1
Fair Work Act 2009
s.604 - Appeal of decisions
Mr Robert Johnson
v
Northwest Supermarkets Pty Ltd T/A Castlemaine IGA
(C2017/3304)
JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT COLMAN
COMMISSIONER CIRKOVIC MELBOURNE, 28 AUGUST 2017
Appeal against decision [[2017] FWC 2866] and order [PR593193] of Deputy President
Hamilton at Melbourne on 1 June 2017 in matter number U2017/1404.
[1] Mr Robert Johnson’s employment with Northwest Supermarkets t/a Castlemaine IGA
was terminated summarily on 7 February 2017. He was found to have taken three items of
produce from the Castlemaine IGA where he worked.
[2] On 9 February 2017, Mr Johnson made an application to the Fair Work Commission
(the Commission) seeking relief from unfair dismissal pursuant to s.394 of the Fair Work Act
2009 (Cth) (the Act). The application was heard by Deputy President Hamilton on 23 May
2017 and a decision was issued on 1 June 2017.1 The Deputy President found that, although
Mr Johnson’s action was authorised by a supervisor, it breached company policy and
constituted a valid reason for his dismissal. The Deputy President dismissed Mr Johnson’s
application.
[3] Mr Johnson applied for permission to appeal the Deputy President’s decision. On 25
July 2017 we issued a decision2 granting permission to appeal. In our view the Appellant had
made out an arguable case that the proportionality of summary dismissal to the conduct in the
case was not considered. In this respect, we were satisfied that the appeal attracted the public
interest as the decision at first instance was disharmonious with other decisions of the
Commission which have emphasised the importance of proportionality being considered.
[4] Directions were issued on 2 August 2017 inviting parties to make any supplementary
written submissions addressing ‘the determination of the appeal, whether the appeal should be
upheld and, in the event that the appeal is upheld, what the appropriate outcome should be
upon a re-hearing of the matter’. The directions also required the parties to notify us if an oral
hearing was required. Neither party requested an oral hearing, and it was common ground that
should the matter proceed to a rehearing then that would occur on the basis of evidence and
material that was before the Deputy President in matter U2017/1404, and the supplementary
submissions filed by the parties.
[2017] FWCFB 4453
DECISION
E AUSTRALIA FairWork Commission
http://www.fwc.gov.au/awardsandorders/html/PR593193.htm
http://www.fwc.gov.au/documents/decisionssigned/html/2017fwc2866.htm
[2017] FWCFB 4453
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[5] We have decided to uphold the appeal and quash the Deputy President’s decision to
dismiss Mr Johnson’s application for relief. We have concluded that the Deputy President’s
decision was affected by appealable error for the reason we identified in our decision on
permission to appeal, namely the failure to consider the question of proportionality of
summary dismissal to Mr Johnson’s conduct. This is an important consideration that bears on
the question of whether or not the termination was harsh, unjust or unreasonable.3 It will
sometimes be possible to establish that a particular matter requiring consideration by a
member has been taken into account, even though it is not expressly and specifically dealt
with in the decision. However, based on our review of all of the materials filed in this appeal,
there is not in our view a sufficient basis to conclude that the Deputy President considered,
but simply did not record, that he took into account the proportionality of summary dismissal
in this case.
[6] We have decided to proceed with a rehearing of the application on the papers, and
propose to make a further decision in relation to the matter that was the subject of the appeal,
pursuant to s.607(3)(b).
[7] The Commission may order a remedy for an unfair dismissal (reinstatement or the
payment of compensation to a person) if:
(a) the Commission is satisfied that the person was protected from unfair dismissal
at the time of being dismissed; and
(b) the person has been unfairly dismissed (see s. 390).
[8] It is not in dispute that the Appellant is a person who was ‘protected from unfair
dismissal’ within the meaning of s. 382 of the Act.
[9] The jurisdictional facts relevant to the determination that a person ‘has been unfairly
dismissed’ are set out in s. 385:
A person has been unfairly dismissed if 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.
[10] It is common ground that the Appellant was dismissed and it is not contended that the
dismissal was a case of genuine redundancy. The Respondent company employs
approximately 230 employees, hence it is not a small business employer and, accordingly,
s.385(c) is not relevant.
[11] The only issue in contention is whether the dismissal was ‘harsh, unjust or
unreasonable’ (s. 385(b)).
[2017] FWCFB 4453
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[12] The criteria we must take into account when considering whether a dismissal was
‘harsh, unjust or unreasonable’ is set out in s.387.
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, 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 FWC considers relevant.”
[13] We now turn to the particular matters we must take into account.
Was there a valid reason for the dismissal–s 387(a)
[14] It is undisputed that on the day of his dismissal Mr Johnson left the store with three
products for which he had not paid. The products were a ham bone, a 100g sample of smoked
salmon, and a 100g sample of prosciutto. The samples and the ham bone were wrapped and
signed by Mr Johnson’s manager, Ms Royal. Mr Blake, a director of the company, stopped
Mr Johnson as he was leaving work, searched his bag and discovered the items. Mr Johnson
said that his supervisor had authorised him, and others, to take certain items (samples and
offcuts) without payment. Mr Blake’s evidence was that the items were ‘saleable items’ and
there were clear policies against theft and removing stock without payment. Mr Johnson
signed the relevant policy when he commenced employment in 2008.4 The police were called
to the store but no charges were laid.
[15] Mr Johnson’s primary position is that there was no valid reason for his dismissal as he
had been authorised by his manager, Ms Royal, to take the items. He also contends that, a
number of other employees were authorised to take excess items of stock home and this had
been occurring over a period of approximately 18 months. It is in this context that Mr Johnson
[2017] FWCFB 4453
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submits that a clear practice existed in the workplace that employees were authorised to take
excess items home when managers formed the view that they could not be sold.
[16] Mr Johnson also contended that he was at all times acting honestly and would not have
taken the items without authorisation. He submits that his breach of the Respondent’s policy
cannot be characterised as substantial and wilful and it therefore should not be seen to be a
valid reason for his dismissal.
[17] The Respondent contended that Mr Johnson’s actions of removing items from the
store without making payment amounted to serious misconduct justifying summary dismissal,
regardless of the value of those goods. The Respondent produced a copy of the Policy and
Procedures Manual and Mr Johnson’s Probation Agreement, both signed by Mr Johnson,
which expressly dealt with taking stock without payment and placing samples into stock.
[18] We note that the “Maxi Foods Group: Staff Policies and Procedures Manual” dated
August 2008 was in evidence in the proceedings before Deputy President Hamilton.5 The
Policy document relevantly provides:
“Any person found consuming or removing goods, regardless of value, from the store without
sufficient evidence of payment will be immediately terminated and prosecuted” (page 5,
paragraph 3)
And further:
“All samples received by staff must be places into stock. Samples or gifts are not to be taken
from the store by management or staff.”(page 7, paragraph 1)
[19] It is not in dispute that Mr Johnson took the items in question and the above extracts
from the relevant policy make it clear that the removal of any goods or samples from the store
is prohibited and will result in termination of employment.
[20] We accept that Mr Johnson acted in breach of the Respondent’s policy and that this
constitutes a valid reason for termination of his employment. While there was a valid reason
for the termination of Mr Johnson’s employment we note that there were a number of
mitigating circumstances (we will return to those matters shortly).
[21] We now turn to the other matters we must take into account in determining whether
the dismissal was harsh, unjust or unreasonable.
Whether the person was notified of that reason – s. 387(b)
[22] It is not in dispute that Mr Johnson was notified of the reason for his dismissal.
Whether the person was given an opportunity to respond to any reason related to the capacity or
conduct of the person - s. 387(c)
[23] The reason for the dismissal related to Mr Johnson’s conduct. Mr Johnson’s evidence
is that the allegation was put to him and that he provided an explanation for his conduct. We
are satisfied he was given an opportunity to respond to the reason for his dismissal.
[2017] FWCFB 4453
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Any unreasonable refusal by the employer to allow the person to have a support person present to
assist at any discussions relating to dismissal - s. 387(d)
[24] There is no evidence of any refusal by the Respondent, unreasonable or otherwise, to
allow Mr Johnson to have a support person present in any discussions relating to his
dismissal.
If the dismissal related to unsatisfactory performance by the person—whether the person had been
warned about that unsatisfactory performance before the dismissal – s. 387(e)
[25] Mr Johnson was not terminated on the basis of unsatisfactory performance, hence this
is not a relevant consideration.
Size of the employer’s enterprise and human resource expertise – s. 387(f) and (g)
[26] The matters in paragraphs 387(f) and (g) concern the degree to which the size of the
employer’s enterprise and the absence of dedicated human resource management specialists
or expertise in the enterprise, would be likely to impact on the procedures followed in
effecting dismissal.
[27] Mr Blake submitted that there are approximately 230 employees of the Respondent
and that there are no dedicated human resource staff. Mr Blake’s evidence was that neither the
size of the business nor the absence of dedicated human resources staff impacted on the
procedures leading to the dismissal of Mr Johnson. We accept that evidence and find that the
size of the employer’s enterprise and the absence of dedicated human resource management
specialists or expertise did not impact on the procedures followed in effecting the dismissal.
Any other matters that FWC considers relevant – s. 387(h)
[28] Mr Johnson submits that the following matters should be taken into consideration:
(i) The length of his service with the Respondent (2008 to 2017) and the fact that
he does not have any prior disciplinary history;
(ii) His personal circumstances. Mr Johnson is currently 63 years old and lives in
Castlemaine. He has 5 children, one of whom lives with him and suffers from a
disability arising out of anxiety, depression and learning difficulties.
(iii) He is likely to have significant difficulties in gaining future employment given
his age and the area in which he lives.
[29] It is submitted that when these factors are weighed against the conduct that led to his
dismissal, the dismissal was harsh.
[30] The Respondent submits that Mr Johnson was aware of the policies and procedures in
place and had signed agreements confirming his understanding of the terms of these
documents. Further, the Respondent says that Mr Johnson was caught removing goods for
which he had not paid and that the termination of his employment was a direct result of the
breach of the policy.
[2017] FWCFB 4453
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[31] Mr Johnson’s conduct involved a breach of policy but, as we have indicated, there
were mitigating circumstances. Two important contextual considerations mitigate Mr
Johnson’s conduct.
[32] First, the taking of the items was authorised by Mr Johnson’s direct supervisor. Mr
Johnson’s evidence in this regard was unchallenged by the Respondent. In particular, Mr
Blake did not contest Mr Johnson’s claim that his supervisor had authorised him to take the
items. Rather, he said that he had no knowledge of any authorisation having been given by the
supervisor. The Deputy President accepted that Mr Johnson had been authorised to take the
items.6 We take the same view.
[33] Second, there was unchallenged evidence that eight other employees were also
engaged in the same practice.7 We note, that Mr Blake’s evidence was that he was unaware of
any such practice, but he did not lead any evidence to suggest that there was no such practice.
Further, Mr Johnson’s evidence as to the practice was unchallenged.
[34] In light of the mitigating circumstances and the matters referred to by the Appellant,
we consider that Mr Johnson’s dismissal was harsh. It follows that Mr Johnson was unfairly
dismissed (see s. 385). We now turn to the remedy to be ordered.
Remedy
[35] As we have mentioned, s. 390 deals with the circumstances in which the Commission
may order a remedy, it states:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the
payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see
Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under
section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all
the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[36] The circumstances in ss. 390(1)(a) and (b), and (2) are satisfied in this case.
Accordingly the first question is whether to make an order for a remedy. If persuaded to order
a remedy then we may order reinstatement or the payment of compensation.
[2017] FWCFB 4453
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[37] We are satisfied that it is appropriate to make an order for a remedy. We now turn to
the nature of the remedy. Section 390 provides that the Commission may order a person’s
reinstatement or the payment of compensation to a person, but the choice between those
remedies is not at large, as it were. The structure of s. 390(3) requires the Commission to first
consider the question of reinstatement. It is only if the Commission is satisfied that
reinstatement is inappropriate that it may consider an order for the payment of compensation.
As the Full Bench observed in Nguyen v Vietnamese Community in Australia t/a Vietnamese
Community Ethnic School South Australia Chapter,8:
“Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair
dismissal as the discretion to order a remedy of compensation may only be exercised if the
Commission is satisfied that reinstatement is ‘inappropriate’. Further, one of the objects of Part
3-2 of Chapter 3, in which the unfair dismissal provisions appear, is “to provide remedies if a
dismissal is found to be unfair, with an emphasis on reinstatement”.9 We would observe that to
describe reinstatement as the ‘primary remedy’, is to simply recognise that reinstatement is the
first, perhaps even the foremost, remedy under the Act.10 The relevant 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 reinstatement is appropriate in the particular case.” 11
[38] Reinstatement is not sought in this case and in those circumstances we are satisfied
that it would be inappropriate to order reinstatement. We therefore turn to consider an order
for the payment of compensation.
[39] Section 392 deals with the orders for the payment of 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
[2017] FWCFB 4453
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(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s
decision to dismiss the person, the FWC must reduce the amount it would otherwise order
under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not
include a component by way of compensation for shock, distress or humiliation, or other
analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not
exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the
dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during
the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so
employed during any part of that period—the amount of remuneration taken
to have been received by the employee for the period of leave in accordance
with the regulations.”
[40] In assessing compensation, it is necessary to take into account all the circumstances of
the case, including the specific matters identified in s 392(2)(a) to (g), and to consider the
other relevant requirements of s 392.
[41] The well-established approach to the assessment of compensation under s 392 is to
apply the ‘Sprigg formula’, derived from the Australian Industrial Relations Commission Full
Bench decision in Sprigg v Paul Licensed Festival Supermarket.12 This approach was
articulated in the context of the current legislative framework in Bowden v Ottrey Homes
Cobram and District Retirement Villages.13 Under that approach, the first step to be taken in
assessing compensation is to consider s.392(2)(c), that is, to determine what the applicant
would have received, or would have been likely to receive, if the person had not been
dismissed. In Bowden this was described in the following way:
“[33] The first step in this process - the assessment of remuneration lost - is a necessary
element in determining an amount to be ordered in lieu of reinstatement. Such an assessment
is often difficult, but it must be done. As the Full Bench observed in Sprigg:
‘... we acknowledge that there is a speculative element involved in all such
assessments. We believe it is a necessary step by virtue of the requirement of
[2017] FWCFB 4453
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s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most
assessments of compensation or damages in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the employee would have
remained in the relevant employment but for the termination of their employment. We refer to
this period as the ‘anticipated period of employment’...”
[42] The identification of this starting point amount ‘necessarily involves assessments as to
future events that will often be problematic,’14 but, as the Full Bench observed in McCulloch v
Calvary Health Care Adelaide,15 ‘while the task of determining an anticipated period of
employment can be difficult, it must be done.’16
[43] Once this first step has been undertaken, various adjustments are made in accordance
with s.392 and the formula for matters including monies earned since dismissal,
contingencies, any reduction on account of the employee’s misconduct and the application of
the cap of six months’ pay. This approach is however subject to the overarching requirement
to ensure that the level of compensation is in an amount that is considered appropriate having
regard to all the circumstances of the case.17
[44] As to the ‘compensation cap’, this is set in s.392(5), which provides that the amount
ordered to be paid by the Commission must not exceed the lesser of:
The total amount of remuneration either received by the person, or to which the person
is entitled, for any period of employment with the employer during the 26 weeks
immediately before the dismissal, and
Half the amount of the high income threshold immediately before the dismissal.18
[45] From 1 July 2016, the high income threshold was $138, 9000 per annum and from 1
July 2017 it is $142,000. Therefore, the compensation cap is:
$69,450 for a dismissal that occurred on or after 1 July 2016 and before 1 July 2017,
and
$71,000 for a dismissal that occurred on or after 1 July 2017.
[46] In the matter before us the Appellant submits that the amount of compensation ordered
should be an award that is greater than simply the payment of the notice period. It is
submitted that if compensation was confined to the notice period only, then the Full Bench
would not be making the appropriate allowances for inter alia:
(i) the disproportionate reaction of the employer to Johnson’s conduct;
(ii) the fact that at no stage could Johnson be described as dishonest;
(iii) the fact there were no policy refreshers provided by the employer in any way
since 2008;
(iv) the denial of procedural fairness and the conduct of the employer in carrying
out the dismissal;
(v) the relatively low-paid nature of Johnson’s work; and
(vi) Johnson’s age, disciplinary history and personal circumstances.’
[47] The Respondent’s submissions in relation to remedy are limited to the submission that
the appeal should not be allowed and that compensation should not be awarded.
[2017] FWCFB 4453
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[48] We are minded to make an order for compensation in this matter, however, we cannot
adequately assess the quantum of such an order on the basis of the limited material currently
before us. Neither party has satisfactorily addressed the matters we are obliged to take into
account (under s. 392(2)(a) to (g)) in determining the amount of compensation to be ordered.
[49] Given the deficiencies in the material currently before us we have decided to remit the
question of the amount of compensation to be ordered to Commissioner Cirkovic for
determination.
PRESIDENT
Printed by authority of the Commonwealth Government Printer
Price code C, PR595641
1 [2017] FWC 2866.
2 [2017] FWCFB 3897.
3 Walsh v Ambulance Victoria (2013) 233 IR 15 at 24-25 per Watson VP; Drake SDP and Johns C concurring on the issue of
misconduct.
4 See paragraph 10 of the Decision. The Appellant acknowledged at hearing that there was no contest as to the facts set out in
this paragraph, save for a contest concerning certain details of the taken items.
5 Exhibit B1.
6 Paragraph 13.
7 Witness Statement of Robert Johnson dated 10 April 2017 at [21].
8 [2014] FWCFB 7198.
9 Section 381(1)(c) Fair Work Act 2009 (Cth).
10 Wark v Melbourne City Toyota, Print R4864, 20 May 1999 per Williams SDP, Acton SDP and Tolley C; Newtronics Pty
Ltd v Salenga, Print R4305, 29 April 1999 per Polites SDP, Acton DP and Smith C; Rowley v EDI Rail Pty Ltd [2008]
AIRCFB64; Colson v Barwon Health [2014] FWCFB 1949.
11 Regional Express Holdings Limited trading as REX Airlines v Richards [2010] FWAFB 8753 at [23]-[24]; Colson v
Barwon Health [2014] FWCFB 1949 at [30]-[31].
12 Print R0235, (1998) 88 IR 21.
13 [2013] FWCFB 431; 229 IR 6.
14 Smith v Moore Paragon Australia Ltd PR942856, [2004] AIRC 57; (2004) 130 IR 446 at [32].
15 [2015] FWCFB 873.
16 Ibid, [27].
17 Ibid.
18 The high income threshold is referred to in the Fair Work Act a s.382(b)(iii), and is discussed in more detail in this
Benchbook.
http://www.fwc.gov.au/decisionssigned/html/2015fwcfb873.htm
http://www.fwc.gov.au/alldocuments/PR942856.htm
http://www.fwc.gov.au/decisionssigned/html/2013fwcfb431.htm
http://www.fwc.gov.au/decisionssigned/html/2017fwc2866.htm
