1
Fair Work Act 2009
s.604—Appeal of decision
Chesson Pty Limited t/a Pay Per Click
v
Nicole Knutson
(C2018/2732)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ANDERSON
COMMISSIONER WILSON SYDNEY, 30 JULY 2018
Appeal against decision [[2018] FWC 2080] of Commissioner Cambridge at Sydney on 1
May 2018 in matter number U2017/13095.
Introduction and background
[1] Chesson Pty Limited t/a Pay Per Click (Chesson) has lodged an appeal, for which
permission to appeal is required, against a decision of Commissioner Cambridge issued on 1
May 2018 (Decision).1 In the Decision, the Commissioner granted Ms Nichole Knutson’s
application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (FW Act)
on the basis of a determination that the dismissal of Ms Knutson by her former employer
Chesson on 6 November 2017 was harsh, unjust and unreasonable, and determined that
Chesson should be required to pay Ms Knutson $22,882.00 in compensation.
[2] An order was issued by the Commissioner on 1 May 2018 to give effect to the
Decision2 (Order). The Order was in the following terms:
1. Pursuant to section 392 of the Act, Chesson Pty Ltd T/A Pay Per Click (ACN:
103 244 695) (the employer), is hereby Ordered to pay to Nichole Knutson (the
applicant), the amount of $22,882.00.
2. The amount Ordered in 1 above is a gross figure and appropriate taxation
treatment is a matter for the Parties.
3. The amount Ordered in 1 above is to be paid to the applicant within 21 days of
the date of this Order.
[3] Chesson’s notice of appeal, which was lodged on 21 May 2018 (the day before the
compensation amount was required by the Order to be paid), sought a stay of the Decision and
1 [2018] FWC 2080
2 PR601919
[2018] FWCFB 4149
DECISION
E AUSTRALIA FairWork Commission
[2018] FWCFB 4149
2
the Order pending the hearing and determination of the appeal. In a decision issued on 25
May 20183 (Stay Decision), Vice President Hatcher determined to issue an order staying the
Decision and Order pending the hearing and determination of the appeal subject to the
condition that Chesson pay Ms Knutson the reduced sum of $14,806.00 by 1 June 2018 (later
extended to 5 June 2018). An order giving effect to the Stay Decision was also issued on 25
May 2018 (Stay Order).4
[4] The facts of the matter relevant to Chesson’s appeal may briefly be described. Ms
Knutson commenced employment with Chesson in November 2014. The contract of
employment attached to her letter of appointment provided that her hours of work were
9.00am to 5.00pm Monday to Friday, with a half hour lunch break per day “with flexibility
depending on client liaison requirements”. The contract did not contain any provision
concerning the period of notice required if Chesson terminated her employment.
[5] In September 2017 Chesson provided Ms Knutson, as well as other employees, with
proposed new contracts of employment. The proposed new contract for Ms Knutson provided
that her hours of employment would be 9.00am to 5.30pm, with one hour for lunch. It also
provided for notice of termination of employment periods consistent with those in s 117(3) of
the FW Act, and contained a restraint of trade provision.
[6] Ms Knutson did not agree to the revised hours of employment, since it would preclude
her attendance at pre-paid Pilates classes on Mondays and Wednesdays. She also did not
agree to the restraint of trade provision and another provision which contemplated her being
required to work on weekends and public holidays. There was correspondence and a meeting
about this, and it was agreed that the restraint provision would be removed. Ms Knutson
ultimately proposed as a compromise an amendment to the proposed new hours provision so
that on Mondays and Wednesdays she would work until 5.15pm with a 45-minute lunch
break. This was refused, and on 2 November 2017 Ms Knutson was advised in an email from
Chesson’s director, Mr Stephen Murphy, that she needed to sign the new employment
contract to remain in employment and “If you still feel, you cannot and do not wish to sign, I
need to find staff that will support the business as it grows and continually changes”. On 6
November 2017 Ms Knutson advised by email that “... due to the inability to meeting me in
the middle ... by allowing me to leave at 5.15pm on Monday and Wednesdays, I will not be
signing the new contract”. That evening in a reply email Mr Murphy said:
“I have stated that if you decide not to sign the employment contract, I need to find
staff that will support the business.
Therefore, sadly I need to inform you that you are now on notice and will work out
your notice period. Post which, you will no longer be employed by PayPerClick.
Jenny from accounts will notify and confirm you your notice period, as per your
previous employment contract.”
[7] On 7 November 2017 Ms Knutson replied that she had sought medical advice and
would not be returning to work until 20 November 2017 in accordance with her doctor’s
instructions. She asked for “Jenny” to provide her with written confirmation of her
termination and notice period. Chesson did not respond to this email, so on 10 November
3 [2018] FWC 2967
4 PR607446
[2018] FWCFB 4149
3
2017 Ms Knutson again emailed Mr Murphy requesting advice concerning her notice period,
but received no direct reply. However on 14 November 2017 Mr Murphy sent her a lengthy
email in which he challenged the medical certificate Ms Knutson had provided to support her
claim for personal leave and requested further evidence to support her personal leave claim.
The email also stated “Naturally we cannot determine the correct rates for your termination
pay, as they vary depending upon sick leave, or unpaid leave and days worked. Once fairly
resolved, the correct termination pay will be made in line with our scheduled pay cycles”. It
ended by requesting that Ms Knutson return her office keys by post.
[8] At this point Ms Knutson engaged lawyers to act on her behalf, and in a letter sent by
her lawyers to Chesson dated 15 November 2017 it was contended that the notice of
termination of employment had not informed Ms Knutson of the amount of notice given to
her or the last day of her employment as required by s 117 of the FW Act. The letter also
noted that Ms Knutson had not been paid for the period she had been on personal leave, and
demanded such payment. Mr Murphy responded in an email on 17 November 2017 at
9.57am, in which he expressed concern that Ms Knutson had made a false personal leave
claim based on a number of documents which he attached, and asked for a response by 20
November 2017. He noted that if the response was not considered satisfactory, “we may take
disciplinary action against Nicole, which could include summary termination of employment”.
Ms Knutson’s lawyers indicated in an email the same day at 1.31pm that a response would be
forthcoming by the end of the following week, but again requested a response from Chesson
concerning “the failure to provide proper notice, the notice period and last day of
employment”. At 3.18pm Mr Murphy replied by insisting on a response by Monday (20
November 2017), “Otherwise ... we will proceed on the basis that she does not wish to
provide a response”. He then went on to say:
“As you said in your letter dated 15 November 2017 and again in your email today,
the notice previously provided was not effective. Therefore we will proceed on the
basis that effective notice of termination has not been provided and no termination of
employment has taken place.
Can you please let us know whether Nicole will still be returning to work on Monday
as previously indicated?
If she is planning to return to work on Monday, we intend to hold a meeting with her
to discuss the concerns we have raised. She is welcome to have a support person
present at that meeting. If Nicole wishes to have a support person present, can she
please tell us who that person will be prior to the meeting.”
[9] On 20 November 2017 Ms Knutson’s lawyers responded in a lengthy letter which
recounted the history of the matter, including that on 7 November 2017 Chesson had changed
Ms Knutson’s work email password to prevent her from accessing work emails and had told
another employee that Ms Knutson was “away on stress leave and would not be returning”,
and that on 8 November 2017 Chesson had changed Ms Knutson’s password on her Google
Profile Account and removed her from all social media connections. The letter then stated:
“It is clear that, despite your failure to provide notice in accordance with section 117
of the Fair Work Act 2009, and even since that was pointed out to you on 15
November 2017, you have proceeded on the basis that our client’s employment with
you had terminated. If your purported withdrawal of termination is accepted, then our
[2018] FWCFB 4149
4
client hereby resigns from her employment with you, but says that the resignation was
forced given all of the above reasons and noting that you have created an unpleasant
environment and stressful circumstances in which our client cannot return to
employment.”
[10] In a letter dated 20 November 2017 but sent the following day, lawyers acting for
Chesson replied at length to the correspondence from Ms Knutson’s lawyers. The main
propositions advanced in the letter were as follows:
Ms Knutson had not been forced to resign because of the conduct of Chesson, but
rather had resigned “because she did not want to respond to the concerns Chesson had
raised relating to her personal leave claim and because she did not want to return to
work after being caught out making such a claim”. (underlining added)
There was “no reason why Ms Knutson could not have remained employed until the
end of 20 November 2017 so the issue regard[ing] her personal leave claim could be
resolved”. (underlining added)
By resigning early on 20 November 2017 Ms Knutson “avoided the prospect that a
finding of serious misconduct could have been made”.
The notice of termination given by Chesson had been recognised by both parties as
ineffective, and therefore both parties understood there had been no termination of
employment.
There had been no dismissal and Ms Knutson did not have the right to bring an unfair
dismissal claim.
If such a claim was brought and overcame the jurisdictional hurdle that there was no
dismissal, she would not be entitled to compensation if the facts showed she had made
a false personal leave claim because “it would have been open to Chesson to terminate
Ms Knutson’s employment summarily and her employment would not have continued
after 20 November 2017 in any event”. (underlining added)
[11] On 23 November 2017 Ms Knutson’s lawyers sent another lengthy response letter.
This letter attached a further medical certificate which had just been obtained and which
addressed the concerns earlier raised by Chesson about the earlier medical certificate and the
validity of Ms Chesson’s personal leave claim. The letter reiterated that Ms Knutson had been
forced to resign due to stress and anxiety caused by Chesson’s conduct. It also rejected the
proposition that Ms Knutson had maintained that there was no effective termination of
employment, but instead claimed Ms Knutson had taken the position that notice had not been
given in accordance with s 117 of the FW Act and had simply wanted to obtain an
understanding of the length of the notice period and her last day of employment.
[12] There was a further lengthy reply from Chesson’s lawyers dated 28 November 2017,
which maintained the position that Ms Knutson had not provided sufficient evidence to
support her personal leave claim. Ms Knutson was paid her termination of employment
entitlements the following day, but was never paid the claimed personal leave.
[2018] FWCFB 4149
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The Decision
[13] The issues to be determined by the Commissioner were primarily whether Ms Knutson
had been dismissed, whether the dismissal was unfair and, if it was unfair, how much
compensation ought be awarded to her. Chesson was a small business employer as defined in
s 12 of the FW Act, but it did not provide any evidence that it had complied with the Small
Business Fair Dismissal Code. It did not attempt to establish at the hearing that Ms Knutson
had made a false or unsubstantiated personal leave claim or that this provided any justification
for the dismissal, if there was found to be one. Ms Knutson did not seek reinstatement as a
remedy and neither party contended that it would be practicable for her to be reinstated.
[14] The Commissioner noted at the outset of the Decision that Ms Knutson’s application
contended that her dismissal took effect on 27 November 2017 and consequently that the
application was made within the 21 day time limit prescribed by s 394(2) of the FW Act.5
[15] In relation to the question of whether Ms Knutson had been dismissed, the
Commissioner found as follows:
“[37] In this case, there was a question raised as to whether the applicant had been
dismissed or, as was suggested in a communication from the applicant’s lawyer,
forced to resign. However, the suggestion of the applicant providing a forced
resignation was raised as a proposition that was contingent upon there being validity
to the employer’s purported withdrawal of the termination of employment as had been
advised on the evening of 6 November 2017. In an email dated 17 November 2017,
Mr Murphy indicated that “no termination of employment has taken place.”
[38] However, the employer’s attempted retraction of the dismissal was made in
response to the applicant’s lawyers directing attention to defects that existed in the
notice of the dismissal made in the email communication of 6 November from Mr
Murphy. The evidence clearly established that the applicant was advised of her
dismissal at 8:53pm in the email of 6 November 2017. Although that advice contained
defects such as the absence of any specified period of notice that the applicant was
required to work out, that communication clearly operated to dismiss the applicant.
The applicant was entitled to act upon that advice and seek to clarify and rectify the
attendant deficiencies. There was simply no capacity for the employer to unilaterally
withdraw the dismissal. In any event, the evidence undeniably established that the
applicant’s employment was terminated on the initiative of the employer.”
[16] The Commissioner then proceeded to consider whether the dismissal was unfair, and
in doing so dealt with each of the matters required to be taken into account by s 387 of the
FW Act. The Commissioner identified the reason for the dismissal as being that Ms Knutson
“refused to sign a new employment contract which extended her daily hours of work finish
time from 5 to 5:30pm”,6 and found that this did not, for the purpose of s 387(a), constitute a
valid reason for dismissal. The Commissioner also found that, for the purpose of s 387(b), Ms
Knutson was “not provided with an opportunity to respond to the prospect that the continued
5 Decision at [2]
6 Decision at [41]
[2018] FWCFB 4149
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refusal to sign the new employment contract would result in dismissal”.7 In relation to s
387(h), pursuant to which the Commissioner was required to take into account any other
matter he considered to be relevant, the Commissioner gave consideration to Chesson’s
refusal to pay Ms Chesson for the personal leave she had claimed for her non-attendance at
work after 6 November 2018 and found as follows:
“[57] The refusal to pay the applicant personal leave despite her entitlement to that
payment meant that the applicant was paid wages only up until that day of her
dismissal, 6 November 2017. The refusal to pay the applicant personal leave during
the period that Mr Murphy had (imprecisely) declared as a notice period created an
outcome whereby the dismissal of the applicant was summary in nature. That is,
although notice was putatively given, the applicant was entitled to be absent during
that period in accordance with the Medical Certificate. The failure to pay the applicant
her personal leave entitlement during the notice period has meant that she was
summarily dismissed without notice on and from 6 November 2017.
[58] There was no serious misconduct on the part of the applicant which could have
possibly justified what has become her summary dismissal.”
[17] The Commissioner’s overall conclusion was that Ms Knutson’s dismissal has harsh,
unjust and unreasonable.8 The Commissioner then turned to the question of remedy. After
finding that reinstatement was impracticable, he determined that an award of compensation
would be appropriate and proceeded to the quantification of the amount of compensation to be
ordered.9 Reference was made to the factors required to be taken into account under s 392 of
the FW Act and to a number of decisions including Sprigg v Paul Licensed Festival
Supermarket,10 and the Commissioner asserted that he had taken into account “all of the
circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection
392 (2) of the Act”.11 The Commissioner reasoned and concluded as follows:
“[68] There was no evidence provided which established that an Order of compensation
would impact on the viability of the employer’s enterprise. However, I have
recognised that the employer is a small business, although it may be inferred from
some of the evidence that the business has been and is growing, and presumably
financially sound.
[69] The applicant had been employed for approximately three years. The applicant
would have been likely to have received remuneration of approximately $1,346.00 per
week if she had not been dismissed.
[70] There was no evidence to suggest that the employment of the applicant would not
have continued for a significant period of time. In particular, it should be noted that
the applicant had received approval to take planned annual leave involving travel to
the USA. Further, the applicant had recently received an increase in her remuneration.
7 Decision at [50]
8 Decision at [62]
9 Decision at [63]-[64]
10 Print R0235, (1998) 88 IR 21
11 Decision at [67]
[2018] FWCFB 4149
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[71] Following the dismissal, the applicant has sought alternative employment. The
applicant secured alternative employment which commenced on 5 March 2018. The
alternative employment provides a level of remuneration commensurate with that
which she received when engaged with the employer.
[72] Thirdly, in this instance there was no established element of misconduct of the
applicant which contributed to the employer's decision to dismiss.
[73] Fourthly, I confirm that any amount Ordered does not include a component by
way of compensation for shock, distress or humiliation, or other analogous hurt caused
to the applicant by the manner of the dismissal.
[74] Fifthly, the amount Ordered does not exceed the compensation cap as prescribed
by s. 392 (5) of the Act.
[75] The applicant was not paid any notice upon termination. The applicant’s
dismissal was essentially summary in nature.
[76] Consequently, for the reasons outlined above I have decided that an amount
approximating with 17 weeks remuneration should be provided as compensation to the
applicant. That amount is $22,882.00. Accordingly, separate Orders [PR601919]
providing for remedy in these terms will be issued.”
Appeal grounds and submissions
[18] Chesson’s notice of appeal contained eight grounds of appeal, but it abandoned the
second and third grounds in its submissions. The first ground of appeal challenged the
Commissioner’s conclusion that Chesson had dismissed Ms Knutson. Chesson submitted that
the Commissioner erred in concluding that the notice given by Chesson to Ms Knutson on 6
November 2017 was effective to terminate her employment. The notice was ineffective, it was
submitted, because it did not specify the time the termination was to take effect or permit that
to be ascertained. Ms Knutson’s previous employment contract did not have a provision
relating to notice of termination, which explained why Ms Knutson and her lawyers were
unable to ascertain Ms Knutson’s notice period and were seeking clarification in later
correspondence with Chesson. The correspondence of both parties during the relevant period
demonstrated that they accepted that the notice was ineffective to bring about a termination of
the employment, and Ms Knutson treated the employment as still on foot by claiming
personal leave. Ms Knutson, it was submitted, had through her lawyers resigned from her
employment on 20 November 2017, and it was this resignation that had effected the
termination of her employment.
[19] In relation to the fourth, fifth, sixth and seventh grounds of appeal, Chesson submitted
that the Commissioner erred in concluding that Ms Knutson was entitled to be paid personal
leave from 7 November 2017. Chesson states that it became aware of social media posts that
cast doubt over whether Ms Knutson was unfit for work. On 17 November 2017, Chesson
determined that it could not be satisfied by her medical evidence and that she was not eligible
for paid personal leave under s 107(4) of the FW Act. However, the Commissioner found that
Ms Knutson was entitled to paid personal leave on the basis that she had provided to Chesson
a medical certificate and had accrued personal leave to cover the period. Chesson submitted
that the Commissioner’s process was insufficient; the Commissioner failed to independently
http://www.fwc.gov.au/awardsandorders/html/PR601919.htm
[2018] FWCFB 4149
8
consider the veracity of Ms Knutson’s medical evidence as to whether it would have satisfied
a reasonable person that she was in fact unfit for work under s 107(3)(a) of the FW Act. On
this basis, the Commissioner erred in concluding that Ms Knutson was entitled to paid
personal leave.
[20] Chesson submitted that the Commissioner further erred in concluding that its decision
to deny Ms Knutson’s paid personal leave amounted to a summary dismissal, which the
Commissioner backdated to 6 November 2017. Chesson had not given any notice of summary
dismissal; the notice of dismissal of 6 November 2017, which was ineffective and later
withdrawn, was for a dismissal on notice. A summary dismissal could not be found where an
employer refused an employee paid personal leave on the erroneous assumption that the
employee’s medical evidence was insufficient and, in any event, a summary dismissal could
not be backdated to 6 November 2017 in circumstances where the refusal of the personal
leave claim was not communicated until 17 November 2017. Chesson submitted that, were it
determined that Chesson terminated Ms Knutson’s employment on 6 November 2017, her
unfair dismissal application was lodged outside of the 21-day time period specified in s
394(2)(a) of the FW Act. On the basis of these matters, it was submitted that the
Commissioner erred in finding that the Respondent’s claim for an unfair dismissal remedy
was established.
[21] The eighth ground of appeal challenged the Commissioner’s quantification of
compensation. Chesson submitted that the Commissioner erred in awarding compensation to
Ms Knutson equating to 17 weeks remuneration ($22,882.00) in two respects:
(1) During the 17 weeks between the date when Ms Knutson stopped working (7
November 2017) and the date that she commenced alternative employment (5
March 2018), she went on a three-week trip to the USA. Prior to the
termination of her employment, Ms Knutson had received approval from
Chesson to take this time as annual leave, which she would have done if her
employment had continued using her accrued annual leave. Instead, Ms
Knutson’s annual leave accrual of 90.74 hours ($3,257.57) was paid to her
following the termination of her employment. The Commissioner erroneously
awarded compensation of $3,257.57 for time that she would have taken as
annual leave in circumstances where that amount was paid to her on
termination.
(2) The Commissioner erroneously took into account the period 6-27 November
2017, having backdated Chesson’s termination of Ms Knutson’s employment
to 6 November 2017, in assessing compensation. Chesson submitted that the
question of whether Ms Knutson was eligible for paid personal leave for the
period 6-27 November 2017 was the subject of a separate dispute, and the
Commissioner should not have awarded compensation in this regard until a
determination as to Ms Knutson’s eligibility for paid personal leave was made.
[22] Chesson submitted that permission to appeal should be granted because its appeal
grounds were reasonably arguable and raised issues of general importance, and the Decision
manifested an injustice and was disharmonious with other recent Commission decisions.
[23] Although not raised in its grounds of appeal, Chesson also made submissions
concerning the tax treatment of any compensation payable to Ms Knutson. Chesson submitted
[2018] FWCFB 4149
9
that in accordance with Taxation Ruling TR 2003/13 it was required to withhold tax at the
rate of 32% from an employment termination payment (ETP) to remit to the Australian
Taxation Office (ATO). Chesson submitted that should the Full Bench uphold the Stay Order
sum of $14,806.00, which Chesson had paid to Ms Knutson in accordance with that order, it
should remit 32% of that figure to Chesson for tax purposes pursuant to s 607(3)(b) of the FW
Act. Chesson submitted that Ms Knutson would otherwise be unjustly enriched.
[24] Ms Knutson submitted in relation to the first ground of appeal that the notice on 6
November 2017 was effective to terminate her employment, given the surrounding
circumstances of Chesson’s conduct. Ms Knutson submitted that she was entitled to rely on
the notice as Chesson failed to respond to her requests for identification of the notice period
and termination date, which demonstrated their disregard for continuing the employment
relationship. In relation to Chesson’s submission that Ms Knutson resigned her employment,
it was submitted that Chesson was not entitled to rely on the resignation in circumstances
where it was conditional on the notice of termination being invalid, which was never
accepted, and also conditional on it being forced by Chesson, which Chesson sought to deny
was the case.
[25] In relation to the fourth, fifth and sixth grounds of appeal, Ms Knutson submitted that
she was entitled to paid personal leave and had provided appropriate evidence to Chesson.
[26] In relation to the eighth ground of appeal, Ms Knutson initially submitted that Chesson
had incorrectly stated that her period of annual leave was for three weeks when in fact it was
only for eight days, but she subsequently conceded that she had informed the Commissioner
that it was for three weeks and accepted that she was bound by this. Ms Knutson submitted
that her entitlement to paid personal leave (not her salary) for the period 6-27 November 2017
was properly payable as compensation.
Consideration
[27] The appeal is made under s 604 of the Fair Work Act 2009 (FW Act). There is no right
to appeal and an appeal may only be made with permission of the Commission. If permission
is granted, the appeal is by way of rehearing. The Commission’s powers on appeal are only
exercisable if there is error on the part of the primary decision maker.12
[28] Section 400 of the FW Act applies to this appeal. It provides:
(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a
decision made by the FWC under this Part unless the FWC considers that it is in the
public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation
to a matter arising under this Part can only, to the extent that it is an appeal on a
question of fact, be made on the ground that the decision involved a significant error
of fact.
12
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, 99 IR 309 at [17]
per Gleeson CJ, Gaudron and Hayne JJ
[2018] FWCFB 4149
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[29] In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with
whom Marshall and Cowdroy JJ agreed) characterised the test under s 400 of the FW Act as
“a stringent one”.13 The task of assessing whether the public interest test is met is a
discretionary one involving a broad value judgment.14 In GlaxoSmithKline Australia Pty Ltd v
Makin a Full Bench of the Commission identified some of the considerations that may attract
the public interest:
“... the public interest might be attracted where a matter raises issues of importance and
general application, or where there is a diversity of Decisions at first instance so that
guidance from an appellate court is required, or where the Decision at first instance
manifests an injustice, or the result is counter intuitive, or that the legal principles
applied appear disharmonious when compared with other recent Decisions dealing
with similar matters”.15
[30] It will rarely be appropriate to grant permission to appeal unless an arguable case of
appealable error is demonstrated. This is so because an appeal cannot succeed in the absence
of appealable error.16 However, the fact that the Member at first instance made an error is not
necessarily a sufficient basis for the grant of permission to appeal.17
[31] In relation to the first ground of appeal, we are not satisfied that it has sufficient merit
to justify the grant of permission to appeal in the public interest. There are a number of
problems with Chesson’s argument, including the following:
(1) The fact that the notice of termination sent by Chesson on 6 November 2017
may not have complied with the requirements of s 117(1) of the FW Act did
not by itself render it ineffective to terminate Ms Knutson’s employment:
Metropolitan Fire and Emergency Services Board v Duggan.18
(2) At common law, a notice of termination that does not either specify a time
when the termination is to take effect, or permit that time to be ascertainable, is
ineffective to validly terminate the contract of employment: Fardell v Coates
Hire Operations Pty Ltd.19 However that it does not follow that such a notice is
ineffective to terminate the employment relationship: Automatic Fire
Sprinklers Pty Ltd v Watson;20 Byrne v Australian Airlines Limited.21
13 (2011) 192 FCR 78, 207 IR 177 at [43]
14 O’Sullivan v Farrer (1989) 168 CLR 210 at 216-217 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v
Hinch (2011) 243 CLR 506 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining
Services Pty Ltd v Lawler and others (2011) 192 FCR 78, 207 IR 177 at [44] - [46]
15 [2010] FWAFB 5343, 197 IR 266 at [27]
16 Wan v Australian Industrial Relations Commission (2001) 116 FCR 481 at [30]
17 GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343, 197 IR 266 at [26]-[27]; Lawrence v Coal & Allied
Mining Services Pty Ltd T/A Mt Thorley Operations/Warkworth [2010] FWAFB 10089, 202 IR 388 at [28], affirmed on
judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78, 207 IR 177; New South Wales Bar
Association v McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663,
(2014) 241 IR 177 at [28]
18 [2017] FWCFB 4878 at [41] – [42]
19 (2010) 201 IR 64 at [82]
20 (1946) 72 CLR 435 at 454, 468
21 (1995) 185 CLR 410
[2018] FWCFB 4149
11
(3) In any event, it has not been established that the period of notice and date of
termination were not ascertainable. The email of 6 November 2017 referred to
the notice period being “as per your previous employment contract”. The
evidence did not clearly establish what the terms of Ms Knutson’s employment
contract were as at 6 November 2017. On one view, the parties had agreed to
the notice period provisions of the proposed new contract such as to give them
contractual force, but even if the original terms attached to the letter of
appointment constituted the entire contract of employment, there would by
implication of law be a right to terminate on reasonable notice.
(4) Once the notice of termination was given, it was not able to be withdrawn
unilaterally: Birrell v Australian National Airlines Commission.22
(5) On an overall view of what occurred, there is no doubt there was a dismissal.
The employment relationship terminated, and the event that initiated that
occurring was the communication by Chesson on 6 November 2017 that Ms
Knutson was dismissed because she refused to agree to the altered hours of
employment. Even if valid, the withdrawal of that notice was disingenuous
because the correspondence from Chesson’s lawyers dated 20 November 2017,
to which we have earlier referred, makes it apparent that Chesson intended to
dismiss Ms Knutson summarily on 20 November 2017 on the basis of the
allegation of a false personal leave claim - an allegation which was not relied
upon at the hearing.
[32] We are also not satisfied that the grant of permission to appeal in respect of the fourth,
fifth, sixth and seventh grounds of appeal would be in the public interest. The matters raised
by Chesson could not be sufficient to displace the conclusion that Ms Knutson’s dismissal
was unfair, and that it was appropriate to award her compensation, in circumstances where
there was no challenge to the Commissioner’s findings that there was no valid reason for her
dismissal and that she was denied procedural fairness. The issue raised concerning the finding
that there was a summary dismissal is however relevant to the issue of the quantification of
compensation, and will be considered in that context.
[33] We are satisfied that the grant of permission to appeal in relation to the eighth ground
of appeal would be in the public interest, because it is apparent that the Commissioner’s
quantification of compensation was attended by appealable error and raises issues of general
application. There is a difficulty at the outset in identifying, from the Decision, the basis upon
which the Commissioner arrived at the conclusion that the amount of $22,882.00 should be
awarded. We have earlier set out the process of reasoning in the Decision which led to this
conclusion. Although nominal regard was had to the matters required to be taken into account
under s 392(2), there was no identification of how each matter was taken into account in a
mathematical sense. It is important to remember that the discretion to award compensation is
not at large; it is a guided discretion, and it is not sufficient merely to mention the matters
which are required to be taken into account without treating them as matters of significance.
Further, although the Decision23 made reference to the decision in Sprigg v Paul Licensed
22 [1984] FCA 419, 5 FCR 447, 9 IR 101
23 At [65]
[2018] FWCFB 4149
12
Festival Supermarket,24 which sets out a well-established, structured and transparent
methodology for the assessment of compensation, that methodology was not followed. It is
necessary to reiterate what was said in the Full Bench decision in Balaclava Pastoral Co Pty
Ltd v Nurcombe,25 where the same type of error was identified:
“[43] We would add to this that in quantifying compensation, it is necessary to set out
with some precision the way in which the various matters required to be taken into
account under s.392(2) (and s.392(3) if relevant), and the steps in the Sprigg formula,
have been assessed and quantified. That is to say, the way in which a final
compensation amount has been arrived at should be readily apparent and explicable
from the reasons of the decision-maker.
[44] We consider (consistent with two arguments advanced by Balaclava in support of
appeal ground 6) that the Commissioner’s quantification of compensation did not
conform to these principles and manifested appealable error in two respects. First,
there was no proper engagement with the critical first step in the Sprigg formula to
assess the anticipated period of employment. Engagement with this step is necessary
in order to make the finding required by s.392(2)(c) concerning “the remuneration that
the person would have received, or would have been likely to receive, if the person
had not been dismissed”. The Commissioner observed that there was some prospect
that the employment may not have endured for a considerable period, and that the
conduct and performance issues may ultimately have led to Mr Nurcombe’s
dismissal. However no anticipated period of employment was identified for the
purpose of the first step in the Sprigg formula, and no amount of remuneration lost
because of the dismissal was quantified for the purpose of s.392(2)(c).
[45] Second, the Commissioner concluded that 24 weeks’ pay, amounting to
$18,552.00, should be awarded as compensation without adequately identifying the
basis upon which this amount was calculated. It is clear that the Commissioner took
into account at least the anticipated period of employment, Mr Nurcombe’s period of
service, and the loss of non-transferable employment credits in assessing
compensation. However the monetary value assigned to these components was not
identified, making it impossible to determine whether the compensation amount was
properly calculated pursuant to s.392 in accordance with established principle.”
[34] The same difficulty was raised in the Full Bench decision in Jimenez v Platypus Pty
Limited:26
“[20] We make the observation that we have grave reservations about the manner in
which the Commissioner dealt with the issue of remedy, particularly his assessment of
the amount of compensation to be awarded. The Decision does not articulate any basis
for the conclusion in paragraph [83] that Mr Jimenez “may have been properly
terminated within a very short period” if he had not been dismissed. It is not clear how
24 Print R0235, (1998) 88 IR 21, since updated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District
Retirement Villages [2013] FWCFB 431, 229 IR 6
25 [2017] FWCFB 429 at [42]-[46]
26 [2016] FWCFB 7201 at [20]
[2018] FWCFB 4149
13
each matter required to be taken into account under s.392(2) was considered and
weighed. The manner by which the final amount of one week’s pay as compensation
was arrived at was not explained. Nor was s.392(3) applied in the process.”
[35] The Decision does not, for example, disclose whether the “recognition” that Chesson
was a small business led to a reduction in the amount of compensation that would otherwise
have been awarded;27 how long the Commissioner assessed Ms Knutson would have been
employed if not dismissed (beyond being a “significant period of time”);28 or precisely what
period of monetary loss the award of 17 weeks’ pay actually related to.29 As to this last matter
we infer that, since the Commissioner appears to have found that there was no monetary loss
after Ms Knutson gained new employment from 5 March 2018, the compensation was for the
17 week period ending on that date. Such a period would commence on or about 6 November
2017, the date upon which Chesson gave notice of the dismissal to Ms Knutson.
[36] Ms Knutson advanced her case on the basis that the termination of her employment
took effect on or about 27 November 2017, she having been dismissed on notice. Her claim
for personal leave was advanced on the basis that she was serving a period of notice
commencing on 6 November 2017, although she was awaiting confirmation as to what that
period of notice was. She never contended that she was summarily dismissed, and there is no
evidence that she was summarily dismissed. The fact that she may not have been paid for a
period of personal leave to which she was entitled did not have the effect of retrospectively
converting a dismissal on notice to a summary dismissal effective from 6 November 2017. In
those circumstances, it was not open for the Commissioner to find that she had been
summarily dismissed on that date. As Chesson pointed out, if she had been dismissed on that
date, then her application was lodged beyond the 21-day time period prescribed by s 394(2);
that would have the consequence that, because she was never granted an extension of time
pursuant to s 394(3), she could not validly have been granted an unfair dismissal remedy.
That makes plain the nature of the error.
[37] The inference we have drawn as to the basis upon which the amount of 17 weeks’ pay
was awarded by the Commissioner suggests that he awarded compensation for a three week
period prior to the dismissal taking effect. That was an error of principle. The function of
compensation ordered pursuant to s 392 is to compensate for loss arising from the dismissal.
Any loss which Ms Knutson suffered in the period 6-27 November 2017 is the result of her
not being afforded her personal leave entitlements under the NES, and is not the result of her
dismissal. Unfair dismissal remedies are not the means by which unpaid NES entitlements are
to be recovered; separate provision for that is made in Pt 4-1 of the FW Act.
[38] We also accept that the Commissioner erred in quantifying compensation in the
second respect identified by Chesson. The evidence and submissions before the
Commissioner demonstrated that Ms Knutson had obtained approval to use her accrued
annual leave entitlements for an overseas holiday prior to her dismissal. She was paid those
accrued entitlements upon the termination of her employment, and took the holiday as
planned. That holiday was, on the basis of what was put to the Commissioner, for a period of
three weeks. It cannot be said therefore that during the holiday period Ms Knutson suffered
27 See Decision at [68]
28 Decision at [70]
29 See Decision at [76]
[2018] FWCFB 4149
14
any loss arising from the dismissal. That three week period should not have been included in
the assessment of compensable loss.
[39] Because of the two identified instances of error, the amount of compensation awarded
exceeded what it should have been by six weeks’ pay. The correct amount should have been
eleven weeks’ pay, which at the weekly rate of pay of $1,346.00 identified in the Decision30
totalled $14,806.00. We will therefore uphold the eighth ground of appeal, quash the Decision
insofar as the assessment of compensation is concerned, as well as the Order, and replace it
with a further order for the payment of compensation inthe amount of $14,806.00. That
amount has already been paid by Chesson pursuant to the Stay Order, so no further payment
will be required by Chesson.
[40] Chesson sought an order that Ms Knutson pay it an amount of $4,737.20 in order to
cover the tax which it says it is liable to pay, at the rate of 32%, on the amount of $14,806.00.
It contends that the Stay Order did not permit it to deduct tax on that amount, and accordingly
it made the payment without deducting tax.
[41] The Order made by the Commissioner did not require any deduction of tax but, as
earlier set out, identified the amount of compensation as a “gross figure”, and stated that
“appropriate taxation treatment is a matter for the Parties”. The difficulty with this is that it
does not actually identify what the payment required to be made is; the more usual approach
is to identify an amount to be paid by the employer to the applicant less any tax required to be
deducted by law. The Stay Order required the amount of $14,806.00 to be paid as condition of
the stay that was granted, and Chesson did not raise prior to making the payment any issue of
tax liability. Even if Chesson has a tax liability on the amount it has paid pursuant to the Stay
Order (a matter about which we make no finding), we do not consider that it can now be
rectified by the making of an order that the relevant amount of the liability be paid back to
Chesson by Ms Knutson. There is no power under Pt 3-2 to make an order requiring an
employee to pay money to an employer, and we doubt that s 607(3)(b), which empowers an
appeal bench to “make a further decision in relation to the matter that is the subject of the
appeal...”, means that the bench is at large to make any decision as it considers appropriate, as
distinct from a decision (in an appeal in an unfair dismissal case) in substitution for the
original decision under Pt 3-2. Ms Knutson herself will no doubt have to bring to account for
taxation purposes the amount she has been paid.
Orders
[42] We make the following orders:
(1) Permission to appeal is granted in relation to the eighth ground of appeal.
Permission to appeal is otherwise refused.
(2) The appeal is upheld in respect of the eighth ground of appeal.
(3) That part of the Decision in which it was determined that Chesson pay Ms
Knutson the compensation amount of $22,882.00, and the Order, are quashed.
(4) Chesson shall pay compensation in the amount of $14,806.00 to Ms Knutson.
30 At [69]
[2018] FWCFB 4149
15
VICE PRESIDENT
Appearances:
N. Knutson on her own behalf.
S. Melbourne, Solicitor, on behalf of Chesson Pty Ltd t/a Pay Per Click.
Hearing details:
2018.
Sydney:
13 June.
Printed by authority of the Commonwealth Government Printer
PR608980
OF THE FAIR WORK MISSION THE
