| [2019] FWC 4116 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s 394 - Application for unfair dismissal remedy
Van-Son Thai
v
Email Ventilation Pty Ltd
(U2018/9896)
DEPUTY PRESIDENT SAMS |
SYDNEY, 27 JUNE 2019 |
Application for an unfair dismissal remedy – Supervisor/Tradesman in a small manufacturing business – jurisdictional objection – alleged genuine redundancy – claim the employee was not dismissed – failure to consult about redundancy – ultimatum to accept reduction in pay – employer a small business – alleged poor performance – no records of any warnings – dismissed by text message – dismissal harsh, unjust and unreasonable – reinstatement inappropriate – further submissions on remedy.
[1] Mr Van-Son Thai was employed as First Class Sheet Metal Worker by Email Ventilation Pty Ltd (the ‘Company’ or the ‘respondent’) until his position was allegedly made redundant, on 30 July 2018, by the Company’s Manager, Sole Director and Owner, Mr Javier Vilches in a text message which read:
‘Sonny
Effective immediately I give notice of termination of your employment, please note you are required to work your notice period.
Sonny
Please note that your (sic) are entitled to 4 to 5 weeks employment termination notice period.’
[2] Mr Son Thai has worked in manufacturing since 1979, having migrated to Australia from Vietnam in 1978. He is 62 years old. He was first employed by the Company on 2 August 2006, and at the time of the termination of his employment, he was paid $1,107.64 gross per week. His terms and conditions of employment were governed by the Building and Construction General On-site Award 2010 (the ‘Award’). He is a member of the Australian Manufacturing Workers’ Union (‘AMWU’ or the ‘Union’).
[3] On 25 September 2018, Mr Son Thai (hereafter the ‘applicant’) filed an application pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’), seeking a reinstatement order from the Fair Work Commission (the ‘Commission’) as a remedy for his alleged unfair dismissal. It was said that his dismissal was not a genuine redundancy, as the respondent did not comply with its consultation obligations under the Award, and the dismissal was otherwise ‘harsh, unjust and unreasonable’, pursuant to s 387 of the Act.
[4] In its Form F3, the respondent raised, what to my mind are three alternative, but irreconcilable objections to the application; firstly, that there was no dismissal; secondly, his dismissal was a case of genuine redundancy; and thirdly, as a small business the respondent had complied with the Small Business Fair Dismissal Code (the ‘Code’). In explaining the objections, the respondent said:
‘Mr Thai was not dismissed; it was a mutual agreement after he was offered a pay reduction and he did not agree and said he preferred to leave his employment.’
It is common ground that the respondent is a small business (three employees). The respondent produces and supplies roof ventilation fittings for commercial and large industrial construction jobs. Accordingly, it will be necessary, assuming the other objections are dismissed, to consider whether or not the respondent complied with the Code.
[5] The matter was referred to me for hearing as to the jurisdictional objections. On 14 December 2018, my Chambers issued directions for a hearing on 6 February 2019. However, on that day, there was no appearance by, or on behalf of, the respondent, and there had been no compliance with the directions by the respondent to file its evidence in the matter. Notwithstanding this regrettable position (including the waste of the Commission’s cost for a Vietnamese interpreter for the day), I reluctantly agreed to reissue fresh directions and list the matter for hearing on 11 March 2019. At the hearing, Mr J Vilches appeared for the respondent and Mr S Rabaud with Ms K Presley from the AMWU, appeared for the applicant.
[6] Mr Vilches filed a two page document being a potpourri of submission, commentary, conjecture and opinion. Given he was unrepresented, to the extent it can be so described, I shall regard this document as his evidence.
[7] Mr Vilches rejected the applicant’s claim of a good employment record and said that over the years he had been spoken to many times about his performance and bad attitude. He identified three specific issues:
(a) not allowing other employees to learn the work or use the machines;
(b) being abusive and unfair to any new employees; and
(c) not giving new employees access to proper PPE (personal protective equipment) when available and necessary. In fact, he made a new employee cry because of the way he treated him, including by screaming at him.
[8] Mr Vilches claimed the applicant’s refusal to accept a reduced pay rate was not the main reason for his termination of employment on 30 July 2018. He said that Mr Stephen Isberg from the Union had called and claimed the applicant had been paid for 38 hours a week for a 40 hour week, without a morning break. Mr Vilches said this was a lie. Further, Mr Vilches denied not paying the applicant’s accrued entitlements. In fact, the applicant owes him one week’s pay for annual leave taken in advance.
[9] Mr Vilches said it was never his intention to dismiss the applicant. There had been many discussions and attempts to have the applicant work a suitable arrangement, but he had consistently refused and then lied to the Union about being underpaid. In three text messages on 30 July 2018, Mr Vilches had requested he agree to a reduction in pay and to stay with the Company. When the applicant was asked to work through his notice, he demanded to be paid in cash. When this was refused, he left and went on a holiday.
[10] Mr Vilches conceded that the applicant’s job was still required, even though the job had reduced responsibilities and fewer duties. However, the applicant refused to discuss any option to reduce his pay. Mr Vilches said that at the present time the factory is closed most weekdays and there is a mountain of accumulated stock. The applicant had not been replaced, and for the last four months, no one has been working in the factory.
[11] In cross examination, Mr Vilches described business conditions as tough for the last five years and even worse in the last two years. Even so, he acknowledged that labour was not a ‘big cost’ in running his business. He currently has two employees. Previously he had four employees, including the applicant who was the only trade qualified employee at the time. He was very important to the business, given his knowledge of the Company’s machinery.
[12] Mr Vilches agreed that the applicant was being paid $31.78 an hour for a 38 hour week when he asked him to agree to $25.00 an hour on 26 July and 30 July 2018. Mr Vilches did not provide the Company’s payslip records, but he had prepared a payroll spreadsheet showing a summary of payments to the applicant since 2011.
[13] Mr Vilches met with Mr Isberg on 30 July 2018. Mr Isberg queried why the applicant was not provided a morning break, which Mr Vilches said had always been provided. He believed the applicant was lying about not having a morning break and he later confronted him about it. Mr Vilches said he was angry when he sent the applicant the text message on 30 July 2018 terminating his employment; see [1] above.
[14] Mr Vilches claimed the applicant’s work involved cutting, but always under instruction and supervision from him. Mr Vilches said that each day, he would start all the machines, allocate and then supervise all the work. Mr Vilches agreed he had taken no notes of his requests for the applicant to be paid a reduced rate of pay. Their conversations were always verbal and he could not recall dates or times when these conversations occurred. He denied he only raised the $25.00 an hour issue on 25 July 2018. Mr Vilches also agreed he had not provided the applicant with a job description.
[15] Mr Vilches stated that while the applicant knew what he was doing, he was not a good employee and they had ‘many run-ins’. His biggest concern was the applicant’s failure to teach other employees how to use the machinery and not letting them use the machines. Mr Vilches acknowledged that the applicant had never been issued with a written warning; however, he had been given verbal warnings, although he had no record of such warnings.
[16] Mr Vilches stated that some of the records he had obtained from the pay summary spreadsheet came from his accounts people and by the time of the applicant’s dismissal, he was doing the payroll. He agreed not all the information in his summary was correct and the table was wrong in respect to the applicant’s annual leave, as it had been double counted. He explained he had prepared the document quickly and that he did not know the applicant’s annual leave prior to the preparation of the tables. Further, he did not know the applicant’s long service leave balance. He now conceded he could have made a mistake when he paid the applicant’s outstanding entitlements when he was dismissed. Mr Vilches denied falsely creating the spreadsheet he provided to the Commission. He believed that employees were provided with their payslips, if they asked for them. He accepted the applicant had never been provided with his payslips.
[17] The applicant said that prior to his termination of employment, he was working as a Supervisor, and although he was not paid the Supervisor’s allowance, he was paid higher than the other employees. He claimed he had not been subject to any disciplinary action during his employment with the respondent.
[18] The applicant said that before he left work on Thursday 26 July 2018, Mr Vilches asked him for the factory key and told him he could not afford to pay the rate of pay he was currently being paid. He could only pay him $25.00 an hour. He rejected this, but agreed to think about it over the weekend. Mr Vilches told him not to come to work the next day. The applicant said he felt as though Mr Vilches might have wanted to get rid of him. The next day, he attended the AMWU Office and spoke to Mr Isberg. Mr Isberg said the employer could not just drop his pay, and advised him to return to work on Monday. In the meantime, he would talk to Mr Vilches. The applicant also told Mr Isberg he was working 40 hours, but only paid for 38 hours, and had no rostered days off.
[19] The applicant spent the weekend anxious about whether or not he had a job. When he returned to work on Monday 30 July 2018, Mr Vilches told him that if he was intending on working, he would be paid $25.00 an hour. The applicant again said he could not accept a reduced rate of pay, and left the workplace. Just as he was leaving, Mr Vilches rang to say that he could not afford to keep him on the same rate of pay. When he told Mr Vilches he was going to the Union, he replied, ‘You do whatever you want’.
[20] The applicant spoke to Mr Isberg and showed him the text message Mr Vilches had just sent him which read:
‘All I am trying to do is keep going and survive through this tough period … if you prefer to move on, there is nothing I can do. Please let me know what your decision is, what ever it turns out to be, I wish you success.’
Mr Isberg undertook to speak to Mr Vilches and advised the applicant to see a doctor, if he was stressed by what had happened. At 4:49pm that day, the applicant received the text message terminating his employment and requiring him to work out his notice period; see [1] above. The applicant spoke to Mr Isberg again who advised him to return to work and he would attempt to sort it out.
[21] Despite feeling anxious and uncomfortable, the applicant attended work the next day. During the shift, he overheard Mr Vilches ask another employee (Joe), if he was a member of the Union. When Joe indicated that he was not a Union member, Mr Vilches responded ‘Good, I don’t employ people who are in the Union’. Although the applicant felt intimidated by this, he kept quiet and continued working his notice until Tuesday 28 August 2018, even though he understood he was to leave on the Friday beforehand. On 28 August 2018, when the applicant inquired about his outstanding entitlements, Mr Vilches asked him to work an additional week (until 4 September 2018) which he agreed to. On 31 August 2018, Mr Vilches asked him to work a few more weeks. He declined.
[22] On 4 September 2018, Mr Vilches claimed he had been too busy to prepare the paperwork and the applicant’s entitlements. The applicant agreed to come back the following week to collect his pay and the paperwork. When he did so, Mr Vilches told him he owed him money for holidays. The applicant said he was not coming back and he would leave the matter to the Union. As the applicant had no paperwork, he could not claim Centrelink benefits. He had not been paid outstanding entitlements or superannuation and not been provided with a certificate of service.
[23] The applicant noted the failure of Mr Vilches to attend two Commission conferences (23 October 2018 and 13 November 2018). The applicant said he was devastated to have lost his job. He is the sole income earner for his family. He had some casual construction work, but was earning considerably less money than when he was working for the respondent.
[24] As Mr Isberg’s recollection of his meetings, and his contemporaneous notes with the applicant, do not conflict with the applicant, I need not repeat those parts of the evidence. I will deal only with his dealings with Mr Vilches.
[25] On 30 July 2018, being concerned with the escalation of the applicant’s situation, he contacted Mr Vilches who agreed to meet him later that day. They had a conversation in the factory’s car park in which Mr Vilches claimed that he had forewarned the applicant that because he was old and had collapsed at work, he had rostered two additional employees to help him. The applicant had received a morning and a lunch break. Mr Isberg told him if he was unable to pay him, he could not just deicide to cut his wages. Rather, he would have to make the applicant redundant. Mr Vilches refused to do so. Later that day, Mr Isberg received a call from Mr Vilches who told him he had spoken to the Commission and had been told he only had to give the applicant four weeks’ notice. Mr Isberg then spoke to the applicant and understood from him that he had been dismissed. He undertook to consult with the Union lawyers. He advised him to see a doctor if he felt stressed. The Union filed the unfair dismissal application on 25 September 2018.
[26] Mr Isberg attended the Fair Work Commission conferences. Mr Vilches failed to attend. Mr Isberg had intended to raise the applicant’s outstanding entitlements and his separation certificate. Mr Isberg also served a right of entry notice on Mr Vilches in order to enter the premises on 5 December 2018. When he did so, the front gate was locked and the roller door to the workplace was closed. It appeared no one was on the premises. However, when he drove past on 17 December 2018 at around 2pm, he noticed the gate was open and the roller doors were up. However, he did not see anyone.
[27] Mr Rabaud set out a short statement of facts, which I apprehend is not disputed. It reads as follows:
(a) The applicant is 62 years old. He is a trade-qualified First Class Sheet Metal Worker, having completed his Certificate III in Shop Fitting, Kitchen and Detailed Joinery at TAFE in 2000. At the time of his dismissal, he was working as a Supervisor producing and supplying roof ventilation fittings for commercial and large-scale industrial jobs.
(b) The applicant has a good employment record and has not been subject to any disciplinary action. He is an experienced sheet metal worker who is proficient in performing all of the necessary manufacturing, production and maintenance work required by the respondent.
(c) At all material times, the applicant was, and remains, fit to perform the inherent requirements of his employment with the respondent.
(d) On 26 July 2018, the applicant had a conversation with the Manager of the respondent, Mr Vilches, at the end of his shift. Mr Vilches proposed to reduce the applicant's rate of pay and requested that he return his factory key.
(e) Mr Vilches proposed to reduce the applicant's pay from $31.80 per hour to $25.00 per hour. The applicant rejected this proposal and in response, Mr Vilches told the applicant not to come to work the following day.
(f) The applicant attended the AMWU Granville office to request assistance from the Union. The AMWU Organiser, Mr Stephen Isberg was allocated the applicant's matter and planned to hold a discussion with Mr Vilches the following week.
(g) As directed, the applicant did not report to work on 27 July 2018. He returned to work after the weekend on Monday 30 July 2018.
(h) On 30 July 2018, Mr. Vilches approached the applicant at the commencement of his shift. Mr Vilches told the applicant, ‘if you're going to work, that means that you're going to accept being paid the $25.00 per hour’. The applicant refused to accept the proposal for the second time and left the workplace.
(i) The applicant attended the AMWU office and met with Mr Isberg to explain the current situation. Mr Isberg spoke with Mr Vilches on the phone and subsequently made plans to meet later that afternoon.
(j) At approximately 5:00pm, applicant received a text message from Mr Vilches terminating his employment. This text message expressed:
‘Sonny- Effective immediately I give you notice of termination of your employment, please not you are required to work your notice period.
Sonny - Please not that you are entitled to 4 to 5 weeks employment termination notice period.’
(k) The applicant was not paid his entitlements upon termination of his employment. He has not yet received any amounts in respect of his accrued annual and long service leave.
[28] Mr Rabaud submitted that the applicant is a person protected from unfair dismissal (s 385 of the Act). He noted that the respondent’s three jurisdictional objections are mutually inconsistent in that it cannot be said the applicant’s dismissal was a genuine redundancy while, at the same time, claiming that he was not dismissed. By reference to each of the matters in s 385 of the Act, Mr Rabaud submitted the following:
(a) The applicant was dismissed by the respondent on 30 July 2018 in a text message which also required him to work out his notice period. The fact the respondent requested the notice be extended does not alter the termination of the applicant’s employment at the employer’s initiative.
(b) Mr Rabaud relied on the definition of genuine redundancy pursuant to s 389(1) of the Act, to submit that the applicant’s job was still required to be done, albeit at a reduced rate of pay. The respondent brought no evidence that the applicant’s job was no longer required to be performed by anyone.
(c) In addition, as a Sheet Metal Worker employed under clause 8.1 of the Award, he was entitled to be consulted by the employer as to any proposal to make him redundant and for the employer to consider options to ameliorate the adverse effect of redundancy, including redeployment options. Mr Rabaud submitted that there was no evidence of any genuine attempts to properly consult with the applicant in accordance with s 389(1)(a) or (b) of the Act; see: Ulan Coal Mines Limited v Honeysett & Ors [2010] FWAFB 7578.
(d) Mr Rabaud acknowledged that the respondent is a small business to which the Code applied. However, this was not a case of the applicant’s conduct or capacity being a reason for his dismissal. The applicant was given no warning, verbal or in writing, indicating that he was at risk of being dismissed. The respondent had produced no evidence of its compliance with the Code. In these circumstances the applicant’s dismissal was not consistent with the Code.
[29] Mr Rabaud turned to the provisions of s 387 of the Act. He submitted that:
(a) As there was no reason for dismissal based on the applicant’s conduct of performance or capacity, there could be no valid reason for the applicant’s dismissal (s 387(a)). A refusal to accept a pay cut and a false claim of redundancy, could not be a valid reason; sees Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371.
(b) As there was no valid reason for the applicant’s dismissal, there is nothing arising for consideration under s 387(b)-(e).
(c) Even accepting the respondent is a small employer without any dedicated human resources advice, the procedure adopted by the respondent was ‘incredibly poor’ (s 387(f)-(g)).
(d) As to other relevant factors (s 387(h)), Mr Rabaud put that the respondent's dismissal of the applicant was entirely disingenuous, particularly given Mr Vilches’ attempts to arbitrarily impose a pay cut upon the applicant and then subsequently terminating his employment via text message. The applicant submits that this contributes to a finding of unreasonableness. Finally, the following factors (also with regard to s. 387(h)) support a finding that the applicant's termination was harsh, unjust and unreasonable:
(i) the applicant's good work record;
(ii) the applicant's age;
(iii) the fact that, as an older worker, the applicant will have consequential difficulties finding comparable work;
(iv) the applicant's considerable 12 years’ service working for the respondent; and
(v) the applicant is the sole income earner in the household.’
[30] Mr Rabaud submitted that reinstatement would be inappropriate in this case. The applicant seeks compensation for his unfair dismissal. He seeks the maximum compensation of 26 weeks’ pay, as he had 12 years’ service, and but for the respondent’s capricious conduct, he would have expected ongoing employment of no less than 52 weeks. According to the Sprigg formula and s 392(5) of the Act, this amounted to $33,072.00.
[31] Arising from the evidence, Mr Rabaud submitted that the job that the applicant performed, still needed to be done, but Mr Vilches just wanted it done cheaper. The applicant was the only trade qualified employee and his specialised skills were still necessary when the two more recently employed workers were engaged. The applicant’s job was vital to the business, as evident by Mr Vilches wanting him to extend his notice. This was not a case of genuine redundancy, even without considering the failure of Mr Vilches to properly consult with the applicant about the business’ financial circumstances. To suggest the applicant was now lying was made without a shred of evidence, and without the applicant ever being confronted with the allegation. The dismissal may have had something to do with the applicant’s Union membership. Mr Rabaud put that the whole case was very messy. He reserved the applicant’s position as to identify any income earned, if the Commission found his dismissal was unfair, as he does not seek reinstatement.
[32] Mr Vilches claimed that his business had not received a sale for over a year and the factory has been closed for around six months with a large stockpile. No one works there. He had been merely trying to work something out with the applicant. Mr Vilches agreed the applicant had been the Supervisor, when there were four or five employees two years ago. It got to the point where the applicant was just following directions as to what to cut and what to fold. Mr Vilches claimed that no one is currently employed by the respondent. He only goes in a few hours a week to do a few minor jobs. Mr Vilches did not want to let the business go as he had started in 2003 and just wanted to keep it going. Mr Vilches said he had not attended the two Commission conciliations because his phones and emails were down for four to five months and he had received no notifications.
[33] In reply, Mr Rabaud submitted that the respondent had put no evidence in support of its financial position. Moreover, there remains the question of the applicant’s outstanding entitlements, which Mr Vilches had still not been able to calculate correctly.
[34] Before considering the merits of this application, a number of preliminary matters need to be determined which also goes to the respondent’s three objections to the application. An unfair dismissal is defined at s 385 of the Act and is to be read in conjunction with s 396. The sections read as follows:
‘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.
396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.’
At this juncture, I find as follows:
(i) the applicant’s unfair dismissal application was lodged within the 21 day time limit set out in s 394(b) of the Act.
(ii) the applicant obviously completed the minimum employment period, set out in ss 382 and 383 of the Act, being over 12 years; and
(iii) the applicant was employed under the Award, In any event, his annual rate of earnings ($66,144.00) was far less than the high income threshold (s 382(b)(iii)).
[35] From the statutory extracts above, it is apparent that the Commission will be required to make findings on all four of the criteria as to ‘what is an unfair dismissal’ and ss (b), (c) and (d) of s 396 in respect to initial matters to be considered. They are obviously linked.
[36] Section 386(1) of the Act provides the meaning of ‘dismissed’. It reads:
‘386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
[37] In Searle v Moly Mines Limited [2008] AIRCFB 1088 a Full Bench of the Australian Industrial Relations Commission (as the Commission was then known) said at [20]:
‘[20] A Full Bench recently considered the meaning of the expression “termination at the initiative of the employer”’ in O’Meara v Stanley Works Pty Ltd. For our purposes it is sufficient to refer to the following passage in which, having referred to the authorities, the Commission said:
“[23] In our view the full statement of reasons in Mohazab [(1995) 62 IR 200] which we have set out together with the further explanation by Moore J in Rheinberger [(1966) 67 IR 154] and the decisions of Full Benches of this Commission in Pawel [Print S5904, 12 May 2000 per Polites SDP, Watson SDP and Gay C] and ABB Engineering [Print N6999, 9 December 1996 per Munro J, Duncan DP and Merriman C] require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” [Mohazab at page 205.] Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer's conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.”’ (my emphasis)
[38] In my view, there is not a skerrick of doubt that the text message of 30 July 2018 was a termination of employment at the employer’s initiative. To submit that there was some form of mutuality about the parting of the ways, or otherwise, is absurd. Plainly, if the applicant was not dismissed, why would the employer insist he work out a period of notice? It makes no sense at all; rather, it makes it abundantly clear that Mr Vilches had dismissed the applicant because he would not accept a reduction in his pay to $25.00 an hour. This jurisdictional objection is dismissed.
[39] Section 389 of the Act expressly defines ‘genuine redundancy’ as follows:
‘389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
[40] The Explanatory Memorandum to the Fair Work Bill 2009 developed the meaning of ‘genuine redundancy’ in this way:
‘389 – Meaning of genuine redundancy
1546. This clause sets out what will and will not constitute a genuine redundancy. If a dismissal is a genuine redundancy it will not be an unfair dismissal.
1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine redundancy if his or her job was no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise. Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548. The following are possible examples of a change in the operational requirements of an enterprise:
• a machine is now available to do the job performed by the employee;
• the employer’s business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or
• the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.
1549. It is intended that a dismissal will be a case of genuine redundancy even if the changes in the employer’s operational requirements relate only to a part of the employer’s enterprise, as this will still constitute a change to the employer’s enterprise.
1550. Paragraph 389(1)(b) provides that it will not be case of genuine redundancy if an employer does not comply with any relevant obligation in a modern award or enterprise agreement to consult about the redundancy. This does not impose an absolute obligation on an employer to consult about the redundancy but requires the employer to fulfil obligations under an award or agreement if the dismissal is to be considered a genuine redundancy.
1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or within the enterprise of an associated entity of the employer (as defined in clause 12).
1552. There may be many reasons why it would not be reasonable for a person to be redeployed. For instance, the employer could be a small business employer where there is no opportunity for redeployment or there may be no positions available for which the employee has suitable qualifications or experience.
1553. Whether a dismissal is a genuine redundancy does not go to the process for selecting individual employees for redundancy. However, if the reason a person is selected for redundancy is one of the prohibited reasons covered by the general protections in Part 3-1 then the person will be able to bring an action under that Part in relation to the dismissal.
[41] A Full Bench of this Commission in Construction, Forestry, Mining and Energy Union and others v Spotless Facility Services Pty Ltd [2015] FWCFB 1162 said at [66]:
‘[66] The meaning of the word ‘redundancy’ is not fixed and the term will take colour from its context. However, in any relevant context it is the abolition of a position which leads to that position being redundant. The cause of the abolition of the position – whether business restructure, technological advance, loss of contract/ordinary turnover or otherwise – is a separate matter, albeit one which may determine the entitlements of the redundant employee. Indeed the presence of the express exclusion in s.119 (and in the predecessor TCR case) demonstrates that the abolition of a position as a result of ordinary and customary turnover is a redundancy; albeit one that does not give rise to an entitlement to redundancy pay. The exclusion would otherwise be entirely otiose. As we have earlier indicated, s.119 does not define ‘redundancy’. It merely sets out the circumstances in which an employee will or will not have an entitlement to redundancy pay under the NES. Doubtless employees who fall within the class have been dismissed by reason of redundancy, but ‘redundancy’ is not thereby so narrowly confined. Further, although we accept that the industrial contextual considerations identified by Spotless lend some support to its contention, other industrial contextual considerations cannot be ignored. There is firstly the incorporation of the redundancy provisions of the Building On-Site Award and the Plumbing Award which each carry a definition of redundancy which is contrary to the meaning of redundancy contended for by Spotless’. (footnotes omitted)
[42] In Foster’s Group Limited v Wing (2005) 148 IR 224 (‘Foster’s v Wing’), Habersberger AJA referred to a number of the higher court authorities on the subject of redundancy. At pages 230-233, His Honour said:
‘The Meaning of Redundancy
33. A clear guide to the meaning of redundancy is to be found in the judgment of the Full Court of the Supreme Court of South Australia in R v Industrial Commission (SA); Ex parte Adelaide Milk Supply Co-operative Ltd. In that case Bray CJ said that:
“… the concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone. A dismissal for redundancy seems to be a dismissal, not on account of any personal act or default of the employee dismissed or any consideration peculiar to him but because the employer no longer wishes the job the employee has been doing to be done by anyone. ”
[43] Further, in Hodgson v Amcor Ltd (2012) 264 FLR 1, Vickery J, after summarising the various authorities, arrived at the following conclusions:
‘In essence, subject to any qualification or re-statement found in the relevant contract of employment or any applicable statute, the common law concept of “redundancy” comes down to the following propositions:
(a) A job becomes redundant when the job of the employee ceases to exist because the employer, for whatever reason, whether by reason of reorganisation, mechanization, change in demand or other reason, no longer desires to have it performed by anyone;
(b) This can occur either when the role no longer exists or the duties have so changed that for all practical purposes the original role no longer exists;
(c) However, redundancy is not limited to the circumstance where the employer, no longer desires to have the work previously performed by the terminated employee done by anyone;
(d) A redundancy may also arise upon the redistribution of job functions, where the duties performed by an employee are redistributed among other employees. In this case the employer still requires the duties to be performed, but the re-organisation may give rise to a redundancy. In this event, although the duties remain to be performed, “for all practical purposes the original role no longer exists” because the duties are divided and assigned amongst others. In such a case the question is whether any function or duty remains to be performed by the employee. A redundancy will occur if, after the reorganisation, the employee in question is left with no duties to discharge; and
(e) Redundancy will not arise where the termination of employment is carried out solely because of any personal act or default of the employee terminated or for any consideration peculiar to that employee’ (footnotes omitted)
[44] There was no evidence that the applicant’s job was no longer required to be performed by anyone. Given that he was the only fully trade-qualified employee at the time, and Mr Vilches was desperate to keep his business going, it is nonsensical to submit that his job was no longer required. The fact Mr Vilches twice sought to extend the applicant’s notice period, demonstrates that he was vital to the business. Mr Vilches claims to the contrary are rejected and in any event, I fail to understand a submission that the applicant’s job was redundant when Mr Isberg’s uncontested evidence was that in a conversation with Mr Vilches he had refused to make the applicant redundant. Mr Vilches tendered no evidence of the Company’s financial position, and simply expected the Commission to accept his ‘say so’, as to the dire financial circumstances he was in. That is not good enough. It is indicative of Mr Vilches’ cavalier, almost dismissive approach to this entire matter. Let me be clear: for an employer to claim financial difficulties as a reason to make an employee/s redundant, requires clear and cogent evidence of the financial state of the business, or any associated entities. Mr Vilches failed to do so. The first leg of s 389(f) of the Act is not made out.
[45] There is the second leg to the Act’s definition of ‘genuine redundancy’. That is, whether it would have been reasonable to redeploy the applicant within the employer’s enterprise, or an associated entity. As there was no evidence provided of any associated entity of the respondent to which the applicant could have been redeployed, I turn to the consultation requirements.
[46] Mr Rabaud claimed that the applicant had not been consulted at all about his alleged redundancy. There is much force to this submission and I accept it. He was certainly given nothing in writing, in accordance with cl 9(1)(b)(iii) of the Award.
[47] In Consultation clause in modern awards [2013] FWCFB 10165, at [30]-[31], the Full Bench said:
‘[30] The word ‘consult’ means more than the mere exchange of information. As Young J said in Dixon v Roy:
“The word ‘consult’ means more than one party telling another party what it is that he or she is going to do. The word involves at the very least the giving of information by one party, the response to that information by the other party, and the consideration by the first party of that response.” [citations omitted]
[31] The right to be consulted is a substantive right, it is not to be treated perfunctorily or as a mere formality. Inherent in the obligation to consult is the requirement to provide a genuine opportunity for the affected party to express a view about a proposed change in order to seek to persuade the decision maker to adopt a different course of action. As Logan J observed in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (QR):
“... A key element of that content [of an obligation to consult] is that the party to be consulted be given notice of the subject upon which that party’s views are being sought before any final decision is made or course of action embarked upon. Another is that while the word always carries with it a consequential requirement for the affording of a meaningful opportunity to that party to present those views. What will constitute such an opportunity will vary according the nature and circumstances of the case. In other words, what will amount to “consultation” has about it an inherent flexibility. Finally, a right to be consulted, though a valuable right, is not a right of veto.
To elaborate further on the ordinary meaning and import of a requirement to “consult” may be to create an impression that it admits of difficulties of interpretation and understanding. It does not. Everything that it carries with it might be summed up in this way. There is a difference between saying to someone who may be affected by a proposed decision or course of action, even, perhaps, with detailed elaboration, “this is what is going to be done” and saying to that person “I’m thinking of doing this; what have you got to say about that ?”. Only in the latter case is there “consultation. ...” (citations omitted)
[48] Even if Mr Vilches had been able to demonstrate financial hardship, it is patently obvious that he failed to satisfy the Award’s requirements to properly consult with the applicant about his purported redundancy. Mr Vilches’ one and only proposal was to require the applicant to work the same hours, for ~22% less of his hourly rate. It is little wonder the applicant rejected this ‘take it or leave it’ ultimatum.
[49] For these reasons, I am satisfied that the applicant’s dismissal was not a case of genuine redundancy, pursuant to s 389(1) of the Act. It follows this objection is dismissed.
[50] I can dispose of the Code question in relatively short order. The Code is expressed as follows:
‘Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009.
Summary dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.
Procedural matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.’
[51] While there can be no doubt that the respondent is a small business employer, I do not see how the Code is relevant in the context of its primary objection based on ‘genuine redundancy’ grounds. This is so, because, shortly stated, the Code deals with dismissals for cause; that is, involving either the employee’s conduct, including serious misconduct, or capacity to do the job and the assessment of procedural fairness relating thereto. Redundancy imputes no fault attributed to the employee.
[52] There was no evidence that the respondent had complied with the Code. Even if I did accept that Mr Vilches had some concerns with the applicant’s age and physical capacity to perform the job (which I do not), there is not a jot of evidence that he had ever raised these concerns with the applicant, or that he had told him his job was at risk for these, or any other reasons. This was a fundamental breach of the Code. Moreover, it is difficult to reconcile Mr Vilches’ attempts to persuade the Commission of some unspecified performance issues, with his requests for the applicant to extend his notice period. In any event, I am satisfied that the Code could not have been complied with because the applicant’s dismissal was not related to his conduct or performance. In my view, his dismissal was solely because he would not accept a reduction in his pay of ~22%. This jurisdictional objection is dismissed.
[53] From the foregoing reasons, I am satisfied that there are no jurisdictional matters which have been made out such as to disqualify the applicant from pursuing his unfair dismissal rights under s 387 and s 392 of the Act. It is to these matters which I now turn; firstly, as to consideration of whether the applicant’s dismissal was unfair, pursuant to s 387 of the Act:
‘Meaning of ‘harsh, unjust and unreasonable’
The matters required to be taken into account by the Commission, under s 387 of the Act are:
(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.
The meaning of ‘valid reason’ in s 387(a) is drawn from the judgement of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 (‘Selvachandran’). This meaning has been considered and applied by members of the Commission and its predecessors for many years. For example, in Rode v Burwood Mitsubishi Print R4471, a Full Bench of the then Australian Industrial Relations Commission (‘AIRC’) discussed the meaning of valid reason in the context of the relevant provisions of the Workplace Relations Act 1996, and by citing Selvachandran. The following is an extract from the Full Bench’s decision at [17]-[19]:
‘[17] In relation to the meaning of “valid reason” the following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd are relevant:
“Section 170DE(1) refers to a ‘valid reason, or valid reasons’, but the Act does not give a meaning to those phrases or the adjective ‘valid’. A reference to dictionaries shows that the word ‘valid’ has a number of different meanings depending on the context in which it is used. In The Shorter Oxford Dictionary, the relevant meaning given is: ‘2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.’ In The Macquarie Dictionary the relevant meaning is ‘sound, just or wellfounded; a valid reason’.
In its context in s 170DE(1), the adjective ‘valid’ should be given the meaning of sound, defensible or wellfounded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must `be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, when considering the construction and application of a s 170DC.”
[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).
[19] We agree with the appellant’s submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.
See also: Nettleford v Kym Smoker Pty Ltd (1996) 69 IR 370.’ (citations omitted)
[54] In my view, there can be no room to doubt that the reasons for dismissal were not only ‘capricious’ and ‘fanciful’, but were contradictory and irreconcilable.
[55] Accordingly, I am satisfied that there was no valid reason for the applicant’s dismissal. This weighs in favour of a finding of unfairness.
[56] Subsections (b)-(e) of s 387 are generally grouped under the rubric of ‘procedural fairness’ or ‘natural justice’ issues. To highlight the importance of procedural fairness issues, I cite three authorities on the subject in unfair dismissal cases. In Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport (2000) 98 IR 137 a Full Bench of the AIRC said at [73]:
‘As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment.’
[57] In Wadey v YMCA Canberra [1996] IRCA 568, Moore J made clear that an employer cannot merely pay ‘lip service’ to giving an employee an opportunity to respond to allegations concerning an employee’s conduct. His Honour said:
‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’
[58] Nevertheless, procedural fairness steps should be applied in a common-sense and practical way. In Gibson v Bosmac Pty Ltd (1995) 60 IR 1, Wilcox CJ said at [7]:
‘[7] Ordinarily, before being dismissed for reasons related to conduct or performance, an employee must be made aware of the particular matters that are putting his or her job at risk and given an adequate opportunity of defence. However, I also pointed out that the section does not require any particular formality. It is intended to be applied in a practical, commonsense way so as to ensure that the affected employee is treated fairly. Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section.’
[59] As I have found there was not a valid reason related to the applicant’s capacity or conduct, axiomatically, he could not have been notified of the reason for his dismissal, in accordance with s 387(b). This factor tells in favour of a finding of unfairness.
[60] Similarly, the applicant could not have responded to an invalid reason for his dismissal. Significantly, he was not given any opportunity to respond at all to what was said to be the three conflicting reasons for his dismissal. In my view, the respondent adopted a hopelessly unfair process to dismiss the applicant.
[61] As I said earlier, it was breathtaking in its complete disregard for any modicum of natural justice, particularly given the applicant’s considerable period of service of 12 years. This factor tells in favour of a finding of unfairness.
[62] Given the applicant was given no warning of his dismissal, he could not have requested a support person, and consequently he was not denied an opportunity to have a support person present. This is a neutral factor in this case.
[63] Despite Mr Vilches’ evidence of numerous verbal warnings given to the applicant about his poor attitude, no specific dates or times were identified. There were no formal written warning/s or contemporaneous notes put into evidence. No corroborating witnesses were brought by the respondent to support the respondent’s claims in this respect. I reject Mr Vilches’ evidence in this respect.
This is a factor that weighs in favour of finding of unfairness in this case.
[64] Although I accept the respondent is a small business and has no dedicated human resource management expertise about procedures to be followed when effecting an employee’s dismissal, it must be bluntly said that no employer with any sense of common decency, would have effected a dismissal in the hopeless manner admitted to in this case; particularly given the applicant’s value to the business and his long period of service. It was disgraceful and grossly unfair. The respondent’s approach in denying the applicant proper and fair procedures cannot be put down to naivety or ignorance. It was deliberate and calculated. The size of the employer’s business and lack of industrial relations expertise, simply does not ‘wash’, as any excuse for the lack of any fair procedure in this case.
[65] I have taken into account the applicant’s age, his long period of service and that he is the sole breadwinner for his family. These matters fall in favour of a finding of unfairness. The applicant was notified of his dismissal in a text message from Mr Vilches sent to him on 30 July 2018; see: [1] above. It is not the first time I have had cause to point out that informing an employee of their dismissal by phone, text or email is an inappropriate means of conveying a decision, which has such serious ramifications for an employee. I consider it would only be in rare circumstances that a decision to dismiss an employee should not be conveyed in person. For example, it may be necessary where the employer believes a dismissed employee might be a threat to the safety of his/her employees or because the employee expressly did not want a ‘face to face’ meeting to hear the outcome of any disciplinary process. I agree with Commissioner Cambridge when he said in Knutson v Chesson Pty Ltd t/a Pay Per Click [2018] FWC 2080 at [47]:
‘[47] The employer provided notification of dismissal by email communication sent at 8.53pm on 6 November 2017. Notification of dismissal should not be made by email communication. Unless there is some genuine apprehension of physical violence or geographical impediment, the message of dismissal should be conveyed face to face. To do otherwise is unnecessary callous. Even in circumstances where email or electronic communications are ordinarily used, the advice of termination of employment is a ,matter of such significance that basic human dignity requires that dismissal be conveyed personally with arrangements for the presence of a support person and documentary confirmation.’
[66] For the above reasons, pursuant to s 387 of the Act, I am satisfied the applicant’s dismissal was ‘harsh, unjust and unreasonable’, both in substance and procedure. I turn now to remedy.
[67] Section 390 of the Act sets out the circumstances in which the Commission may make an order for reinstatement or compensation. The applicant does not seek reinstatement. Given the degree of animus I observed in the proceedings, I do not consider that reinstatement is appropriate in this case. This finding leads to a consideration of compensation.
[68] Section 392 of the Act sets out the matters the Commission must have regard to when determining:
(a) whether compensation should be ordered;
(b) if so, what amount of compensation should be ordered;
(c) the effect of any order as to any findings of misconduct by the applicant;
(d) the upper limit of compensation; and
(e) specific matters not to be taken into account.
[69] Section 392 reads as follows:
‘392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
[70] The methodology to be adopted by the Commission in calculating compensation, having regard for each of the matters set out in s 392 of the Act, (often referred to as the Sprigg formula), was considered by a Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. t/a Ottrey Lodge [2013] FWCFB 431 (‘Ottrey’); see also: Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21 and Ellawala v Australian Postal Corporation [1999] AIRC 1250. A recent Full Bench said in Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra v Nurcombe [2017] FWCFB 429 at [42]-[43]:
‘[42] The correct approach to the assessment of compensation was summarised by the Full Bench in the recent decision in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Alan Humphries as follows (footnotes omitted):
“[16] The well-established approach to the assessment of compensation under s.392 of the FW Act, taking into account the matters specified in s.392(2), is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages. 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 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’...’
[17] The identification of this starting point amount “necessarily involves assessments as to future events that will often be problematic”. 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.”
[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.’ (footnotes omitted)
[71] In a recent Full Bench decision, Hanson Construction Materials Pty Ltd v Pericich [2018] FWCFB 5960, it has been made clear that the Sprigg Formula is not to be applied in a rigid manner. At [39], the Full Bench said:
‘The strict application of the approach set out in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg), and endorsed in subsequent decisions, would yield an order that Mr Pericich be paid compensation of 1 weeks’ pay. Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission ‘must take into account all of the circumstances of the case’ including the particular matters set out at s.392(2)(a) to (g).’ (my emphasis)
[72] The Commission finds that the dismissal of the applicant by Email Ventilation Pty Ltd on 30 July 2018 was ‘harsh, unjust and unreasonable’, within the meaning of s 387 of the Act. Reinstatement of the applicant is not appropriate in the circumstances. I am not in a position, at this stage, to make a final order as appropriate compensation to be ordered in this case, particularly as there will need to be evidence of any post dismissal earnings of the applicant. Therefore, I direct that:
1. The applicant shall file and serve any evidence and short submissions going to the provisions of s 392(2) of the Act by 4 July 2019.
2. The respondent shall file and serve any evidence and short submissions going to the provision of s 392(2) of the Act by 18 July 2019.
Consequent orders will be made when the evidence and submissions are filed. The parties may also consider discussing a resolution of the applicant’s claim in light of my findings in this decision.
DEPUTY PRESIDENT
Appearances:
Mr J Rabaud of AMWU with Ms K Presley for the applicant.
Mr J Vilches for the respondent.
Hearing details:
2019.
11 March:
Sydney.
Printed by authority of the Commonwealth Government Printer
<PR709334>