Ying Guan v Australia JW Trading Pty. Ltd
[2017] FWC 5149
•11 OCTOBER 2017
| [2017] FWC 5149 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Ying Guan
v
Australia JW Trading Pty. Ltd; H&Y Brother Investment & Development Pty Ltd
(U2017/4759)
| Commissioner Bissett | MELBOURNE, 11 OCTOBER 2017 |
Application for unfair dismissal remedy - dismissal not consistent with small business fair dismissal code - applicant unfairly dismissed - compensation ordered.
Ms Ying (Tina) Guan was employed by both Australia JW Trading Pty. Ltd (JW) and H&Y Brother Investment & Development Pty. Ltd. (H&Y) (collectively the Respondents). Ms Guan’s employment was terminated by each company on 19 April 2017. Ms Guan has made an application for relief from unfair dismissal in relation to the termination of her employment pursuant to s.394 of the Fair Work Act 2009 (FW Act).
The Respondents collectively have less than 15 employees. Each is a small business as defined in the FW Act.
Prior to the hearing I granted JW and H&Y permission to be represented by a lawyer.
The totality of the proceedings was subject to interpretation between Mandarin and English. The Respondents raised concerns at some of the interpretation. For this reason I provided both parties with access to the audio recording of the proceedings (and transcript) to enable them to undertake whatever checking of the translation they considered necessary. The parties were advised that they could indicate any errors of substance they perceived in the translation in which case the translation would be independently verified by the Commission. Whilst the Respondents indicated some errors, these were of a very minor nature (“he” instead of “she”) and do not affect the decision.
Parts of the material filed by each of the parties was in Mandarin and no translation was provided. I indicated to the parties that I could draw no conclusions from such material and it would not be relied upon.
Where the parties did provide translated material they have, in the main, had the translation undertaken by a NAATI Accredited Translator.
Witnesses
Ms Guan gave evidence on her own behalf and Ms Luxi (Lucy) Li gave evidence in support of Ms Guan.
Mr Bin Hu is the owner of both companies and gave evidence by telephone. Evidence for the Respondents was also given by Mr John Blackney, Mr Yiwei (Micky) Tian, Mr Shun Wai Ku, Ms Shicong (Emma) Wang, and Ms Ailsa Buckle.
Mr Sail Zhang and Mr Koning Zheng provided witness statements as they were not available to give evidence. Ms Guan objected to the admission of their statements. As neither witness was available to have their testimony tested, no reliance is placed on their statements.
Assessment of witnesses
Ms Li’s evidence is not relevant. She did not work with Ms Guan.
Ms Guan sought to lay out the facts of her case in a methodical manner. At times she was overly dramatic and passionate in her responses and she was, by this, prone to overstatement or exaggeration. Her evidence needs to be viewed in this light.
Mr Hu’s evidence was generally given in an appropriate manner although he did seek to question the reliability of the interpreter on the basis that one of his employees who was to give evidence (who was excluded from the court room whilst other witness evidence was given) suggested Ms Guan and the interpreter were too friendly. Mr Hu, on the second day of his evidence sought to excuse his comments on the grounds that he was unwell.
The evidence of Mr Blackney was not relevant to any of the matters before me.
Mr Tian gave evidence of Ms Guan’s conduct on 19 April 2017. To the extent that Ms Guan reacted angrily that day I accept that it was because she was advised that she had been dismissed. It is difficult to suggest that this presents a pattern of behaviour or indicates tendency on Ms Guan’s part to act in such a manner. A dismissal is likely to be a highly emotionally charged affair – particularly when it is conducted in front of the remainder of the staff as is the evidence in this case. To the extent that such evidence is intended to demonstrate a pattern of behaviour of Ms Guan I do not accept it as reliable.
There is no evidence that Mr Tian was aware of warnings given to Ms Guan or that after each warning Ms Guan would “apologise profusely and promised to change.”[1] I do not accept that he was present on all occasions he says this occurred. When pressed, his evidence was that he could recall one incident at a board meeting in 2016 where this occurred.[2] His evidence is of little probative value as to Ms Guan’s conduct.
Mr Tian’s evidence that Ms Guan did say to Mr Hu over the phone that she would slap him is accepted. I do note his evidence that Ms Guan was crying at the time she said this.
Mr Ku’s evidence does not go to any of the matters I am required to decide. He gave evidence of Ms Guan’s conduct during the dismissal meeting and said that she was rude to him at this time. For the reasons given above I have not had regard to this evidence. Much of Mr Ku’s written statement is hearsay or vague (“I recall a warning being given to the applicant during February – March 2017, however I can not locate the accurate date and time…Mr. Bin Hu was not happy with the applicant’s performance…”[3]) such that it is not reliable. Mr Ku provided written testimony that he “observed the applicant does not seem to devote much attention to her work matters…”[4] but agreed during cross-examination that he works on a different floor to Ms Guan, that he reached this conclusion because “one time” he came down and observed Ms Guan resting on couch with her eyes closed and once she did not respond to his emails although is unaware if Ms Guan can access these when she is outside the workplace. [5] Mr Ku also gave evidence that Ms Guan was never aggressive towards him.[6]
Mr Ku’s evidence was of little probative value in the matters before the Commission.
Ms Buckle said in her written statement that she “felt that the applicant was a very poor manager”[7] as she failed to communicate with other employees. She said that Ms Guan consistently failed to maintain a professional front when meeting clients and “would also wear inappropriate attire to work.”[8] During cross examination Ms Buckle agreed that she did not work with Ms Guan often, generally did not know what Ms Guan was doing and that she is “not the sort of person…to make a comment on someone’s external appearance because I feel there are more intrinsic values to a person”.[9] In any event the “inappropriate” clothing was limited to Ms Guan wearing stilettos. Ms Buckle said that she understood that while dress standards for staff was raised in staff meetings she did not understand that Ms Guan’s dress standards formed a reason for her dismissal.
Overall Ms Buckle had little direct evidence that went to matters of relevance that I am required to decide. I am not convinced Ms Buckle’s views on Ms Guan’s choice of footwear adds to the matter and am satisfied that, given she did not work with Ms Guan often, is not in a position to comment on Ms Guan’s professionalism, relationship with clients or how her conduct may or may not have affected the Respondents’ businesses.
Ms Wang, in her written statement, said that she was aware of requests made by Mr Hu of Ms Guan that were not followed through by Ms Guan. She also said that she “received instructions from Mr Hu that [Ms Guan] was given a final warning”[10] regarding her inappropriate behaviour and that, up until 19 April 2017, she had received instructions to work on a performance improvement plan with Mr Tian to assist Ms Guan improve.
Ms Wang’s oral testimony was in relation to payments made to Ms Guan on and post the termination of her employment and in relation to overtime payments and liability for various bills.
Ms Wang’s written statement was not supported by any documentation and is, in this respect, limited.
At the conclusion of her cross-examination Ms Wang indicated that she wished to make a further statement to the Commission to “prove” the misconduct of Ms Guan. I did not allow this. The Respondents were represented by lawyers during the proceedings. The opportunity was provided to them to undertake examination-in-chief of the Respondents’ witnesses. It was at this point any further relevant evidence could have been brought out. The legal representative chose not to elicit such evidence.
All witnesses were asked in cross-examination and, with the exception of Mr Blackney (who was not asked) and Mr Tian, positively affirmed that their statements were their own work and in their own words. It is apparent however that the statements have a level of similarity in format and phraseology which strongly suggests that the statements are not solely the work of the witness who swore to it. Mr Tian agreed that his statement had been provided to the lawyers who, he said, may well have re-worded it. Further, each statement has as the closing paragraph that the witness is “here to voluntarily issue this statement on behalf of myself, instead of receiving a force requirement or threat from my employer.” Whilst I appreciate that no-one attended by force (although I note that all employees of the Respondents did make a statement) the statement adds nothing to the value of the evidence and does not overcome the deficiencies otherwise apparent in the evidence given.
Evidence of Ms Guan
In addition to being an employee of JW, Ms Guan was the “nominal shareholder and director of JW”.[11] She said this was done as she is an Australian citizen. She said that she was entitled to a payment of $8,000 for holding the nominal position but she has only received $4,000.00 of this amount.[12]
Ms Guan said that on 19 April 2017 she received notice of dismissal from the Respondents without any warning. She said that when she requested a reason for the dismissal she was told that the Respondents did not have to do provide one because they were small businesses.
Ms Guan’s dismissal was actioned through resolutions of the Boards of each of the Respondents.
Ms Guan said that H&Y owed Deloittes $23,230.00 but that Mr Hu refused to pay it. She said that he asked her to pay $8,000.00 of her own money and H&Y would pay the rest but she would be reimbursed at some later date.[13] For this reason Ms Guan gave $8,000.00 of her own money to H&Y.[14] She said she has not been reimbursed this $8,000.
Ms Guan said that in 2015 Mr Hu asked her to purchase a property for H&Y at Docklands. She said that Mr Hu was aware of the commission or referral fee she had previously received on the Carlton property that she had purchased for Mr Hu when she was a real estate agent and prior to commencing work for Mr Hu. When she said to Mr Hu that she would not get a referral fee he said she should take the commission/referral fee and transfer it to the company.[15]
Ms Guan said she did not receive a referral fee on the purchase of a further property for H&Y at Marina Towers in Dockland. She relied on a letter from the real estate agent as evidence of this.[16]
Ms Guan said that she had never received “any formal notice or warning, written warning”[17] and “never, ever had a feeling that [Mr Hu] gave me a warning”.[18] Ms Guan sought to distinguish a “personal warning” given by Mr Hu from a “warning from the company.”[19]
Ms Guan agreed that she was a given a warning by Mr Hu in relation to receiving a commission on the payment of a property and, at Mr Hu’s request, wrote a letter of apology. She denied however that she received a warning in August 2015, November 2016, and December 2016.[20]
Evidence of Mr Hu
Mr Hu is the owner of JW and H&Y. His evidence is that, through the entire period that the applicant was employed with the Respondents, the applicant received more than 20 warnings regarding various misconduct, including, but not limited to:
a. Directing a threat of violence to another person;
b. Bullying of junior employees;
c. Use of abusive language in the workplace;
d. Providing fraudulent reports of company matters to the Companies;
e. Attempting to receive payment of a secret commission for company matters without the Companies’ knowledge or authorisation;
g. Refusing to carry out work duties;
h. Unsatisfactory and unprofessional work behaviour, attitude and conduct; and
i. Poor performance.[21]
Mr Hu said that these warnings were given to Ms Guan in writing and verbally. He said that Ms Guan had “acknowledged and made several written apologies for the various misconduct”[22] but her misconduct became worse.
Mr Hu attached to his statement a table in which he set out the circumstances where Ms Guan was given a verbal warning (six occasions from August 2015 until March 2017); complaints made of Ms Guan by other staff (five occasions from August 2015 to March 2017) and other matters of misconduct including:
April 2016 – Ms Guan acknowledged she was remiss in her job duties, and caused H&Y financial losses of $23,230.00 – Ms Guan offered to repay H&Y $8,000.00 compensation – Bin Hu accepted the offer.
March 2017 - Mr Hu had a discussion by phone with Ms Guan “to discuss the complaints [of staff] and made another warning to her that she has to improve her conduct…[Ms] Guan refused to accept that she had acted inappropriately…Bin Hu noted that this was not the first complaint…It reflects badly on Ying Guan’s upbringing and education for her subordinate employees to be complaining of her bullying and abusive behaviour – Ying Guan responded that she will slap his mouth because that was a very insulting thing to say to her…”[23]
Mr Hu said that, at the end of his conversation with Ms Hu on 21 March 2017 he said that her employment would be terminated if her performance did not improve.[24]
Mr Hu said that Ms Guan’s employment was terminated for the repeated misconduct.
Mr Hu said he had lent $12,000 to Ms Guan[25] when he first met her. His evidence is:
…I altogether lended Ms Ying Guan $12,000-odd. Why I say $12,000-odd was because this happened quite some time ago. They all occurred before 2014. And then from my recollection the last time - the latest time - date that I lended her money was before Christmas of 2013.
Has Ying Guan paid back any of that money? ‑ No. [She] only paid back $8000, and then I instructed her to transfer this amount of money to the company account to be as the money that I lended to the company…[26]
Mr Hu gave oral evidence that he was “sure there are [written warnings to Ms Guan of bullying her colleagues], and then at least more than 20 times, and quite often that…the minutes of our meeting would record that.[27]
With respect to the purchase of properties, Mr Hu said that:
· He purchased a property through Ms Guan – who then worked as a real estate agent – in Carlton. Ms Guan received a commission on that sale;
· As an employee of the Respondents Ms Guan purchased a property at Marina Towers in Docklands in February 2015. He later found out she had received a commission on that purchase. He confronted Ms Guan about the matter and she wrote an apology for her conduct;
· As an employee of the Respondents Ms Guan purchased another property in August 2015 at New Quay Promenade in Docklands. Ms Guan again, against instructions, received a commission on the purchase of the property.[28]
Mr Hu said he instructed Ms Guan to purchase the second property at Docklands on behalf of H&Y. He said that Ms Guan “suggested that this transaction and signing of the contract should be like my personal purchasing. So, I accepted her suggestion.”[29]
Unfair dismissal
I am satisfied that Ms Guan is protected from unfair dismissal. At the time of her dismissal she had completed the minimum employment period and there is no dispute that she was either covered by a modern award or her annual rate of earnings is less than the high income threshold.
The FW Act requires that the Commission consider initial matters prior to a consideration of the merits of Ms Guan’s application.
Section 396 of the FW Act states:
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;
(d) whether the dismissal was a case of genuine redundancy.
There is no dispute that JW and H&Y are both small businesses such that it is necessary to determine, in the first instance, if the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).
The Code states:
Small Business Fair Dismissal Code
Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009…
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.
Ms Guan was dismissed without notice or warning. That she was, at some future date, provided with some payment in lieu of notice does not change the fact that she was dismissed without notice.
In Pinawin T/A RoseVi.Hair.Face.Body v Domingo[30] (Pinawin) the Full Bench of Fair Work Australia (FWA) stated:
[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.
[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned…
[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee…
In Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services[31] the Full Bench of the Commission considered the circumstances under which the “summary dismissal” provisions of the Code would apply, rather than the “other dismissal” requirements. The Full Bench concluded:
[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.
It is not clear from the submissions of the Respondents if they say that Ms Guan’s dismissal was for serious misconduct. The Respondents’ written submission (such as it is) indicates that the dismissal complied with the Code because Ms Guan was provided with several warnings and a written warning of 21 March 2017 prior to being dismissed on 19 April 2017.
In its Form F3, Employer Response to Unfair Dismissal Application, each of the Respondents said, in relation to its objection on the grounds that the Code applied:
1. The Applicant was dismissed because it was understood, based on reasonable grounds, that:
a. During her duties, the Applicant had been found to be seeking out and accepting secret commissions from the other party in multiple property transactions in which she was representing the company or its shareholder. The Applicant only admitted this to the Respondent after being caught. The Respondent wants the secret commissions she has received paid to the company.
b. The Applicant had been engaging in threatening and inappropriate workplace conduct, including foul language towards her superiors and co-workers. Her behaviour was creating a hostile workplace and caused a complete breakdown of the employer-employee relationship.
c. The Applicant was caught taking home the Respondent’s documents and property. The documents contained financial information about the company.
2. In addition to the above reasons for summary dismissal, the Respondent also complied with the Small Business Fair Dismissal Code because:
a. The Applicant had been warned verbally on repeated occasions that her work performance and conduct was unsatisfactory, and that if her performance did not improve then she would be dismissed. The first of these warnings was given in early December 2015. The Applicant made a minimal improvement for a short period of time before returning to her previous standard of work. She was warned about her performance and conduct again on other occasions leading up to her dismissal.
The Respondents said in their respective Form F3 that the reasons for dismissal were:
1.The Applicant was dismissed because she had been engaging in threatening and abusive language and behaviour towards other employees and to her managers.
2. The Applicant was dismissed because it had been discovered that she had been receiving secret commissions and bonuses from other parties in transactions where she had been representing the company or its shareholder. The Respondent wants the secret commissions she has received paid to the company.
3. The Applicant had been taking company documents and property home.
4. The Applicant had been repeatedly warned that her work performance was unsatisfactory, and had not corrected or improved her performance.
Given the paucity of submissions of the Respondents I have relied on the material contained within the Form F3 to guide this decision.
On the basis of this material I am satisfied that the Respondents do, in the first instance, rely on the “summary dismissal” provisions of the Code to ground claims that the dismissal was not unfair.
Did the employer hold a belief that employee’s conduct was sufficiently serious to justify immediate dismissal?
On the basis of the evidence before me I am satisfied that the employer held a belief that Ms Guan’s conduct was sufficiently serious to justify immediate dismissal.
Was that belief based on reasonable grounds?
I am not satisfied, on the basis of the evidence before me, that the belief was held on reasonable grounds. As was said in Pinawin this “element incorporates the concept that the employer has carried out a reasonable investigation into the matter”.[32]
There is no clear or reliable evidence before me that would enable me to conclude that Mr Hu had reasonable grounds to conclude that Ms Guan was receiving commissions and that this was sufficient to justify immediate dismissal. The incident of which the Respondents complain occurred on the purchase of properties in 2015. Ms Guan admits that, at the request of Mr Hu, she wrote an apology to the company (although does not agree she did anything wrong or unknown by Mr Hu). The matter was apparently resolved in 2015. It did not justify instant dismissal at that time and it is difficult to see how Mr Hu could have reasonable grounds to believe that, two years later it would provide such grounds. Whilst it is not necessary that the Respondents prove that Ms Guan engaged in such conduct I cannot conclude that Mr Hu had reasonable grounds for his belief on the basis of his evidence which is, in any event, contested by Ms Guan.
None of the employees who gave evidence (and noting all of the employees of the Respondents gave evidence) provided credible evidence that Ms Guan had engaged in the conduct of which they complained. With the exception for Ms Guan’s conduct in a discussion with Mr Hu on 21 March 2017 and at the meeting where her employment was terminated in April 2017.
Any reasonable belief of Mr Hu must have been formed before the meeting of 19 April 2017.
Whilst I accept that Mr Hu had a reasonable belief that Ms Guan had threatened to “slap his face” in a discussion with her (by telephone) on 21 March 2017 he clearly did not reasonably believe that this provided grounds for instant dismissal. Following this incident Mr Hu provided Ms Guan with a written warning. A copy of this apparent warning was provided to the Commission.[33] Whilst I accept that document is what the Respondent says it is, it is written in Chinese and a translation has not been provided. The precise contents of the document cannot be confirmed.
There is nothing before the Commission on which I could conclude that Ms Guan was taking company documents home in breach of her obligations or responsibilities as an employee. Nothing was put of what these documents were. Whilst it became apparent during the proceedings that Ms Guan had returned some documents to the Respondents’ representative during the course of proceedings it is not clear when these were taken such that they could form the basis of any reasonable belief of Mr Hu that could justify instant dismissal.
There is no basis to conclude that the Respondents either through Mr Hu or through any agent undertook any investigation into the matters on which it now relies to justify the dismissal.
For these reasons I am not satisfied that the “summary dismissal” provisions of the Code were complied with by the Respondents.
The dismissal of Ms Guan is not consistent with the Code.
Other dismissal
If the dismissal was not a summary dismissal (although it appears that it was) the Respondents say that that they complied with the requirement to give Ms Guan verbal warnings that she may be dismissed. The Respondents say that the first such warning was given in December 2015 and again leading up to her dismissal.
This misunderstands the requirements of Code.
The “other dismissal” provisions require that the employer must provide the employee with a valid reason, based on capacity or conduct, as to why the employee is at risk of being dismissed.
The employee must be warned verbally or in writing that he or she risks dismissal if there is no improvement.
Whilst I accept that the Respondents may have provided Ms Guan with a written warning[34] I have no evidence as to content of the warning. The Respondents have failed to provide any accredited translation of the document. This deficiency was put to the Respondents’ representative during the hearing. He acknowledged that I could not know the content of the warning letter.
For this reason I cannot conclude that the warning letter of 21 March 2017 contained a warning that Ms Guan risked dismissal for a valid reason based on her capacity or conduct.
Whilst Ms Guan agrees that she received warnings from Mr Hu, she distinguishes these warnings (as “personal” warnings) from any warnings given by the “company”. This distinction was not explored further in cross-examination and the Respondents’ representative did not seek to clarify this in examination of its witnesses.
Conclusion
For these reasons I am not satisfied that the dismissal was consistent with the Code.
If the dismissal was not consistent with the Code was it unfair?
Section 385 of the FW Act states:
385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a)the person has been dismissed; and
(b)the dismissal was harsh, unjust or unreasonable; and
(c)the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d)the dismissal was not a case of genuine redundancy.
I am satisfied in this case that Ms Guan has been dismissed. I have found above that the dismissal was not consistent with the Code. There is no claim that the dismissal relates to redundancy.
To determine if Ms Guan was unfairly dismissed it is necessary to determine if her dismissal was harsh, unjust or unreasonable. The criteria for considering this is set out in s.387 of the FW Act:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a)whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b)whether the person was notified of that reason; and
(c)whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d)any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e)if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f)the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g)the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h)any other matters that the FWC considers relevant.
Section 387(a) - a valid reason
For a reason to be valid it must be “sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced cannot be a valid reason”.[35]
To the extent that the Respondents rely on acts that occurred in 2015 (the taking of commissions) this can only be described as capricious. The matter was raised and resolved. It was not considered grounds for dismissal at the time and Ms Guan had reasonable grounds to consider that matter closed.
To the extent that the Respondents rely on Ms Guan’s conduct on 21 March 2017, whilst I am satisfied that she received a warning I am not aware of the content of that warning. Clearly Ms Guan’s conduct on 21 March 2017 did not provide a reason for dismissal at that time. On the best evidence a warning was considered adequate. There was no evidence of any repetition of this conduct.
The only incident said to have occurred after 21 March 2017 related to a claim by the Respondents that Ms Guan did not carry out some work as required in relation to a report on Impex Lawyers and Advisors.
It is not apparent from the evidence of Mr Hu or any other employees of the Respondents precisely what it is Ms Guan was meant to do that she did not do. Ms Guan provided copies of text messages between Emma (Ms Wang) and others in relation to complaints made to the Victorian Legal Services Board and Commissioner in Victoria. Ms Guan says these text messages show that Emma was responsible for the matter.
To the extent that Mr Hu says Ms Guan gave fraudulent reports about the matter, there is no evidence before me to support such a statement. It might be correct but I cannot make any finding on the basis of the evidence before me.
Given the paucity of factual and reliable evidence I am not satisfied that there was a valid reason for Ms Guan’s dismissal.
Had there been evidence in relation to at least a portion of the claims of misconduct and/or poor performance by Ms Guan my decision may well have been different.
For these reasons I am not satisfied that there is a valid reason for the dismissal of Ms Guan.
Section 387(b) - notified of the reason
As there was no valid reason for dismissal Ms Guan cannot have been advised of it. Given the inability to read the warning letter of 21 March 2017 this matter could not, in any event, be affirmed.
Section 387(c) - opportunity to respond
It appears that Ms Guan’s dismissal was effected at a meeting of the Board of Directors of JW and H&Y on 19 April 2017. It is not apparent that Ms Guan was given an opportunity to respond to the reasons for her dismissal prior to the decision being made to dismiss her.
Section 387(d) - unreasonable refusal by the employer to allow the person to have a support person present
The evidence does not disclose if Ms Guan was advised in advance of the meetings where her employment was terminated that this was the purpose of the meetings. In these circumstances it is difficult to make any judgement as to whether she was unreasonably refused a support person.
It should be observed however that a failure to provide notice of a meeting or reasons for a meeting where the purpose is to dismiss the employee could be seen as an unreasonable refusal, by omission, to allow the person to have a support person present. Ms Guan was given no opportunity to have a support person present because of the timing of the meeting.
Section 387(e) - unsatisfactory performance
It is not clear if the basis for Ms Guan’s dismissal was performance or conduct. If the performance of her work was a reason for her dismissal there is no evidence that she was advised of the standards required of her, provided with assistance to reach those standards or provided with time within which to reach those standards.
Sections 387(f) & (g) - the degree to which the size of the employer’s business would impact on the procedures followed
The Respondents are both small businesses. They however made no submissions on this matter. I do accept nonetheless that the lack of access to human resource expertise and the size of the businesses would have had an impact how the dismissal was effected.
This does not excuse the lack of any sense of structure of system in the processes adopted by the Respondents. Ms Guan had the right to have at least some rudimentary documentation of issues with her conduct and performance and she had a right to procedural fairness.
The size of the Respondents’ businesses is no excuse for its abject failures in this regard.
Whilst I appreciate that Mr Hu, the owner of both companies, spends most of the year in China, that too is no excuse for ignoring some basic procedures in employee management.
Section 387(h) - any other matters
A substantial number of other matters were raised by both Ms Guan and Ms Wang in relation to company bank accounts, a company Telstra phone account and money owed by the companies to Ms Guan or by her to the Respondents and/or Mr Hu. These claims were confused and difficult to untangle. Many of these are not matters for the Commission to determine.
To the extent however that Ms Guan has not been paid entitlements owing to her, the Respondents are reminded that there are legal obligations on them to do so. There is an obligation on the employer to maintain accurate records of leave taken by an employee. This allows for accurate reconciliation of amounts otherwise owing. Such reconciliation should be made across the totality of Ms Guan’s employment (given that leave not taken accrues to the following year).
To the extent the Respondents’ claim Ms Guan still has access to company bank accounts I am satisfied that the Respondents maintain control over their bank accounts and a discussion with the relevant bank manager should resolve any such problems.
Conclusion
This was a difficult case to determine. The Respondents are companies run from China with an owner who spends most of the year in China. Mr Hu has relied on his staff in Melbourne to do their work as required whilst he managed the businesses from afar. This is not an ideal situation.
It was apparent that there was a level of collusion amongst the Respondents’ witnesses and a lack of honesty by them. The witness statements were too alike in phrasing to be accepted as the true work, as claimed, of the individuals and further were not supported by the oral evidence. One of the Respondents’ witnesses had spoken to Mr Hu after the commencement of proceedings although before he gave evidence, this much was clear because of his comments to the Commission about the alleged closeness of the interpreter and Ms Guan, but when asked, none of the witnesses admitted to talking to him of such matters. Ms Wang agreed that she had spoken to Mr Hu during the proceedings but claimed it was a work related matter only.
The reliability of the witness testimony was compounded by claims as to the contents of documents that were written fully in Chinese with no translation provided. This was not appropriate or probative material to put before the Commission and the Respondents’ representative should have been aware of this.
For all of the reasons outlined in this decision I am satisfied that the dismissal of Ms Guan was harsh in that it was disproportionate to the conduct that could be shown and it was unjust in that there was no evidence of the conduct that could justify the decision..
I therefore find that Ms Guan was unfairly dismissed.
Remedy
Ms Guan does not seek reinstatement and I am satisfied that reinstatement would not be appropriate.
Compensation
In determining the amount of compensation, s.392 of the FW Act states:
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.
I have taken into account Ms Guan’s period of employment and the apparent warning issued by the Respondents with respect to her conduct and/or performance. I have also taken into account that Mr Hu had decided to remove Ms Guan from her position as a director of one of the companies. It is apparent that the relationship between Mr Hu and Ms Guan had deteriorated significantly.
In these circumstances I am satisfied that Ms Guan would only have remained with the Respondents for a further eight weeks. I am satisfied that within this time Ms Guan would have decided to leave the company due to the loss of the directorship, the additional scrutiny on her conduct and performance that was indicated by a written warning.
Ms Guan’s lost remuneration in this respect is eight weeks’ pay plus superannuation less the notice period she has already been paid.
I am not satisfied that this amount should be reduced for contingencies. There is no reason to assume Ms Guan would not work throughout that period of time.
Ms Guan has been ill since her dismissal – her evidence suggests that the illness was caused by the manner of her dismissal. This was not disputed by the Respondents. I therefore do not intend to reduce the amount for a failure to mitigate her loss.
I am satisfied that Ms Guan did tell Mr Hu that she would slap his face and I find that for this reason the amount of compensation should be reduced for misconduct by a further one week.
I have examined the materials provided by Ms Guan including her bank statements.[36] From these it is clear that she was paid $4,000 net by JW and $1,200 net by H&Y each calendar month in wages. There are other amounts paid, presumably for lunch and car allowance, on a regular basis.
I shall therefore order that Ms Guan be paid an amount of:
· $9,600 (net – equivalent to 8 weeks’ pay) less $2,084 notice payment already paid and less $1,200 = $6,316 (net).
· Superannuation on the gross pay.
The final net amount and the appropriate superannuation amount are to be paid to Ms Guan within 14 days of the making of this Order. The Respondents are liable for the superannuation component and the relevant taxation amount.
These calculations are done on the best available material before the Commission which is, like much of the evidence, scant.
The order of the payment of this amount is not to be offset against any other amounts or any claims without mutual agreement.
The order of this amount does not settle any other claims any party may have in relation to loan repayments, outstanding leave, director’s fees or the like. Those are matters for the parties to settle or seek redress though the Fair Work Ombudsman or relevant courts. They are not matters for consideration by the Commission.
The order[37] shall be issued in conjunction with this decision.
COMMISSIONER
Appearances:
Y. Guan on her own behalf.
R. Downing on behalf of Australia JW Trading Pty. Ltd and H&Y Brother Investments & Development Pty Ltd.
Hearing details:
2017.
Melbourne:
August 30, 31.
September 1.
[1] Exhibit R4.
[2] Transcript, PN633-634.
[3] Exhibit R5.
[4] Exhibit R5.
[5] Transcript, PN850-857.
[6] Transcript, PN828.
[7] Exhibit R9.
[8] Ibid.
[9] Transcript, PN1133.
[10] Exhibit R6.
[11] Exhibit A11.
[12] Transcript, PN187.
[13] Transcript, PN99-100.
[14] Exhibits A2 and A3.
[15] Transcript, PN121.
[16] Exhibit A5.
[17] Transcript, PN278.
[18] Transcript, PN280.
[19] Transcript, PN281.
[20] Transcript, PN283-286.
[21] Exhibit R2.
[22] Ibid.
[23] Exhibit R2, Annexure B1.
[24] Transcript, PN494.
[25] Transcript, PN481.
[26] Transcript, PN481-482.
[27] Transcript, PN770.
[28] Exhibit R3.
[29] Transcript, PN779.
[30] [2012] FWAFB 1359.
[31] [2015] FWCFB 5264.
[32] [2012] FWAFB 1359 at [29].
[33] Respondents document list – document 1.
[34] Ibid.
[35] Selvachandran v Peteron Plastics Pty Ltd, (1995) 62 IR 371, 373.
[36] Exhibit A10.
[37] PR596571.
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