trains Melbourne Pty. Ltd. T/A Metro

[2017] FWC 788

[2017] FWC 788

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Theo Tzaros
v
Metro Trains Melbourne Pty. Ltd. T/A Metro
(U2016/9467)

COMMISSIONER GREGORY MELBOURNE, 8 FEBRUARY 2017

Application for relief from unfair dismissal.

Introduction

[1] Mr Theo Tzaros has been employed by Metro Trains Melbourne Pty Ltd T/A Metro (“MTM”) and its predecessor entities since 1979. However, his employment ended on 7 July last year, although he last attended at work in September, 2015. At that time he worked as a Station Master at the Essendon railway station.

[2] Mr Tzaros lodged an unfair dismissal application on 14 July 2016. MTM responded by raising a jurisdictional objection. It submits Mr Tzaros was not dismissed and his employment did not come to an end at the initiative of the employer. Therefore, he cannot have been unfairly dismissed. This decision accordingly deals with both the unfair dismissal application and the jurisdictional objection raised in response by MTM.

[3] Mr Garry Dircks was granted permission to appear on behalf of Mr Tzaros under s.596(2)(a) of the Fair Work Act 2009 (Cth)(“the Act”) as the matter involves a degree of complexity, particularly given the jurisdictional objection, and his involvement might enable it to be dealt with more effectively. Ms Jessica Gillam and Ms Melissa Hogan appeared on behalf of MTM.

The Issues to be Determined

[4] Section 386 (1) of the Act relevantly provides that:

“Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative;” 1

[5] MTM submits, in summary, that Mr Tzaros has refused to return to work, despite being given multiple opportunities to do so, and his actions have accordingly constituted a repudiation of his contract of employment. Therefore, he has not been dismissed “on the employer’s initiative.”

[6] The Commission is accordingly required to initially determine this threshold jurisdictional issue. If it finds in favour of MTM on this count then the application must be dismissed. However, if the Commission dismisses the jurisdictional objection then the application must be determined in accordance with the provisions contained in section 387(a) to (h) of the Act.

The Jurisdictional Objection – the Evidence and Submissions

[7] MTM submits, in summary, that Mr Tzaros refused to return to work after a long period of absence, despite being given multiple opportunities to return, and his actions in all the circumstances constituted a repudiation of his employment contract. It accordingly submits he was not dismissed “on the employer’s initiative” and therefore cannot have been unfairly dismissed.

[8] In September 2015 Mr Tzaros was demoted to a Station Officer 3 classification level as a consequence of his “misconduct.” However, on 22 September 2015 he commenced a period of sick leave, apparently as a consequence of the shock and distress caused by his demotion, and has not returned to work since.

[9] MTM then met with Mr Tzaros on 22 March 2016 to discuss the outcome of a review carried out into what had occurred. During this meeting he was told that, following the review, MTM had not been persuaded to overturn the decision to demote him. However, he was offered an opportunity to take up the role of Station Master Class 4 at the Clifton Hill Station for a reduced period of 6 months. However, he immediately rejected this offer, and again declined the same offer in a further discussion on 14 April 2016.

[10] A letter was then forwarded to Mr Tzaros on 3 June 2016 by Ms Lisa McIndoe, Business Partner, People and Performance, seeking an indication of when he would be able to return to work and requiring confirmation of this by close of business on 14 June 2016. It was again indicated that any return to work would be on the basis of the Station Master Class 4 position at the Clifton Hill Station.

[11] Mr Tzaros did not respond to that correspondence, but instead sought a meeting with the Chief Executive Officer (“CEO”), Mr Andrew Lezala. That meeting took place on 29 June 2016, and included the Secretary of the Rail Tram and Bus Union (“the Union”), Ms Luba Grigorovitch. MTM submits that several further significant concessions were made in this meeting to the conditions on which a return to work would occur. Mr Tzaros then asked for a further period of time to consider the offer, but had still not provided a response by 6 July 2016.

[12] Doctor Jacques Liebenberg, Director of People and Performance at MTM, then forwarded a letter to Mr Tzaros, dated 6 July 2016. The letter set out the circumstances referred to above, and indicated in part:

“We have over the last few months made a number of attempts to get you to return to work and unfortunately MTM is no longer able to hold your position open and as a result your employment will come to an end. Normally you would be provided with a period of notice however since you are not in a position to perform any useful work then your last day of employment will be the date of this letter.” 2

[13] Mr Colin Shaw is the Head of Employee Relations for MTM. In March last year he was asked to review the circumstances involving Mr Tzaros and, on 22 March 2016, he and Ms McIndoe met with Mr Tzaros and a representative from the Union to discuss the situation. At that meeting a compromise offer was put to him, but he immediately declined this offer. He also made clear he would not return to work unless the disciplinary action was withdrawn entirely.

[14] Mr Shaw was then asked to attend a meeting on 29 June 2016, involving the CEO and Mr Tzaros. A number of further concessions were made in that meeting, including a reduced period of demotion, placement at a station of his choice, back pay for the period of his demotion, and the option of an interest-free loan to clear his legal fees. Mr Shaw said he was very surprised when Mr Tzaros refused to immediately accept this offer, and instead asked for a few days to consider it.

[15] However, on 6 July 2016 when Mr Tzaros had failed to accept or respond to the offer it was decided his position could not be kept open any longer and his employment would be ended. Mr Shaw concluded by indicating that Mr Tzaros had a position at MTM that he could have returned to at any time, but refused to do so.

[16] MTM submits, in conclusion, that despite the efforts it made Mr Tzaros has refused to return to work and fulfil his duties in accordance with his contract of employment. This has resulted in the contract of employment “being exhausted,” 3 leaving it with no choice but to end the employment relationship. It relies on the decision in T.A. Arnold v Department of Justice4 in support of this submission.

[17] It continues to submit Mr Tzaros was given a number of directions requiring him to inform MTM about his intention to return to work, but elected to either not respond or to make clear he had no intention of doing so except on his terms. Given his lengthy period of absence from work, and the various attempts to have him return, MTM submits it was left in a position where it could no longer hold a position open for him.

[18] Mr Tzaros submits, in response, that his employment was terminated on the initiative of MTM and relies, in particular, on the letter from Doctor Liebenberg of 6 July 2016. He submits this correspondence provides a “complete answer to the question of who terminated the employment.” 5

[19] He also rejects the submission that he can be said to have repudiated his contract of employment, and submits instead that MTM repudiated it by demoting him in circumstances where there was no right to demote. He also submits MTM’s submissions ignore the fact he was off work because of ill health, and had provided medical certificates in support.

[20] Mr Tzaros continues to submit the circumstances do not bear out the claim of him repudiating his contract of employment. He refers to the fact he met with the CEO on 29 June 2016 and after that discussion was considering a new return to work offer. He points to the evidence of Mr Shaw, which confirms he asked for a few days to consider this revised proposal. He then sought clarification from the Union on 1 July 2016 about some aspects of the proposal and it sent him an email in response setting out what it intended to have clarified.

[21] He also points to the notification to the Union by Mr Shaw, which includes the statement that “a decision has been made to end his employment” 6 and “it is time to end the relationship.”7

[22] Mr Tzaros also relies on the Full Bench decision in Searle v Moly Mines Limited (Moly Mines) 8 in support of the submission that the jurisdictional objection cannot be relied upon, given the obvious steps taken by MTM to bring the employment relationship to an end. He submits the decision makes clear that the essential question to be considered is whether his employment was terminated at the initiative of the employer. It also makes clear that it does not involve, at this stage, an evaluation of the reasonableness of the parties’ conduct. The relevant issue is simply whether the employer initiated the termination. He continues to submit, “Where questions of jurisdiction are involved it is the facts which are relevant, not the parties’ subjective beliefs or the reasonableness of their conduct.”9

[23] Mr Tzaros’ witness statement also makes reference to the meeting with the CEO, Mr Lezala, on 29 June 2016. He said he was provided with a revised offer in that meeting, and asked to provide a response by the following day. He indicated in response that his solicitor was away until the following Monday, and he wanted to consult with her before making a decision. He said this was agreed to, and then on 1 July 2016 he sent an email to the Union seeking further clarification about some aspects of the offer. He received a response indicating it would seek this further clarification on his behalf and provide a response.

[24] He then heard nothing from either the Union or MTM during the next 6 days, and on 6 July 2016 sent a text message to the Union asking when he could expect a response. He then rang the Union on the same day and was told it had just received an email from Mr Shaw indicating MTM was going to end his employment. He then received the letter from Doctor Liebenberg on 8 July 2016. He said this occurred despite the fact he was not provided with a specific timeframe in which to respond, and was still on sick leave at the time.

Consideration of the Jurisdictional Objection

[25] I am satisfied that the jurisdictional objection can be dealt with reasonably briefly. The relevant circumstances essentially involve the meeting with the CEO on 29 June 2016, and what occurred in the days that followed, because clearly Mr Tzaros was still employed at the time of this meeting.

[26] A revised return to work offer was put to Mr Tzaros in the meeting on 29 June 2016. It included, amongst other things, the rather unusual offer of an interest free loan to cover what were apparently significant legal bills incurred in conjunction with advice obtained about the issues he was dealing with at work. The CEO apparently asked for a response to the offer by the following day, however, Mr Tzaros requested some additional time because his solicitor was unavailable.

[27] He then made further contact with the Union on 1 July 2016 to seek clarification about one aspect of the offer, and understood the Union was to take this matter up with MTM. However, after hearing nothing he contacted the Union again on 6 July 2016 to find out whether a response had been received. He was then told the Union had just been informed MTM intended to end his employment. Mr Tzaros then received the letter from MTM dated 6 July 2016. The relevant contents of that letter have been set out in an earlier part of this decision, but can be restated now.

“We have over the last few months made a number of attempts to get you to return to work and unfortunately MTM is no longer able to hold your position open and as a result your employment will come to an end. Normally you would be provided with a period of notice however since you are not in a position to perform any useful work then your last day of employment will be the date of this letter.” 10

[28] It is also noted that the letter indicates, “You asked for a few days consider those concessions. A week later you have not made any attempts to advise Metro of any intention to return to work.” 11 This confirms Mr Tzaros’ evidence that it was agreed in the meeting on 29 June 2016 that he could have some additional time to consider the offer put to him.

[29] MTM was clearly frustrated by Mr Tzaros’ apparent refusal to accept the disciplinary action imposed on him, and by his subsequent extended absence from work on sick leave. Its frustration appears to have been exacerbated by his failure to accept a “watered down” offer put to him in March last year. He then refused to immediately accept a further revised proposal put to him in a specially convened meeting with the CEO in June, instead asking for further time to consider the proposal. That request appears to have been reluctantly agreed to.

[30] In addition, MTM does not appear to take issue with the fact it received medical certificates concerning Mr Tzaros’ absence from work. While some private doubts might have existed about the legitimacy of the health issues impacting on him, this does not appear to have been challenged or tested in any formal sense.

Conclusion of Jurisdictional Objection

[31] MTM may well have had good reason to be frustrated in all the circumstances by Mr Tzaros’ extended absence from work, following the disciplinary action imposed upon him. However, as the Full Bench decision in Moly Mines makes clear, questions about what is reasonable are not relevant at this stage of the proceedings. It is, instead, the facts which are relevant. I am satisfied Mr Tzaros’ employment was terminated as a consequence of the letter sent to him by Doctor Liebenberg on 6 July 2016. As was the case in Moly Mines if that letter had not been sent his employment would not have ended at that time. In addition, his extended absences from work were covered by medical certificates and this was known to MTM.

[32] I am satisfied, in conclusion, that Mr Tzaros’ employment was “terminated on the employer’s initiative.” The jurisdictional objection raised by MTM is accordingly dismissed. I now turn to consider whether the dismissal was “harsh, unjust or unreasonable” taking into account the following matters in s.387 I must have regard to.

Merits of Application – the Evidence and Submissions

[33] “387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

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

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

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

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.” 12

[34] The submissions provided on behalf of Mr Tzaros deal with each of the matters in s.387 that the Commission must have regard to. Mr Tzaros was temporarily demoted to a Station Officer Class 3 position in September 2015 for a period of 12 months, following two separate incidents. These followed an earlier warning he had been given in July 2015 for handing out leaflets at a time when he was off work on carers leave.

[35] The first of the two incidents involved him returning a lost wallet to the wrong person, without appropriately verifying that the person was the owner of the wallet. The second incident involved him providing what was described as “incorrect and inflammatory information” in response to a series of circumstances that unfolded early one morning. It was concluded as a consequence that he had not demonstrated the attributes expected of a Station Master, and had not abided by MTM’s values. Mr Tzaros was given “another First and Final Warning” as a consequence, and demoted from his Station Master Class 6 position at the Essendon Station to a Station Officer Class 3 position at the North Melbourne station. He was told this would be for a period of at least 12 months, and during this time he would be provided with additional training and coaching, as well as being subject to a monthly Performance Improvement Plan. At the conclusion of the 12 month period he would be able to apply to return to the Station Master position at Essendon.

[36] However, Mr Tzaros was off work from that time, citing medical grounds, and without providing any clear indication of when he would be able to return to work. MTM finally concluded in its letter of 6 July 2016 that after a number of attempts to get him to return to work it was no longer able to keep his position open and “as a result your employment will come to an end” 13 with effect from the date of the letter.

[37] Mr Tzaros submits, in response, there was no valid reason for his dismissal related to his conduct or capacity, and the fact he had experienced a lengthy absence from work because of ill health does not establish MTM had a valid reason to dismiss him on grounds of “capacity.” He submits if this ground was to be established it would require medical evidence confirming his inability to return to work, and refers to various authorities in support of this submission. He also refutes any suggestion about the validity or otherwise of his medical condition, or the medical certificates provided on his behalf, and suggests his medical condition resulted from MTM’s actions. He also submits the medical certificates show progress being made to a point where he has now been cleared fit to return to work.

[38] His submissions also take issue with whether MTM had any right to demote him in terms of the range of options available to it. He also submits he was not provided with a genuine opportunity to respond to the reasons for the decision to terminate his employment, and the decision was instead a “fait accompli.” 14 He also submits he was entitled to a “fair go,”15 particularly given the size of the business, and this has been denied in all the circumstances.

[39] Mr Tzaros also submits his length of service (more than 36 years since first employed in 1979), and the fact he had been promoted on several occasions during this time, entitled him to be treated more favourably. He submits in all the circumstances that he should now be reinstated with an order for payment of lost wages from the date of termination.

[40] MTM submits, in response, his behaviour meant it was unable to keep his position open any longer, in circumstances where he had previously been provided with numerous options and opportunities in an effort to get him to agree to return to work. It continues to submit “that after a considerable period of absence from the workplace and multiple attempts to resolve the differences between the parties the respondent could no longer hold a position open for Mr Tzaros despite the desire of MTM to have Mr Tzaros return.” 16

[41] MTM submits it did have a valid reason for termination. Mr Tzaros had not been at work since 15 September 2015, having been off work on sick leave since a disciplinary meeting where he was told he was to be temporarily demoted. Since that time repeated attempts, involving different offers about his return to work, have been put in an attempt to have him return, but all have been rejected. MTM was therefore now in a position where it could no longer hold a position open for him, and his extended absence from work was placing pressure on other staff members. MTM refers to the decision in Ulla-Maija Dunkerley v. Commonwealth of Australia (Department of Industry, Innovation, Science, Research and Tertiary Education) (Dunkerley)  17 in support of this submission.

[42] It continues to submit that Mr Tzaros was given a number of opportunities and options in response to his concerns, but was also told that if he continued to refuse to return to work MTM would have no option but to end the employment relationship. This was last communicated to him in a letter dated 28 June 2016. However, he refused to accept this advice and sought a meeting with the CEO, which took place on the following day. He was provided with a further offer in that meeting, but asked for time to consider his position. However, he had not provided a response by 6 July 2016. In addition, MTM provided a response to the Union on 4 July 2016 in regard to a further point of clarification it raised on Mr Tzaros’ behalf on the previous Friday. It did so even though similar advice had previously been given to him in the letter of 3 June 2016.

[43] MTM also rejects the submission that it has no entitlement to demote an employee, and refers to clause 2.19.3 of the Enterprise Agreement that covers the parties, which states, “Employees who are redeployed or demoted to an alternative position on performance and/or disciplinary grounds do not have entitlement under this clause.” 18

[44] It also rejects any suggestion that Mr Tzaros has not been provided with a “fair go,” and points to the various meetings and concessions provided to him as part of the process of attempting to get him to return to work.

[45] MTM also submits in terms of any possible remedy that reinstatement is not appropriate as Mr Tzaros’ continued refusal to return to work, while disciplinary action was in place, has led to an irretrievable breakdown of the employment relationship. It also submits compensation is not appropriate as he had exhausted all paid sick leave entitlements, and if he had remained employed, but not at work, would have been on unpaid leave. It also submits he has failed to mitigate any loss suffered.

Consideration of Application

[46] I have already made reference to the fact MTM was clearly frustrated by Mr Tzaros’ apparent refusal to accept the disciplinary action imposed on him, and by his extended absence from work while he sought to return on terms acceptable to him. At the same time Mr Tzaros is clearly unhappy about the fact he has been subjected to disciplinary action at all. In his view the action was not justified, or at the very least disproportionate, given what occurred. As a consequence he has endeavoured to use all available avenues to have the action revoked. He is clearly now unhappy about the fact his employment has been terminated. I now turn to consider whether his dismissal was “harsh, unjust or unreasonable” taking into account the considerations in s.387 I must have regard to.

[47] It is noted at the outset that the decision in Byrne & Frew v Australian Airlines Ltd 19 contains an explanation about the nature of the conduct or behaviour that might be encompassed within the phrase “harsh, unjust or unreasonable.” The judgement of McHugh and Gummow JJ contains the following explanation:

“…It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.” 20

[48] The decision of a Full Bench of Fair Work Australia in the matter of L. Sayer v Melsteel Pty Ltd 21 also provides guidance about the Commission’s role in regard to each of the considerations in s.387. It stated:

“Where the applicant does present a case, in the ordinary course each of the criteria in s.387 which is capable of being relevant on the facts emerging at the hearing must be taken into account.” 22

[49] I now turn to deal with each of the considerations in s.387 having regard to these authorities.

(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

[50] The existence or not of a “valid reason” is invariably an important issue in any unfair dismissal application, and often determinative. In the often cited decision of Parmalat Food Products Pty Ltd v Kasian Wililo 23 a Full Bench of the Commission made the following statement about the importance of “valid reason”:

“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination.” 24

[51] It is also clear that the reason must be objectively valid. It is not sufficient for the employer to simply believe it had a valid reason for termination. This was made clear in the Full Bench decision handed down in Rode v Burwood Mitsubishi 25at paragraph 19 where it held:

“...the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.” 26

[52] The decision in Selvachandran v Peterson Plastics Pty Ltd 27 also makes clear the reason should be “sound, defensible and well founded,” and not be “capricious, fanciful, spiteful or prejudiced.”

[53] Mr Tzaros was not dismissed because of the separate incidents that occurred in 2015 involving the return of a lost wallet to the wrong owner, or when he engaged in what MTM considered to be inappropriate communications with other staff in the organisation. As the letter of 6 July 2016 from Doctor Liebenberg makes clear he was instead dismissed because MTM was unable to hold his position open in circumstances where he had been absent from work since September 2015, despite various attempts to get him back to work. These included various offers and proposals which mitigated the original disciplinary action. The most recent offer was proposed in a meeting with the CEO on 29 June, six days before the letter of termination was sent.

[54] As indicated, MTM’s frustration in these circumstances is understandable. It cannot be expected to hold a position open indefinitely for any employee, even when the absence is supported by medical certificates. It was also entitled to be at least a little bemused by the fact Mr Tzaros appeared to be prepared to get involved in negotiations about the terms on which he would return to work, despite being off work on sick leave. Coincidentally, he also produced a medical clearance to return to work on 3 November 2016, just four days prior to the hearing of this application.

[55] MTM also relies on the decision in Dunkerley in support of its submissions. In that matter the employee had been off work for an extended period, despite having earlier provided a medical certificate indicating she was fit to return to work, without restriction. However, the employee continued to persist with a range of conditions she wanted satisfied before she would return. The Commissioner at first instance concluded:

“[82] Every opportunity was given to the applicant to arrange a proper return to work program but she refused to take part in the process. She made unreasonable demands of the Department and put as many obstacles in the way of her return to work as she could muster. The Department acted properly in all its dealings with the applicant, who was clearly a difficult employee who necessitated the application of a disproportionate amount of Departmental resources.

[83] The applicant made no effort to prevent the termination of her employment or even to contest it in any way until the decision had taken effect.

[84] I am satisfied that the applicant’s dismissal was not harsh, unjust or unreasonable. As the dismissal was not unfair the application is dismissed.” 28

[56] The employee subsequently took the matter on appeal, however, it was dismissed with the Full Bench concluding:

“[25] The evidence before the Commissioner demonstrated that the Applicant had refused to participate in a return-to-work process, even though there was no sound medical reason for such refusal. Furthermore, the Applicant failed to return to work despite efforts by the Department to facilitate her return in such a way as to address her concerns, and even though she was aware that dismissal would be the likely consequence.

[26] In these circumstances, it was open to the Commissioner, and correct, to conclude that there was a valid reason for the Applicant’s dismissal.” 29

[57] The employer in that matter appears to have experienced some of the same frustrations MTM has experienced in the present matter. However, the circumstances in this matter can also be distinguished from those in Dunkerley. For example, Mr Tzaros did provide a series of medical certificates to MTM from September 2015 in support of his absence from work, even though these were in large part loosely worded indicating, for example, “I examined Mr Theo Tzaros who in my opinion, / who states that they were, suffering from a personal illness on the history or and will be / and was unfit for work.” 30 This appears to involve some form of self-diagnosis. Other certificates indicate he “is receiving medical treatment and for the period … he will be unfit to continue his usual occupation.”31

[58] A report from a psychologist was then provided, dated 28 October 2016, which stated in part, “Theo has continued to access regular therapy in September and October 2016. Theo has achieved substantial psychological gains and appears to be acceptant of his situation. His thoughts are less ridged in regards to his situation and he is now able to effectively conduct his daily tasks and attend to his adaptive needs with ease. Hence, it is recommended that Theo return to full employment. I also recommend that Theo may continue to access therapeutic support to enable him to consolidate on gains already made in therapy”. 32  This report was obviously provided almost 4 months after his employment had ended.

[59] The final document tendered in the bundle of medical reports is a letter dated 3 November 2016 from Dr M. J. Willis which states, “Mr Tzaros has been undergoing treatment for depression related symptoms over a period of time. He has been consulting a psychologist for these problems. He has made good progress recently and it is my opinion he is currently fit for full-time employment”. 33

[60] As indicated, much of the content of the medical certificates contains limited detail and relies in large part on Mr Tzaros’ assessment of his medical condition. Nevertheless, the fact he was off work because he was unfit for work, with his absence supported by these medical reports, can be contrasted with the circumstances in Dunkerley. It also appears MTM did not take issue with the validity of these medical certificates.

[61] However, despite being “unfit for work” this did not stop or prevent Mr Tzaros from actively negotiating or seeking to return to work on terms that suited him. This is unusual in circumstances involving someone who is unfit for work at the time. It would normally be expected that discussions or negotiation about the terms of any return to work would only commence once a medical clearance had been obtained. It could be suggested, in response, that his medical condition was used to justify his absence from work until such time as he could negotiate a return on terms that suited him. However, MTM does not appear to have taken the next step and, for example, requested Mr Tzaros undergo an independent medical examination.

[62] This matter can also be contrasted with the circumstances in Dunkerley in that the evidence suggests the negotiations about Mr Tzaros’ return to work had arguably not concluded at the time he received the termination letter. This suggests that MTM acted precipitously in taking the action to end his employment when it did. These circumstances have been detailed previously. In summary, they involve Mr Tzaros’ request for a meeting with the CEO and the subsequent meeting that took place on 29 June 2016. He was provided with a revised offer of return to work in that meeting, but requested some additional time to consider the offer because his Solicitor was unavailable. He then sought further clarification with the Union about one aspect of the offer and understood it had taken this matter up on his behalf. Mr Tzaros then made contact with the Union again on 6 July 2016, having heard nothing at that point from either the Union or MTM, but was told it had just been informed he was to be terminated. Mr Tzaros then received the termination letter.

(b) whether the person was notified of that reason;

[63] Mr Tzaros was notified of the reason for his dismissal in the letter of termination he received last year. It was also indicated in an earlier letter given to him in the previous month that unless he agreed to return to work he would be dismissed. However, Mr Tzaros submits that despite being provided with a reason for his termination his dismissal was actually a “fait accompli”. 34

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

[64] Mr Tzaros submits he was not provided with any opportunity to respond to the reason for the decision to terminate his employment. However, MTM submits he was provided with numerous opportunities to resolve the issues between the parties, and was informed if he continued to refuse to return to work his employment would be ended. It submits he continued to maintain he would refuse to return to work until such time as the proposed disciplinary action was withdrawn.

(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;

[65] There is no suggestion of any refusal to allow a support person to be present.

(e) if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal;

[66] Mr Tzaros’ termination was not related to unsatisfactory performance. It instead derived from his failure to return to work.

(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;

[67] In regard to both of the above considerations MTM is obviously a large employer with dedicated HR resources and expertise and, as such, it can and should be expected to deal with termination matters in an appropriate way.

(h) any other matters that the FWC considers relevant.

[68] I am satisfied that Mr Tzaros’ length of service is a relevant consideration in all the circumstances of this matter. He has had a long period of service of more than 37 years. He was also promoted during this time. This clearly entitles him to be treated with more consideration than someone who has only been with the organisation for a limited period.

[69] However, at the same time I am satisfied that the evidence indicates that his circumstances have already been given significant additional consideration as a consequence of his length of service. For example, MTM provided him with various options and opportunities to accept a lesser disciplinary outcome than originally proposed. Significantly, he was also provided with the opportunity to meet with the CEO to argue his case. This came about at his request after he had met the CEO, Mr Lezala, at a staff function. I have no doubt that this unusual opportunity would not have been provided, but for his long period of service. In addition, offers were put to him in that meeting which would have been most unlikely to have been offered to someone with only a limited period of service. It can therefore be concluded that he has already been advantaged by his service record. It appears in fact that he might have placed too much store on his length of service and acted as though it made him “bullet-proof” in response to what MTM was proposing.

[70] I have also had regard to the submissions made about MTM’s ability to demote Mr Tzaros. It is acknowledged that a demotion involving a significant reduction in duties or remuneration may be deemed to constitute dismissal from employment. In addition, an employment contract may be considered to have been repudiated by the employer’s actions in circumstances where an employee is demoted without their consent. However, this will generally require the employee to have either expressly or impliedly accepted and acknowledged the repudiation, otherwise they will be viewed as remaining in an ongoing employment relationship.

[71] This is the situation in the present matter. Mr Tzaros has remained in employment, despite not agreeing with the decision to demote him to a different classification level. It is also noted that the Agreement that covers the parties acknowledges that demotion can be an option, as it makes reference to this possibility. Mr Tzaros also appears to have at least impliedly accepted the possibility of demotion by getting involved in negotiations about this potential outcome, although it is clearly acknowledged that he does not accept it is an outcome that is warranted.

Conclusion

[72] I have already indicated that MTM was entitled to be frustrated, firstly, by Mr Tzaros’ apparent refusal to accept the disciplinary action imposed on him and, secondly, by his subsequent absence from work, ostensibly on sick leave, while he refused to return to work except on terms acceptable to him. Clearly, an employer is entitled to take disciplinary action in appropriate circumstances in response to the actions or behaviour of an employee. Equally, an employee is entitled to have that action reviewed through dispute resolution procedures or other available mechanisms. This occurred in this case and it was decided in that process of internal review that MTM’s actions were justified in all the circumstances.

[73] An employer is also entitled to conclude in appropriate circumstances that after an employee has been absent for an extended period of time, with no indication about when they will be able to return to work, that it can no longer hold the position open for that person and their employment is therefore brought to an end.

[74] However, at the same time the relevant provisions in the Act, as s.381 makes clear, are predicated upon “a fair go all round.” In this context I am concerned that MTM has acted too hastily in finally deciding to end Mr Tzaros’ employment in circumstances where it is reasonable to conclude that a process of negotiation about his return to work was still on-going.

[75] These circumstances have been referred to previously, but are briefly restated now. On 28 June 2016 Mr Tzaros requested a meeting with the CEO to discuss his circumstances. That request was granted and the meeting took place on the next day. Mr Tzaros was provided with a further offer in that meeting regarding his return to work and was asked to provide a response by the following day. However, he indicated that his solicitor, who had been advising him about these matters, was not available until Friday 1 July 2016. He therefore requested some additional time in which to provide a response. In addition, on 1 July 2016 he asked the Union to clarify one aspect of the offer and it confirmed it would take this matter up on his behalf.

[76] MTM responded to the Union about this point on the following Monday, being 4 July 2016, however, it appears the Union did not pass on this information to Mr Tzaros, meaning that by 6 July 2016 he had heard nothing from either the Union or MTM. He therefore made contact with the Union on 6 July to find out what was happening, only to be told it had just been informed by MTM that his employment was about to be ended. Mr Tzaros then received the letter from MTM, dated 6 July 2016, confirming this outcome.

[77] As indicated, it is not surprising that MTM was frustrated by its seeming inability to reach agreement with Mr Tzaros about the disciplinary action, or the terms upon which he would agree to return to work. Its actions in deciding to end his employment after a long period of absence can be understood in these circumstances. However, given what occurred following the meeting on 29 June 2016 I am satisfied that in the context of affording “a fair go all round” it would have been both appropriate and prudent for MTM to seek a final response from Mr Tzaros to the offer put to him 6 days earlier, given that he had been granted additional time to provide a response, before it proceeded to take the decision to end his employment. Therefore, whilst MTM may well have had a valid reason to end Mr Tzaros’ employment I am satisfied it acted unreasonably in ending his employment when it did, given the circumstances outlined above. I have therefore concluded that on balance Mr Tzaros was unfairly dismissed. Having come to this decision I now turn to consider what remedy might be appropriate in all the circumstances.

Remedy

[78] Section 390 of the Actprovides as follows:

“(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.

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

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

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.” 35

[79] Previous decisions of the Tribunal have acknowledged that trust and confidence is a necessary ingredient in any employment relationship, and where trust and confidence is lost reinstatement may be impractical. However, the rationale for the loss of trust and confidence must be sound and rationally based.

[80] In Perkins v Grace Worldwide (Aust) Pty Ltd 36 the Full Court of the Industrial Relations Court of Australia came to the following conclusion:

“Trust and confidence is a necessary ingredient in any employment relationship… So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.

…

Each case must be decided on its own merits … In most cases, the employment relationship is capable of withstanding some friction and doubts. Trust and confidence are concepts of degree. It is rare for any human being to have total trust in another. What is important in the employment relationship is that there be sufficient trust to make the relationship viable and productive.

…

It may be difficult or embarrassing for an employer to be required to re-employ a person the employer believed to have been guilty of wrongdoing. The requirement may cause inconvenience to the employer. But if there is such a requirement, it will be because the employee’s employment was earlier terminated without a valid reason or without extending procedural fairness to the employee. The problems will be of the employer’s own making. If the employer is of even average fair-mindedness, they are likely to prove short-lived. Problems such as this do not necessarily indicate such a loss of confidence as to make the restoration of the employment relationship impracticable.” 37

[81] In addition, in Australian Meat Holdings Pty Ltd v McLaughlin 38 a Full Bench of the Commission found that:

“We accept that the question of whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate. It is one factor to be taken into account, but it is not necessary conclusive.” 39

[82] As indicated, Mr Tzaros had been employed by MTM and its predecessors for a long period at the time his employment came to an end. However, he had also been involved in an extended wrangle about disciplinary action imposed on him. This had extended over a period of more than 9 months, and involved a review into what occurred and extensive discussions about the terms on which a return to work might occur. Mr Tzaros had refused to accept the imposition of any form of disciplinary action and had, instead, absented himself from the workplace on medical grounds. Despite this he appeared able to participate in discussions and negotiations about the terms on which he might be prepared to return to work, although he was ultimately not prepared to accept any of these options.

[83] I am satisfied, in response, that in these circumstances it can be concluded that MTM has lost trust and confidence in Mr Tzaros in that it appears he is only prepared to engage with the organisation in a manner and on terms acceptable to him. It can also be assumed that he has lost trust and confidence in MTM as well, given its refusal to accept his position that the proposed disciplinary action was unwarranted and should be withdrawn, and its subsequent failure to accept a return to work on his terms. I am accordingly satisfied, in conclusion, that the level of trust and confidence between the parties has been eroded to a point where reinstatement is no longer a viable option by way of remedy. I now turn to consider whether an order for compensation is appropriate.

[84] Section 392 of the Act states:

“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

(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 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.” 40

[85] It is also noted that a Full Bench of the Commission in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries 41 as provided further guidance regarding the assessment of compensation under the above provisions. It stated at [16]:

“[16] The well-established approach to the assessment of compensation under s.392 of the FW Act, taking into account the matters specified in S.392 (2) is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket. This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes and District Retirement Villages. Under that approach, the first step to be taken in assessing compensation is to consider s.392(2)(c) – that is, to determine what the applicant would have received, or would have been likely to receive, if the person had not been dismissed. In Bowden this was described in the following way:

“[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 the 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’…”

[17] The identification of the starting point amount “necessarily involves assessments as to future events that will often be problematic.” Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of 6 months’ pay. This approach is, however, subject of the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case.” 42

[86] I have endeavoured to apply this approach in considering whether an award of compensation is appropriate. At the time he was dismissed Mr Tzaros had been absent from work for a period of more than 9 months, after failing to accept the disciplinary action that MTM believed appropriate, despite an extended process of negotiation around these issues. His absence was supported by medical certificates indicating he was unfit for work. He was finally cleared fit to return to work at the time of the hearing, which was more than 4 months after his employment came to an end.

[87] It is always difficult to estimate with any certainty about how long a person might remain in employment. It is even more difficult in all the circumstances of this matter, given Mr Tzaros had been off work for an extended period of time at the point at which his employment came to an end. In addition, he had still not received a medical clearance to return to work at that time and, in any case, no agreement had been confirmed about the terms on which he would agree to return to work. In these circumstances MTM might likely have acted to terminate his employment within a short time span, given his extended absence and its requirement to fill the vacancy on a permanent basis. Nevertheless, I am prepared to accept that on balance his period of employment might have extended for a further period of 3 months.

[88] There is no evidence that Mr Tzaros has earned anything since his employment ended, however, he was only cleared fit to return to work in November 2016, and it would appear his medical condition acted against him being able to mitigate his losses.

[89] I am also satisfied that misconduct is an issue in all the circumstances of this matter. It led to the original decision to discipline Mr Tzaros, and this situation has been compounded by his subsequent failure to accept the disciplinary action imposed on him. I am accordingly satisfied that it is appropriate to reduce the amount of any compensation that might be awarded by one third. I am also satisfied that it is appropriate to reduce this amount by 25% on account of contingencies. Despite Mr Tzaros’ long period of service the more recent circumstances make it very difficult to predict with any certainty how long he would have remained in employment, or when he was likely to return to work, and what his earning capacity might be. It is also noted that he did not receive any notice of termination or payment in lieu.

[90] I accordingly find that Mr Tzaros should be awarded an amount equivalent to six weeks’ salary, less taxation. I am also of the view that this amount should be based on the Station Master Class 4 classification level, given this was the classification level MTM most recently proposed that Mr Tzaros should now be employed at. This amount is to be paid within 30 days of the date of this decision. The parties are also at liberty to apply for the purposes of settling these arrangements, if necessary. An order giving effect to this decision will also now be issued.

COMMISSIONER

Appearances:

G Dircks for the Applicant.

J Gillam and M Hogan for the Respondent.

Hearing details:

2016.

Melbourne:

November 7.

 1   Fair Work Act 2009 (Cth) s 386.

 2   Attachment to Respondent’s submissions, “Termination Letter”, dated 6 July 2016.

 3 Respondent’s Outline of Submissions, dated 26 September 2016, at [2].

 4   Print R8365, 20 August 1999, Merriman C.

 5 Applicant’s Submissions in Response to Jurisdiction Objection, dated 28 September 2016, at [6].

 6 Ibid at [32].

 7   Ibid.

 8   [2008] AIRCFB 1088.

 9   Above n 5 at [47] quoting Searle v Moly Mines [2008] AIRCFB 1088, 38.

 10   Above n 2.

 11   Ibid.

 12   Fair Work Act 2009 (Cth) s 387.

 13   Above n 2.

 14 Applicant’s Outline of Submissions, dated 5 September 2016, at [48].

 15 Ibid at [56].

 16 Above n 3 at [5].

 17   [2013] FWCFB 2390.

 18   Metro Trains Melbourne Pty Ltd Rail Operations Enterprise Agreement 2015-2019, AE417210.

 19 (1995) 185 CLR 140.

 20 Ibid at [465].

 21   [2011] FWAFB 7498.

 22 Ibid at [20].

 23   [2011] FWAFB 1166.

 24 Ibid at [24].

 25  Print R4471, 11 May 1999, Ross VP , Polites SDP , Foggo C.

 26 Ibid at [19].

 27 (1995) 62 IR 371, 373.

 28   Dunkerley v Commonwealth of Australia (Department of Industry, Innovation, Science, Research and Tertiary Education [2012] FWA 10220.

 29   Above n 17 at [25]-[26].

 30   Exhibit GD2, Bundle of medical certificates, dated 23 September 2015.

 31   Ibid, dated 25 November 2015.

 32   Ibid, dated 28 October 2016.

 33   Ibid, dated 3 November 2016.

 34   Above n 14.

 35   Fair Work Act 2009 (Cth) s 390.

 36 (1997) 72 IR 186.

 37   Ibid at [191]-[192].

 38   Print Q1625, 5 June 1998, Ross VP, Polites SDP, Hoffman C.

 39   Ibid 17.

 40   Fair Work Act 2009 (Cth) s 392.

 41   [2016] FWCFB 7206.

 42   Ibid, at [16]-[17].

Printed by authority of the Commonwealth Government Printer

<Price code C, PR590063>