Victoria Lea v Sally Priscilla Lock (formerly T/A Sally's Place)

[2016] FWC 8165

[2016] FWC 8165

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Victoria Lea
v
Sally Priscilla Lock (formerly T/A Sally’s Place)
(U2016/10240)

COMMISSIONER MCKENNA SYDNEY, 24 NOVEMBER 2016

Application for relief from unfair dismissal.

[1] On 12 August 2016, Victoria Lea (“the applicant”) made an application pursuant to s.394 of the Fair Work Act 2009 (“the Act”) seeking an unfair dismissal remedy. The applicant was formerly employed at an early childhood education and care facility named Sally’s Place (“the centre” or Sally’s Place). Sally’s Place was the then name of the facility which operates in premises located in Mosman, New South Wales, under leasing arrangements with the Sydney Harbour Federation Trust (“Harbour Trust”). As best as can be ascertained, the business that formerly traded as Sally’s Place was owned and operated by a sole proprietor named Sally Priscilla Lock (“the respondent”).

[2] The application for an unfair dismissal remedy proceeded to hearing in the absence of any appearance by or on behalf of the respondent. That is, given the background to matters, and the evidence and submissions, I was satisfied it was appropriate to proceed ex parte. In short form, the respondent did not file or serve a Form F3 Employer’s Response; did not participate in the telephone conciliation by a Fair Work Commission conciliator; did not appear in a pre-hearing telephone listing before me; did not file or serve any materials pursuant to the directions; and did not make any contact with the Commission despite matters within the file record as to endeavours to contact the respondent and send relevant communications to her. (Separately, there was no appearance by or on behalf of the respondent in earlier proceedings concerning an application to deal with a dispute made pursuant to s.739 of the Act, being an application which had been lodged preceding the dismissal now the subject of this application.)

[3] In these circumstances, the only matters before the Commission are those relied upon by the applicant. What follows is drawn from those materials.

Background

[4] Around October 2010, the applicant began working for the respondent as a casual children’s services educator at the centre. Over the applicant’s approximately six years of years of employment, she obtained various promotions and, eventually, held the full-time position of director of the centre. The applicant’s employment as director of the centre was the subject of a contract of employment and, that contract noted, coverage by the Children’s Services Award 2010.

[5] The applicant’s evidence described her duties in her employment with the respondent. It is unnecessary to repeat those duties; the duties were typical of those of a director of a childcare centre, albeit it may be noted they included liaising with not only the respondent as her employer but also liaising with the Harbour Trust.

[6] The applicant’s evidence described the events leading to her dismissal as including the following:

● The applicant was responsible for duties including purchasing groceries for the centre and preparing wage records (which she emailed to the respondent’s accountants for processing payment of wages).

● Until late-June 2016, the applicant and the respondent had been in contact “several times each day about the running of the centre”. Thereafter, the applicant was unable to contact the respondent as readily as had occurred in the past, and no alternative arrangements were put in place to facilitate contact about matters essential to running the centre.

● On 28 June 2016, the respondent’s accountants advised the applicant they had been instructed by the respondent to stop paying bills on the respondent's behalf. The accountants further advised that people might start contacting the applicant about their invoices and payments.

● Wages were due to be paid to staff on 1 July 2016, but no wages were paid to the applicant or two other senior staff. The respondent sent a text message on 5 July 2016 advising of a problem with her bank which she indicated she was trying to resolve.

● On the afternoon of Friday 8 July 2016, the applicant asked the respondent if there were sufficient funds on the centre’s credit card for the purchases of groceries for the following week. On Sunday 10 July 2016, the respondent advised the applicant by email that she did not have access to any monies or her account.

● Despite the applicant’s endeavours in the first two weeks of July 2016, there were no satisfactory responses concerning matters such as unpaid wages and payment for items for the centre. As a result of the effective lack of communication from the respondent and an absence of access to any funds or credit from the respondent, the applicant “was forced to make purchases for the Respondent’s business from [her] own personal funds in order to continue to run the centre”. The applicant, along with three other staff members, incurred expenses in the first two weeks of July 2016 to maintain the respondent’s business (and, on 15 July 2016, the centre’s credit card was again declined for relevant purchases).

● On 14 July 2016, the applicant sent an email to the respondent seeking confirmation that all staff would be paid their wages on 15 July 2016, in accordance with the usual pay cycle, after enquiries made to the applicant by several staff; and she also followed-up on 15 July 2016 by texted communication to the respondent. The reply from the respondent addressed matters such as sending belated birthday wishes to the applicant, advising that she was very unwell and unable to work, and noting that an inspector from the Harbour Trust was attending that day “which should clear up everything”. The respondent’s reply did not address payment of wages.

● Having earlier put the respondent on notice of her intentions, the applicant communicated the situation to, and sought assistance from, the Harbour Trust.

● On 15 July 2016, the applicant received an email from the respondent for circulation to all staff. The respondent’s email outlined certain health matters and other matters; noted there was to be an inspection by the Harbour Trust that day; addressed certain matters as to pay, group certificates and the like; and thanked the employees for their understanding at this “most difficult time”. The applicant duly circulated the respondent’s communication. The applicant’s evidence was that throughout this period she did her best to motivate the centre’s staff and to keep the respondent’s business running.

● On Saturday 16 July 2016, staff advised the applicant they had not been paid their fortnightly wages on 15 July 2016, the nominated payday. Staff members further advised the applicant, in her capacity as director of the centre, that they refused to attend work on Monday 18 July 2016. The applicant found herself faced with “a grave predicament” on Monday 18 July 2016 and made the decision, along with the Harbour Trust, “in the absence of an alternative”, to “close the doors of the respondent’s business because there would be insufficient childcare workers in attendance to run the centre”. The applicant, the respondent’s second-in-charge and two representatives of the Harbour Trust attended the centre on the morning of Monday, 18 July 2016.

[7] At the suggestion of the Harbour Trust, the applicant sent an email to all parents and staff of the centre on 18 July 2016, which read:

“Dear [Sally’s Place] Families

Unfortunately I am writing to advise all parents that Sally’s Place won’t be operating starting Monday 18^th July. It came apparent over the weekend that no staff wages were paid for the previous fortnight and staff communicated that they would not be returning to work. As the nominated supervisor of the service we legally cannot operate due to the lack of staff and therefore, we cannot comply with children to staff ratios.

Over the past weeks I have attempted to address our concerns with Sally [Lock, the respondent], but without success. All fees have been put on hold due to the circumstances until further notice.

It is with a very sad heart that I have to send out this message on behalf of a very dedicated and caring team at the centre and do hope that something positive can unfold in the future.

As the matter progresses we will keep the communication lines open with families as we want to ensure you are kept informed.

Kind Regards,
Victoria Herbert.”

[8] The applicant’s evidence indicated that a journalist from a television station “turned up at the centre on the morning of 18 July 2016 and started asking questions about the centre closing its doors” in circumstances where, at no time, did the applicant contact any media or communicate with journalists about the situation.

[9] On 19 July 2016, United Voice (“union”) lodged an application pursuant to s.739 of the Act for the Commission to deal with a dispute concerning unpaid wages. There was no appearance by or on behalf of the respondent. On 26 July 2016, Harper-Greenwell C made a recommendation concerning compliance with the relevant modern award and communication by the respondent which read:

“[12] It is clear from the materials before me the Respondent is required to comply with clause 19.2 of the [Children’s Services Award 2010]. Ms Lea and United Voice are seeking for the Respondent to comply with clause 19. I therefore strongly recommend the Respondent comply with clause 19 of the Award and communicate with the Applicant, United Voice and its employees about the circumstances of the business.”

[10] There is nothing in the evidence to indicate that there was any acceptance by the respondent of the recommendation set out above.

[11] The applicant received a telephone call from the respondent at about 2.45pm on 29 July 2016. A conversation ensued in which the respondent informed the applicant she was at the centre. The respondent asked the applicant if she could give her the list of passwords, advising that she needed this information by 3.30pm to be able to pay the applicant.

[12] As the applicant was not at the centre where the lengthy (two pages) list of passwords was “safely and securely stored”, the applicant replied in words to the following effect:

“I am not at work and I don’t have the passwords with me when I am not at work. The passwords are the same as the list of passwords I emailed you 12 months ago so it will be in your emails. I don’t have the list of passwords with me, but they are on the computer at the Centre.”

[13] The applicant’s evidence described the information she advised to the respondent to access the centre’s computer and where the list of passwords was located on the centre’s computer. The applicant further informed the respondent that the passwords were in a particular computer folder, and if she could not find that folder the respondent could do a search and type certain words.

[14] On the applicant’s description, the respondent became “irate at this point during the telephone conversation” and made a number of “accusations”. Among other matters, the respondent stated that the applicant was in breach of her “contract as a director”because she could not provide to the respondent the log-in and passwords. The applicant said she reminded the respondent she did not have the passwords and log-ins with her, as she had not been at work since 18 July 2016. The respondent replied: “So you were in the centre on Monday 18th July.” The applicant confirmed she was at work on 18 July 2016, and added: “I had to turn the families away because the staff communicated they were not coming back to work because they hadn’t been paid”.

[15] The respondent asked if the applicant had written the email to the families, and the applicant replied that she had. The applicant then said to the respondent that she did not want to continue this conversation and that any further communication will be through her union or she could contact the Harbour Trust because she was no longer at work. The applicant stated to the respondent that the union had been trying to make contact regarding her pay and the respondent had not responded to the union. The applicant added that she too had been trying to contact the respondent by telephone, text messages, and emails to the respondent’s work and personal email addresses.

[16] The respondent ended the conversation with advice that her lawyers would be in contact with the applicant. At approximately 6.23pm that same day, Friday 29 July 2016, the applicant received an email from the respondent which enclosed the following letter advising of the dismissal (“dismissal letter”):

“Dear Victoria

Your employment with Sally’s Place

We note that today [29 July 2016], at approximately 2.45pm, you were issued with a lawful and reasonable direction (Direction) to provide all passwords to devices and accounts within your control as Director of Sally’s Place. You refused to comply with that Direction. As a result of your failure we have been unable to properly conduct the business of Sally’s Place.

During our conversation you advised me you had provided me with a list of passwords twelve (12) months ago. Such statement suggests that you have failed in your duties to properly maintain and secure Sally’s Place business records in circumstances where you have not changed any passwords in a 12 month period.

The reason we were required to issue the Direction today stems from the email sent by you to all families that utilise the services of Sally’s Place on Monday, 18 July 2016 at 8:54am (Email) that purported to advise families that:

1. Sally’s Place would not be operating from 18 July 2016;

2. Employees of Sally’s Place had not been paid for a fortnight; and

3. You had been unsuccessful in resolving these issues with me.
(together referred to as the Statements)

These Statements are defamatory of me and I fully reserve my rights in this respect.

As Director of Sally’s Place your responsibilities include to:

a) Bring to my attention any concerns that might jeopardise the successful running of the business;

b) Take all steps possible to mitigate any loss that might be suffered by the business at any time; and

c) Maintain our client relationships at all times.

You have failed to fulfil your responsibilities as a Director by:

a) Failing to take steps to prevent the temporary closure of Sally’s Place, for instance engaging temporary staff to work in the place of the employees;

b) Failing to take steps to assure employees that they would be paid; and

c) Failing to keep Sally’s Place’s confidential information confidential by disclosing to families that employees had not been paid.

You are well aware that I/Sally’s Place engages Mills Oakley [solicitors], and that they would have been well placed to assist you with this matter if I was not contactable.

Given the content of your email [to families], and in particular the statement “Over the past few weeks I have attempted to address our concerns with Sally”…, I have cause to question whether you were actively involved in the decision that all employees allegedly made not to attend for work.”

Your actions have caused Sally’s Place to suffer what may be irreparable financial and reputational damage. This includes:

• Causing circumstances to arise that led to a defamatory article being published in the Sydney Morning Herald on 18 July 2016;



• Causing circumstances to arise that led to Channel 9 News, broadcasting a news story regarding the matter;



• Causing circumstances to arise that led to the loss of business from a number of families who use the services of Sally’s Place;



• Placing Sally’s Place’s lease and licence with Sydney Harbour Federation Trust in jeopardy.

In the circumstances, we have determined that you have engaged in serious and wilful misconduct, namely that you have:

1. Refused to carry out lawful and reasonable instructions and directions to you;

2. Failed to perform your duties and responsibilities in a proper and efficient manner;

3. Failed to use your best endeavours to protect and promote the interests of Sally’s Place;

4. Engaged in conduct which has damaged Sally’s Place’s reputation;

5. Used confidential information contrary to the terms and conditions of your employment.

Accordingly you are hereby advised that your employment is terminated for serious and wilful misconduct, with immediate effect. You will be paid all wages owing to you up to today, 29 July 2016 as soon as possible.

We take this opportunity to remind you that your employment contract contains post-employment obligations in relation to confidential information. You should take this as formal notice that Sally’s Place takes the misuse of confidential information very seriously and should it become apparent that you intend to/do utilise confidential information for your own benefit or for the benefit of any other person we will take all steps to prevent the use of that information. In that regard, we note that in your employment contract you have acknowledged and agreed that:

• Damages may be inadequate compensation for breach of your obligation under the confidential information clause and that Sally’s Place may seek specific performance or may seek to restrain, by an injunction or similar remedy, any conduct or threatened conduct which is or will be in breach of the clause; and



• You will fully indemnify Sally’s Place in respect of any and all loss, damage, claims, liability, cost and expenses, of any kind, suffered or incurred by Sally’s Place as a result of your breach of the confidential information clause.

Yours faithfully
Sally Lock”
(bold, underlining and italics in original)

[17] For her part, the applicant strongly rejects the assertion she engaged in serious and wilful misconduct - and instead contends she was at all times a diligent, responsible and highly-regarded employee, with an excellent reputation among staff and the families. The applicant further noted that she (and other staff) made many attempts to communicate with the respondent throughout the fortnight ending 15 July 2016 regarding: (a) staff pay; (b) purchasing food, art supplies and nappies for the centre; (c) the issuing of group certificates; (d) (unpaid) superannuation; (e) unpaid invoices; and (f) the identity of the respondent’s new accountants. The applicant added that throughout the week ending 15 July 2016 the staff on a number of occasions asked the applicant if they would be paid, and the applicant told them she was waiting to hear from the respondent in this regard.

[18] The applicant noted that one of the matters raised in the dismissal letter was that she did not bring to the respondent’s attention any concerns that would jeopardise the successful running of the business. The applicant contended that, on the contrary, she brought to the respondent’s attention many issues, coupled with requests for instructions on matters concerning the running of the centre – mostly, the applicant said, to no avail.

[19] As to the matter of the (alleged) breach of confidentiality procedures addressed in the dismissal letter, the applicant contended that, on the contrary, full confidentiality was upheld and no parents were informed of the difficulties faced with the running of the business, until the applicant had been “forced to make a decision to close the centre’s doors”.

[20] In conclusion, the applicant’s evidence noted that she was not paid any wages in the period from 17 June 2016, notwithstanding the advice in the dismissal letter that she would be paid all outstanding wages as soon as possible and nor has she been paid any other amounts such as accrued but untaken annual leave. In addition, the applicant has not been reimbursed for the “significant” out-of-pocket expenses she incurred for the centre in purchasing groceries and other essential provisions for the children’s needs during the period 4 July to 15 July 2016.

[21] The applicant obtained employment effective from 29 August 2016, with a new childcare provider which was appointed by the Harbour Trust to manage the centre/premises formerly operated by the respondent (albeit now operating with a new name). Evidence was adduced in relation to the remuneration the applicant receives in that employment as well other post-dismissal work in the general nature of casual employment.

Consideration

[22] Section 396 of the Act provides that the Commission must decide certain matters relating to an application for an order for an unfair dismissal remedy before considering the merits of the application.

Whether the application was made within time

[23] As to s.396(a) of the Act, the dismissal was effected on 29 July 2016. As the application was lodged on 12 August 2016, the application was made within the period required in s.394(2) of the Act.

Whether the person was protected from unfair dismissal

[24] The applicant was a person protected from unfair dismissal. That is, the applicant had completed a period of employment of at least the minimum employment period and one or more of the criteria in s.382(b) of the Act applied to that employment (for example, the applicant’s most recent contract of employment specified at clause 3.1 that, in addition to matters there set-out, the applicant’s employment will be covered by the relevant modern award).

Whether the dismissal was consistent with the Small Business Fair Dismissal Code

[25] I have concluded the Small Business Fair Dismissal Code (“the Code”) does not apply in relation to this application - for reasons considered in more detail, below.

Whether the dismissal was a case of genuine redundancy

[26] The dismissal did not raise any issues concerning genuine redundancy; it was a summary dismissal based on reasons in the dismissal letter.

The Small Business Fair Dismissal Code

[27] It was far from clear to me on the oral evidence whether the respondent’s operations comprised a small business (with the Code being a matter raised by me in the proceedings in view of the initial matters required to be considered). The precise number of employees was not in evidence and any margin of error in the approximate count of employees could easily have tipped matters one way or the other.

[28] Given the lack of precision in the evidence and in the absence of any evidence or submissions concerning the precise number of employees, I am bound to consider the Code. As it transpires, whichever count of the number of employees is adopted, the end-result of my conclusions as to relevant matters leads in any event to a consideration of the provisions specified in s.387 of the Act.

[29] The dismissal in this case was a summary dismissal. The Code relevantly reads as follows:

“Summary dismissal

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

[30] Section 12 of the Act defines “serious misconduct” as having “the meaning prescribed by the regulations.” Regulation 1.07 of the Fair Work Regulations 2009 (“Regulations”) provides the following meaning:

“1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

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

(5) …”

[31] As I have noted earlier, the hearing of this application proceeded without the filing or service of materials by the respondent, and without any appearance by or on behalf of the respondent. As such, there was no evidence adduced by the respondent before the Commission as to, for example, the respondent’s reasonable belief concerning the matters set-out in the letter advising of the termination of employment. That being said, it is objectively the case that on the morning of Monday 18 July 2016, the applicant sent the impugned email communication to families of children who attended the centre.

[32] It was self-evidently both necessary and appropriate for the applicant to advise families of children who attended the centre that it could not operate due to lack of staff. Specified staff ratios of course apply to the provision of care and education services in facilities for pre-school children; and the evidence indicated that staff had communicated to the applicant over the weekend that on Monday they would not return to work absent payment of wages to them. It would have been a serious dereliction in connection with a range of responsibilities of a children’s services provider to purport to operate if the required ratios were not met or could not be met.

[33] It was not serious misconduct for the applicant to send the email correspondence to families of children who attended the centre. On the contrary, the applicant would have seriously misconducted herself as director of the respondent’s childcare business had she purported to operate the centre where staff had communicated to her that they would not return to work on 18 July 2016. Moreover, it was not serious misconduct for the applicant to advise the families of children who attended the centre that the reason why the staff would not return to work on 18 July 2016 was because their wages had not been paid. The advice in the applicant’s email constituted, no more and no less, a statement of fact – by which the applicant not unreasonably endeavoured to provide some explanation or context to the families of the children about why the centre could not operate from 18 July 2016 (and by extension why those who attended with their child or children had to be turned-away on 18 July 2016).

[34] More particularly, as to the Code and the definition of serious misconduct in the Regulations, the applicant’s behaviour was not inconsistent with the continuation of the contract of employment. Rather, the applicant’s behaviour showed her responsibility - in what she described as this “grave predicament” - in both her role as director of the centre and employee of the respondent; and her responsibility concerning the children entrusted to the care of the respondent’s business given it was apparent the required ratios could not be met. The applicant’s conduct averted a potential serious and imminent risk to children who otherwise would have been placed in the care of the respondent’s business, in circumstances where, absent any other considerations that may have arisen (such as immediate payment of wages or consultation by the respondent with her employees, ensuring a resumption of work), the ratios could not be met on and from 18 July 2016. To the extent the applicant’s conduct in sending the email of 18 July 2016 caused serious and imminent risk to the reputation, viability or profitability of the employer’s business, the necessity for the applicant to take the responsible step she did in sending the email in question cannot be doubted. That necessity was a direct product of the respondent’s own making, arising from the failure to pay wages to employees who were employed to work in the centre. The reputation, viability or profitability of the respondent’s business would at least equally have been jeopardised if the centre had purported to operate without sufficient staff to properly meet ratio minima designed to provide a safe and secure environment children.

[35] It also may be noted the applicant’s email of 18 July 2016 was the subject of prior discussion between the applicant and representatives of the Harbour Trust. The Harbour Trust is not a mere lessor of premises in which the respondent’s business operated. The evidence indicated the Harbour Trust is a statute-based Commonwealth government agency which, among other matters, is the planning approval authority for the assessment of actions on its lands. Documentation in evidence in these proceedings indicates that the Harbour Trust believes it is in the best interests of the children, parents and the lessee that its childcare facility in Mosman is operated in accordance with the Children (Education and Care Services National Law Application) Act 2010 and Education and Care Services National Regulations. In consequence, the childcare service is therefore licensed and regulated by the Harbour Trust in consultation with a nominated compliance specialist. The Harbour Trust issues the operator of the childcare facility at Mosman with a childcare licence which mirrors current legislation. The Harbour Trust’s documentation further explains that as “a minimum standard, the operator will be responsible for continuous compliance with all state and Commonwealth government regulations, policies and procedures in relation to the operation of a childcare for the duration of the lease as if the facility was under state jurisdiction.” Here, the actions of the applicant in issuing the email had the imprimatur of representatives of the Harbour Trust as it was issued following discussions with, or on the suggestion of, representatives of that organisation.

Conclusion – the Code

[36] I have considered the principles discussed in authorities including Pinawin T/A RoseVi.Hair.Face.Body v Domingo[2012] FWAFB 1359, and in Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services [2015] FWCFB 5624 where this was said:

“[38]We therefore consider that the “Summary dismissal” section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in reg.1.07.

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

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

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

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

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

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.” (citation not reproduced)

[37] As the respondent did not participate in the proceedings, there was no evidence whether, for example, she genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal following the discussions in the telephone conversations about computer passwords and the applicant’s confirmation she had (earlier) written the impugned email. Even if the respondent held any such belief it was not, objectively speaking, based on reasonable grounds. Here the applicant did not commit serious misconduct that falls within the meaning in the Code/definition in reg.1.07 of the Regulations. That is because it was the case, objectively speaking, the business of the respondent could not be operated on 18 July 2016 given the ratio requirements (because wages had not been paid - and staff, unsurprisingly, would not work or continue to work for the respondent’s business for no wages). There was an imperative that families be informed immediately of the fact the centre - for which those families were charged fees for the provision of closely-regulated care-related services for their young children - simply could not operate in those circumstances.

[38] The respondent sought otherwise in the dismissal letter to rely on an alleged failure to comply with a direction on 29 July 2016 to provide passwords and/or to seek to rely on an alleged failure to properly secure passwords. On my consideration of the (uncontested) evidence from the applicant as to what transpired in the conversation in question, there is no substance at all to such matters.

[39] The dismissal cannot be considered properly to come within the Code as it relates to either summary dismissal or other dismissal. As such, I turn now to the matters the Commission must take into account in considering whether a dismissal was harsh, unjust or unreasonable.

Criteria for considering harshness etc

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)

[40] The reasons for the termination of employment were set out in the dismissal letter of 29 July 2016, which is reproduced earlier in the decision.

[41] There was no evidence that the applicant failed to comply with any “direction” on 29 July 2016 about the provision of information about computer passwords. The applicant’s evidence as to what occurred in the relevant conversation was the only direct evidence as to what was said, and I accept that evidence as credible and disclosing nothing involving a breach of any direction or the like. Similarly, there is no evidence that applicant failed in her duty to properly maintain and secure the centre’s business records.

[42] As to the email the applicant sent to families, the dismissal letter noted that it advised: the centre would not be operating from 18 July 2016; the centre’s employees had not been paid for a fortnight; and the applicant had been unsuccessful in resolving these issues with the respondent. The applicant’s advice to families was correct because Sally’s Place did not operate from on or after 18 July 2016; the staff had not been paid for a fortnight; and the applicant had not been successful in resolving with the respondent issues including non-payment of employees.

[43] As to the applicant’s alleged failures as set out in the dismissal letter, the applicant could not take steps to prevent the temporary closure of the centre, for instance by engaging temporary staff to work in the place of the employees, because, for example, temporary staff could not be engaged to work without wages. The applicant was not in any position to assure even existing employees they would be paid by the respondent, either as to outstanding wages or future wages. For her own part, the applicant personally had not been paid since mid-June; there had been issues concerning payments to other staff from around the same time; and, in the end, the majority of other staff had not been paid for a fortnight.

[44] As to disclosing to families that employees had not been paid, it is not apparent to me why underpayment or non-payment of wages by an employer to all its employees (as a reason why a business could not operate) is, or indeed should be considered to be, a confidential matter. True it is that employers who do not pay or who underpay employees typically prefer not to have that known more broadly, but that does not make such information “confidential”. Moreover, the evidence of communications by way of text messages and email correspondence confirms that attempts had indeed been made to address with the respondent concerns which, in the end, led to the advice to the applicant by staff that they would not present for work on 18 July 2016 because they had not been paid. If it is the case that information the applicant set out in her email of 18 July 2016 properly could be characterised as confidential information, it was information that, it seems to me, was most likely information “used or disclosed in the proper course of performing [her] duties for Sally’s Place” within the meaning of cl.17.5 of the employment contract.

[45] There is no evidence that the law firm, Mills Oakley, would have been well-placed to assist the applicant with matters if the respondent was not personally contactable. (It may be noted, in passing, that I instructed my Associate to send correspondence with a copy of the notice of listing and directions to Mills Oakley in circumstances where the respondent did not appear when the matter was initially listed before me for pre-hearing directions and/or conference. In response, Mills Oakley promptly confirmed they no longer acted for the respondent; noted they did not have an email address other than as already used in the Commission’s original documentation sent to the respondent; and apologised that the firm was unable to provide my office with any assistance.)

[46] The respondent raised in the dismissal letter the issue about her having cause to question whether the applicant was “actively involved” in the decision that all employees made not to attend for work. There was no evidence as to what caused the employees individually/collectively to decide not to attend work when they had not been paid wages, other than the evidence of their advice to the applicant that their decision/s turned on the fact they had not been paid.

[47] As to the respondent’s assertions in the dismissal letter that it was the applicant’s actions which had caused the respondent’s business to suffer “what may be irreparable financial and reputational damage” - including media attention, the loss of business, and placing in jeopardy the arrangements with the Harbour Trust - I reiterate that such matters were the direct product of the respondent’s actions/inaction.

[48] The evidence does not support a conclusion that the respondent had a valid reason for dismissal of the applicant on the basis of allegations (whether considered individually or collectively) set out in the letter of dismissal, which largely reference certain provisions in the employment contract - specifically as to the allegations concerning: refusal to carry out lawful and reasonable instructions and directions; failure to perform duties and responsibilities in a proper and efficient manner; failure to use best endeavours to protect and promote the interests of the business; engagement in conduct which damaged the reputation of the business; and use of confidential information contrary to the terms and conditions of employment.

Whether the person was notified of that reason

[49] The applicant was notified of the respondent’s reasons in the dismissal letter of 29 July 2016.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[50] The applicant was not given an opportunity to respond to any reason related to her capacity or conduct.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[51] There were no discussions between the respondent and the applicant relating to the dismissal.

If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[52] There was no evidence of warnings of any description having been given to the applicant before the dismissal.

The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal/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

[53] The evidence suggested the respondent employed somewhere in the vicinity of 14 or so employees, plus at least some casual employees. There was no evidence that the respondent had any dedicated human resource management specialists or expertise within the business, albeit part of the applicant’s own role had involved human resources-related matters. The evidence indicated that the respondent’s closing words to the applicant in the telephone conversation on the afternoon of 29 July 2016 were that the respondent’s lawyers would be in contact with her. At 6.23pm that same day, the applicant received the dismissal letter. While it is not clear, it appears from the content and tenor of the dismissal letter that it may – and I put it no higher than that in the absence of direct evidence of involvement of lawyers or paid agents who may have advised on the procedures followed by the respondent in effecting the dismissal - have been drafted with assistance from a lawyer or paid agent. (More particularly, for the record, while Mills Oakley acted for the respondent, at least at some point, I do not suggest that Mills Oakley advised on the respondent’s procedures in effecting the summary dismissal.)

Any other matters that the Commission considers relevant

[54] Contrary to the contentions of the respondent in the dismissal letter that the applicant had failed to use her best endeavours concerning Sally’s Place, the evidence indicated that the applicant (together with some other employees) in fact continued to personally pay for essentials for the centre at a time when the business credit card was declined - and the centre’s accountants had otherwise informed the applicant that they no longer acted for the respondent and she also should expect to be contacted about invoices and the like. The applicant’s payment of such expenses to keep the centre running was above and beyond the call of duty. As of 8 July 2016, the applicant informed the respondent that $900.00 needed to be arranged to cover payment for food and school holiday programme items - and that, as she had not been paid for the last fortnight of work, she would not be able to pay for the cost of the groceries despite having done this previously. Matters had reached such a serious point that the applicant advised the respondent by email on Thursday 14 July 2016 that there was no food left in the centre for the children and that the centre was in “desperate need” of food, art supplies and nappies.

[55] While the employees and the applicant had a legitimate concern about their own unpaid wages (and the fact no reimbursement was forthcoming for the expenses personally incurred for the centre’s operations), it is plain that there were deep issues of concern in circumstances where the centre was, separately from issues of wages and reimbursement, in “desperate need” of essentials including food and nappies for the children. There is nothing to suggest that the staff of the centre acted in any way that unreasonable, notwithstanding the sudden advice on 18 July 2016 and the undoubted difficulties that would inevitably ensue for the families of the children who were left without the provision of childcare services. The applicant – together with her staff – found themselves in a most difficult and unacceptable position of the respondent’s making.

Conclusion – harsh etc.

[56] Considered in the context of the matters addressed in the dismissal letter, and the evidence and submissions in the proceedings, I am satisfied the applicant was unfairly dismissed. The applicant has established a case that her dismissal was harsh, unjust and unreasonable. As such, I turn next to the question of remedy.

Remedy

[57] The applicant does not seek the remedy of an order for reinstatement and it would be impracticable given what transpired in relation to the cessation of all operations of the business that formerly traded as Sally’s Place. I consider that an order for an unfair dismissal remedy involving compensation is appropriate, given my conclusion that the applicant was unfairly dismissed and because an order for a return to work would be impracticable.

[58] Section 392(2) of the Act specifies that in determining an amount for the purposes of an order for the payment of compensation, the Commission must take into account all the circumstances of the case including certain specified matters, which I turn to consider.

The effect of the order on the viability of the employer’s enterprise

[59] The evidence indicates that the respondent’s enterprise, specifically the childcare business that formerly was operated by the respondent under the business name or trading name of Sally’s Place, no longer exists. Extracts of records from the Australian Securities & Investments Commission database for the business name Sally’s Place with the former BN identifier indicate registration was cancelled on 5 August 2016. Other records indicate the respondent personally has a separate ABN number as an individual/sole trader, which is still active or current.

[60] Having regard to the foregoing, it appears there can be no effect on the viability of the particular enterprise known as Sally’s Place as a result of any compensation order, as that is now only a cancelled business name. There was no evidence as to the effect any order that may attach personally would have on the respondent (or the enterprise, if any, in which she may now be engaged in as an individual/sole trader).

The length of the person’s service with the employer

[61] The applicant was an employee of the respondent at the centre for a period approaching six years.

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

[62] The question of the remuneration the applicant would have received, or would have been likely to receive, if she had not been dismissed (assuming she was actually paid), would likely, given what unfolded in relation to the appointment of a new childcare provider, have been limited to dealing, for example, with exigencies associated with transitional or hand-over type arrangements for the incoming management.

[63] In connection with the conclusion or anticipated conclusion of any such transitional or hand-over work in her employment with the respondent, the applicant would then (separately) also have had a presumptive entitlement to relevant notice or a payment in lieu of notice based on her age and length of service as set out in the contract of employment/National Employment Standards.

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

[64] The applicant made efforts to mitigate her loss by undertaking some form of intermittent childcare/babysitting-related work. Effective 29 August 2016 (that is, after about a month following the dismissal) the applicant gained new full-time employment as the director of the “The Lookout Early Education Centre” now operating at the same Harbour Trust premises where the respondent’s business had formerly operated as Sally’s Place.

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/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

[65] In recognition of the fact the applicant had received some remuneration for undertaking intermittent work and commenced alternative employment on 29 August 2016, the applicant sought an order for compensation calculated in an amount of $8,460.00 – which approximates to an amount the applicant would have received in remuneration in ongoing employment with the respondent to the date she commenced her new position.

Any other matter that the Commission considers relevant

[66]   I am cognisant of the fact that this matter proceeded to hearing on an ex parte basis. In those circumstances, I have, in this decision, endeavoured to address in the context of the available evidence such matters as may be discerned concerning the respondent’s position as indicated in written communications. It is, in the end, unclear why matters of the respondent’s operation of the centre declined so rapidly in a comparatively confined period (including the seeming disregard by the respondent of the need to either personally attend to, or, failing that, put in place basic arrangements to ensure that wages were properly paid and paid on time; and to ensure that proper arrangements were put in place so that the centre (not the employees) were paying for routine requirements such as food, art supplies and nappies for the children.

Conclusion

[67] In all the circumstances, and also noting and considering the applicant’s submissions concerning relevant case law, I am satisfied that it is appropriate to make an order in the amount sought by the applicant namely, $8,460.00.

[68] There is no cause for any misconduct-related reduction in the compensation amount, for there was no evidence of any misconduct by the applicant. Moreover, while the applicant’s evidence described certain matters in the dismissal letter as “extremely hurtful” and “baseless” accusations, the amount does not include any component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the applicant by the manner of the dismissal. Lastly, while it is clear the applicant’s evidence addressed a range of underpayment-related issues relevant to payments during the period of employment and on termination of employment, the submissions for the applicant also properly conceded that these are matters to be addressed elsewhere and such underpayment are not to be factored-in to the amount in any order for an unfair dismissal remedy; and the amount ordered does not include any amount with respect to redressing such underpayments.

[69] An order for compensation issues with these reasons.

COMMISSIONER

Appearances:

H Pararajasingham of United Voice for the applicant.

No appearance by or on behalf of the respondent.

Hearing details:

2016.

Sydney:

November 14

Printed by authority of the Commonwealth Government Printer

<Price code C, PR587487>