Xavier Modoux v MakerSpace and Co Pty Ltd T/A MakerSpace

[2019] FWC 1297

[2019] FWC 1297

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Xavier Modoux
v
MakerSpace & Co Pty Ltd T/A MakerSpace
(U2018/11916)

COMMISSIONER MCKENNA SYDNEY, 29 MARCH 2019

Application for an unfair dismissal remedy.

[1] Xavier Modoux (“the applicant”) has made an application pursuant to s.394 of the Fair Work Act 2009 (“the Act”) in which he seeks an unfair dismissal remedy. The applicant was formerly employed by MakerSpace & Co Pty Ltd, which trades as MakerSpace (“MakerSpace”). MakerSpace summarily dismissed Mr Modoux on 29 October 2018. MakerSpace, which is a small business employer (eight employees, with a total of four full-time equivalents at the time of the dismissal), has raised an objection to the application against the background of the Small Business Fair Dismissal Code (“the Code”).

[2] I note in this decision, as I noted over the course of the proceedings, that this is a case that had atypical features. Given what was described in the evidence and submissions, I observe it is highly regrettable - and this reflects each party’s own expressed views - that the employment relationship ended in the circumstances that it did. It is necessary to provide some context in that regard.

Background

[3] MakerSpace was established to enable Sydney-based designers and makers to access employment and professional development opportunities. Among other matters, MakerSpace provides facilities where work of this nature may be undertaken and it operates courses including in metalwork, woodwork, digital fabrication and ceramics focussed on fields of artistic endeavour. MakerSpace is a not-for-profit company, with charitable tax status.

[4] Mr Modoux is a ceramicist and was one of MakerSpace’s inaugural employees as its Ceramic Technical Officer. Following duties associated with the start-up of MakerSpace, Mr Modoux was responsible for the ongoing maintenance, operational and educational aspects of the ceramics studio. It was common ground in the evidence and submissions that Mr Modoux was considered as a highly-regarded and committed employee – described by one director and CEO as “a wonderful team member with whom I had shared my blood, sweat and tears, [and] for whom I had provided an opportunity to live out his ‘dream job’ as he always said ..”. The written testimonials that were put in evidence also addressed the high personal and professional esteem in which Mr Modoux was held by fellow employees, as did the oral evidence and submissions.

[5] Each and every one of the witnesses in the respective cases who gave evidence in the proceedings were highly impressive, albeit their own perceptions of what had unfolded in the lead-up to the dismissal differed - and differed entirely reasonably, I might add, based on those perceptions or perspectives of the particular circumstances that ensued. Their evidence indicated that they all were proud and passionate about having been collaboratively involved in the MakerSpace venture, which operates with the ultimate aim of assisting designers and makers in the local community. The contribution of each of the witnesses to the local community should be commended.

[6] The commitment to best-fulfilling the “vision” of MakerSpace was palpable in the evidence of each one of the employee/former employee and director witnesses. Matters such as senses of sadness, hurt, disappointment and betrayal - as well as anger - also strongly emerged in the evidence of certain witnesses as it concerned the actions of the others as matters in relation to MakerSpace’s ongoing viability came to somewhat of a head around October 2018. It is unnecessary to describe these matters other than to reiterate such sentiments were palpable.

[7] It may be noted that the seed funding for MakerSpace derived from, among other sources, substantial personal financial contributions by one or more the founding directors. Likewise, of his own volition, Mr Modoux undertook many hours of unpaid work for MakerSpace beyond his part-time hours of work (as did other employees, given their commitment to the vision for MakerSpace). Mr Modoux’s personal commitment to Makerspace and its vision was so high that he personally paid for a gas kiln for use on loan at the workplace.

[8] MakerSpace was also was encountering significant financial issues from at least around May 2018 (when an emergency meeting was convened to inform staff of MakerSpace’s dire financial situation). Expenses could not be paid by MakerSpace, or be paid in a timely way. Among other matters, superannuation contributions were not being made by MakerSpace for its employees (MakerSpace was endeavouring around the time of the hearing to rectify those past non-payment or underpayment of such contributions). To compound matters, MakerSpace was informed of a dramatically-high rental increase concerning the leased premises from which it then operated. To remain at that premises with the rent increase would have made MakerSpace unviable, putting aside what had otherwise emerged in terms of financial difficulties. A decision subsequently was made by management to relocate to different, cheaper premises.

[9] I have previously noted that this case had atypical features. This was not a typical workplace, and the relationship of Mr Modoux as an employee of MakerSpace certainly was not typical either. For example, upon becoming aware that certain contract teachers of MakerSpace had not been paid, Mr Modoux and his wife went so far as to make a $3,200.00 donation to MakerSpace to assist it in the financial difficulties it was by then encountering. As to that donation, Mr Modoux had learned that a number of contract ceramics teachers’ invoices had not been paid and “as the person responsible for engaging the ceramic teachers and to protect my reputation and professional relations, in consultation with my wife, I donated $3,200 to MakerSpace to cover the ceramic teachers’ fees.” It may be noted, in this regard, that the amount of the donation constituted the equivalent of approximately eight weeks of the net wages Mr Modoux earned as a part-time employee in his employment with MakerSpace. That is, Mr Modoux, in a donation made together with his wife, paid for other teaching contractors’ unpaid invoices out of their own pockets in an amount equivalent to two months of his take-home pay.

[10] Mr Modoux also anecdotally understood that MakerSpace’s financial issues were manifesting themselves in other ways than just a significant tax liability and teachers’ fees not being paid. For his own reasons, which were developed in the evidence and submissions, Mr Modoux was also very concerned about the premises that had been selected by management for the proposed relocation of MakerSpace’s premises following the rental increase on the existing location. In circulated emailed correspondence dated 25 October 2018, Mr Modoux identified a number of his concerns about the suitability of the proposed new premises as well as in relation to the MakerSpace “business model”.

[11] Mr Modoux’s expressions of concerns were regarded by the directors as being, put at its lowest, unhelpful or not constructive; and concern was held about what was later considered to be the tenor with which matters were said and his body language in interactions with one of the directors. I apprehend there may have been some element of personal affront felt by those involved in the decision-making that the decisions were being effectively challenged by Mr Modoux – but he was, of course, entitled to express his own views and different options. The language and descriptors in the witness statements, and in what unfolded in the course of the proceedings in further oral evidence and submissions, bespeak very high levels of emotion of all witness about what was occurring concerning MakerSpace.

[12] In the end, the directors formed the view that Mr Modoux was, in effect, depleting staff morale and otherwise mutineering in relation to comments he made in discussions, including discussions he separately had with other employees. Such was Mr Modoux’s level of concern about matters, that, in the end, he personally formed the view - more in sorrow than in anger - that MakerSpace should in fact cease operations. As a result of discussions at an impromptu meeting on 25 October 2018 involving some of the employees of MakerSpace, this was a view shared by a number of other employees. The evidence of Mr Modoux was that: “It was agreed by the staff present at the impromptu meeting that the most reasonable action was to close MakerSpace and that we should present this decision to [the two directors] in a full staff meeting the following day”. However, this view was not one shared by the directors of MakerSpace whose own view, it transpired, having reflected on the financial and social costs of closing, was “to protect and continue the mission of MakerSpace” (and staff who did not wish to relocate to the new premises would be invited to resign).

[13] Mr Modoux also formed the view that it would be appropriate to suspend bookings for certain student classes, and proceeded to take steps thereto to give effect to his decision. Mr Modoux described the matter in the following way:

“After the impromptu meeting, and in consultation with … the General Manager and Education Coordinator, I took the decision to suspend future enrolment into the ceramic program beyond the classes already under way. The decision was made to avoid potentially damaging the credibility of our service and the trust of our clients in our ability to service the ceramic program thoroughly due to the uncertain future for MakerSpace. While inaction would have resulted in short-term revenue, not doing so would have resulted in increased future liabilities through reimbursements for false advertising. I believed this decision was the only diligent option.”

[14] Mr Modoux further elaborated in the proceedings that he decided to take the step of removing the capacity of MakerSpace to accept new bookings against the background of concern about, for example, whether Makerspace would have to capacity to provide classes to students at a relevant time and that, in those circumstances, it would be appropriate that new bookings not be accepted at least for a period of time. Mr Modoux did not, however, discuss this step with the directors, and nor was it with the scope of his authority unilaterally to determine to stop accepting applications for bookings by students.

[15] When it came to the attention of the directors on 29 October 2018 that Mr Modoux had taken the steps he did so concerning bookings, matters moved swiftly that same day. For example, one witness, who is a director and CEO of MakerSpace described how she was “shocked and angry at learning this because it is not [Mr Modoux’s] job to direct staff to undertake work that impacts our revenue or decide when classes can be accepted.” Another director witness said he believed Mr Modoux was working to undermine the organisation during its most significant change that threatened its survival.

[16] Mr Modoux’s actions were perceived by management as, in effect, a form of intentional sabotage, involving disloyalty, in furtherance of Mr Modoux’s expressed view that MakerSpace should not move to the alternative premises. I do not, however, accept that Mr Modoux’s actions were mis-intentioned in relation to the organisation with its “community” of members to which he held such a strong personal conviction.

[17] Mr Modoux was fully entitled to raise concerns about the financial situation of MakerSpace; it may be recalled that matters had reached a point where superannuation employee contributions were not being made and Mr Modoux had personally made a donation of $3,200.00 to MakerSpace out of concern that contract teachers had not been paid. Mr Modoux also explained that his steps in relation to the bookings were motivated by, among other matters, a desire to protect against the potential for disappointment to students if the classes that had been booked could not be delivered and of fall-out in the nature of reputational damage to MakerSpace.

Small Business Fair Dismissal Code

[18] Given the small number of employees that MakerSpace employed, the Code arises for consideration. The Code provides 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.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity. A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

Consideration

[19] The circumstances of this application are, as I have indicated earlier in the decision, atypical and perceptions about what was the best approach for MakerSpace and its “community” of makers, designers and students were polarised. One witness said, for example, in reply to evidence adduced in the case advanced for MakerSpace:

“I don’t believe there was any attempt on Xavier’s part to “upset the team” and his conduct was not aggressive. He was frank in sharing his scepticism of the plan to move but at no time was I as a member of staff, upset or intimidated by his conduct. Further to that, over the course of the weeks in which the staff at MakerSpace struggled with the upheaval, Xavier had always been deeply supportive of other staff. He and I had a number of positive conversations throughout late October in which he offered his support to me in continuing collaborative projects and I witnessed him on multiple occasions offering support to other staff who were distressed by the conduct of the management of MakerSpace.”

[20] The evidence and submissions suggested that MakerSpace was perceived by some of the employees as having characteristics of something analogous to a workers’ cooperative. So much was attested to by the fact that a number of employees came to the view that MakerSpace should not relocate to the premises selected by the directors and, indeed, that MakerSpace should cease operations entirely. In the end, however, it was a matter for the directors of MakerSpace to determine what might be the appropriate steps to address the challenges of the financial crisis that the organisation was facing, and the future of MakerSpace. True it is that Mr Modoux and a number of his work colleagues held to different views about the appropriateness about what was being proposed by the directors, particularly including in relation to the suitability of the new premises, but ultimately those decisions of the directors - whether right or wrong - were decisions for the directors to make. (Separately, Mr Modoux’s wife, who had some type of relevant experience in relation organisations not dissimilar to MakerSpace, had earlier been providing some level of advice/assistance to MakerSpace. There was evidence of emailed correspondence which set out views that she had proposed concerning MakerSpace, including, but not limited to, the question of relocation.)

[21] I do not accept that some of the matters referred to in the letter advising of the reasons for the dismissal would, on any reasonable view of it, have substantiated grounds for Mr Modoux’s summary dismissal. Some of those matters amount to no more than expressions of disagreement with matters that Mr Modoux had said and/or unsubstantiated (on the evidence) assertions about stress he was causing to employees when the employees’ own evidence indicated, for instance, it was the actions or inactions of management which were the stressors. While I accept that Mr Modoux did not take a step back in addressing the concerns he held, I do not accept the allegations that Mr Modoux’s comments or demeanour in discussions involving the CEO director would have given grounds for summary dismissal. In so concluding, that is not to say that the CEO director did not did not perceive such matters as set out in her evidence and dismissal letter. There is at least a certain element of what might be described as preciousness in allegations about Mr Modoux conducting himself in a way that was “mocking, rude and offensive” – when there was no evidence that Mr Modoux actually said anything that objectively had those characteristics. There was even evidence in the proceedings complaining, in effect, that Mr Modoux had sat with his armed folded and, on another occasion, had stood throughout a meeting.

[22] The submissions for MakerSpace put that the employer had formed the view that Mr Modoux’s behaviour included repeated rudeness, disrespect and hostility. I consider the better description is as set out above in the extract of evidence about, namely, that Mr Modoux was “frank in sharing his scepticism”. A frank sharing of scepticism about managerial proposals is not a matter for summary dismissal of an employee, within the meaning of the Code or otherwise – much less so in relation to Mr Modoux as a foundation employee of MakerSpace and as an employee who had invested so much in the organisation as a demonstration of his personal conviction to it achieving its goal of assisting its community of designers, makers and students.

[23] The decision of Mr Modoux unilaterally to take steps having the result of suspending new bookings falls, however, into a category different from the other matters to which I have referred. Regardless of the motivations he described, Mr Modoux’s high-handed decision unilaterally to cancel new bookings/classes beyond the classes already underway was outside his authority and was inappropriate. It would be an objectively serious matter for any employee to take (unauthorised) steps to suspend or cancel arrangements whereby students could apply for bookings in courses offered by the employer; and, here, fees paid by students for classes form part of MakerSpace’s revenue. In this regard, it may be noted that Mr Modoux’s actions in such respects followed upon the impromptu meeting on Thursday 25 October 2018 with a number of other employees who had themselves determined to inform management of their view that MakerSpace should close. Moreover, Mr Modoux did not advise the CEO that he had taken this step in the discussions which were held on Friday 26 October 2018; the matter came to management’s attention only at the start of the following week.

[24] The Code provides that 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. Considering Mr Modoux’s unilaterally-effected decision to suspend future enrolments into the ceramic program beyond the classes already underway (being a matter he failed to disclose/discuss in a meeting with the CEO the following day, namely, Friday, 26 October 2018), MakerSpace’s management, it may be accepted, did believe on reasonable grounds that Mr Modoux’s conduct was sufficiently serious to justify dismissal.

[25] It seems to me that the dismissal may be viewed as Code-compliant, considering the circumstances described in the evidence. Following from the approach of the Full Bench of the Fair Work Commission in John Pinawin T/A RoseVi.Hair.Face.Body v Edwin Domingo[2012] FWAFB 1359, the termination of Mr Modoux’s employment was consistent with the Code and the termination thereby was not, within the meaning of the Act, an unfair dismissal. As such, it is unnecessary to consider the other elements as to the unfair dismissal application.

[26] An order dismissing the applicant’s application for an unfair dismissal remedy issues in conjunction with this decision.

COMMISSIONER

Appearances:

X Modoux on his own behalf.

B Jeffreys, director.

Hearing details:

2019.

Sydney:

14, 26 February.

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