[2014] FWC 437
The attached document replaces the document previously issued with the above code on 24
January 2014.
In paragraph [32] in the last sentence, the word “not” has been removed.
Abbygayle Lang
Associate to Deputy President Gostencnik
Dated 31 January 2014
1
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Anthony Callahan
v
Graphic Impressions
(U2013/8459)
DEPUTY PRESIDENT
GOSTENCNIK MELBOURNE, 24 JANUARY 2014
Application for relief from unfair dismissal.
Introduction
[1] Anthony Callahan (Applicant) was the Managing Director of Graphic Impressions Pty
Ltd (Respondent) until he was summarily dismissed from his employment on 10 April 20131.
He was 46 years of age at the time of his dismissal2. The reasons given by the Respondent for
the dismissal were that the Respondent had discovered that the Applicant had been diverting
work intended for the Respondent to other businesses; he had been authorising work to be
undertaken by the Respondent but invoiced for that work externally and had been producing
work using the Respondent’s resources for another business but not invoicing for that work3.
On 11 April 2013 the Applicant lodged with the Fair Work Commission (Commission) an
application under s. 394 of the Fair Work Act 2009 (Act) for an unfair dismissal remedy. This
decision deals with that application.
Factual context and findings
The relationships
[2] The Applicant has spent the majority of his career in the printing industry4. He
commenced employment with the Respondent as its Managing Director in December 20015.
The position of Managing Director was responsible for the day-to-day management and
control of the Respondent’s business6 and the Applicant had autonomy in making
1 Exhibit A 2
2 Submissions of the Applicant on reasonable notice (23/1/2014) at [15]
3 Ibid
4 Exhibit A1 at [2] - [5]
5 Transcript PN94-PN97
6 Transcript PN 118
[2014] FWC 437
DECISION
[2014] FWC 437
2
management decisions7. Apart from his role as Managing Director he jointly established the
business of the Respondent in 20018. The Applicant agreed that as the Respondent’s
Managing Director, he was subject to various duties to be found in the Corporations Act
2001, and in the shareholders agreement9, together with duties implied into a contract of
employment10. The Applicant’s total remuneration package as the Respondent’s Managing
Director at the time of his dismissal was $100,000 per annum11. The Applicant remains a
shareholder of the Respondent, controlling 44% of the total shareholding12.
[3] Silvio Morelli is the Respondent’s majority shareholder (51%)13 and works for the
Respondent in a part-time capacity on a total remuneration package of $50,000 per annum.
Mr Morelli signed the letter of termination14. The remaining 5% of the shareholding is
controlled by Mr Castagnini15. Mr Morelli is also the owner of a publication business called
Blitz Publications which is a client of the Respondent16.
[4] Genine Thornton is married to the Applicant. She operates a business trading as
Genuine Print which provides various print related services including low volume printing
and print brokering17. Much of the allegations which formed the reasons for the Applicant’s
dismissal centred on Genuine Print. The Applicant and the Respondent are also separately
involved in a commercial dispute18.
The investigation
[5] On 22 March 2013 the Applicant commenced a period of extended sick leave19. Mr
Morelli assumed the day-to-day management and control of the Respondent’s business20.
While acting as the Respondent’s Managing Director, Mr Morelli became suspicious of
decisions that the Applicant had made which seemed to favour Genuine Print and were to the
detriment of the Respondent’s business21. Mr Morelli formed the view that further enquiries
were necessary and as, in his view, the Respondent was not in a financial position to engage
an external investigator, decided to undertake the investigation himself22. Mr Morelli’s
evidence was that he undertook the following steps in the conduct of his investigation:
A review of email correspondence that had been retrieved from backups;
7 Transcript PN 3211
8 Exhibit A1 at [5]
9 Exhibit R1
10 Transcript PN 129; PN 159: Exhibit R 1; Transcript PN 145
11 Transcript PN 83-PN84
12 Transcript PN 112
13 Transcript PN 113
14 Exhibit A 2
15 Transcript PN112-PN114
16 Transcript PN116; Exhibit R1 at Clause 44
17 Exhibit A4 at [1] – [8]
18 Transcript PN201-PN202
19 Exhibit A1 at [24]
20 Exhibit R5 at [20] – [21]
21 Ibid at [24]
22 Ibid at [25] – [26]
[2014] FWC 437
3
An examination of the Respondent’s “books” recording, amongst other things, jobs
quoted, job/purchase orders invoicing supplier invoices;
Speaking with other employees of the Respondent about the Applicant’s practices; and
Contacting select clients about anomalies on the Respondent’s “books” and practices
of the Applicant in directing work to Genuine Print.23
[6] After examining between approximately 25% to 30% of the data available for
examination, Mr Morelli concluded that the Applicant had been directing work and
consequently income to Genuine Print at the expense of the Respondent’s business over an
extended period. Mr Morelli estimated that this conduct resulted in a loss of income to the
Respondent’s business that was in excess of $140,00024.
The general meeting and meeting of directors
[7] Thereafter Mr Morelli decided to convene a general meeting of the Respondent and
notice of the meeting to be held on April 2013 was given25. A meeting of directors of the
Respondent was to follow the general meeting.26. The Applicant did not attend the general
meeting but gave a proxy27. The outcome of Mr Morelli’s investigation was not
communicated to the Applicant prior to the general meeting28 nor did the notice of meeting
provide any indication that the subject matter of Mr Morelli’s investigation or the prospect of
the Applicant’s dismissal would be discussed29. Indeed on the face of the notice of meeting
the only matter on the agenda was the election of Mr Mark Hossan as a director of the
Respondent30. It is therefore unremarkable that the Applicant did not attend the meeting on 8
April 2013 since he was unaware of Mr Morelli’s investigation, its outcome or that this matter
and his future employment would be discussed at that meeting or at the subsequent meeting of
directors. Mr Morelli conceded as much31. Mr Morelli was the only shareholder at the general
meeting as, in addition to the Applicant, the other shareholder Mr Castagnini did not attend32.
[8] Mr Morelli gave evidence that the actual decision to terminate the Applicant’s
employment was made at the directors meeting which followed the general meeting. He said
that the Applicant had been notified of the directors meeting but could not remember whether
the notice set out that the purpose of the meeting was to discuss the outcome of Mr Morelli’s
investigation33. A copy of the notice of directors meeting was not produced in evidence and
the failure to produce it was not explained. I am therefore prepared to infer that the notice did
not contain any information which would have alerted the Applicant to the fact that Mr
Morelli’s investigation, its outcome or his future employment would be discussed34.
23 Ibid at [28]
24 Ibid at [29] – [32]
25 Exhibit R9
26 Ibid at [39]; exhibit R9
27 Exhibit R5 at [39]
28 Transcript PN 3275 – PN 3278
29 Exhibit R9 at page 2
30 Ibid
31 Transcript PN 3295 – PN 3296
32 Transcript PN 3678, PN 3693
33 Transcript PN 3685 – PN 3687
34 See Jones v Dunkel (1959) 101 CLR 298
[2014] FWC 437
4
Decision to dismiss the Applicant
[9] The meeting of directors was constituted by the newly appointed director Mr Hossan
and Mr Morelli. Mr Hossan had been appointed as a director at the antecedent general
meeting at which the only shareholder in attendance was Mr Morelli35. In his witness
statement Mr Morelli said that “the directors and shareholders of the Respondent were
uniformly of the view that the Applicant had breached” certain duties as director and
employee of the Respondent, and that “we made this decision” (to terminate the appellant’s
employment) “in circumstances where:
The Applicant continued to be absent from the workplace;
There was compelling evidence of the Applicant acting to the detriment of the
Respondent over an extended period of time;
Respondent being in a financially vulnerable position and needing management
decisions to be made in the best interests of the Respondent.”36
[10] Mr Morelli gave evidence that Mr Hossan, the other director present at the meeting
was satisfied the state of the material arising from Mr Morelli’s investigation and that it
justified summary dismissal of the Applicant37. Minutes of the directors meeting were
apparently kept38 but the minutes were not produced in evidence nor was the failure to
produce them explained. Mr Hossan was not called to give evidence about what happened at
the meeting of directors. The failure to call Mr Hossan was also not explained. Given that the
Respondent relied on Mr Hossan’s attendance at the meeting of Directors and his apparent
agreement with the decision to terminate the Applicant’s employment, to present the air of
collective decision making, his absence and that of the minutes apparently kept, from the
Respondent’s evidentiary case should have been explained. The opportunity to explain
certainly arose during the hearing39. In the circumstances I am prepared to infer that it is
unlikely that Mr Hossan, having earlier been appointed as a director at the general meeting at
which the only shareholder present was Mr Morelli, would at the subsequent meeting of
directors, have taken a view contrary to Mr Morelli40. In my view based on the evidence, the
decision to terminate the employment of the Applicant was made by Mr Morelli and the
decision was based on the outcome of the investigation conducted by Mr Morelli. Mr Morelli
seemed, albeit reluctantly, to accept that this was so41.
[11] By letter dated 10 April 2013 the Applicant was advised of his summary dismissal42.
The letter advised the Applicant that the reason for his dismissal was that he had engaged in
conduct that amounted to a breach of his fiduciary duties as a director and employee of the
Respondent to act in the best interests of the Respondent and specifically that:
35 Transcript PN 3692 – PN 3698
36 exhibit R 5 at [40] – [42]
37 transcript PN 3697 – PN 3698
38 transcript PN 3699 – PN 3701
39 Transcript PN3695 - PN3701
40 See Jones v Dunkel (1959) 101 CLR 298
41 Transcript PN3693 - PN3697
42 exhibit A2
[2014] FWC 437
5
“1. You are diverting work intended for graphic impressions to genuine print and to
Docklands Press;
2. You have authorised works to be undertaken by Graphic Impressions but invoiced
them externally;
3. Produced work for Genuine Print but not invoiced it.”43
The allegations
[12] In addition to the allegations which founded the reasons for dismissal contained in the
letter of termination dated 10 April 2013, during the course of the proceedings before me
several other allegations were raised, which were said to provide further justification for the
Applicant’s dismissal. All of these matters are dealt with below.
Work performed by Graphic Impressions for Genuine Print without invoice
[13] It is unnecessary to deal in detail with the factual basis upon which this allegation was
made, as ultimately the Applicant and Respondent agreed during proceedings before me that
between February 2010 and February 2013, the Applicant had caused to be printed by the
Respondent in excess of 2000 posters for Genuine Print without invoicing for that work44.
These poster print runs were undertaken on more than 200 occasions during that period45. The
number and quantity of poster print runs undertaken for Genuine Print ultimately conceded by
the Applicant stands stark contrast to the initial evidence given by the Applicant that he had
caused to be undertaken poster print runs for a Genuine Print “on a few occasions”46.
[14] The Applicant’s evidence was that the cost of each poster printed was between two
and three dollars47. This represented the cost of materials and ink48 but did not include labour
costs which the Applicant said would be minimal nor the opportunity cost of a profit
component for the work49. The Applicant said that with the benefit of hindsight, he should not
have caused the Respondent to undertake the work without invoicing and accepted that by
doing so had breached his obligations as Managing Director of the Respondent50.
[15] Matthew McGregor is the Prepress Manager of the Respondent51 and was the
employee instructed by the Applicant to undertake poster print runs for Genuine Print52. Mr
McGregor gave evidence that the retail price for posters of the kind printed for Genuine Print
if undertaken on a bulk rate would be between $20 and $25 per poster 53 and the raw material
costs not including labour was approximately $7 per poster54. I accept Mr McGregor’s
43 Ibid
44 Transcript PN 2518 – PN 2534; exhibit R4, Annexure D
45 Ibid
46 Transcript PN 261
47 Transcript PN 336
48 Transcript PN 337 – PN 338
49 Transcript PN 339 – PN 340
50 Transcript PN 341 – PN 343
51 Exhibit R7 at [1]
52 Transcript PN 340; exhibit R7 at [5]
53 Transcript PN 1982
54 PN 1961 – PN 1965
[2014] FWC 437
6
evidence in preference to that of the Applicant because, as the Prepress Manager of the
Respondent, he is more likely than the Applicant to understand the input cost of poster
production in the Respondent’s business. On this basis the minimum raw materials cost to the
Respondent of the print runs performed for Genuine Print without invoice is $14,000. The
fact that the Applicant says that the work was carried out by Mr McGregor in a manner so as
not to interrupt any other production55, is beside the point. The work was undertaken for
Genuine Print at a cost to the Respondent. The conduct was in breach of the Applicant’s duty
to act in the Respondent’s best interests. In the circumstances the Applicant’s conduct is
misconduct.
Use of Respondent’s resources
[16] On a related theme it seems clear that the Applicant devoted some of his time and the
resources of the Respondent to furthering the interests of Genuine Print, when he should have
been carrying out work for the Respondent and using those resources to further the
Respondent’s interests. For example, in relation to his dealings with English Tapware56, in
instructing Mr McGregor to undertake printing work for Genuine Print for which no charge
was to be rendered57 , in arranging for finishing works to product produced by Genuine Print
to be undertaken by the Respondent’s employees utilising the Respondent’s facilities and
equipment and for that product to be delivered by one of the Respondent’s employee’s to a
Genuine Print customer58. The Applicant’s conduct in this regard is, in my view, also
misconduct as it is also a breach of his duty to act in the Respondent’s best interests.
Diverting work intended for the Respondent to Genuine Print and Docklands Press
[17] Genuine Print and Docklands Press both undertake or facilitate the undertaking of
work, which can be performed (or contracted out at a profit) by the Respondent. In the letter
of termination of 10 April 2013 the Respondent says that one of the reasons for the dismissal
of the Applicant was that he had been diverting work intended for the Respondent to Genuine
Print and Docklands Press. Insofar as Docklands Press is concerned, the gravamen of the
allegation is that the Applicant was active in speaking with Truck Power Magazine (also
known as Transport Today), a client of the Respondent, referring it to Genuine Print, which in
turn referred the magazine to Docklands Press. It is said by the Respondent that the Applicant
did not try to retain Truck Power Magazine as a client and facilitated the Respondent losing
the magazine as a client and consequently a significant amount of prospective work59.
[18] The Applicant gave evidence that on 24 March 2013 he received an email and later a
phone call from Geoff Paradise the owner of Truck Power Magazine. Mr Paradise told the
Applicant that he had received an abusive call from Mr Morelli on 22 March 2013 and as a
consequence was ending the relationship between the magazine and the Respondent. It was in
this context that the Applicant referred the magazine to Genuine Print60. During proceedings
before me the Applicant gave the following evidence:
55 Transcript PN265
56 Transcript PN 605 – PN 610
57 Transcript PN 340; exhibit R7 at [5]
58 Transcript PN 357 – PN 382
59 Respondent’s Final Submissions at [24]
60 Exhibit A1 at [25] – [26]
[2014] FWC 437
7
“Whilst you’re still working for the Respondent you have taken the work from Truck Power Magazine
to another printer, haven’t you?---No, yes, I did. The reason why is that Jeff decided to take his work
elsewhere after getting an abusive call from Mr Morelli and he refused to do any work with Graphic
Impressions moving forward and he put that in writing which I later found out and he didn’t have
another resource so I suggest that he go to another
Truck Power Magazine has been a Graphic Impressions client for many years. That’s correct, isn’t it?--
-Yes, three years.
You didn’t discuss this with Mr Morelli, did you?---No.
No?---No, I didn’t, no, not at all.
Not even a phone call?---No.
As a director, it was your duty to do so, wasn’t it?---No, I was ill at the time. I was ill. I rang him up
and I just put him onto the Genuine Print. I said, “Go to Genuine Print and they’ll probably send it to
Docklands.” That’s all I did. I was off on sick leave.”61
[19] And later:
“You were also causing by diverting the work to Genuine Print and to Docklands Press – I think that’s
just a reference to the Truck Power Magazine – you were causing Graphic Impressions to forego the
opportunity to outsource the work and make a profit margin?---No, I believe as stated earlier that there
was no room for any profit margin in that so I sent the work to Genuine Print, (a) to help the client out
so that I can get the work done; b) if they sent it to another printer that could do digital print work as
well as long-sheet fed offset same as we, they may get an opportunity to quote the work that we’ve
been producing; and (c) Genuine Print are not going to go behind Graphic Impressions’ back and try
and steal clients. It’s just trying to service the clients as best I can.
Yes, and another example you gave of that was sending a significant-sized repeat magazine job for
Truck Power Magazine to Docklands Press?---Yes, and if I may just bring it back to your attention
that the reason why the client left that is because of an abusive phone call from Mr Morelli chasing up
money. And he terminated us, so he wasn’t a client of Graphic Impressions when I suggested that he
goes to another printer. He asked for my advice.
Okay, thank you, Mr Callahan. Mr Callahan - - -
THE DEPUTY PRESIDENT: Can I just test you on that? Why wouldn’t your advice have been,
“Well, why don’t you reconsider the termination of our engagement?”?---Well, he sends an email
apparently earlier. I was on leave at the time.
I understand that?---Yes.
But why wouldn’t your first advice would not have been to try and repair the relationship?---Well, I
told him it’s not necessary to do that and he was quite adamant that he was going to move on. He was
very adamant. And he told me that he’d been thinking about it for some time. I think that was just a
catalyst. That’s how I was informed, sir.
And you referred him to Genuine Print - - -?---Yes.
- - - who in turn outsourced the work to - - -?---Yes.
- - - Docklands Press?---Yes.”62
[20] The Respondent did not call any person from Truck Power Magazine to give evidence
about the circumstances of the magazine terminating its relationship with the Respondent. Nor
did the Respondent seriously challenge the Applicant’s version of the events leading to the
magazine terminating its relationship and the referral to Docklands Press through Genuine
Print. Instead it submitted that the Applicant believed that he was not under any duty to seek
to retain the magazine as a client of the Respondent, took no steps to do so and facilitated the
move by the magazine to another print provider.63 This is not a fair reflection of the evidence.
The Applicant’s evidence was that he told the magazine’s owner it was not necessary for them
to terminate the relationship but that Mr Paradise was adamant and it was in that circumstance
the Applicant referred the magazine to Genuine Print64. Whilst the Applicant might be
61 Transcript PN 524 – PN 529
62 Transcript PN 868 – PN 876
63 Respondent’s Final Submissions at [24]
64 Transcript PN 873 – PN 874
[2014] FWC 437
8
criticised for dealing with the matter whilst he was on sick leave, it seems to me on the basis
of the Applicant’s evidence, which is uncontroverted on this point, the Applicant did not
divert the work of Truck Power Magazine intended for the Respondent to Docklands Press.
The email correspondence passing between Mr Morelli and Brett Chalmers of Docklands
Press on 3 and 4 April 2013 did not assist the Respondent in making good this allegation65
[21] As to the diversion of work to Genuine Print, the substance of the allegation is that the
Applicant has undermined the Respondent’s business by sending work to Genuine Print rather
than outsourcing that work to another printer so that the Respondent could retain the work and
charge the client a margin for that work66.
[22] The Applicant gave evidence that the Respondent had a practice of referring work to
other printing companies which was inappropriate work for the Respondent, for example,
because the project was too small, the Respondent was too busy or did not undertake the type
of printing that was required67. He said that in 2006 his wife Genine Thornton established
Genuine Print68. In about 2007 the Respondent and Genuine Print began a business
relationship whereby some work required by a client involving a small volume, would be
referred to Genuine Print, some clients requiring low volume or unsuitable work would be
referred directly to Genuine Print and external enquiries made of Genuine Print for high-
volume work would be referred to the Respondent69. The Applicant said that the business
relationship “was not agreed upon formally although all of [the Respondent’s] employees
knew that [Thornton] was my wife and that Genuine [Print] was her business”70.
[23] Ms Thornton gave evidence that in their business dealings, she and her husband
maintained a professional relationship when dealing with each other at work71. While I have
little doubt that was intended to be the case, it seems to me clear that the professional
relationship blurred from time to time with the personal relationship as is evident in the
following evidence given by the Applicant during cross examination:
But your practice has been to send those smaller jobs straight to Genuine Print, hasn’t it?---Not always,
not always, but if I can, yes, I will help my wife out - - -72
[24] Although referral of work to Genuine Print by the Applicant was ill advised, given the
self-evident conflict arising from his position with the Respondent and his relationship with
Ms Thornton, this is not the issue about which the Respondent was aggrieved. The
fundamental complaint of the Respondent was not the referral or outsourcing of work but
rather it was the fact that some work had been outsourced or referred to Genuine Print, in
relation to which a profit margin could have been added for the benefit of the Respondent but,
65 Exhibit R4 Annexure K
66 Respondent’s Final Submissions at [25]
67 Exhibit A1 at [11]
68 Exhibit A1 at [12]; I note that Ms Thornton gave evidence that she commenced operating the business of Genuine Print in
2005 (exhibit A4 of [5]) but as nothing turns on the date on which that business commence I do not need to resolve the
conflict of evidence
69 Exhibit A1 at [14]
70 Exhibit A1 at [16]
71 Exhibit A 4 at [12]
72 Transcript PN 354
[2014] FWC 437
9
was not73. The Applicant accepted that he outsourced work to Genuine Print, however the
evidence that the Applicant, when outsourcing or referring work to Genuine Print, should
have but did not charge a margin on the work is less than satisfactory and in circumstances of
such a serious allegation, in my view fall well short of the required standard74 for the
following reasons.
[25] First, the Applicant maintained that most of the work referred to Genuine Print was
work for which no margin could be charged by the Respondent. Secondly, no evidence was
called from any client whose work had been referred. Thirdly, although the Applicant made a
concession that work in relation to the Belgair account undertaken by Genuine Print could
have been outsourced with a margin applied, the evidence does not establish that the work
carried out by Genuine Print was referred or outsourced to it by the Applicant. So much is
clear from the following exchange recorded in the extract from transcript and reproduced
below:
“MR HOOPER: Mr Callahan, if I could take you to page 128?---Yes.
This is in relation to work performed for a company called Belgair?---Yes.
Looking at page 128, it’s an email from Gary Scott at Belgair to Genuine Print and also to yourself at
Graphic Impressions, you agree?---Yes.
Belgair had been a longstanding client of Graphic Impressions, I think going right back to when it was
basically is set up?---At our inception, yes.
So this is work in this email that we’re looking at that could have been outsourced and a margin charged
by Graphic Impressions, isn’t it?---Maybe, yes. Yes.
But the work was referred to Genuine Print, wasn’t it?---I don’t know. Gary sent this email to both
Genine as well as myself. Now, Gary is also a friend of Genine’s, a personal friend of the family as
well. So I think it would be up to him to place the work wherever he feels best, wherever he would like
to. Gary sources several quotes on all work that he does and whoever is the best price pretty much gets
it. I’m lucky enough that he gives me a second chance.
So your evidence is effectively you would have quoted on behalf of Graphic Impressions for this and
Genine would have quoted on behalf of Genuine Print?
---I’m not sure to be honest with you. It goes back gees, nearly two years.
THE DEPUTY PRESIDENT: Well, the second line of that email, Mr Callahan, suggests, “Tone” –
which is I think a reference to you?---Yes.
And you also quote to print et cetera. So that part of the quote at least is directed over to you?---Yes, I
would say the letter, it’s an overprint in black, which wouldn’t be for us. The overprint in black would
be variable data. So it would be a Genuine Print job.
MR HOOPER: So he’s asking you to quote on behalf of Genuine Print?---It looks that way, yes.
So this is 1.26 in the afternoon on Friday and effectively you’re quoting for Genuine Print?---No, he
sent it through to Genine as well. So I’m assuming given the time how long ago it was that Genine may
have quoted it. So he’s only copied me in on it and Mark. So it’s sent through to Genine and customer
service at Genuine Print so it he hasn’t really – yes, I know he has marked it, “Tone, can you quote
this?” But I see he’s directed it directly to Genuine Print and just copied myself and also his own
designer, Mark.”75
[26] Although the Applicant’s answers above further highlight the obvious conflict that
existed in his management of the business relationship between the Respondent and Genuine
Print on the one hand and his relationship with Ms Thornton on the other, the evidence does
not establish that the work at issue was referred or outsourced by the Applicant to Genuine
Print without the application of an appropriate profit margin.
73 Transcript PN 3520 – PN 3525
74 See Briginshaw v Briginshaw (1938) 60 CLR 366
75 Transcript PN 566– PN 576
[2014] FWC 437
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[27] Fourthly, the evidence relied upon by the Respondent in relation to the work for
English Tapware76 to make good this point merely shows that the Applicant was devoting
some of his time while working for the Respondent in furthering the business interests of
Genuine Print, a matter about which I have earlier made findings77. It does not establish that
the work was referred or outsourced to Genuine Print without the addition of an appropriate
profit margin by the Applicant or that such a margin could have been applied78.
[28] Fifthly, the example relied upon by the Respondent in relation to the work for Doug
Pell79, establishes no more than the Applicant exercising a judgement that the work requested
was not profitable or suitable work for the Respondent to undertake. It does not establish that
it was work of a kind to which a profit margin could be attached by the Respondent80. Such
judgements fall within the Applicant’s day to day management responsibilities.
[29] When viewed in its totality, the evidence under this head establishes that the Applicant
referred work to Genuine Print in circumstances where his relationship with Ms Thornton and
her position as owner of Genuine Print were likely to be in conflict with his duties as
Managing Director of the Respondent. Although the Applicant was prepared only to concede
that “maybe in hindsight”81 it would have been prudent to have someone else deal with the
Genuine Print account and business relationship, it seems to me that that was the appropriate
course. But the Respondent did not press this issue as a basis for the dismissal nor did it cross
examine the Applicant about the issue. Instead it relied upon the diversion of work from the
Respondent to Genuine Print82 which was intended to convey not merely the referral or
outsourcing of work to Genuine Print, but doing so without first applying a margin to the
work83. For the reasons given above, I am not satisfied that the evidence supports that finding.
Consequently it is not a reason established by evidence justifying dismissal, much less
summary dismissal. Furthermore the fact that Genuine Print may have made a profit margin
on the work referred or outsourced to it by the Applicant does not mean, much less
established by evidence, that the Respondent could have applied a margin to that work and
that the Applicant was in breach of his duties as an employee in failing to ensure that this was
done.
Reducing the prices charged to Genuine Print for work performed for it by the Respondent
(excessive discounting)
[30] The Respondent relied upon a number of invoices of the Respondent rendered to
Genuine Print to establish excessive discounting84. The Respondent says that as a result it
made a loss on these transactions by which it meant (in most cases) a loss of profit that it
would otherwise have made had the discount not been applied. It is not contested by the
Applicant that some work was undertaken the Respondent for Genuine Print at a discounted
rate but he says this was done to win work and to match better prices that Genuine Print had
76 Respondent’s Final Submissions at [25(b)]
77 See [16] of these reasons
78 Transcript PN 605 – PN 615
79 Respondent’s Final Submissions at [25(c)]
80 Transcript PN 410 – PN 424
81 Transcript PN 1038
82 Exhibit A 2
83 Transcript PN 3525
84 Exhibit R4
[2014] FWC 437
11
secured from other providers85. The Applicant’s evidence was that Genuine Print did not
show him these other quotes, but he took Genuine Print at its word86. The Applicant’s
evidence was that he and other sales employees of the Respondent also adopted the practice of
matching prices obtained by clients other than Genuine Print from other suppliers87, and that
if a financial analysis were undertaken of those transactions to that undertaken an analysis
relied on by the Respondent (exhibit R4), a similar financial outcome would be
demonstrated88. This evidence was not seriously challenged by the Respondent.
[31] Apart from the obvious conflict issue discussed earlier, the evidence does not establish
that there was excessive discounting given to Genuine Print by the Applicant. Such a
conclusion would only be available if an analysis was undertaken of the totality of the
discounting of work performed by the Respondent for all of its clients and a comparison is
made with the discounting practice related to Genuine Print. Such an analysis has not been
undertaken, or if it has, was not produced in evidence. However, the real issue is not whether
there was excessive discounting in favour of Genuine Print, but rather, the discounting enable
Genuine Print to make a profit on the transaction, and in that respect the discounting in favour
of Genuine Print stands in stark contrast to discounting given to other clients of the
Respondent. This is because the other clients nominated by the Applicant (which are
publishers of magazines) as recipients of a discount do not then on sell that printing work as
printing work performed or procured by them or add a margin for that work.89 These other
clients are also not competititors.
[32] It was not contested that Genuine Print charged a margin to its clients of between 20%
and 34% for the discounted work at issue undertaken by the Respondent90. Although the
Applicant gave evidence that he was not aware of the margin charged for the work by
Genuine Print91, it beggars belief that he would not have been aware that Genuine Print would
be making a profit on the transaction and the Applicant conceded as much92. Further, in my
view it is imprudent to simply accept, sight unseen, assertions from Genuine Print that it had
procured a better price elsewhere for printing work. All the more so when the owner of
Genuine Print is married to the Applicant and the potential for conflict in loyalty and duty is
ever present. On a proper analysis of the evidence, it seems clear that the work that the
Applicant caused the Respondent to undertake for Genuine Print at a discounted rate, was
done in part to enable Genuine Print to make a profit on the work, and did not result in an
appropriate level of profit to the Respondent. Viewed in this way, in giving a discount to
Genuine Print the Applicant was acting in its interests, and while he was not in my view
acting dishonestly, he was not acting in the interests of the Respondent. Consequently the
conduct was misconduct.
Scottish Pacific
85 Transcript PN 919 – PN 921
86 Transcript PN 921 – PN 924
87 Transcript PN 1031 – PN 1037
88 Transcript PN 1035
89 See the list of clients at transcript PN 1032 – PN 1035
90 Applicant's final submissions at [26]
91 Transcript PN 385
92 Transcript PN 386 – PN 388
[2014] FWC 437
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[33] The allegations concerning Scottish Pacific transactions did not form part of the
reasons for the Applicant’s dismissal as set out in the letter of termination93, however it was
Mr Morelli’s evidence that the Scottish Pacific transactions formed part of his reasons,
although he was not able to offer an explanation for the absence of any reference to those
matters in the termination letter94.
[34] The Respondent has a credit facility with Scottish Pacific95 which assists with its cash
flow. Under the credit facility the Respondent sells an invoice for work performed by it to
Scottish Pacific and receives funding equal to 80% of the invoice amount96. Interest on the
amount advanced by Scottish Pacific is charged at the rate of 12% per annum97. Payment on
the invoice is usually made by the client directly to Scottish Pacific, and once payment is
received, Scottish Pacific would pay the Respondent the remaining 20% of the invoice
amount98. The credit facility with Scottish Pacific has a maximum total amount that may be
advanced to the Respondent of $800,00099.
[35] There are two allegations concerning the Scottish Pacific transactions. The first
concerns a practice called “factoring”. It is a term of the credit facility arrangement between
the Respondent and Scottish Pacific that the Respondent will only sell to Scottish Pacific
invoices relating to work performed or delivered (also referred to as the delivery date)100.
Factoring involves selling an invoice to Scottish Pacific before the delivery date. Factoring is
a breach of the agreement establishing the credit facility with Scottish Pacific101. Mr Morelli
and the Applicant had an agreement or understanding for the Respondent to engage in the
practice of factoring even though the practice was in breach of the Respondent’s agreement
with Scottish Pacific102. Mr Morelli’s evidence about the circumstances and content of the
agreement or understanding with the Applicant was as follows:
“Before you continue, Mr Hooper, just going back a little bit, Mr Morelli, you indicated earlier about an
agreement - an earlier agreement that you had with Mr Callahan about factoring?---Yes.
Do you remember that?---Yes.
Can you just explain to me what that agreement was and when it was made?
---Yes. For quite some time we would factor according to the agreed terms with Scottish Pacific, and
that is that we would factor at the time when we delivered the job. Experiencing the cash flow squeeze,
Mr Callahan suggested that we might factor certain jobs a couple of days ahead because they were in
production. I agreed with that, and I did say that - we had an agreement. I said, "Tony, we do not factor
anything that isn't in production that we don't have a purchase order, we don't have a disc and we
haven't begun production. We don't factor anything that we are not going to be delivering within five
days. The reason for that was the risk of factoring something and then a client saying, "I don't want to
go ahead with the job." Mr Callahan agreed to that. He assured me that that would be the practice.
You agreed to that even though you knew that it was inconsistent with the arrangement that you had
with the factoring provider?---Yes, I did.”103
93 See exhibit A2
94 Transcript PN 3708 – PN 3711
95 Exhibit R8 at [8]
96 Exhibit R8 at [9]
97 Transcript PN 2941 – PN 2943
98 Transcript PN 2835
99 Transcript PN 204
100 Transcript PN 2896
101 Transcript PN 2902 – 2903
102 Transcript PN 3297
103 Transcript PN 3297 – PN 3300
[2014] FWC 437
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[36] The allegation that is made by the Respondent is that the Applicant engaged in
factoring outside the terms agreed with Mr Morelli and that this put at risk the credit facility
with Scottish Pacific. This is an extraordinary allegation and amounts to an argument that the
Applicant is permitted to engage in conduct which facilitates a breach of the Respondent’s
agreement with Scottish Pacific but only to the extent agreed with the Respondent’s majority
shareholder.
[37] Ajith Udayakumara is the Respondent’s bookkeeper. He gave evidence that the
Applicant had instructed him to render several invoices to Scottish Pacific well before the
delivery date104. The Applicant disputed Mr Udayakumara’s account. I do not propose to
resolve the disputed evidence. Mr Morelli and the Applicant entered into an agreement or
understanding to engage in conduct that was, and which they knew to be, in breach of the
credit facility agreement with Scottish Pacific. To now suggest that the Applicant’s
instruction to Mr Udayakumara to engage in excessive factoring should amount to a reason
for dismissal in the circumstances is quite frankly absurd. Factoring would not be occurring at
all but for Mr Morelli’s complicity in the practice. It is factoring, which is authorised by Mr
Morelli that places at risk the credit facility with Scottish Pacific. Excessive factoring might
well increase the risk of the Respondent been caught out, but that does not give Mr Morelli
licence to rely upon that conduct as a basis for the Applicant’s dismissal. It is factoring, the
practice that Mr Morelli authorises, that is in breach of the credit facility agreement. That the
Applicant may have factored outside of the vague boundaries of the unlawful agreement or
understanding with Mr Morelli is beside the point. Mr Morelli has made his bed and he can
sleep in it.
[38] The second allegation concerning Scottish Pacific transactions involves late payments
made to Scottish Pacific of sold invoices paid by clients to the Respondent instead of to
Scottish Pacific. When a client makes a payment to the Respondent in respect of an amount
on an invoice that has been sold to Scottish Pacific, the Respondent is required to immediately
pay that amount to Scottish Pacific. Failure to do so means the Respondent is in breach of its
credit facility agreement with Scottish Pacific.
[39] The Applicant has acknowledged that on occasions funds received in this way by the
Respondent were not immediately paid to Scottish Pacific and instead were used to meet other
expenditure105. This concession is an acceptance that the Applicant engaged in conduct that
resulted in the Respondent breaching obligations under the credit facility agreement with
Scottish Pacific. Given the Applicant’s position as Managing Director of the Respondent, the
deliberate conduct, which placed the Respondent in a position of breaching an important
agreement with a third-party that is designed to assist the Respondent with its cash flow
needs, is in my opinion misconduct.
[40] The subject matter of this allegation was dealt with in a meeting of directors, at which
only Mr Morelli and the Applicant were present, held on 27 February 2013. Minutes of that
meeting was tendered in evidence106. The Applicant does not dispute the accuracy of those
minutes107. According to the minutes, the meeting was convened to discuss several serious
104 Exhibit R 8 at [4] – [6]
105 Transcript PN 224
106 Exhibit R2
107 Transcript PN 244
[2014] FWC 437
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financial issues facing the Respondent including the late payments to Scottish Pacific that
were outstanding108. The minutes also record that Mr Morelli stated that “Scottish Pacific
must be paid today for accounts that should have been transferred”109.
[41] It seems that this issue had been dealt with and resolved at the meeting of 27 February
2013. The minutes do not record any action that is to be taken against the Applicant in
relation to the Scottish Pacific transactions. Mr Morelli did not give any evidence that any
action was taken against the Applicant because of the late payments to Scottish Pacific. As Mr
Morelli knew about the issue since at least 27 February 2013, had raised the issue with the
Applicant at the meeting of 27 February 2013, and dealt with the issue without action of any
kind having been taken against the Applicant, the Respondent cannot in my view now rely
upon that issue alone as a reason justifying summary dismissal. To the extent that the conduct
surrounding the late payments made to Scottish Pacific is serious misconduct, then based on
the minutes of the meeting of 27 February 2013 the Respondent has waived its right to
summarily dismiss the Applicant on that ground. It is clear from the minutes and the
continued employment of the Applicant after that time, that Respondent had full knowledge
of the misconduct alleged and with that knowledge, the Respondent elected to retain the
Applicant in its service and gave him instructions in relation to continuing to carry out his
duties. It has therefore waived its right to summarily dismiss the Applicant for that reason110.
[42] But a waiver of a right to dismiss summarily does not mean that the misconduct
somehow disappears or becomes irrelevant when further misconduct occurs. Previously
waived misconduct may be taken into account in determining whether fresh misconduct
would justify dismissal111. I will therefore take this matter into account in assessing whether
the matters set out in the termination letter of 10 April 2013 justified summary dismissal of
the Applicant or dismissal at all.
Misappropriation of digital plotter/printer
[43] It has been alleged that the Applicant misappropriated a HP 5000 DesignJet printer
belonging to the Respondent for use by Genuine Print. The allegation did not form part of the
reasons for dismissal of the Applicant set out in the letter of termination of 10 April 2013. The
allegation did not form part of the material filed by the Respondent on which it intended to
rely. The allegation was not put to the Applicant when he gave evidence and was cross-
examined by Counsel for the Respondent on 2 September 2013. The allegations were first
raised in the statement of Matthew McGregor dated 18 September 2013 and tendered in
evidence as exhibit R7 when Mr McGregor gave evidence on 25 September 2013112. The
allegation was not contained in a statement of Mr McGregor filed by the Respondent before
the proceedings commenced but ultimately not relied upon. This was because, according to
Mr Morelli’s evidence, Mr Morelli became aware of the issue of a week or so before he gave
108 Exhibit R2 at p. 1
109 Exhibit R2 at p. 2
110 See for example Federal Supply and Cold Storage Co of South Africa v Angehrn (1910) 103 LT 150; Martin v South
Australia (1982) 49 SAIR to 69; McCasker v Darling DownsCo-op Bacon Association (1988) 25 IR 107 and
Australasian Transport Officers Association v Department of Motor Transport (1988) 25 IR 235
111 See for example John Lysaght (Australia) Ltd v Federated Ironworkers; Re York (1972) 14 AILR 57 and McCasker v
Darling DownsCo-op Bacon Association (1988) 25 IR 107
112 Exhibit R7 at [14] – [26]
[2014] FWC 437
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evidence (on 25 September 2013) and that he had no knowledge of the printer having been
moved113.
[44] Ms Thornton gave evidence that the printer had been delivered to her premises but that
it did not function, it served as a decorative piece of machinery but that it had been intended
to be used for printing jobs for Genuine Print114. No questions were asked of the Applicant
about the printer. This is understandable as Mr Morelli only became aware of the issue after
the Applicant had given his evidence. However no application was made to recall the
Applicant in order that the allegations made be put to him by way of cross examination.
Although no objection was made to the receipt of the evidence or to Mr Morelli’s explanation
of it or to questions put in cross examination to Ms Thornton about the printer, I am inclined
to disregard all of the evidence in relation to this issue. Whilst the Respondent might
otherwise be entitled to rely upon this conduct as after acquired knowledge further justifying
the dismissal of the Applicant, as a matter of fairness because the Applicant has not had an
opportunity to answer the allegation.
Consideration and application of the statutory framework
Protection from Unfair Dismissal
[45] An order for reinstatement or compensation may only be made if I am satisfied the
Applicant was, at the date of his dismissal, protected from unfair dismissal under the Act.
Section 382 sets out the circumstances that must exist for the Applicant to be protected from
unfair dismissal:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her
employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if
any) worked out in relation to the person in accordance with the regulations, is less
than the high income threshold.
Note: High income threshold indexed to $123,300 from 1 July 2012.”
[46] There is no dispute, and I am satisfied, the Applicant was, on 10 April 2013, protected
from unfair dismissal within the meaning of s.382.
Was the dismissal unfair?
[47] The Applicant’s dismissal will have been unfair if I am satisfied, on the evidence, that
all of the circumstances set out at s.385 of the Act existed. Section 385 provides:
113 Transcript PN 3317 – PN 3335
114 Transcript PN 2569 – PN 2587
[2014] FWC 437
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“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.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
[48] There is no dispute that the Applicant was dismissed at the Respondent’s initiative
within the meaning of s.386 of the Act, that the Small Business Fair Dismissal Code did not
apply to the Respondent or that the dismissal of the Applicant was not for reasons of
redundancy and I am satisfied of these matters.
Harsh, unjust or unreasonable
[49] It remains therefore, for me to consider whether I am satisfied the Applicant’s
dismissal was harsh, unjust or unreasonable. The matters I must take into account when
assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the
Act:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must
take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or
conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the
capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support
person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the
person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on
the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists
or expertise in the enterprise would be likely to impact on the procedures followed in effecting
the dismissal; and
(h) any other matters that the FWC considers relevant.”
[2014] FWC 437
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[50] I am obliged to consider each of these matters in reaching my conclusion and I do so
below.115
[51] The ambit of matters that may fall within the words ‘harsh, unjust or unreasonable’
was explained in Byrne v Australian Airlines Ltd116 by McHugh and Gummow JJ as follows:
“.... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh
or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will
overlap. Thus, the one termination of employment may be unjust because the employee was
not guilty of the misconduct on which the employer acted, may be unreasonable because it was
decided upon inferences which could not reasonably have been drawn from the material before
the employer, and may be harsh in its consequences for the personal and economic situation of
the employee or because it is disproportionate to the gravity of the misconduct in respect of
which the employer acted.”
[52] The substance of the Applicant’s argument117 that his dismissal was harsh, unjust or
unreasonable is as follows:
He did not engage in much of the conduct alleged by the Respondent or in the manner
alleged by the Respondent so that the Respondent did not have a valid reason for
dismissing him;
The conduct alleged was not misconduct in any event;
Even if the conduct was misconduct, it was not sufficiently serious to justify his
dismissal;
The reasons that the Respondent now relies upon to justify his dismissal were not
communicated to him;
The Respondent did not provide him with an opportunity to respond to any of the
reasons for his dismissal;
Insofar as the reasons for dismissal relate to his performance as managing director of
the Respondent, he has not received warnings about his performance;
He was denied the opportunity to respond to the outcome of the investigation and the
Respondent did not comply with the procedure set out in the shareholder agreement
dealing with misconduct;
He was absent due to illness at the time of his dismissal; and
His conduct should be judged in the context of the conduct of Mr Morelli in relation to
Blitz Publications.
[53] The Respondent submitted that its dismissal of the Applicant was not harsh, unjust or
unreasonable. The Respondent’s argument118 is summarised below:
The Respondent had a valid reason for its dismissal of the Applicant because the
Applicant, on his own admission has been derelict in and in breach of his duties as an
employee;
115 Sayer v Melsteel [2011] FWAFB 7498
116 (1995) 185 CLR 410 at 465
117 See Final Submissions of the Applicant
118 See Respondent's Final Submissions
http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281995%29%20185%20CLR%20410
[2014] FWC 437
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In particular the Applicant engaged in conduct which included causing work to be
performed for Genuine Print without charge, diverting work to Genuine Print that
could otherwise have been outsourced and a profit margin applied, using the resources
of the Respondent’s business to further the interests of Genuine Print, reducing the
price quoted by the Respondent to Genuine Print to further the interests of Genuine
Print, excessive factoring and delaying payments Scottish Pacific;
Further, the Applicant misappropriated a printer belonging to the Respondent for use
conducted by Genuine Print;
The totality of the conduct amounted to misconduct which struck at the heart of the
employment relationship and which justified dismissal;
Respondent acknowledges that it did not put “the full plethora of reasons for the
termination” to the Applicant but that this occurred in circumstances where the
Respondent was in financial crisis, the Applicant occupied a crucial role as managing
director, he had removed himself and his personal effects from business and taken a
period of sick leave and the Respondent had investigated the Applicant’s misconduct;
Further the Applicant was aware of the Respondent’s concerns about the late payment
of invoice amounts to Scottish Pacific from the 27 February 2013 directors meeting;
Warnings were not required since the Applicant’s conduct justified summary
dismissal;
The Respondent is a small size business and does not have in-house human resources
or legal expertise from which to take advice;
Some of the Applicant’s conduct was dishonest and the conduct occurred in
circumstances where the Applicant occupied a position of trust with the Respondent as
its managing director.
[54] I have considered the competing submissions in the context of my earlier findings and
in my consideration of each of the criteria in s.387 of the Act below.
Valid reason - s.387(a)
[55] There must have been a valid reason for the dismissal of the Applicant related to the
Applicant’s capacity of conduct, although it need not be the reason given to the Applicant at
the time of the dismissal.119 The reason should be “sound, defensible and well founded”120
and should not be “capricious, fanciful, spiteful or prejudiced.”121 Where, as in the present
case, the Respondent relies in part on conduct of the Applicant to justify its decision to
terminate his employment, I must be satisfied that the conduct as alleged by the Respondent
occurred.122 A mere suspicion of conduct does not amount to a valid reason.123
[56] For the reasons given earlier at [13] – [15] of these reasons I am satisfied that the
Applicant caused printing works to be performed for Genuine Print without charge work. The
119 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378
120 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373
121 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373
122 King v Freshmore (Vic) Pty Ltd, Full Bench AIRC, 17 March 2000, (Print S4213)
123 Australian Meat Holdings Pty Ltd v McLauchlan (1998) 88 IR 1
[2014] FWC 437
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Applicant acknowledged that this conduct was a breach of his obligations as managing
director of the Respondent124. I am also satisfied for the reasons given at [16] that the
Applicant devoted some of his time and applied some of the resources of the Respondent to
further the interests of Genuine Print. I am satisfied that the conduct as found in [13] - [15]
and in [16] was misconduct. For the reasons given at [17] – [29] I am not satisfied on the
evidence that the Applicant diverted work to genuine print without charging a margin in the
manner alleged by the Respondent.
[57] I am satisfied for the reasons given earlier at [30] – [32] of these reasons, that the
Applicant caused work to be performed by the Respondent to the benefit of Genuine Print at a
discounted rate for the purpose of enabling Genuine Print to make a profit on the work and
this discounting resulted in the Respondent not making a profit or a larger profit on the work.
In so doing, the Applicant was not acting in the interests of the Respondent. I am satisfied that
this conduct was also misconduct.
[58] For the reasons given at [35] – [37] of these reasons, given Mr Morelli’s complicity in
the practice of factoring, the Respondent should not be permitted to rely upon the allegations
that the Applicant engaged in excessive factoring. To do so would be to validate that which
Mr Morelli knows to be conduct in breach of the credit facility that the Respondent has with
Scottish Pacific. Further for the reasons given at [38] – [42] of these reasons I am satisfied
that the Respondent waived its right to rely upon the late invoice payments to Scottish Pacific
alone to justify summary dismissal of the Applicant, but I am nevertheless satisfied that the
conduct was inappropriate and in breach of the credit facility agreement in place with Scottish
Pacific. Consequently I take that matter into account in assessing whether there was a valid
reason for the Applicant’s dismissal.
[59] Finally for the reasons given at [43] – [44] of these reasons, I am disregarding the
allegations concerning the misappropriation of a printer in my assessment.
[60] The Applicant was the Respondent’s Managing Director. To that position attaches a
great deal of trust. As Managing Director, the Applicant should have at all times acted in the
best interests of the Respondent. In my view the Applicant did not always do so, and at times
acted contrary to the Respondent’s interests. I am satisfied that the conduct that I have
identified earlier above as established by the evidence is misconduct and provides a valid
reason for the Applicant’s dismissal.
[61] However, I am not persuaded in circumstances that it justified summary dismissal of
the Applicant. This is because:
(a) The Applicant’s role as shareholder and director will likely have contributed to his
sense that the conduct was not inappropriate as he was part owner of the business and
was authorised to engage in questionable conduct. The confused nature of the
relationship is evidenced in the fact that the shareholder deed deals with a multiplicity
of issues, some touching employment, some touching shareholding, some dealing with
directors and some dealing with Blitz Publications;
(b) The Respondent and Mr Morelli knew of the relationship between the Applicant and
Ms Thornton and her connection to Genuine Print and did not take steps to ensure that
124 Transcript PN 341 – PN 343
[2014] FWC 437
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some other employee managed the relationship between Genuine Print and the
Respondent;
(c) The confused relationship between Mr Morelli in his capacity as a part-time
employee, director and majority shareholder of the Respondent and Mr Morelli in his
capacity as owner of the Blitz Publications. The evidence shows for example, that Mr
Morelli used his position as a director of the Respondent to obtain better print pricing
from the Respondent for Blitz Publications125. The duty that Mr Morelli had to Blitz
Publications to negotiate the best printing price conflicted with his duty to the
Respondent to ensure that it was able to obtain the best and most profitable price for
the work that it performed for Blitz Publications; and
(d) The evidence also shows that Mr Morelli was prepared to be complicit in conduct
that was in breach of the Respondent’s obligations to Scottish Pacific when it suited
him, and thereby gave the impression that it is sometimes acceptable to engage in
inappropriate behaviour.
[62] These confused relationships and blurred lines between that which is acceptable and
that which is not, in my view, created an environment in which the Applicant is likely to have
thought that his conduct or at least some of it was acceptable.
Notification of the valid reason - s.387(b)
[63] Notification of a valid reason for termination should be given to an employee
protected from unfair dismissal before the decision is made,126 in explicit terms127 and in plain
and clear terms.128 In Crozier v Palazzo Corporation Pty Ltd129 a Full Bench of the Australian
Industrial Relations Commission dealing with a similar provision of the Workplace Relations
Act 1996 stated the following:
“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for
their termination before any decision is taken to terminate their employment in order to provide them
with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very
little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to
respond after a decision had been taken to terminate their employment. Much like shutting the stable
door after the horse has bolted.”130
[64] The requirement to notify of the reason, together with the requirement to provide an
opportunity to respond to the reason in s.387(c), involves consideration of whether procedural
fairness was afforded the Applicant before his dismissal was effected.
[65] Satisfaction of the notification requirement will usually require a straightforward
factual inquiry to be made, namely: what was the Applicant told about the reason for the
dismissal, before the dismissal took place? As I have indicated earlier the Applicant was not
notified of the reason for his dismissal before the dismissal took place. The decision to
125 Transcript PN 3587 – PN 3509
126 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41]
127 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151
128 Previsic v Australian Quarantine Inspection Services Print Q3730
129 (2000) 98 IR 137
130 (2000) 98 IR 137 at 151
[2014] FWC 437
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dismiss the Applicant was taken at a meeting of directors which was not attended by the
Applicant and he was not aware that the subject of his ongoing employment would be at issue
at that meeting. The notification of termination contained in the letter to the Applicant dated
10 April 2013 set out some but not all of the matters upon which the Respondent relied to
justify dismissal. On any reasonable view, apart from the late payments made to Scottish
Pacific discussed at a meeting of directors on 27 February 2013, the Applicant was not aware,
let alone notified of the reasons for his dismissal before dismissal was effected.
Opportunity to respond - s.387(c)
[66] An employee protected from unfair dismissal should be given an opportunity to
respond to any reason for dismissal relating to the conduct or capacity of the person. The
consideration of whether and to what extent that opportunity was given is to be applied in a
common sense way to ensure the employee is treated fairly and should not be burdened with
formality.131 Recently in Pitts v AGC Industries Pty Ltd132 a Full Bench of the Commission
said:
“In considering whether the Commissioner was satisfied that the dismissal of the Appellant was harsh,
unjust or unreasonable the Commissioner was required to take into account, inter alia, whether the
Appellant was given an opportunity to respond to any reason related to his capacity or conduct. This
opportunity must have been afforded to the Appellant before a decision to dismiss is made. The process
involved in providing the Appellant with such an opportunity does not require formality and is to be
applied in a common sense way, to ensure that the Appellant has been treated fairly. In this regard we
reject so much of the Appellant’s submissions which asserts that this requires an employer to conduct a
meeting with the employee to inform the employee of the reasons for the proposed dismissal or
otherwise provide the employee with an opportunity to address the concerns in writing.”133 (Citations
omitted)
[67] As I have concluded that the Applicant was not notified of the reasons for his
dismissal before the termination of his employment took effect, it follows that the Applicant
was not given the opportunity to respond to any of the reasons now identified by the
Respondent relating to his capacity or conduct. Moreover the Respondent was not aware of
the investigation being conducted by Mr Morelli and was not given an opportunity to
comment on the outcome of the investigation nor to participate in the directors meeting at
which the investigation was discussed because he was unaware that Mr Morelli’s
investigation would be discussed at that directors meeting.
Unreasonable refusal by the employer to allow a support person - s.387(d)
[68] If an employee protected from unfair dismissal has requested that a support person be
present to assist in discussions relating to the dismissal, the employer should not unreasonably
refuse to allow that person to be present.
[69] It is clear from the plain language of s.387(d) that this consideration is directed to an
employer’s unreasonable refusal to allow a support person to be present. It is not concerned
with whether an employer offered the employee such an opportunity. In most cases, the
section will be engaged if the employee asks for a support person to be present and the
131 RMIT v Asher (2010) 194 IR 1 at 14-15
132 [2013] FWCFB 9196
133 Ibid at [4]
[2014] FWC 437
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employer refuses the request.134 It may well be appropriate in some cases to consider the
overall circumstances in which meetings to discuss an employee’s performance, capacity and
conduct or dismissal occurred to properly determine whether there was an unreasonable
refusal by the employer to allow the employee to have a support person present. This is not
such a case.
[70] In this case there was no meeting at which either the investigation or the Applicant’s
conduct was discussed with the Applicant. Consequently the Applicant did not have cause to
request a support person. This consideration is therefore essentially neutral.
Warnings regarding unsatisfactory performance - s.387(e)
[71] If an employee protected from unfair dismissal is dismissed for the reason of
unsatisfactory performance, the employer should warn the employee about the unsatisfactory
performance before the dismissal. Unsatisfactory performance is more likely to relate to an
employee’s capacity than their conduct.135 For the reasons given earlier in this decision I am
satisfied that the Applicant was not warned by the Respondent about any unsatisfactory
performance and although the issue of late payments to Scottish Pacific was discussed with
the Applicant at the directors meeting on 27 February 2013, this occurred without any
apparent warning or sanction.
Impact of the size of the Respondent on procedures followed - s.387(f)
[72] The size of the Respondent’s enterprise may impact on the procedures followed by the
Respondent in effecting the dismissal.
[73] The fact the Respondent conducted a business that is small in size and Mr Morelli’s
apparent lack of experience in dealing with the kinds of issues which confronted the
Respondent no doubt had an impact on the procedure followed by the Respondent in effecting
the Applicant’s dismissal. However, any procedure that is followed, even one affected by the
size of a business and inexperience, must not be devoid of any fairness. In my view the
Respondent acted with undue haste in moving to terminate the Applicant’s employment. It
should have as a minimum notified in that Mr Morelli’s investigation would be the subject of
discussion at a directors meeting and allowed the Applicant an opportunity to comment on the
findings of the investigation before it was decided to dismiss the Applicant. It is not to the
point, as the Respondent submits, that the Respondent was justified in summarily dismissing
the Applicant because of the seriousness of the conduct, so the procedure adopted is less
important. To the contrary, the Respondent made serious allegations including possible
fraud136, which makes the provision of an opportunity to respond more, not less, important.
Absence of dedicated human resources management specialist/expertise on procedures
followed - s.387(g)
[74] The absence of dedicated human resource management or expertise in the
Respondent’s enterprise may also impact on the procedures followed by the Respondent in
effecting the dismissal. However the allegations the Respondent made against the Applicant
134 See also Explanatory Memorandum to the Fair Work Bill 2008 at [1542]
135 Annetta v Ansett Australia (2000) 98 IR 233 at 237
136 See exhibit A2
[2014] FWC 437
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are serious and the Applicant should have been given the opportunity of being told by the
Respondent what the allegations were and been given an opportunity to respond to them.
Other relevant matters - s.387(h)
[75] Section 387(h) provides the Commission with broad scope to consider any other
matters it considers relevant. The following matters are relevant and I have taken them into
account in determining whether the dismissal of the Applicant was harsh, unjust or
unreasonable:
The working environment created by the confusing relationship of Mr Morelli and
Blitz Publications discussed earlier above;
The fact that the Applicant was on extended sick leave, was not contacted about the
allegation and first knew that his employment had been ended when he received his
letter of termination;
The fact that the shareholder deed137 to which Mr Morelli and the Applicant are both
parties deals with the manner in which a “default” by a director is to be dealt with
under the deed138. “Default” includes conduct that is prejudicial to the business139. The
allegations that were the subject of Mr Morelli’s investigation, were in my view,
clearly an allegation of “default” under the deed and should have been dealt with in
accordance with the deed;
The Applicant’s lengthy period of service for the Respondent.
Conclusion as to merits
[76] Having considered each of the matters specified in s.387, although there was a valid
reason for the Applicant’s dismissal by reason of the Applicant’s misconduct, the misconduct
did not in my view justify summary dismissal of the Applicant. Termination of employment
on notice would have been appropriate. Further the Applicant was denied procedural fairness
by the Respondent in effecting the dismissal. I am therefore satisfied the dismissal of the
Applicant was harsh.
Remedy
[77] Section 390 of the Act sets out the circumstances in which I may make an order for
reinstatement or compensation:
“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
137 Exhibit R1
138 Ibid at clause 10; see also dispute resolution procedure at clause 26
139 Ibid at clause 1
[2014] FWC 437
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(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.”
[78] The matters set out in subsections 390(1)(a) and (b) are not put in issue in the
proceedings before me. There is no question that the Applicant is a person protected from
unfair dismissal and has made a valid application under 394. I have also found the Applicant
has been unfairly dismissed. Therefore the jurisdictional preconditions to the order of an
appropriate remedy are satisfied. Accordingly I will now consider whether to order the
reinstatement of the Applicant or, in circumstances where reinstatement is inappropriate,
whether it is appropriate in all the circumstances to order the payment of compensation to the
Applicant.
Reinstatement
[79] In his submissions filed before the hearing commenced the Applicant did not seek an
order for reinstatement and sought instead an order for compensation140. In his final
submissions the Applicant was more circumspect141. Regardless of the remedy sought by the
Applicant, s.390 of the Act requires that I first determine whether reinstatement is
inappropriate before I may consider an order for compensation. The Respondent submitted
that in the event of the Applicant’s application was upheld, an order of reinstatement of the
Applicant is inappropriate because the Respondent “has no trust and confidence in the
Applicant” and further the relationship between the parties has obviously broken down142.
[80] The question whether to order a remedy in a case where a dismissal has been found to
be unfair remains a discretionary one. I consider that a remedy is appropriate in all the
circumstance of this case.
Reinstatement as the primary remedy for an unfair dismissal
[81] Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair
dismissal. The discretion to order a remedy of compensation may only be exercised if the
Commission is satisfied that reinstatement is inappropriate. The object of Part 3-2 of Chapter
3, in which the unfair dismissal provisions appear, also tells us that an object of that Part is “to
provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement”.143
140 Applicant's submissions dated 29 August 2013 at [20] – [23]
141 Applicant's final submissions at [74] – [75]
142 Respondent's final submissions at [86]
143 Section 381(1)(c)
[2014] FWC 437
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But to describe reinstatement as the ‘primary remedy’, is to do no more than to recognise it as
being the first, perhaps even the foremost, remedy under the Act. The description is not
licence to search for a reason to order an employee’s reinstatement when that is not
appropriate. The only question in determining whether to grant the remedy of reinstatement of
an employee in relation to a dismissal that is found to have been ‘unfair’ is whether that is
appropriate in the particular case.
Determining whether reinstatement of the person is inappropriate
[82] In order to understand and appropriately decide the question of whether reinstatement
of The Applicant is inappropriate, it is important to briefly consider the legislative
development of the remedy provisions pertaining to unfair dismissal relief. In the federal
sphere, codified remedies for ‘unfairly’ dismissed employees first commenced on 30 March
1994 when Part VIA of the Industrial Relations Act 1988 (IR Act) commenced. The
jurisdiction to order a remedy was conferred on the Federal Court144 and section 170EE (2) of
the IR Act then provided:
“If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170
DB or 170 DD) constituted by the termination of employment of an employee, that the reinstatement of
the employee is impracticable, the Court may, if it considers it appropriate in all the circumstances of
the case, make an order requiring the employer to pay employee compensation of such amount as the
Court thinks appropriate.” (Emphasis added).
[83] Commencing on 25 November 1996 the IR Act was renamed the Workplace Relations
Act 1996 (WR Act) and from 31 December 1996 the unfair dismissal scheme was amended.
Simply stated, remedies in respect of a harsh, unjust or unreasonable dismissal were thereafter
to be dealt with by the Australian Industrial Relations Commission (AIRC) by conciliation
and if needed, by arbitration.145 Section 170CH (3) of the WR Act relevantly provided that the
AIRC may make an order requiring the employer to reinstate the employee if it “considers it
appropriate”. Section 170CH(6) of the WR Act provided as follows:
“If the Commission thinks that the reinstatement of the employee is inappropriate, the commission may,
if the commission considers it appropriate in all circumstances of the case, make an order requiring the
employer to pay the employee an amount ordered by the commission in lieu of reinstatement.”
(Emphasis added).
[84] Two things may be observed from the foregoing. The first is that the earlier IR Act
provision required a consideration of the ‘practicability’ of reinstatement, whereas the latter
WR Act provisions focused attention on whether reinstatement of the employee is
‘appropriate’ and permitted orders of compensation to be made only if the Commission
thought that reinstatement is ‘inappropriate’. The second is that, although somewhat more
cumbersomely expressed, the remedy provisions of the WR Act are to the same effect as
section 390 of the Act. Both schemes emphasise reinstatement as the primary remedy with
compensation available as a remedy only when reinstatement is inappropriate. The only
relevant question as to remedy under both schemes is whether reinstatement is appropriate.
144 The then Australian Industrial Relations Commission could make an award that provided a remedy of a kind that could be
granted by the Court under section 170EE of the IR Act if the parties made an election to have the matter dealt with by
content arbitration; see section 170EC of the IR Act
145 See generally subdivision B of Division 3 of Part VIA of the WR Act
[2014] FWC 437
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[85] As to the first observation, a Full Bench of the AIRC in Australia Meat Holdings Pty
Ltd v McLauchlan146 gave consideration to the differences in the provisions of the IR Act and
the WR Act and concluded that “a consideration of appropriateness of reinstatement involves
the assessment of a broader range of factors than practicability . . . [I]n considering whether to
order the reinstatement the Commission is not confined to an assessment of the practicability
of such an order are that must decide whether such an order is appropriate”147. I respectfully
agree. It follows from my second observation that the conclusions of the Full Bench in
McLauchlan about the consideration of the appropriateness of reinstatement continue to have
currency and I adopt them for the purposes of deciding whether an order reinstating the
Applicant is appropriate.
When might reinstatement be inappropriate?
[86] Reinstatement might be inappropriate in a whole range of circumstances. The remedy
may be inappropriate if reinstatement would be futile, for example where reinstatement of an
employee would almost certainly lead to a further termination of the employee’s employment
because the employer has since discovered that the employee engaged in an act of serious
misconduct which was only discovered after the employee’s termination.148 Reinstatement as
a remedy may be inappropriate if the employer no longer conducts a business into which the
employee may be reappointed.149 The mere absence of a position in a business into which an
employee may be reappointed will rarely found a conclusion that reinstatement is
inappropriate.150 However if reinstatement of an employee would result in the employee being
surplus to the employer’s business requirements, this is clearly a factor which goes to the
question of the appropriateness of reinstatement.151
[87] Reinstatement may be inappropriate if an employee is incapacitated because of illness
or injury in a material way so that further performance of the employee’s contractual
obligations would be impossible.152
[88] The most common basis advanced to support the proposition that reinstatement is
inappropriate is that there has been a loss of trust and confidence, or a breakdown in that
relationship, so as to make the re-establishment of the employment relationship unviable or
unproductive. Here we are concerned with that which is essential to make an employment
relationship workable. It is not to be confused with an implied term in a contract of
employment of mutual trust and confidence, the existence of which in Australian law has not
been considered by the High Court, and continues to be the subject of differing judicial
opinion.153
146 (1998) 84 IR 1
147 Ibid at 17
148 Such discovery might also be relied upon by the employer as a valid reason for the employee’s dismissal which is the
subject of an unfair dismissal remedy application
149 Chelvarajah v Global Protection Pty Ltd (2004) 142 FCR 296
150 Ibid; See also Smith v Capral Aluminium, 7 October 1999 Print R9808; Fairhall v Smorgon, 22 February 2002, PR913285
151 Newtronics Pty Ltd v Salenga, AIRC Full Bench 29 April 1999, Print R4305
152 See for example Smith v Moore Paragon AIRC Full Bench 20 January 2004, PR942856
153 See most recently in Commonwealth Bank of Australia v Barker [2013] FCAFC 83; per Jacobson and Lander JJ at [77]-
[108]; C/f Per Jessup J at [236]-[340]; On 16 December 2013 the CBA was granted special leave to appeal this decision
in the High Court of Australia
[2014] FWC 437
27
[89] It is doubtless the case, that trust and confidence is a necessary ingredient in any
employment relationship. But it would be wrong to assume the status of the relationship of
trust and confidence is the sole criterion or even a necessary one to determine whether or not
reinstatement is appropriate.154 As Justice Gray observed in Australasian Meat Industry
Employees’ Union v G & K O’Connor Pty Ltd155 the development of the law relating to trust
and confidence in the employment relationship commenced when that relationship invariably
involved a close personal relationship between the employer and employee, but with the
emergence of corporate employers, the importance of trust and confidence in the employment
relationship has diminished.156
[90] I do not take his Honour’s comments to mean that trust and confidence as an element
of the employment relationship is no longer important. It is merely recognition that in many
cases it will be important to have regard to the totality of the employment, and that in the case
of a corporate employer, the loss of trust and confidence in the employee will be by a
manager or managers of the corporate employer. But as his Honour observed, in such cases
the “critical question must be what effect, if any, a loss of trust by the manager in an
employee is likely to have on the operation of the workplace concerned”. 157 It is important to
understand that his Honour’s observations were made in the context of an interlocutory
application while His Honour was considering “balance of convenience” arguments against
reinstatement on an interlocutory basis. His Honour’s observation about the effect of the shift
from a personal to a corporate employment relationship were made as an introduction to his
conclusion that the Respondent did not provide any evidence on the “critical question” as
identified. So much is clear from the following passage:
“. . . It might be more significant, for instance, to know the name of Mr Voss’s immediate supervisor and
to know the attitude of that person towards him. If the immediate supervisor had no trust in Mr Voss, it
might also be relevant to know whether it would be possible to place Mr Voss in another part of the
workplace, under another supervisor, who did have such trust. It would also be relevant to know what
effect any lack of trust by any manager or supervisor in a particular employee might have on the conduct
of operations in the workplace. There is no evidence as to any of these matters.
[43] Resort to an assertion that trust and confidence in a particular person have been lost cannot be a
magic formula for resisting the compulsory reinstatement in employment of the particular person.”158
[91] In my view, His Honour is merely saying that it is not enough to simply assert that
trust and confidence in an employee has been lost. Where this is relied upon then there must
be evidence from the relevant managers holding that view and an assessment must be made as
to the effect of the loss of trust and confidence on the operations of the workplace. In short, all
of the circumstances must be taken into account. This seems evident and is hardly
controversial.
[92] In Perkins v Grace Worldwide (Aust) Pty Ltd159 the Full Court of the Industrial
Relations Court considered the effect of a loss of trust and confidence on the question of the
“practicability” of a reinstatement remedy and said:
154 See Tenix Defence Pty Ltd v Galea, PR928494, 11 March 2003; see also Liddell v Lembke (1994) 1 IRCR 466, per Gray J
at 495 and Abbott-Etherington v Houghton Motors Pty Limited (1995) 63 IR 394, per Marshall J at 396-397
155 [2000] FCA 627
156 Ibid at [42]
157 Ibid
158 Ibid
http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281995%29%2063%20IR%20394?stem=0&synonyms=0&query=perkins
http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281994%29%201%20IRCR%20466?stem=0&synonyms=0&query=perkins
http://www.fwc.gov.au/awardsandorders/html/PR928494.htm
[2014] FWC 437
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“Trust and confidence is a necessary ingredient in any employment relationship. That is why the law
imports into employment contracts an implied promise by the employer not to damage or destroy the
relationship of trust and confidence between the parties, without reasonable cause: see Burazin v
Blacktown City Guardian Pty Limited (Wilcox CJ, von Doussa and Marshall JJ, 13 December 1996,
not yet reported). The implication is not confined to employers, it extends to employees: see for
example Blyth Chemicals Ltd v Bushell [1933] HCA 8; (1933) 49 CLR 66 at 81-2 and North v
Television Corporation Ltd (1976) 11 ALR 599 at 609. So we accept that the question whether there
has been a loss of trust and confidence is a relevant consideration in determining whether
reinstatement is impracticable, provided that such loss of trust and confidence is soundly and
rationally based.
At the same time, it must be recognised that, where an employer, or a senior officer of an employer,
accuses an employee of wrongdoing justifying the summary termination of the employee’s
employment, the accuser will often be reluctant to shift from the view that such wrongdoing has
occurred, irrespective of the Court’s finding on that question in the resolution of an application under
Division 3 of Part VIA of the Act.
If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust
and confidence between employer and employee, and so made reinstatement impracticable, an
employee who was terminated after an accusation of wrongdoing but later succeeded in an application
under the Division would be denied access to the primary remedy provided by the legislation.
Compensation, which is subject to a statutory limit, would be the only available remedy.
Consequently, it is important that the Court carefully scrutinise any claim by an employer that
reinstatement is impracticable because of a loss of confidence in the employee.
Each case must be decided on its own merits. There may be cases where any ripple on the surface of
the employment relationship will destroy its viability. For example the life of the employer, or some
other person or persons, might depend on the reliability of the terminated employee, and the employer
has a reasonable doubt about that reliability. There may be a case where there is a question about the
discretion of an employee who is required to handle highly confidential information. But those are
relatively uncommon situations. In most cases, the employment relationship is capable of
withstanding some friction and doubts. Trust and confidence are concepts of degree. It is rare for any
human being to have total trust in another. What is important in the employment relationship is that
there be sufficient trust to make the relationship viable and productive. Whether that standard is
reached in any particular case must depend upon the circumstances of the particular case. And in
assessing that question, it is appropriate to consider the rationality of any attitude taken by a party.
It may be difficult or embarrassing for an employer to be required to re-employ a person the employer
believed to have been guilty of wrongdoing. The requirement may cause inconvenience to the
employer. But if there is such a requirement, it will be because the employee’s employment was
earlier terminated without a valid reason or without extending procedural fairness to the employee.
The problems will be of the employer’s own making. If the employer is of even average fair-
mindedness, they are likely to prove short-lived. Problems such as this do not necessarily indicate
such a loss of confidence as to make the restoration of the employment relationship impracticable.”160
[93] As the Full Bench of the AIRC observed in McLauchlan, although Perkins was
decided under the IR Act, the Court’s observations reproduced above remain relevant to the
question of whether reinstatement is appropriate in a particular case.161 To this I would add
the observations of Full Bench of Fair Work Australia in Regional Express Holdings Limited
v Richards: 162
159 (1997) 72 IR 186
160 Ibid at 191
161 (1998) 84 IR 1 at 18
162 [2010] FWAFB 8753
http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281976%29%2011%20ALR%20599?stem=0&synonyms=0&query=perkins
http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281933%29%2049%20CLR%2066?stem=0&synonyms=0&query=perkins
http://www.austlii.edu.au/au/cases/cth/HCA/1933/8.html
[2014] FWC 437
29
“Whenever an employer dismisses an employee for misconduct, assuming the employer is acting
honestly, there is an implied loss of trust and confidence in the employee. If it is subsequently found that
the termination was harsh, unjust or unreasonable is appropriate to consider whether the relationship can
be restored if the employee is reinstated. That question cannot be answered solely by reference to the
views of management witnesses. All of the circumstances should be taken into account.”163
[94] From the foregoing, and putting to one side the obiter observations of the Full Court in
Perkins that the law imports into employment contracts an implied term of mutual trust and
confidence, the following propositions may be distilled concerning the impact of a loss of
trust and confidence on the question of whether reinstatement is an appropriate remedy:
An assessment of whether there has been a loss of trust and confidence must be
decided on the circumstances of the particular case, including the nature of the
employment;
An allegation that there has been a loss of trust and confidence must be soundly and
rationally based and it is important to carefully scrutinise any claim by an employer
that reinstatement is inappropriate because of a loss of confidence in the employee;
The appropriateness of reinstatement does not depend on notions of a loss of trust and
confidence in the employee, although it is a relevant and even important
consideration;
Dismissal for misconduct, assuming the employer is acting honestly, will in most
cases imply a loss of trust and confidence in the employee. If the dismissal is
ultimately found to be ‘unfair’, the question becomes whether the relationship can be
restored if the employee is reinstated. In answering that question all of the
circumstances must be taken into account, not just the views of management;
The reluctance of an employer to shift from a view, despite a tribunal’s assessment
that the employee was not guilty of serious wrongdoing or misconduct, does not
provide a sound basis to conclude that the relationship of trust and confidence is
irreparably damaged or destroyed;
The fact that it may be difficult or embarrassing for an employer to be required to re-
employ an employee whom the employer believed to have been guilty of serious
wrongdoing or misconduct are not necessarily indicative of a loss of trust and
confidence so as to make restoring the employment relationship inappropriate;
In most cases, employment relationships are capable of withstanding some friction and
doubt and in this context, trust and confidence are concepts of degree;
The question, so far as it relates to reinstatement is ultimately, whether there can be a
sufficient level of trust and confidence restored to make the relationship viable and
productive. In making this assessment, it is appropriate to consider the rationality of
any attitude taken by a party.
Is reinstatement of the Applicant appropriate?
[95] The Applicant was the Managing Director of the Respondent. He was responsible for
the management and direction of the Respondent. This is a position to which a significant
163 Ibid at [26]
[2014] FWC 437
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degree of trust attaches. Confidence that he will carry out his responsibility of management
and direction in the best interests of the Respondent is of critical importance. As is apparent
from my earlier findings, on several occasions the Applicant acted in the interests of Genuine
Print and contrary to the interests of the Respondent. The Applicant conceded that on
occasions he breached his duties as Managing Director. Furthermore, there remains the
commercial dispute between the parties ongoing and a dispute about the repayment of a loan.
Moreover based on my observations of Mr Morelli and the Applicant during the course of the
proceedings it was clear to me that the relationship between them lacks a sufficient level of
trust and confidence to make an ongoing employment relationship between the Applicant and
the Respondent viable. In the circumstances I am satisfied that it is not appropriate to order
the reinstatement of the Applicant.
Compensation as a remedy
[96] Section 390(3)(b) of the Act provides that I must not make an order for compensation
unless I am satisfied that reinstatement is inappropriate and I consider that an order for the
payment of compensation is appropriate in all the circumstances.
[97] The Applicant submitted that an order for compensation was appropriate in all the
circumstances. The Applicant submitted that taking into account all of the matters in s.392 of
the Act, he would have remained employed for at least 12 months and since he has no
earnings since his dismissal, the remuneration that he would have received if he had not been
dismissed by the Respondent is $100,000.00.
[98] The Applicant also submitted that if a deduction is to be made by reasons of s.392(3),
that amount should be no greater than 15% of the remuneration that would have been earned
had the Applicant not been dismissed. After applying the statutory cap, the Applicant
submitted that an order of compensation in the amount of $50,000.00 was appropriate.
[99] The Respondent submitted that no order of compensation should be made and that a
compensation order would affect the viability of the Respondent’s business. No evidence was
led as to how this might be so. The Respondent also says that the Applicant’s period of
service should be given little weight as he was fundamentally dishonest in discharging his
duties as the Respondent’s Managing Director. I have not found that the Applicant has acted
dishonestly.
[100] Furthermore, the Respondent says that as it was justified in summarily dismissing the
Applicant, even if given an opportunity to provide an explanation of his conduct, the
explanation as disclosed by his evidence, would not have changed the result. I have found to
the contrary. It is submitted that there would not have been any remuneration earned by the
Applicant for which compensation should attach. Moreover it says the Applicant did not take
any steps to mitigate any loss and the Applicant still owes it $190,000 arising from a loan
advance to the Applicant by the Respondent connected with the Applicant’s directorship.
[101] Taking into account my findings discussed earlier in this decision and all of the
circumstances of this case I am satisfied that an order for compensation is appropriate.
[102] Section 392 of the Act sets out the circumstances that must be taken into account when
determining an amount of compensation, the effect of any findings of misconduct on that
compensation amount and the upper limit of compensation that may be ordered:
[2014] FWC 437
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“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.
Note: subsection 392(5) indexed to $61,650 from 1 July 2012
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
[2014] FWC 437
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(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.”
[103] The method for calculating compensation under s.392 of the Act was recently dealt
with by a Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District
Retirement Villages Inc. T/A Ottrey Lodge164 (Bowden). In that decision the Full Bench set out
the order in which the criteria and other factors should be applied, taking into account
authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival
Supermarket165 and Ellawala v Australian Postal Corporation166. I have adopted the
methodology in Bowden in determining the amount of a payment of compensation.
Remuneration that the Applicant would have been received: s.392(2)(c)
[104] At the time of his dismissal, the Applicant’s annual remuneration was $100,000.00.
That represents an amount of $8,333.33 per calendar month or $1,923.08 per week.
[105] The Applicant was dismissed summarily from his employment on 10 April 2013. The
conduct that has been established did not justify summary dismissal, but the conduct provided
a valid reason for dismissal. Dismissal should have been on notice. I have also found that
there had been a complete disregard of procedural fairness. Had the Respondent afforded the
Applicant an opportunity to respond to the investigation and to explain some of his conduct,
then contrary to the Respondent’s submissions, that opportunity would in my view (when
viewed objectively) have at least resulted in termination of the Applicant’s employment on
notice. Given that the Applicant was on sick leave at the time, and taking into account the
seriousness of the allegations that were made, he would likely have sought assistance in
responding to the allegations and sought the assistance of a support person. Further, the
Respondent would have been required to give notice of and convene a directors meeting to
consider the response before making a decision. Consequently I assess that the Applicant
would have continued to be employed for a further three weeks before a decision to dismiss
was made by the Respondent.
[106] As I have already indicated, summary dismissal of the Applicant was not warranted
but dismissal on notice would have been. In order to determine the remuneration that the
Applicant would have received for the purposes of s. 392(2)(c) I need to determine what that
period should be. The Respondent submitted that an assessment of the period of reasonable
notice is not relevant to the assessment of a remedy of compensation167. I disagree. Plainly
such an assessment is relevant. Section 392(2)(c) requires that I take into account, “The
remuneration that the person would have been likely to receive if the person had not been
dismissed”. In my view if the Applicant had not been summarily dismissed on 10 April 2013,
164 [2013] FWCFB 431
165 (1998) 88 IR 21
166 Print S5109
167 Respondent’s submissions on reasonable period of notice (23/1/2014) at [d]
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he would have likely been given notice of dismissal (or paid in lieu of notice) some three
weeks later. The remuneration that he would have received or likely to have received would
include payment for the period worked on notice, or the payment received in lieu of notice.
[107] The contract of employment which governs the employment relationship between the
Applicant and the Respondent was partly in writing, partly oral and partly to be implied. To
the extent that it was in writing, it is constituted by the shareholder deed168. That deed does
not deal with notice of termination. There is no oral agreement about termination.
Consequently the contract is silent on the question169. In order to give business efficacy to the
contract it may be necessary to imply a term allowing for the termination of the employment
upon the giving of reasonable notice. Although the Commission is not a court, an assessment
of whether a period of reasonable notice is to be implied, and if so what that period should
be, needs to be made in order to properly assess the remuneration the Applicant would have
received for the purposes of s.392(2)(c).
[108] Where the length of notice is not specified in a contract of employment, it may be
implied. However, it is necessary before doing so to determine whether such a term is
necessary and that is not inconsistent with any express term contract170. The Respondent
submitted that the statutory notice period was sufficient and no further period should be
implied171. I disagree.
[109] There is nothing in the shareholder deed, which is the only document setting out the
written terms of the contract of employment between the Applicant and Respondent172, which
would be inconsistent with the implication of a term as to notice in the contract of
employment.
[110] It may be the case that the implication of a term as to notice might be unnecessary in
the face of, for example, a statutory provision setting a minimum period of notice. I note that
by s.117 of the Act, an employer must not terminate the employment of an employee unless
the employer has given at least the period of notice that is set out in s.117(3) or paid to the
employee a payment in lieu of the notice173. Having regard to the Applicant’s length of
service and his age, the Applicant would be entitled to a minimum period of five weeks notice
worked out in accordance with s.117(3) or payment in lieu of that notice period. In this case
the matter is more complicated given that the shareholder deed deals with a range of matters
and only touches upon employment related matters. It is the case that the Applicant is more
than merely an employee. As part of the arrangement the Applicant is also a shareholder and
director. He was also a founding member of the Respondent. In the circumstances I am
satisfied that notwithstanding the existence of a statutory minimum period of notice of
termination, it is necessary that a term as to notice of termination be implied into the contract
168 Exhibit R1
169 On 16 January 2014 my associate wrote to the parties asking them to confirm whether shareholders deed was the only
written document setting out employment arrangement between the Applicant and the Respondent, that it is silent
question of notice of termination, that the contract of employment was therefore partly written partly oral and partly to be
implied, and that it was silent on the question of notice. On 20 January 2014 the Applicant and the Respondent each
confirmed that this was the case.
170 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 449 – 450 per McHugh and Gummow JJ
171 Respondent’s submission on reasonable period of notice (23/2/2014) at [c]
172 Exhibit R1
173 Section 117(2)
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of employment between the Applicant and the Respondent that existed immediately before
the dismissal took effect.
[111] The next question is what period of notice is reasonable in the circumstances? The
Applicant submitted that the period should be 12 months174. In the circumstances of this case
such a lengthy period is excessive. The Respondent submitted that if a period is to be implied,
it should be 5 weeks, consistent with the statutory minimum period of notice175. In the
circumstances of this case I do not think that period is sufficient.
[112] There are no strict or rigid rules for assessing the period. That which is reasonable will
depend upon the circumstances of each case. The assessment of a period of reasonable notice
is to be determined having regard to all of the circumstances that applied as at the date that
notice is to be given rather than the date on which the contract of employment commenced176.
The purpose of an obligation to give notice of termination is to allow the other party to the
notice a reasonable period within which to adjust their affairs so as to minimise the impact of
the termination177. Among the factors that may be taken into account in determining the
length of the period of reasonable notice, the following are commonly considered:
The “high-grade” of the appointment;178
The importance of the position;179
The size of salary;180
The nature of the employment;181
The length of the employees service;182
The professional standing of the employee;183
The age of the employee;184
The qualifications and experience of the employee;185
The employees degree of job mobility;186
The expected period would take employee to obtain alternative employment;187
174 Applicant’s submisisons on reasonable notice (23/1/2014) at [11]
175 Respondent’s submissions on reasonable notice (23/1/2014) at [c]
176 See Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580; Logan v Otis Elevator Co Pty Ltd (1999) 94 IR 218 at 229
and Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at 140
177 IOOF Building Society Pty Ltd v Foxeden Pty Ltd (2009) 23 VR 536
178 Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580
179 Ibid
180 Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at 140
181 O'Donnell v GIO Australia Ltd (1995) 64 IR 297 at 303; Brookton Holdings No V Pty Ltd v Kara Kar Holdings Pty Ltd
(1994) 57 IR 288 at 290 – 291
182 Hill v CA Parsons Ltd [1971] 3 WLR 995 at 999
183 Ibid; Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580
184 Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580; Rankin v Marine Power International Pty Ltd (2001) 107 IR
117 at 140
185 O'Donnell v GIO Australia Ltd (1995) 64 IR 297 at 303; Rankin v Marine Power International Pty Ltd (2001) 107 IR 117
at 140
186 O'Donnell v GIO Australia Ltd (1995) 64 IR 297 at 303; Rankin v Marine Power International Pty Ltd (2001) 107 IR 117
at 139
187 Grout v Gunnedah Shire Council (No 1) (1994) 57 IR 243 at 250 – 251; Birrell v Australian National Airlines commission
(1984) 5 FCR 447 at 458; Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67 at 79
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The period that it was likely the employee would have continued employment, apart
from the dismissal;188
Whether the employee gave up something, such as secure employment, to come to the
current employer;189
The employee’s prospective pension or other rights.190
[113] The Applicant occupied the most senior position in the Respondent. He had been
employed for over 12 years and he was at the time of his dismissal, over 46 years of age. The
position that he occupied was an important one. The size of the salary was significant but not
extraordinary taking into account his role. The nature of his employment was that of a high
level executive in a small size business. The Applicant had jointly with Mr Morelli
established the Respondent’s business191. Given the downturn in business in this area as
seems to be accepted by both parties, the Applicant’s mobility within the industry in which he
has spent most of his working life would appear to be limited and he will not easily find
comparable employment in a similar senior role in the industry. That is not to say that the
Applicant’s management skills obtained during the course of his employment are not
transferable to other fields of endeavour. Although there is no evidence that the Applicant
gave up anything in particular to commence employment with the Respondent it is clear from
the evidence that the Applicant is invested in the Respondent as one of its largest
shareholders. Taking all of these matters into account I have concluded that a period of notice
longer than that provided by s.117 would be warranted. I have decided that the reasonable
period of notice that is likely to be implied into the contract is 4 months. Thus the Applicant
would have continued in the employment had he not been dismissed for a total period of 4
months and 3 weeks (17.33 weeks) or continued in employment for a further 3 weeks and
been paid 4 months’ remuneration in lieu of notice192 . The remuneration that he would have
received or would likely have received during that period is $33,326.98.
Remuneration earned by the Applicant: s.392(2)(e)
[114] The Applicant has not earned income from sources other than the Respondent since
the termination of his employment.
Income likely to be earned: s.392(2)(f)
[115] I find the Applicant is unlikely to have earned any income during the period between
the making of the order for compensation and the actual payment of that compensation.
Other matters: s.392(2)(g)
[116] In the circumstances of this case I do not I think it is appropriate that a contingency
deduction be applied.
188 Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67 at 79; Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580
189 Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 580
190 Hill v CA Parsons Ltd [1971] 3 WLR 995
191 Exhibit A1 at [5]
192 The former is more likely than the latter as the contract did not provide for payment in lieu of notice, and payment in lieu
instead of allowing the Applicant to work out the notice period would likely be a breach of the contract.
[2014] FWC 437
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[117] The Respondent submitted that I should take into account the fact that the Applicant
was dishonest in circumstances in which he occupied a position of trust with the Respondent,
that the Respondent was in financial difficulty, that Mr Morelli had invested significant sums
of money into the Respondent to keep the business operating, that the Applicant remains
indebted to the Respondent, and that the Applicant remains a shareholder in the Respondent
and maybe in the position in the future to benefit from profits earned by the Respondent193.
Consistent with my earlier findings, I do not accept that the evidence establishes that the
Applicant was dishonest. The viability of the Respondent is considered separately below. The
level of Mr Morelli’s personal investment in the Respondent is not, in my view, relevant to
the question of compensation nor is the alleged indebtedness of the Applicant to the
Respondent. Similarly the mere possibility of future benefit to the Applicant by reason of his
shareholding in the Respondent is not particularly relevant, and more importantly, it is not
presently quantifiable. Further there is no evidence about projections for future profit.
[118] In addition to the matters set out above, the Applicant would have accrued additional
annual leave of approximately 1.6 weeks had he been permitted to work out the period of
notice that I have assessed as a reasonable period. This is also remuneration that he would
have or would have likely have received. This would amount to an additional $3076.93
bringing total remuneration the Applicant would have received, or would likely have received
from the Respondent to $36,403.90.
[119] I have considered the impact of taxation on this amount but have decided to leave
taxation to be determined according to law.
Viability: s.392(2)(a)
[120] There is a suggestion in the Respondent’s submissions that an order for compensation
would have an adverse consequence for the viability of the Respondent’s business194.
According to the minutes of the directors meeting held on 27 February 2013, the accuracy of
which is not disputed, the Applicant claimed the Respondent was trading whilst insolvent195,
although both the Applicant and Mr Morelli ultimately agreed that the business was viable196.
I accept that the evidence suggests that the business of the Respondent is facing financial and
trading challenges. But that falls well short of evidence establishing adverse consequences of
a compensation order of the Respondent’s viability. The Respondent continues to trade as a
going concern. Given the amount that I proposed to order as compensation I do not think that
that amount will impact negatively on the viability of the Respondent’s business and I make
no reduction as a consequence.
Length of service: s.392(2)(b)
[121] The Applicant’s period of service was approximately 12 years as at the date of
termination. I have already taken the Applicant’s service into account in assessing the period
of reasonable notice and I do not think his length of service should further affect the
compensation amount.
193 Respondent's final submissions at [87 (g)] and [82] – [84]
194 Respondent’s final submissions at [87(a)]
195 Exhibit R2 at p.2
196 Ibid at p.3
[2014] FWC 437
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Mitigating efforts: s.392(2)(d)
[122] The Applicant gave evidence that he has not made any attempts to find alternative
employment. He said that the reason for the lack of attempt was that he had been ill, he was
on medication and he had been trying to run his own litigation197. The Respondent did not
challenge this evidence in cross examination nor did it put to the Applicant that he had taken
insufficient or no steps to mitigate his loss. The Respondent has submitted that the Applicant
made no effort to mitigate his loss and that “trying to run my own litigation” as an
explanation for the reason for lack of effort or attempt to mitigate is not a proper reason198. It
was submitted that his other explanation, namely illness and medication, did not prevent the
Applicant from participating in the hearing of his application199.
[123] It must be said firstly the Respondent should properly have put the assertions it now
seeks to advance in submissions to the Applicant whilst he was being cross-examined. It did
not do so. No other evidence to contradict the Applicant’s evidence was led by the
Respondent. In the circumstances I am satisfied with the Applicant’s explanation as to the
reason for his inability to pursue steps to mitigate the loss. Consequently I make no deduction
on account of any failure to mitigate.
Misconduct: s.392(3)
[124] As I have earlier indicated I am satisfied that the Respondent had a valid reason for
dismissing the Applicant because of his misconduct. Although the misconduct did not
justifying summary dismissal, the misconduct nonetheless contributed to the dismissal. I
accept the Applicant’s submission that an appropriate reduction is a 15% reduction in
compensation that might otherwise be ordered.
Calculation of total compensation
[125] Applying the above matters, the Applicant would have earned $36,403.90 had his
employment not been ended summarily. No deductions are otherwise made. Fifteen percent of
that amount is $5460.59. The total compensation after a reduction for misconduct
contribution is $30,943.31.
Applying the Compensation cap: s.392(5)
[126] As the amount of $30,943.31 is less than the compensation cap in s.392(5) that applied
as at 10 April 2013, I propose to order the payment of compensation in that amount.
Payment by instalments: s.393
[127] The Respondent did not suggest that any compensation order be paid by instalments
and in the circumstances I do not think that an order for compensation to be paid by
instalments is either necessary or appropriate.
Conclusion
197 Transcript PN52 – PN54
198 Respondent's final submissions at [87(d)]
199 Ibid
[2014] FWC 437
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[128] I am satisfied that the Applicant’s dismissal was harsh.
[129] I have concluded that reinstatement of the Applicant is inappropriate and that in all the
circumstances it is appropriate to order that the Respondent pay the Applicant an amount of
compensation. The amount of compensation that I have determined is $30,943.31. That
amount will be subject to taxation according to law. The compensation amount will be
payable by the Respondent to the Applicant within 14 days of the date of the order. An order
giving effect to this decision is published separately.
[130] As a postscript I note that the Applicant has alleged that on the termination of his
employment, he was not paid outstanding remuneration for work completed between 7 and 21
March 2013, that he had not been paid his accrued annual leave entitlements and that he has
not been reimbursed expenses incurred200. Although these matters are not within my
jurisdiction to determine, and putting aside the last of these matters, I would simply note that
it is a very serious matter to withhold wages payments and accrued entitlements upon
termination of employment. Based on the contractual documents available to me there does
not seem to be any right of set off. Consequently seeking to set off entitlements, some of
which at least, arise as a consequence of the operation of the National Employment Standards,
against the alleged indebtedness of the Applicant arising from a directors loan (which has no
bearing on his employment) is highly questionable and in my view should be rectified by the
Respondent. I would also note that if the Applicant is indebted to the Respondent, he should
take steps to resolve the debt.
DEPUTY PRESIDENT
Appearances:
A. Jewell for the Applicant
J. Hooper of Counsel for the Respondent
Hearing details:
2013.
Melbourne.
2, 25, 26 September
Final written submissions:
Applicant 20 October 2013
Respondent 4 November 2013
Applicant in reply 11 November 2013
Applicant (Reasonable notice) 23 January 2014
Respondent (Reasonable notice) 23 January 2014
200 Exhibit A1
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