William Sim v New Leaf Developments

[2017] FWC 6021

[2017] FWC 6021

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

William Sim
v
New Leaf Developments
(U2017/7583)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 16 NOVEMBER 2017

Application for an unfair dismissal remedy.

[1] On 12 July 2017, Mr William Sim (Applicant) made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy in respect of his dismissal by New Leaf Developments (Respondent) (NLD).

[2] Mr Sim was dismissed from his employment on 5 July 2017 at the initiative of the employer and the dismissal took effect immediately. Mr Sim submits his dismissal was unfair.

Procedural Background

[3] This matter was listed for conciliation on 9 August 2017. On 4 August 2017 Mr Liam Robertson, director of NLD, advised the Commission that he was not going to participate in the conciliation. The matter was subsequently listed for arbitration before me on 10 October 2017.

[4] On 28 August 2017, Mr Sim filed a written submission in which he indicated that the Respondent had ‘gone out of business’. 1 NLD failed to comply with the directions issued by the Commission and did not file any materials.

[5] The matter was listed for a mention/directions hearing on 26 September 2017 to resolve these issues prior to the hearing. My chambers made several unsuccessful attempts to contact both Mr Sim and NLD, however neither were able to be contacted at the commencement of this hearing.

[6] My chambers issued directions on that same day directing the parties to provide submissions addressing whether the matter was able to proceed given Mr Sim’s statement above. Neither party complied with these directions.

[7] The matter was subsequently listed for a further mention/directions hearing on 5 October 2017. Once again, despite numerous attempts to contact the parties, neither the Applicant nor the Respondent were able to be contacted.

[8] The matter proceeded to hearing on 10 October 2017. Mr Sim attended the hearing and gave evidence on his own behalf. The Respondent failed to attend and was unable to be contacted by phone.

Preliminary Matters

[9] On the basis of Mr Sim’s submission that NLD had ‘gone out of business’, directions were issued requiring the parties to file submissions addressing whether the Respondent had entered into administration and, if so, the various restrictions to proceedings regarding companies in administration in the Corporations Act 2001.

[10] No submissions were received from either party. The Commission performed a check on the ASIC liquidation notices database which returned no results.

[11] Mr Sim gave oral evidence that his previous submission had been mistaken. He submitted that Mr Robertson was losing money from the project he was working on so had decided to abandon that project and move to another job in the Geelong area.

[12] In the absence of any evidence to the contrary, I am satisfied that NLD has not entered into administration and accordingly there is no bar to these proceedings.

[13] Section 396 of the Act requires the following matters be decided before the merits of Mr Sim’s application may be considered:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code (the Code);

(d) whether the dismissal was a case of genuine redundancy.”

[14] Mr Sim’s application was made within the period required and there is no evidence or submission before me that suggests Mr Sim’s dismissal was a case of genuine redundancy. I do not consider his dismissal to be a case of genuine redundancy.

[15] I am satisfied that NLD was a small business at the time of the dismissal and that the applicant is a person who is protected from unfair dismissal. Therefore, the first issue to be determined was whether the dismissal was consistent with the Code.

The cases presented

[16] Mr Sim commenced working for NLD on 13 April 2015 as an Apprentice Carpenter. Mr Sim commenced his Apprenticeship Training contract on that same day. 2

[17] Mr Sim gave evidence that on 8 June 2017, he received a call from his Apprenticeship provider MEGT advising him that NLD had sought to cancel his apprenticeship. Mr Sim advised that NLD did not discuss this matter with him and instead continued to offer him work and pay him as an apprentice.

[18] Mr Sim gave evidence that he was contacted whilst at home on 5 July 2017 by Mr Tom Stubbings, the qualified carpenter with whom he worked, and advised that Mr Robertson ‘was over it’ and did not want to continue with the business.

[19] He submits he was advised that there was no more work and that Mr Robertson had told the other employees that he was going to pursue a different line of work.

[20] Mr Sim gave evidence that he had made numerous attempts to contact Mr Robertson regarding his apprenticeship, dismissal and unpaid entitlements however was unable to reach him.

[21] On 2 August 2017 Mr Sim received a letter from the Victorian Registration and Qualifications Authority advising him that NLD had cancelled his Training Contract. 3 Mr Sim submits he had not received any warnings prior to his dismissal and was not provided with any reason as to why he was dismissed.4

[22] NLD did not file any materials and did not appear at the hearing.

Small Business Fair Dismissal Code

[23] The Small Business Fair Dismissal Code applies to small business employers with fewer than 15 employees. Small business employees cannot make a claim for unfair dismissal in the first 12 months following their engagement. An employee will not be considered to have been unfairly dismissed after this period if the employer has complied with the Code. 5 The Code is easily found on the Commission website as is the Small Business Fair Dismissal Checklist, a tool to help small business employers comply with the Code.

[24] 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.

[25] Although Mr Sim was dismissed without notice or warnings, there is no evidence before me to suggest that his dismissal was for reasons of serious misconduct.

[26] In cases not involving summary dismissal the Code requires that the employee must be given a reason why he or she is at risk of being dismissed. That reason must be a valid reason based on the employee’s conduct or capacity to do the job. The employee must be warned that he or she risks being dismissed if there is no improvement, must be given an opportunity to respond to the warning, and must be given a reasonable chance to rectify the problem.

[27] It was Mr Sim’s evidence that he was never warned that his employment was at risk nor was he provided with any warnings regarding his conduct or performance, verbally or in writing.

[28] Given Mr Sim’s summary dismissal and the absence of any warnings I am satisfied that NLD did not comply with the Code.

[29] Having determined that the dismissal was not consistent with the Code I will now consider if the termination was harsh, unjust and unreasonable.

Was the termination Harsh, Unjust or Unreasonable?

[30] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Fair Work Commission must take into account the following;

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) – s.387(a)

[31] Mr Sim’s evidence was that he had been contacted by the qualified tradesperson and notified that Mr Robertson was not returning to the existing job because he had ‘had enough’ and therefore Mr Sim and his work colleagues were no longer employed.

[32] Mr Robertson as a business owner and operator has both legal and ethical responsibilities which, for whatever reason, he abandoned. Mr Robertson had an opportunity to present his case to the Commission and chose not to.

[33] There was insufficient evidence before me to enable me to be satisfied that there was a valid reason for the termination of Mr Sim. On Mr Sim’s account of the events leading to his termination of employment, I am not satisfied that NLD had a valid reason for the termination of Mr Sim’s employment.

Whether Mr Sim Was Notified Of The Valid Reason – s.387(b)

[34] Mr Sim was notified by the qualified tradesperson that his employment had ended for the reasons outlined above however he was not provided with notification a valid reason for his dismissal.

Whether Mr Sim Was Provided With An Opportunity To Respond – s.387(c)

[35] As there was no discussion prior to the dismissal, Mr Sim was not given an opportunity to respond.

Unreasonable Refusal Of A Support Person – s.387(d)

[36] Mr Sim was advised of his dismissal over the phone with no prior warning that this phone call was to take place. As there was no discussion prior to his dismissal this criterion is not relevant.

Warnings Regarding Unsatisfactory Performance – s.387(e)

[37] This was not a case of unsatisfactory performance and Mr Sim had not received any warnings about his performance prior to the dismissal.

Impact Of The Size Of The Respondent On Procedures Followed And Absence Of Dedicated Human Resources Management Specialist/Expertise On Procedures Followed – s.387(f)-(g)

[38] Mr Sim’s evidence was that NLD employed 5 apprentices, including himself, and one qualified carpenter. There is no evidence that NLD consulted with anyone outside of the business to obtain advice prior to the dismissal.

[39] Although the lack of human resource management specialist skills and knowledge may have contributed to the problem with procedure in this matter, this does not excuse the conduct of Mr Robertson. There are many resources available to assist small business employers manage terminations of employment. It is incumbent upon those business operators to access and use the resources available to them.

Other Relevant Matters – s.387(h)

[40] There were no submissions that there were any other matters that I should give consideration to in this application.

Finding

[41] I am satisfied that Mr Sim’s termination was unjust and unreasonable. Apprentices are not a form of labour that an employer can simply dispose of at will. There was no valid reason for the termination of his employment and he was certainly not afforded procedural fairness.

Remedy

[42] The Fair Work Act 2009 (Cth) (the Act) provides the following with respect to remedy:

“390 When the FWC may order remedy for unfair dismissal

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

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

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

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

(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.

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

[43] Mr Sim does not seek reinstatement.

[44] Mr Sim has obtained alternative employment and has been engaged to recommence his apprenticeship with his new employer. I do not consider reinstatement would be appropriate or practical. I find an order for compensation is appropriate.

[45] Section 392 of the Act sets out the criteria to which I must give regard in determining any amount of compensation I might order the Respondent to pay Mr Sim. I will consider each of these in succession below.

[46] In determining the amount of compensation to be ordered, the Act provides:

“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.”

The Effect Of The Order On The Viability Of The Employer’s Enterprise – s.392(2)(a)

[47] The parties did not make any submission addressing this criterion. Accordingly, there are no submissions or definitive evidence before me that any amount of compensation I might order NLD to pay Mr Sim would threaten the viability of NLD’s enterprise.

Length Of The Person’s Service With The Employer – s.392(2)(b)

[48] Mr Sim’s length of service with NLD was not insignificant and totalled 2 years, 2 months.

Remuneration That The Person Would Have Received, Or Would Have Been Likely To Receive, IfThe Person Had Not Been Dismissed – s.392(2)(c)

[49] Mr Sim was working as a third year apprentice at the time of his dismissal and was paid $13.76 per hour. 6 He gave evidence that he worked 40 hours per week and did not accrue any rostered days off. This equates to $550.40 per week.

[50] Had he not been dismissed Mr Sim would likely have remained in employment with NLD for the remainder of his apprenticeship. Therefore he would have continued to be employed for a further 12 months. Mr Sim’s earnings during that period would have been approximately $28,620.80.

The Efforts Of The Person (If Any) To Mitigate The Loss Suffered By The Person Because Of TheDismissal – s.392(2)(d)

[51] Mr Sim gave evidence that immediately following his dismissal he commenced working for Mr Stubbings as a labourer. He continued in this work until 19 September 2017, when he commenced work as a labourer for PVC Carpentry. Mr Sim gave evidence that he would soon be resuming his apprenticeship with this company.

[52] Mr Sim’s evidence was that he earned approximately $7.00 more per hour as a labourer than he had been earning whilst employed by NLD.

The Amount Of Remuneration Earned By The Person From Employment Or Other Work During The Period Between The Dismissal And The Making Of The Order For Compensation – s.392(2)(e)

[53] I have adopted the approach of the Full Bench of the AIRC in Ellawala v Australian Postal Corporation 7 as follows;

“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.

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 12 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.”

[54] Mr Sim gave evidence that whilst working for Mr Stubbings as a labourer he was earning $20 per hour and working 40 hours per week. Mr Sim’s total earnings for this period would have been $8,800.00

[55] From 19 September 2017, Mr Sim commenced working for PVC Carpentry. He gave evidence that he received $700 per week and worked for 40 hours per week. Mr Sim’s earnings from 19 September 2017 to the date of the hearing would amount to a total of $2,100.00.

[56] Mr Sim’s total remuneration since the time of the termination of his employment amounts to $10,900.00.

[57] Mr Sim has remained in employment since the time of his dismissal and has presumably now recommenced his apprenticeship. His earnings during the period from the time of his dismissal to the making of this compensation order exceed the amount he would have earned had he remained employed by NLD.

Any Amount Of Income Reasonably Likely To Be Earned During The Period Between The Making Of The Order And The Actual Compensation – s.392(2)(f)

[58] I have considered this requirement in the context of the above.

Any Other Matter That The FWC Considers Relevant – s.392(2)(g)

[59] Although Mr Sim has remained in employment since the time of his dismissal, and indeed received earnings in excess of what he would have received from NLD, he has still suffered an economic loss. From the date of his dismissal until the date of his hearing Mr Sim’s apprenticeship remained in limbo. Mr Sim will now finish his apprenticeship at least 14 weeks later than he would otherwise have done, depriving Mr Sim of the opportunity to earn a fully qualified tradesperson’s wage of $23.10 per hour.

[60] Over a period of 14 weeks for a 40 hour work week Mr Sim would be entitled, at the fully qualified tradesperson’s wage, to $12,936.00. However in the 14 weeks his apprenticeship was suspended Mr Sim earned $10,900.00. Accordingly, to compensate Mr Sim for the delay in completing his apprenticeship, I award a compensation payment of $2,036.00.

[61] I have considered the absence of any submission from the Respondent and the possibility that Mr Sim may complete his apprenticeship earlier than expected. I have also considered the possibility that Mr Sim may not immediately obtain employment as a tradesperson after the completion of his apprenticeship. Therefore I reduce this amount by 10% for contingencies bringing the total amount of compensation to $1,832.40.

[62] I do not consider there has been any misconduct which would require me to reduce the amount of compensation.

[63] I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.

Conclusion

[64] There were no objections by the parties to making a decision on remedy based on the materials before me.

[65] For the reasons I have discussed above, NLD must pay to Mr Sim the amount of $1,832.40 plus applicable superannuation, less appropriate taxation as required by law.

[66] I take into account that NLD is not likely to have budgeted for an order of compensation in these circumstances. I therefore deem it appropriate that the compensation be paid within 30 days from the date of the accompanying order 8 (as issued simultaneously with this decision).

COMMISSIONER

Appearances:

W. Sim on his own behalf

Hearing details:

2017

Melbourne

10 October

 1   Exhibit A1

 2   Exhibit A2

 3   Exhibit A4

 4   Exhibit A1

 5   Fair Work Act (Cth) s.385

 6   Exhibit A3

 7   Ellawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109

 8   PR597783

Printed by authority of the Commonwealth Government Printer

<Price code C, PR597782>