Thieu Khai Chung v HSS Fabrication Pty Ltd

[2021] FWC 1682

[2021] FWC 1682

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Thieu Khai Chung
v
HSS Fabrication PTY LTD
(U2021/364)

DEPUTY PRESIDENT CLANCY MELBOURNE, 26 MARCH 2021

Application for an unfair dismissal remedy.

[1] On 14 January 2021, Mr Thieu Khai Chung made an application to the Fair Work Commission for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). The Respondent to Mr Chung’s unfair dismissal application is HSS Fabrication Pty Ltd (HSS Fabrication).

[2] On 15 February 2021, I issued a Decision 1 (the February Decision) granting Mr Chung an extension of time for the making his application and Directions for the filing of material on the question of whether Mr Chung’s dismissal was unfair. I conducted a determinative conference on 26 March 2021, at which the Commission was assisted by an interpreter and I granted Mr Chung permission to be represented by his lawyer, Ms Jordana Le. As there was no appearance on behalf of HSS Fabrication, I had regard to the following procedural history:

a) The Commission attempted to telephone Mr Kenny Khuong of HSS Fabrication on 14 January 2021 however the call went to voicemail for another named individual. As such, no voice message was left.

b) As the Commission had been unable to obtain a personal email address for service, a letter notifying HSS Fabrication of the application and providing the Form F3 Employer response form was emailed to the general sales email address for HSS Fabrication provided by Mr Chung instead. It should be noted that this email address, [email protected], can also be found on the HSS Fabrication Pty Ltd website.

c) On 8 February 2021, my Chambers sent another email to HSS Fabrication noting that no material had been filed in accordance with my Directions issued in relation to the application for an extension of time. This email advised that I would decide the question of whether or not to grant an extension of time having regard only to the material filed. The Digital Court Book and the Microsoft Teams link for the Extension of Time hearing were emailed to the parties on 10 February 2021.

d) Mr Khuong did not appear at the extension of time hearing on 12 February 2021 and nor did any other representative of HSS Fabrication.

e) As outlined above I issued the decision granting an extension of time on 15 February 2021, together with Directions for the filing of material on the question of whether Mr Chung’s dismissal was unfair and a Notice of Listing advising that the matter was listed for Arbitration Conference/Hearing by Video using Microsoft Teams before me on 26 March 2021.

f) HSS Fabrication’s material was due to be filed with the Commission and served on Mr Chung by 3PM AEDT on Monday 15 March 2021. No material was received.

g) On 25 March 2021, a telephone call was made to the number listed on the Respondent’s website. My Associate asked if Mr Kenny Khuong was available. The recipient of the call asked where she was from and did not confirm who he was. My Associate stated that she was calling from the Fair Work Commission and asked if she could speak with Mr Kenny Khuong. She then directly asked if she was speaking with Mr Kenny Khuong. The recipient of the call replied, “I’ll tell you something about the Fair Work Commission” and then continued with “Are you calling about the old man – is this about the old man?” My Associate stated that she could not speak about specifics unless she could confirm that she was speaking with Mr Kenny Khuong. After repeating her request to speak to Mr Kenny Khuong, the recipient of the call hung up.

h) The Digital Court Book and link to the Hearing were sent out on 25 March 2021.

i) On the morning of the Arbitration Conference/Hearing, my Associate made a telephone call to the number listed on the Respondent’s website but was not connected through to Mr Khuong. My Associate was advised she had called a wrong number and the recipient of the call then hung up. My Associate also made telephone calls to two mobile phone numbers. One was provided by Mr Chung who said it was for Mr Khuong. The other was listed on the company website and was identified by Mr Chung as belonging to Mr Khuong’s brother. There was no answer to either and so voice mail messages were left.

j) Throughout the conduct of the matter, no ‘bounce-back’ emails were received by the Commission in response to any of the emails sent to HSS Fabrication’s sales email address.

[3] This procedural history satisfies me that HSS Fabrication has been notified of this matter and its various procedural steps and requirements and has been given the opportunity to participate and advance its position. I am also satisfied HSS Fabrication was notified of the Arbitration Conference/Hearing in advance and on 26 March 2021. As such, I determined that I would proceed to deal with the matter in the absence of HSS Fabrication, having regard to the material that was put before me.

Background

[4] Mr Chung began working for HSS Fabrication on 19 January 2019 full-time as a First-Class Sheet Metal worker. He was paid $1,520 gross per week less $363 PAYG Withholding tax, leaving $1,157 net. He says that in May 2020 he was placed on JobKeeper and thereafter earned $750 gross/$654 net per week until the termination of his employment.

[5] The employment contract between Mr Chung and HSS Fabrication dated 19 January 2019 stated his employment was to be for a term of two years unless it was extended by HSS Fabrication in writing before 1 February 2021.

[6] In the February Decision, I made the following findings:

“Although the Form F2 outlined that Mr Chung was notified of his termination on 19 October 2020 and it took effect the same day, it became apparent when I heard his evidence that he was left confused as to his employment status following a conversation with his employer on that day when he was told there was no more work. There has at no stage been written notice of the termination of his employment provided to Mr Chung. Having tried to contact his employer following 19 October 2020, Mr Chung said there was no response to his attempts and so he visited the workplace on or about 9 November 2020. A heated conversation with his employer regarding his employment ensued and this led Mr Chung’s employer to contact the police. The attending police officer persuaded Mr Chung to leave the premises and obtain legal advice in relation to his grievances. I am satisfied on the basis of Mr Chung’s oral testimony that any confusion he might have had in relation to his employment status after 19 October 2020 was well and truly dispelled on 9 November 2020 and I am also satisfied that from that time, Mr Chung was aware that his employment had been terminated…” 2

[7] Mr Chung said he was given no warnings during the course of his employment and was dismissed without being given a reason, beyond Mr Khuong stating there was no job or JobKeeper for him. He said he was upset by this because there were other employees working, some of whom he had trained, and they were still getting JobKeeper.

Initial matters to be considered

[8] I will deal with the four matters referred to in ss.396(a)-(d) of the Act, as follows.

[9] Firstly, while Mr Chung’s application was not made within the 21-day period required by s.394(2) of the Act (s.396(a) of the Act), I allowed a further period for the making of it in the February Decision.

[10] Secondly, Mr Chung is a person protected from unfair dismissal, as he had completed the minimum employment period. Further, at the time of his dismissal, Mr Chung’s annual rate of earnings ($79,040 per annum) was less than the high income threshold (s.396(b) of the Act).

[11] Thirdly, while s.396(c) of the Act requires me to consider whether the dismissal was consistent with the Small Business Fair Dismissal Code (the Code) before turning to deal with the issue of whether the dismissal was unfair, 3 it has not been submitted that Mr Chung’s dismissal was consistent with the Small Business Fair Dismissal Code and on the material and evidence before me, I am satisfied it was not. Mr Chung denies engaging in any form of behaviour that could be considered sufficiently serious to justify his immediate dismissal and says there were no issues relating to his capacity or conduct for which he received a warning that he was at risk of being dismissed. Mr Chung’s evidence was convincing and unchallenged. There was no material submitted or evidence lead on behalf of HSS Fabrication contradicting it.

[12] Fourthly, there is no material before me that establishes this dismissal was a case of genuine redundancy (s.396(d) of the Act) and Mr Chung’s unchallenged evidence was that HSS Fabrication retained other employees when dismissing him.

Section 385 – was Chung’s dismissal unfair?

[13] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 of the Act provides the following:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.”

[14] On the basis of the material and evidence before me, I am satisfied Mr Chung was dismissed (s.385(a)) and that this was not a case of genuine redundancy (s.385(d)). It has not been submitted that Mr Chung’s dismissal was consistent with the Small Business Fair Dismissal Code (s.385(c)) but on the material and evidence before me outlined above at [11], I am satisfied it was not.

[15] That leaves s.385(b) and in determining whether the dismissal was harsh, unjust or unreasonable, I must have regard to s.387 of the Act:

“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.”

[16] Based on the evidence of Mr Chung, I am not persuaded there was a valid reason for his dismissal related to his capacity or conduct (s.387(a)) and as such, ss.387(b), (c) and (e) do not apply. That there was no valid reason for the dismissal related to the Mr Chung’s capacity or conduct weighs in favour of a finding that his dismissal was unfair.

[17] On the facts before me, s.387(d) has no application and I can give no weight either way in relation to ss.387(e) and (f). HSS Fabrication did not file any material or make submissions addressing these factors.

[18] I have also had regard to unchallenged evidence from Mr Chung that when he was dismissed there were other employees working, some of whom he had trained. Further, he said that Mr Khuong told him that he wanted to reduce wages and Mr Chung’s regular wages were higher than the other workers (s.387(h)). Mr Chung has also alleged underpayment of wages and non-payment of superannuation, annual leave and sick leave throughout his employment with HSS Fabrication. These matters also weigh in favour of a finding that Mr Chung’s dismissal was unfair.

Consideration

[19] Having considered each of the matters specified in s.387 of the Act, I am satisfied the dismissal of Mr Chung was harsh because the Respondent appears to have singled him out because his base rate of pay was higher than other employees.

[20] Further, I am satisfied on the material and evidence before me that the dismissal was unjust and unreasonable because it had no sound, defensible or well-found basis. There was no valid reason for the dismissal related to Mr Chung’s capacity or conduct and nor was the dismissal related to unsatisfactory performance.

[21] Accordingly, I find that Mr Chung’s dismissal was unfair. Mr Chung’s application for unfair dismissal remedy is therefore granted

Remedy

[22] In the circumstances where I have found Mr Chung was protected from unfair dismissal at the time of being dismissed and that he has been unfairly dismissed, s.390 of the Act prescribes that a remedy is available. Accordingly, I am required to determine whether to order the reinstatement of Mr Chung or, if I am satisfied reinstatement is inappropriate, to order the payment of compensation if I am satisfied that such an order is appropriate in all the circumstances. 4

[23] Mr Chung has expressed that he does not wish to return to the workplace and did not seek the remedy of reinstatement. In circumstances in which his contract expired in February 2021 and noting HSS Fabrication’s refusal to deal with the application in any way, I am satisfied that reinstatement is inappropriate (s.390(3)(a)).

[24] I must therefore consider whether it is appropriate in all the circumstances to make an order for payment of compensation (s.390(3)(b)).

[25] Mr Chung seeks compensation from the period of his termination (19 October 2020) until the end of his contract. In addition, he seeks the difference between his normal wage and the JobKeeper payments for the period between May 2020 until 19 October 2020. He also seeks entitlements for annual leave, sick leave and superannuation contributions for the duration of his contract.

[26] Section 392 of the Act sets out the criteria for determining the amount of compensation that may be ordered.

“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

(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.”

[27] In considering each of the criteria in s.392 of the Act, it is useful to refer to the helpful restatement of principles to be applied in the assessment of compensation in Johnson v North West Supermarkets T/A Castlemaine IGA: 5

“[9] The well-established approach to the assessment of compensation under s 392 is to apply the ‘Sprigg formula’, derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. This approach was articulated in the context of the current legislative framework in Bowden v Ottrey Homes Cobram 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 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’...”

[10]The identification of this starting point amount ‘necessarily involves assessments as to future events that will often be problematic,’ but, as the Full Bench observed in McCulloch v Calvary Health Care Adelaide, ‘while the task of determining an anticipated period of employment can be difficult, it must be done.’

[11]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 six months’ pay. This approach is however subject to 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.” (my emphasis - references omitted)

[28] The Sprigg formula was discussed and refined in Ellawala v Australian Postal Corporation 6as follows:

“[31] The principles applicable to determining an amount to be ordered in lieu of reinstatement are dealt with in Sprigg. In that case the Full Bench endorsed the following approach:

Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

[32] Any amount provisionally arrived at by application of these steps is subject to whether offsetting weight is given to other circumstances, including those that need now to be taken into account under paragraphs 170CH(7)(a), (b) and (c). The legislative cap on the amount able to be ordered is then applied pursuant to ss.170CH(8) and (9).

[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.

[35] In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first twelve months after termination - that is $36,000 - is deducted from the Commission’s estimate of the applicant’s lost remuneration. Monies earned after the end of the “anticipated period of employment”, 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.

[36] The next step is to discount the remaining amount for “contingencies”. This step is a means of taking into account the possibility that the occurrence of contingencies to which the applicant was subject might have brought about some change in earning capacity or earnings.

…

[45] In relation to the fourth step set out in Sprigg we note that the usual practice is to settle a gross amount and leave taxation for determination.” (my emphasis, references omitted)

[29] In Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra v Darren Nurcombe, 7 the Full Bench stated that in quantifying compensation, it is necessary to set out with some precision the way in which the various matters required to be taken into account under s.392(2) (and s.392(3) if relevant), and the steps in the Sprigg formula, have been assessed and quantified. The Full Bench also proffered that the way in which a final compensation amount has been arrived at should be readily apparent and explicable from the reasons of the decision-maker.

[30] I consider it is appropriate in all the circumstances to make an order for payment of compensation and will assess compensation having regard to these matters.

Remuneration that would have been received if the dismissal had not occurred – s.392(2)(c)

[31] If the dismissal had not occurred, I am satisfied Mr Chung would have at least completed his contract, which ran for two years from 19 January 2019 until 18 January 2021 unless extended by HSS Fabrication. As he was terminated on 19 October 2020, Mr Chung might have expected to have been employed for a further 13 weeks.

[32] As such, I find 13 weeks on full pay of $1,520 gross per week, plus Superannuation of $144.40 per week, to be the appropriate starting point of my calculation of appropriate compensation.

Remuneration earned – s.392(2)(e) and income reasonably likely to be earned – s.392(2)(f) and (g)

[33] Remuneration earned from the date of dismissal to the date of any compensation order is required to be taken into account under s.392(2)(e) of the Act. Remuneration reasonably likely to be earned from the date of any compensation order to the date the compensation is paid is also to be taken into account (under s.392(2)(f) of the Act). Any remuneration likely to be earned after that date to the end of the period of anticipated employment determined for the purpose of s.392(2)(c) is a relevant amount to be taken into account under s.392(2)(g) in accordance with the Sprigg formula. 8

[34] Mr Chung gave evidence that he has not earned any additional remuneration from employment or other work since being dismissed. As to the consideration in s.392(2)(f) of the Act, this factor is not relevant in the circumstances of this matter given the date the contract would have ceased has already passed.

Viability – s.392(2)(a)

[35] There was no evidence before me that would support a finding that an order for compensation will affect the viability of HSS Fabrications in any material way and there will be no deduction made having regard to this factor.

Mitigation efforts – s.392(2)(d)

[36] In considering whether Mr Chung has taken steps to mitigate the loss suffered as a result of the dismissal, I note that Mr Chung has previously stated “I am not looking for any jobs because of the covid 19 which has made things very difficult.” 9 At the determinative conference, Mr Chung said he had not applied for any jobs because he had to wait for Mr Khuong to sort out the underpayments and non-payment of superannuation

[37] I accept it would have been difficult to find a job while pandemic restrictions were in place and over the Christmas/New Year period but simply not looking for a job is a different matter. Nonetheless, having regard to matters outlined below relating to s.393(2)(g), I am not inclined to make any adjustment on account of the failure by Mr Chung to mitigate his loss.

Length of service – s.392(2)(b) any other matters – s.392(2)(g)

[38] Mr Chung was employed for 21 months. This is not an extensive period of time and there will be no adjustment on account of this factor.

[39] I observe that Mr Chung is 66 years old and in circumstances where he had served in his position without issue until he was terminated, he held a reasonable expectation that he would have remained employed until at least 18 January 2021. Further, I note that while HSS Fabrication had been in receipt of JobKeeper payments, Mr Chung had remained employed throughout the period from May – October 2020 and had trained a number of his colleagues. Despite these factors, Mr Chung appears to have been treated badly by his former employer in terms of his remuneration and entitlements and was denied notice upon termination for what would otherwise have been his entitlement of two weeks’ notice.

Misconduct – s.392(3)

[40] There has been no evidence of misconduct put before me, therefore, this factor does not arise in the case.

Compensation cap – s.392(5)&(6)

[41] The amount of compensation I intend to order does not exceed the compensation cap.

Instalments – s.393

[42] There having been no submissions made on this point, I do not consider that there is any reason for compensation to be made by way of instalments.

Shock, Distress – s.392(4)

[43] The amount of compensation calculated must not and will not include a component for shock, distress, humiliation or other analogous hurt caused to Mr Chung by the manner of his dismissal.

Conclusion

[44] I am satisfied that Mr Chung was protected from unfair dismissal, that the dismissal was unfair and that order for compensation is an appropriate remedy in all the circumstances. The overarching requirement in assessing compensation is to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case. 10 In this case, I consider the appropriate amount of compensation to be awarded to Mr Chung is 13 weeks’ compensation at his usual rate of pay plus Superannuation for the same period. This equates to $21,637.20, less taxation as required by law.

[45] An order requiring the payment of this amount within 14 days will be issued with this decision.

[46] I observe that during the conduct of this proceeding, various other claims have been made in regard to the underpayment of wages and an entitlement to annual leave, sick leave and superannuation contributions. These claims, if pressed, will ultimately need to be pursued in a Court of competent jurisdiction.

DEPUTY PRESIDENT

Appearances:

J. Le for the Applicant.

Hearing details:

2021.
Melbourne (via video on Microsoft Teams):
March 26.

Printed by authority of the Commonwealth Government Printer

<PR728161>

 1   [2021] FWC 783

 2 Ibid at [10].

 3   TIOBE Pty Ltd T/A TIOBE v Chen [2018] FWCFB 5726 at [24].

 4   Section 390(3) of the Act.

 5   [2018] FWC 679.

 6   Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000).

 7   [2017] FWCFB 429 at [43].

 8   Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206 at [31].

 9   DCB at p.22.

 10   McCulloch v Calvary Health Care Adelaide[2015] FWCFB 873 at [29].