[2015] FWC 6422

The attached document replaces the document previously issued with the above code on 28 October 2015.

References at paragraphs [31], [38] and [40] to other paragraphs within this decision have been corrected.

Edrea Tio

Associate to Senior Deputy President Hamberger

Dated 2 November 2015

Fair Work Act 2009
s.394—Unfair dismissal

James Deeth
v
Milly Hill Pty Ltd
(U2014/15784)

Application for relief from unfair dismissal – criminal charges – dismissal inconsistent with Small Business Fair Dismissal Code – valid reason for dismissal but pre-dismissal process deficient – dismissal harsh and unjust but not unreasonable – reinstatement not appropriate – compensation ordered.

[1] Mr James Deeth has applied under s.394 of the Fair Work Act 2009 (Cth) (the Act) for an unfair dismissal remedy against his former employer, Milly Hill Pty Ltd (Milly Hill).

Jurisdictional issue: extension of time

[2] Milly Hill summarily dismissed Mr Deeth on 26 September 2014. He lodged this application for an unfair dismissal remedy on 4 December 2014, more than 21 days after his dismissal took effect. It was therefore outside the default timeframe for lodgement prescribed by s.394(2)(a) of the Act. On 31 March 2015, Commissioner Roberts decided 1 that “exceptional circumstances” existed and therefore ordered an extension of time to allow Mr Deeth to validly apply.2

The substantive hearing

[3] The substantive hearing of this matter was held on 10 September 2015. With permission, Mr Deeth was represented by Mr Hannaway, solicitor, and Milly Hill was represented by Ms Coupland, solicitor.

[4] Mr Deeth tendered:

● the witness statement of Sharon Deeth, his mother; 3

● his own witness statement; 4

● the witness statement of Mark Deeth, his father; 5

● his PAYG payment summary from Milly Hill for the year ending 30 June 2015; 6 and

● his PAYG payment summary from Centrelink for the year ending 30 June 2015. 7

[5] Milly Hill tendered:

● the witness statement of Aidan Davey, an employee at Milly Hill’s retail butcher store; 8

● the witness statement of Debra Farrell, proprietor of a pottery business (“The Mud Shack”) on neighbouring premises to Milly Hill’s retail butcher store; 9

● the witness statement of Shayne Scafidi, a butcher at Milly Hill’s retail butcher store and Mr Deeth’s manager at the front of the store before his dismissal; 10

● a bundle of documents titled “List of Appendices”, relevantly comprising media statements (newspaper articles, etc.) relating to Mr Deeth and paperwork relating to Mr Deeth’s apprenticeship; 11 and

● copies of Mr Deeth’s pay slips from 30 August 2014 to the end of his employment. 12

[6] Mr Peter Strelitz, director of Milly Hill, also gave evidence at the hearing. 13 All the witnesses except Mrs Deeth were cross-examined.

[7] The issue of Mr Jamie Latham’s absence arose at the hearing. Mr Latham was the manager of the retail butcher store at which Mr Deeth worked before his dismissal. Mr Strelitz gave evidence that, while enquiries were made, Milly Hill did not ultimately call Mr Latham to give evidence out of respect for the latter’s concern for his young family’s safety if he were to do so. 14 Mr Latham’s concern stems from Mr Deeth’s criminal charges. I accept this and do not draw an adverse inference from Mr Latham’s absence. While the Fair Work Commission should not lightly depart from the general principle that hearsay is inadmissible, it is not strictly bound by the rules of evidence.15 In situations where the information would otherwise not be available – and I consider that this is such a situation – it is appropriate to consider hearsay evidence. I am therefore willing to admit Mr Strelitz’s evidence about Mr Latham’s views on a limited basis.16

The facts

[8] Milly Hill is a meat supplier. The majority of its revenue derives from wholesale supply to restaurants in New South Wales and Queensland. 17 However, it also has retail operations.

[9] Mr Deeth worked for Milly Hill in its retail butcher store in Kempsey, New South Wales as an apprentice butcher. He was in the third and final year of his apprenticeship at the time of his dismissal.

[10] While I note there was some dispute over this, 18 I find that Milly Hill had fewer than 15 employees at the time it dismissed Mr Deeth.19 It was therefore a small business as defined by s.23 of the Act at the relevant time.

[11] A detailed chronology of the events leading up to Mr Deeth’s dismissal is found at paragraph [5] of Commissioner Roberts’ decision. 20 In brief, on Sunday 21 September 2014, Mr Deeth was charged with being an accessory after the fact to murder. His father contacted Mr Latham early the next morning, Monday 22 September 2014, to advise that Mr Deeth would not be attending work because he was in custody, and spoke to Mr Strelitz about the situation that evening. Mr Deeth was granted bail in the evening of Wednesday 24 September 2014. On Thursday 25 September 2014, Mr Strelitz telephoned Mr Deeth’s mother to discuss the situation. In that conversation, he raised his concerns about the impact Mr Deeth’s criminal charge might have on his employees’ and customers’ opinion of Milly Hill.21 On Friday 26 September 2014, Mr Strelitz verbally advised Mrs Deeth that Mr Deeth’s employment with Milly Hill was terminated.22

[12] Milly Hill dismissed Mr Deeth for two reasons: 23

● that the other employees at the retail butcher store would resign if Milly Hill continued to employ Mr Deeth and so the business would no longer be viable; and

● that customers would boycott the retail butcher store if Milly Hill continued to employ Mr Deeth, and so its profitability would suffer.

Other employees

[13] In relation to the first reason, which Mr Strelitz said was the “main reason” for dismissing Mr Deeth, 24 Milly Hill first called Mr Davey. He gave evidence that he “would not like to work with James Deeth and would rather not work for Millyhill [sic] Meats anymore if he returned”.25 Mr Davey also gave evidence that Mr Deeth’s appearance and mood had deteriorated.

[14] Milly Hill also called Mr Scafidi, who gave similar evidence about Mr Deeth’s appearance and mood deteriorating in the weeks leading up to his dismissal. 26 He also said that, while at work, Mr Deeth had threatened aggression towards unidentified people:

“James received a phone call at work, a short time later I noticed him sharpening his knife very aggressively and I said to him what's up and he replied by saying if any of them touch me mates I will stab them.

I then told James Deeth to pull your head in and wake up to yourself and don't be so stupid, from that day on I had fears for my own safety and feeling threatened.” 27

[15] Mr Scafidi did not expressly state that he would have considered resigning or prefer not to work at Milly Hill any longer if it were to have continued to employ Mr Deeth. (Mr Scafidi had in fact already given Milly Hill notice of his resignation before the events of 21 September 2014, and was working out his notice period at the time Mr Deeth was dismissed.)

[16] Mr Strelitz gave evidence that Mr Latham told him that “if [Mr Deeth] came back, there would be no-one down there [at the retail butcher store] to work initially”. 28

Customers

[17] In relation to the second reason, Milly Hill called Ms Farrell, who gave evidence that she and certain customers of her pottery business would not frequent Milly Hill’s retail butcher store if Mr Deeth continued to work there. 29 However, much of her evidence was directed to the fact that she felt bullied by Mr Deeth’s previous refusal on multiple occasions to move his car out of her parking space, rather than concerns about his criminal charge.

Consideration

[18] It is not in dispute that Mr Deeth is a person protected from unfair dismissal. 30 I am satisfied that he is so protected.

[19] Section 385 of the Act provides:

“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.”

[20] Sections 385(a) and 385(d) of the Act are satisfied. It is not in dispute that Milly Hill dismissed Mr Deeth on 26 September 2014 with immediate effect. 31 Neither party contended that he was made redundant.

Whether dismissal consistent with the Small Business Fair Dismissal Code: s.385(c)

[21] Milly Hill submitted that Mr Deeth’s dismissal was consistent with the Small Business Fair Dismissal Code (the Code). 32

[22] The Code was declared by the Minister for Employment and Workplace Relations on 24 June 2009. It relevantly provides:

“Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.”

[23] In John Pinawin T/A RoseVi.Hair.Face.Body v Domingo 33 (Pinawin), the Full Bench set out a two-step test to determine if an employer had complied with the summary dismissal aspect of the Code:

“[29]... There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.” 34

[24] Milly Hill submitted that Mr Deeth’s dismissal was consistent with the Small Business Fair Dismissal Code because he had engaged in “conduct that causes serious and imminent risk to… the reputation, viability or profitability of the employer’s business” 35 and was therefore liable to be dismissed summarily for serious misconduct.

[25] In relation to the first (subjective) step of the Pinawin test, I accept that at the time of dismissal, Mr Strelitz believed that Mr Deeth’s actions were sufficiently serious to justify immediate dismissal. On the balance of probabilities, I find that Mr Strelitz had a knee-jerk reaction to the news that Mr Deeth had been charged, fuelled by reports of customer and employee dissatisfaction, and proceeded to terminate his employment on that basis.

[26] However, I do not consider that Mr Strelitz had reasonable grounds on which to believe this. The second (objective) step of the Pinawin test is therefore not satisfied. I find that Mr Strelitz did not conduct a reasonable investigation into the matter. This is borne out by the fact that Mr Strelitz described Mr Deeth’s charge as “aid and abet murder” on several occasions, 36 though I accept he did not intend anything malicious by the difference in terminology. While I accept that Mr Strelitz contacted his solicitors on the day he was told about Mr Deeth’s charge to seek advice on the situation, I do not believe that the purpose of doing so was to direct the solicitors to conduct an investigation into that situation. Similarly, while I accept that customers and employees told Mr Strelitz (in some cases indirectly, through Mr Latham) that they would not be happy if Mr Deeth continued to work for Milly Hill, I cannot find that that this constitutes a reasonable investigation. The evidence suggests that Mr Strelitz was a passive recipient of these reports of dissatisfaction, rather than that he had actively sought out their opinions.

[27] I find that Mr Deeth’s dismissal was not consistent with the Code. I therefore turn to consider whether the dismissal was harsh, unjust or unreasonable.

Whether dismissal was harsh, unjust or unreasonable: s.385(b)

[28] Section 387 of the Act sets out the factors I must take into account when deciding whether Mr Deeth’s dismissal was harsh, unjust or unreasonable:

“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.”

Valid reason: s.387(a)

[29] Mr Deeth was not at work at the time the actions that led to his criminal charge occurred. While it is not the case that out-of-hours conduct can never be a valid reason for dismissing an employee, the starting point must be that what an employee does on his or her own time is a matter for him or her. There is no presumption that a criminal conviction alone is a valid reason for termination of employment, particularly where the criminal offence was committed outside of work. 37 Even conduct outside of work involving criminal offences does not, alone, warrant dismissal. There must still be a relevant connection between the criminal activity and the employee’s employment.38 In any case, Mr Deeth was far from having been convicted at the point of dismissal. As at the date of this decision, my understanding is that he is still on bail.

[30] While I have found that Mr Deeth’s conduct falls short of what would be reasonable grounds on which to base a finding of serious misconduct, it was nonetheless grave. The offence with which he was charged was not a violence offence, but the offence to which he was charged as an accessory certainly was. This, taken together with:

● the fact that Milly Hill’s retail butcher store is a relatively small operation in a country town;
● the fact that Mr Deeth had, while at work, threatened aggression a few weeks before being charged; and
● the fact that Mr Deeth’s work involves the use of sharp knives

is sufficient to persuade me that both employees and customers of Milly Hill could legitimately have been concerned. I do, however, find on Ms Farrell’s evidence that any proposal not to frequent Milly Hill’s retail butcher store was more motivated by the parking space dispute 39 than by Mr Deeth’s charge. The “main reason” for dismissal (being Milly Hill’s concern about its other employees) is therefore more plausible than that relating to customers.

[31] The first factor listed in paragraph [30] is of particular significance in this case. The murder was given significant publicity in the local media. 40 The person charged with committing the murder to which Mr Deeth was charged as an accessory was under 18 at the time and so his name was not published in the articles, etc. reporting the incident. Mr Deeth was therefore the only alleged offender named in the media. It would therefore have been possible that members of the local community might conflate the identity and charges of the two alleged offenders, and be more apprehensive about Mr Deeth than was warranted.

[32] I therefore find there was a valid reason to dismiss Mr Deeth, but emphasise that this is only because of the peculiar combination of circumstances above.

Notification of that reason and opportunity to respond: ss.387(b) and (c)

[33] Even taken at its highest, the evidence is that Mr Deeth was not notified of the reason for his dismissal until after it took effect. 41 Further, Mr Strelitz communicated the fact of Mr Deeth’s dismissal to his mother rather than to Mr Deeth himself, which is less than ideal. The issue of having an opportunity to respond therefore does not arise. The process by which Mr Strelitz effected Mr Deeth’s dismissal was at best deficient.

Unreasonable refusal of support person: s.387(d)

[34] This factor is not applicable to Mr Deeth’s situation as his employment was terminated with immediate effect and so there were no discussions relating to dismissal which he might have requested a support person to attend.

Warnings about unsatisfactory performance: s.387(e)

[35] This factor is not applicable to Mr Deeth’s situation as he was not dismissed because of unsatisfactory performance.

Size of employer’s enterprise and absence of human resource management expertise: ss.387(f) and (g)

[36] Milly Hill is a small business. Mr Strelitz gave evidence that he has an employee in Armidale who processes the pays for the business, 42 but apart from that, no evidence was tendered to suggest that it had dedicated human resource management specialists or expertise.

Other relevant matters: s.387(h)

[37] I consider it relevant that Mr Deeth was more than two-thirds of the way through his apprenticeship at the time he was dismissed. 43 I accept his evidence that he has not since been able to secure alternative employment that would enable him to complete it.44 While I make no finding that this would in fact have been possible, I do not think Milly Hill put sufficient thought into whether it could have retained Mr Deeth and still have mitigated the perceived risks in relation to its employees and customers. It barely turned its mind to this. This weighs in favour of a finding that the dismissal was harsh.

[38] Having had regard to all the relevant factors above, I find that Mr Deeth’s dismissal was harsh and unjust, but not unreasonable. The unusual combination of circumstances described at paragraph [30] above combined to give Milly Hill a valid reason to dismiss Mr Deeth. However, Milly Hill did not afford Mr Deeth procedural fairness in effecting the dismissal.

Remedy

[39] Section 390 of the Act 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.”

[40] Mr Deeth did not seek reinstatement as a remedy. 45 In any case, I am satisfied that reinstatement would be inappropriate in these circumstances. In this regard, I rely upon my reasons for finding that there was a valid reason to dismiss Mr Deeth, set out at paragraphs [29] to [32] above. I consider it appropriate that I order Milly Hill to pay compensation to Mr Deeth instead of ordering reinstatement.

[41] While the decision in Sprigg v Paul’s Licensed Festival Supermarket 46 (Sprigg) sets out a method of calculating compensation that has since been well established and widely adopted, it is not the final word. The amount ordered must still be appropriate in all the circumstances of the case.47 In this case, I do not consider that the mathematical approach Sprigg prescribes would achieve a “fair go all round”.48 I have taken into account the fact that, while insufficient to constitute serious misconduct, Mr Deeth’s actions nonetheless contributed to his dismissal.49

[42] In all the circumstances of this case, I consider that an order of compensation equivalent to six weeks’ wages, less applicable taxation, is appropriate.

Conclusion

[43] Mr Deeth was unfairly dismissed. Reinstatement would be inappropriate. I consider that compensation equivalent to six weeks’ wages, less applicable taxation, is an appropriate remedy.

[44] An order to this effect will issue concurrently with this decision.

SENIOR DEPUTY PRESIDENT

Appearances:

D Hannaway, solicitor, for James Deeth.

C Coupland, solicitor, for Milly Hill Pty Ltd.

Hearing details:

2015.

10 September.

Sydney with video link to Armidale.

 1   [2015] FWC 1987.

 2   PR562312.

 3   Exhibit D1.

 4   Exhibit D2.

 5   Exhibit D3.

 6   Exhibit D4.

 7   Exhibit D5.

 8   Exhibit MH1.

 9   Exhibit MH2.

 10   Exhibit MH3.

 11   Exhibit MH4; see PN996 and PN293-PN342.

 12   Exhibit MH5.

 13   PN203-PN810.

 14   PN246-PN251.

 15   CEPU and another v Abigroup Contractors Pty Ltd [2013] FWCFB 453 [36].

 16   PN625-PN627.

 17   PN538-PN540; exhibit D1 para 10; exhibit D3 para 6.

 18   Appendix 13 of exhibit MH4 is a copy of Mr Deeth’s apprenticeship training contract. The response to question 36 indicates the number of employees at Milly Hill is 30. However, I accept Mr Strelitz’s evidence that this was a genuine error: PN293-PN342, PN1177-1187.

 19   PN242-PN243, PN277-PN292, PN801-PN803, PN826-PN827, PN936.

 20   [2015] FWC 1987.

 21   Exhibit D1 para 8.

 22   Exhibit D1 para 12; exhibit D2 para 21; exhibit D3 para 16.

 23   PN221, PN232-PN234, PN574, PN613, PN628, PN654, PN808-PN809, PN858.

 24   PN574.

 25   Exhibit MH1.

 26   PN954-PN964.

 27   Exhibit MH3.

 28   PN625.

 29   Exhibit MH2; PN884-PN904.

 30   Fair Work Act 2009 (Cth) s.382.

 31   PN1054.

 32   PN762-PN763.

 33   [2012] FWAFB 1359.

 34   Ibid [29].

 35   Fair Work Regulations 2009 (Cth) reg 1.07(2)(b)(ii).

 36   PN467-PN506.

 37   Leigh v Nestle Australia Pty Ltd t/a Uncle Tobys [2010] FWA 4744 [40]; upheld on appeal in [2010] FWAFB 7802.

 38   HEF of Australia v Western Hospital (1991) 33 AILR 249; cited in Rose v Telstra Corporation Ltd Print Q9292.

 39   Refer paragraph [17], PN870-PN902 and exhibit MH2.

 40   Exhibit MH4.

 41   PN1162-PN1167.

 42   PN347, PN350.

 43   Exhibit MH4 appendix 13.

 44   Exhibit D1 paras 13-14; exhibit D2 paras 27-28; exhibit D3 para 18.

 45   PN793-PN794.

 46   (1998) 88 IR 21.

 47   Fair Work Act 2009 (Cth) s.390(3); Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 [32].

 48   Fair Work Act 2009 (Cth) s.381(2).

 49   Fair Work Act 2009 (Cth) s.392(3).

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