| [2019] FWC 7365 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Saar Markovitch
v
Krav Maga Defence Institute Pty Ltd T/A KMDI
(U2018/6030)
COMMISSIONER CAMBRIDGE |
SYDNEY, 5 NOVEMBER 2019 |
Unfair dismissal - Re-Hearing - Small Business Fair Dismissal Code - summary dismissal implemented after resignation retracted - no basis to establish belief that employee’s conduct was sufficiently serious to justify immediate dismissal - dismissal not consistent with Small Business Fair Dismissal Code - valid reason - absence of procedural fairness - dismissal without notice - dismissal found to be harsh and unreasonable - compensation Ordered.
[1] This Decision involves an application for unfair dismissal remedy which has been made under section 394 of the Fair Work Act 2009 (the Act). The application was made by Saar Markovitch (the applicant). The respondent employer has been identified to be Krav Maga Defence Institute Pty Ltd t/a KMDI (ABN: 11 134 517 767) (the employer or KMDI).
[2] The application was filed on 7 June 2018, and it indicated that the date of the applicant’s dismissal was 21 May 2018. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) (a) of the Act.
[3] The employer raised a jurisdictional objection to the application on the basis that the dismissal was consistent with the Small Business Fair Dismissal Code (the SBFD Code). On 18 October 2018, Riordan C of the Fair Work Commission (the Commission) issued a Decision, [2018] FWC 6114, which involved a determination that the jurisdictional objection raised by the employer be dismissed.
[4] On 19 June 2019, a Full Bench of the Commission issued a Decision, [2019] FWCFB 4258, in matter C2018/6094. The Full Bench Decision was made in respect to an Appeal taken by the employer against the Decision of Riordan C, in which the employer’s jurisdictional objection was dismissed.
[5] In broad terms, the Full Bench Decision upheld the employer’s Appeal and determined to remit the matter to another Member of the Commission for Re-Hearing. Relevantly, at paragraph [69] the Full Bench made the following Orders:
“[69] We make the following orders:
• The appeal is upheld;
• The Decision in Markovitch v Krav Maga Defence Institute Pty Ltd [2018] FWC 6114 is quashed; and
• Application U2018/6030 is remitted to the Region 1 Coordinator for allocation to another Member for hearing.”
[6] In accordance with the Orders of the Full Bench, the matter was remitted to the Commission as currently constituted for Re-Hearing. Subsequently, the matter was listed for Mention and Directions proceedings on 2 July 2019. In respect to the Re-Hearing it is relevant to note paragraph [67] of the Full Bench Decision which stated:
“[67] A number of relevant matters may flow from a redetermination of the appellant’s jurisdictional objection. These may include:
• whether the Code applied to the dismissal, having regard to the number of employees employed by the appellant at the time of the respondent’s dismissal;
• if the Code applied, whether the dismissal was consistent with the Code according to the principles in Pinawan and Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services [2015] FWCFB 5264;
• whether the CCTV footage should be admitted into evidence, as a matter of discretion, in accordance with our conclusions in the appeal;
• if the dismissal was not consistent with the Code, whether the respondent’s dismissal was ‘harsh, unjust or unreasonable’, within the meaning of s 387 of the Act; and
• if the dismissal is found to be unfair, what, if any, remedy should be ordered, pursuant to s 394 of the Act.”
[7] At the proceedings held on 2 July, the Commission firstly provided permission, pursuant to s. 596 of the Act, for the Parties to be represented by lawyers or paid agents. The Commission also issued Directions which established a timetable for the filing and service of all evidentiary and other materials prior to a date for the Re-Hearing that was fixed for 26 September 2019. The Re-Hearing encompassed both the employer’s jurisdictional objection and the substantive merits of the unfair dismissal claim, the later only requiring consideration if the jurisdictional objection was not upheld.
[8] At the Re-Hearing, the employer was represented by Mr P Moorhouse, barrister, instructed by Ms N Town, solicitor from Bradbury Legal. Mr Moorhouse introduced evidence from the employer’s sole Director and owner, Mr R Engelman. The evidence provided by Mr Engelman as a witness was taken via remote video link to Tel Aviv, Israel. The applicant appeared for himself at the Re-Hearing, and he was the only witness called to provide evidence in support of the unfair dismissal claim.
[9] The employer operates three personal fitness gyms located in the Sydney suburbs of Surry Hills, Bondi Junction and Caringbah. These gyms specialise in providing instruction and training in a full contact martial arts/self-defence discipline known as Krav Maga. The Krav Maga martial arts/self-defence discipline was developed in the 1940s by the Israeli army, and it has subsequently been introduced for use in the military and police forces of various countries around the world. The instruction and training of Krav Maga martial arts and self-defence techniques involves high-risk physical contact including, full contact sparring, high-intensity exercises, weapons training and wrestling.
[10] The applicant was engaged by the employer as a qualified and certified Krav Maga Instructor. The applicant was employed for a period of about two years and eight months on a full-time basis. The applicant was initially engaged to work at the employer’s Surry Hills gym, and in February 2017, he commenced working as the full-time Instructor and Manager of the employer’s Bondi gym.
[11] The applicant and the employer’s Director and owner, Mr Engelman were good friends and they had known each another when serving in the Israeli army. Mr Engelman identified the applicant as a candidate to assist him in the establishment of KMDI gyms in Australia. The employer funded the sponsorship of the applicant under the subclass 457 Visa program and it arranged for the employment of the applicant in the specialist skills area involving instruction in the Krav Maga martial arts and self-defence discipline.
[12] The work performance and conduct of the applicant was the subject of two written warnings. In December 2015, Mr Engelman issued the applicant with a written warning regarding his use of his mobile phone whilst teaching a sparring class. The applicant was warned that his behaviour by failing to provide the sparring class with his full attention, was unprofessional and damaging to the employer. In December 2017, the applicant was issued with a second written warning following an incident which involved some injury to a student who was participating in a class that the applicant, inter alia, was supervising.
[13] On Thursday, 17 May 2018, Mr Engelman was using his mobile phone to remotely access CCTV footage from surveillance cameras that had recently been installed at the Bondi gym. Mr Engelman noticed that the applicant was using his mobile phone at a time when he should have been supervising a class of Krav Maga students. The applicant’s use of his mobile phone and his apparent failure to provide his full attention to the class under his supervision, raised significant concern for Mr Engelman.
[14] Mr Engelman decided to conduct a more thorough investigation of the CCTV records held on the digital video recording machine that was located at the Bondi gym. During Saturday 19, and Sunday, 20 May 2018, Mr Engelman examined the historical records of the CCTV footage at the Bondi gym, and he discovered that the applicant was seen to be spending a substantial amount of his working time engaged on his mobile phone whilst seated at the reception desk, and that this activity was regularly occurring whilst he was the Instructor responsible for supervising Krav Maga classes.
[15] Mr Engelman said that he was shocked and extremely disappointed by the applicant’s conduct as displayed on the historical CCTV records. Mr Engelman came to the view that the conduct of the applicant was systematic, serious and unacceptable such that he could not continue to employ the applicant. Mr Engelman said that he believed that the applicant’s conduct was sufficiently serious to justify the applicant’s immediate dismissal.
[16] Mr Engelman and the applicant had a meeting scheduled on Monday, 21 May 2018 to further discuss and finalise details of a profit-sharing arrangement that had been under consideration for some time. As a result of the concerns that Mr Engelman developed from his review of the historical CCTV records involving the applicant’s use of his mobile phone, he decided to use the scheduled meeting on 21 May as a forum during which he would dismiss the applicant from his employment. Prior to the commencement of the meeting on 21 May, Mr Engelman prepared a letter of resignation for the applicant to sign at the meeting.
[17] On Monday, 21 May 2018, the applicant attended the scheduled meeting with Mr Engelman at the employer’s Surry Hills gym. The applicant was understandably surprised when rather than discussion regarding profit share details, Mr Engelman confronted the applicant about his use of his mobile phone during classes and the resultant failure to supervise the Krav Maga students. Initially the applicant suggested that his use of the mobile phone whilst conducting classes was limited. However, Mr Engelman then commenced to show the applicant various extracts from the historical CCTV records.
[18] The applicant was understandably surprised when confronted with the historical CCTV records which confirmed the extent of his mobile phone use at times when he should have been directly supervising Krav Maga classes. The applicant then signed the letter of resignation that had been prepared by Mr Engelman. During the termination meeting on 21 May, Mr Engelman also pressed upon the applicant that he should leave Australia and return to Israel. The applicant also agreed to this proposition, and he took steps to make alterations to international flight arrangements that would facilitate the applicant’s return to Israel at the same time that Mr Engelman was also travelling to that location.
[19] During the termination meeting on 21 May, after the applicant had signed the prepared resignation and agreed to leave Australia, Mr Engelman decided that the applicant could continue to teach further Krav Maga classes. Mr Engelman told the applicant that if he continued to teach classes for about two weeks until the two men were scheduled to leave Australia, this would “save face” and provide for the suggestion that the applicant had obtained alternative employment back in Israel. Mr Engelman also told the applicant that the further classes that would be conducted by the applicant would involve his strict supervision to avoid the applicant having any opportunity to use his mobile phone.
[20] After the termination meeting had concluded, at 1:55 pm, the applicant sent Mr Engelman a text message which advised that he could not teach a Krav Maga class scheduled later that day as he was “full of emotions”. Mr Engelman responded by indicating that he would do the training but that he wanted the applicant to be there with him in the gym. At around the same time that Mr Engelman sent text messages to the applicant stressing the requirement for the applicant to attend the gym and conduct the training class scheduled for later that day, the applicant sent an email to Mr Engelman in which he retracted the resignation that he had given earlier that day.
[21] The email provided by the applicant in which he sought to retract the resignation given several hours earlier, indicated that he had signed the letter of resignation under duress, and that if he was to no longer work for KMDI he requested a letter of dismissal. The applicant did not perform any further work for the employer.
[22] In a letter dated 23 May 2018, Mr Engelman confirmed that the applicant had been summarily dismissed, effective 21 May 2018, as a result of the serious misconduct arising from the CCTV footage that established that the applicant had failed to supervise the Krav Maga students that were under his care. The letter of dismissal also confirmed that the applicant’s conduct was found to have caused risk to the employer’s clients health and safety, and to the employer’s reputation, and that it represented serious and wilful neglect in the performance of the applicant’s duties. The letter of dismissal also stated, inter alia, that “…your final payment owed and any outstanding leave entitlements will be withheld to assist in offsetting the costs incurred by the Company.” 1
[23] Following the applicant’s dismissal, solicitors acting on his behalf successfully obtained payment of the applicant’s outstanding leave entitlements that had been withheld by the employer. The applicant was restricted by his subclass 457 Visa requirements, and contractual restraint obligations, from the pursuit of alternative employment. Approximately 10 months after his dismissal, the applicant secured some alternative employment in a new Krav Maga training business. The applicant has not sought reinstatement, but alternatively, monetary compensation as remedy for his alleged unfair dismissal.
[24] Mr Moorhouse, who appeared on behalf of the employer, made verbal submissions in elaboration of two outline of submission documents that had been respectively filed on 30 July and 19 September 2019. Mr Moorhouse submitted that the dismissal of the applicant was consistent with the SBFD Code, or, in the alternative, it was a dismissal that was not harsh, unjust or unreasonable.
[25] The submissions made by Mr Moorhouse firstly focused upon the asserted compliance with the SBFD Code. The submissions made on behalf of the employer asserted that the evidence demonstrated that at the time of the dismissal of the applicant, the employer had less than 15 employees, and was thus a small business. Further, it was submitted that the summary dismissal of the applicant was consistent with the SBFD Code. Consequently, it was submitted that the employer’s jurisdictional objection should be upheld, and the unfair dismissal application should be dismissed.
[26] The submissions made by Mr Moorhouse asserted that the evidence established that at the time of the dismissal of the applicant on 21 May 2018 the employer had nine employees on its books. Mr Moorhouse made submissions which examined evidence that some of the persons that the applicant claimed to be employees were independent contractors that from time to time performed work for the employer. Mr Moorhouse submitted that when the evidence was properly examined, the 21 names that the applicant asserted as being employees of the employer were reduced either to 14 or more accurately nine actual employees. Mr Moorhouse submitted that when the status of the individuals was properly established the employer had less than 15 employees and thus, as a small business, the SBFD Code was applicable to the dismissal of the applicant.
[27] In further submissions, Mr Moorhouse said that the applicant was dismissed with immediate effect and the summary dismissal provisions of the SBFD Code were applicable. In this regard, Mr Moorhouse submitted that the evidence established that Mr Engelman did believe, after viewing the CCTV footage of the applicant’s conduct, that the conduct in question was sufficiently serious to justify immediate dismissal.
[28] Further, Mr Moorhouse submitted that there was clear reasonableness for the view that had been adopted by Mr Engelman once he’d observed the CCTV footage. Mr Moorhouse said that the reasonableness of the view adopted by Mr Engelman was supported by the two previous written warnings that had been given to the applicant, one which involved the applicant’s mobile phone use and the second which was about his inadequate supervision generally. In addition, Mr Moorhouse noted the evidence that there had been a verbal discussion between the applicant and Mr Engelman in around March 2018 about any excessive mobile phone use by the applicant.
[29] Mr Moorhouse also made submissions that rejected assertions from the applicant that his dismissal involved some Machiavellian plot to avoid any requirement to pay the applicant amounts that could be derived from some profit share arrangement. Mr Moorhouse noted that there had been no final agreement reached about any specific profit share arrangements, and, importantly, the employer had spent considerable amounts of money assisting the applicant with an application for permanent residency in Australia.
[30] Mr Moorhouse made further submissions which traversed what was considered to be the unlikely prospect that the employer’s jurisdictional objection was not upheld. In this regard, the submissions made on behalf of the employer referred to the criteria set out in s. 387 of the Act.
[31] Mr Moorhouse submitted that the conduct of the applicant satisfied the definition of serious misconduct as set out in Regulation 1.07 of the Fair Work Regulations 2009. Mr Moorhouse said that the established serious misconduct of the applicant clearly provided valid reason for his dismissal. Further, Mr Moorhouse submitted that the serious misconduct of the applicant had to be assessed in the context of the prior written warnings that had been provided. Mr Moorhouse submitted that there was clearly valid reason for the dismissal of the applicant.
[32] The submissions made on behalf of the employer further asserted that the applicant had been given an opportunity, prior to being dismissed, to respond to the reason for his dismissal. The submissions of the employer did acknowledge that Mr Engelman had clearly formed a view that he could not continue to employ the applicant prior to the meeting held on 21 May 2018. However, the opportunity to respond was said to have been provided at the meeting that was held and which involved the applicant signing the letter of resignation that had been prepared, although he subsequently rescinded that resignation by email.
[33] The employer further submitted that there had been no refusal by it to allow a support person to be present at the meeting in which there was discussion regarding the termination of the employment. The employer submissions also noted that the size of the KMDI operation, and the lack of dedicated human resource specialists should be taken into account. In respect to any procedural deficiencies that may be identified, Mr Moorhouse said that in this instance the nature of the proven misconduct of the applicant was such as to outweigh any issues of procedural unfairness.
[34] The employer’s submissions also addressed the question of any appropriate remedy and stressed that it strongly resisted any finding that the dismissal was harsh, unjust or unreasonable. However, it was submitted that if remedy was contemplated, it was apparent the applicant would not have remained in employment for much longer, and in any event, it was asserted that the employment, at most, would have involved the four weeks’ notice as required under the employment contract.
[35] In conclusion, Mr Moorhouse submitted that at the time of the applicant’s dismissal the employer was a small business employer, and the dismissal of the applicant complied with the SBFD Code. Therefore, the applicant could not have been unfairly dismissed and his application for unfair dismissal remedy must be rejected. Alternatively, in any event, the dismissal of the applicant was for valid reason related to serious misconduct of such gravity and nature as to outweigh any issues of procedural unfairness. Consequently, Mr Moorhouse submitted that the application should be dismissed.
[36] The applicant made verbal submissions which elaborated upon various documentary submission materials that he had filed. The submissions made by the applicant commenced with the jurisdictional objection raised by the employer regarding the operation of the SBFD Code. The applicant made submissions which sought to reject the assertion that his dismissal was consistent with the SBFD Code.
[37] The applicant submitted that the employer was not a small business operation. The applicant said that the employer operated four gyms, three of which were full-time operations, and another in the CBD. The applicant said that in these operations the employer had employed dozens of people on a regular basis. Further, the applicant asserted that the business operations of the employer had a revenue of over $1 million, and that it had other operations around the world including in Israel and Korea. Consequently, the applicant submitted that the employer could not be considered as a small business and thus the SBFD Code did not apply in respect to his dismissal.
[38] The applicant made further submissions which sought to re-agitate the alleged illegality of the use of the CCTV footage from the Bondi gym. The applicant said that there was evidence which demonstrated that the installation and use of the footage obtained from the CCTV equipment that was installed at the Bondi gym represented conduct that was illegal. The applicant asserted that there had been improper private use of the CCTV footage and that this activity was contrary to law.
[39] The submissions made by the applicant acknowledged that his conduct, as was established by the CCTV footage, was something that he was ashamed of. However, according to the applicant, the employer consistently broke the law in the way in which that conduct was identified and subsequently used by Mr Engelman.
[40] The applicant further submitted that although his behaviour was wrong, and he was ashamed of his conduct, it was not conduct that warranted immediate dismissal that was conducted without due process. In this regard, the applicant noted that although Mr Engelman asserted that the applicant’s behaviour provided him with no other option than immediate dismissal, Mr Engelman himself said that he requested that the applicant continue teaching for two more weeks. According to the submissions of the applicant, this showed a level of inconsistency in the manner in which Mr Engelman treated the conduct of the applicant. The applicant said that he found it very conflicting that if Mr Engelman believed that the applicant’s behaviour was so dangerous that he could let him continue teaching even under guidance and supervision.
[41] The submissions made by the applicant also raised complaint about the process that Mr Engelman used when he attended the scheduled meeting that was held to discuss the division of profits but instead, he was confronted with a disciplinary process that led directly to his dismissal. The applicant said that he found it very peculiar that Mr Engelman implemented a summary dismissal and he avoided any consideration of properly finalising the profit share agreement. The applicant indicated that he believed that Mr Engelman had intentionally sought to avoid having to pay any money that was owed to the applicant and this was reflected by his initial refusal to pay the applicant’s entitlements.
[42] In summary, the applicant said that he completely admitted that what he had done was wrong, and that he was ashamed of what he had done. However, the applicant said that he did not believe that his conduct had caused any threat to anyone, and that it was not conduct that deserved what Mr Engelman had implemented which included his loss of ability to stay as a resident in Australia, and his incapacity to obtain any further earnings by working in any other gyms. The submissions made by the applicant stressed that he believed he had been unfairly dismissed, and that Mr Engelman had illegally and immorally used the CCTV footage in a way which left him stranded in a foreign country with no income, no work, and no apparent future. The applicant asserted that these circumstances made the dismissal harsh.
[43] The applicant concluded his submissions by saying that he had lost a huge amount of money, and that he had suffered tremendously as a result of the way he had been treated by Mr Engelman. The applicant said that he believed that he deserved, at least, proper conduct and proper procedure as he had given his heart and soul to the employer’s business.
[44] The applicant was a person protected from unfair dismissal and other than the issue of the alleged compliance with the SBFD Code, his claim for unfair dismissal remedy was jurisdictionally established. Section 385 of the Act stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. These elements can be identified in s. 385 which is in the following terms:
“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.”
[45] In this instance there was no dispute that the applicant had been dismissed, and that the dismissal was not a case of genuine redundancy. Consequently, only the provisions of subsections (b) and (c) of s. 385 of the Act have any relevance.
[46] Section 396 of the Act requires that the Commission must decide certain matters before considering the merits of any application for relief from unfair dismissal. One of the initial matters to be considered before any consideration of the substantive merits of an unfair dismissal application is whether the dismissal was consistent with the SBFD Code. Relevantly, s. 396 of the Act is in the following terms:
“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.”
[47] It is clear from subsection 396 (c) of the Act that a determination of any application of the SBFD Code should precede any more general contemplation of whether the dismissal could have been considered to have been harsh, unjust or unreasonable. Further, in the event that the dismissal of the applicant was found to have been consistent with the SBFD Code, any further consideration as to whether the dismissal was harsh, unjust or unreasonable would become unnecessary.
[48] In this instance there was a dispute as to whether the employer was a small business employer as comprehended by the meaning of small business employer stipulated by the terms of s. 23 of the Act. The applicant provided a list of names of 23 persons that he believed were employees of KMDI. The employer contended that a significant number of these persons were not employees but rather, independent contractors, such that at the time of the dismissal of the applicant, only 9 of the 23 individuals were actually employees of KMDI.
[49] The question of whether there is an employment relationship, or alternatively a relationship of independent contractor, can be a complex and difficult issue to resolve. In many cases a detailed analysis of the individual circumstances is required which involves application of what is known as a multi-factorial test applying numerous indicia in order to make a proper, sound determination. In this instance, such a detailed analysis would be necessary so as to properly establish the number of employees that KMDI had as at 21 May 2018.
[50] The evidence that was provided about the particular circumstances of the 23 named individuals who were the subject of contest as to whether their status was that of employee or independent contractor, was broadly, unlikely to provide a satisfactory foundation for any confident determination to be made. However, any sound determination of the precise number of employees of KMDI at the time of the applicant’s dismissal may be unnecessary if, at least hypothetically, the employer was accepted to be a small business employer, and following examination and application of the SBFD Code, the dismissal was found to have not been consistent with the SBFD Code.
[51] This approach has involved the Commission hypothetically accepting that the employer was a small business and undertaking the relevant examination of whether the dismissal was or was not consistent with the SBFD Code. If the dismissal was found to have been consistent with the SBFD Code, then there may be a need to revisit the evidentiary basis upon which any sound determination of the precise number of employees could be provided. Alternatively, if the dismissal was found to have not been consistent with the SBFD Code, then there is no requirement to determine the exact number of employees at the time of the applicant’s dismissal.
[52] Therefore, the Commission has hypothetically accepted that the employer is a small business and the provisions of subsection 385 (c) of the Act require consideration. Specifically, by way of operation of s. 388 of the Act, it is necessary to determine whether the employer complied with the SBFD Code in relation to the dismissal of the applicant.
[53] The SBFD Code is in the following terms:
“Small Business Fair Dismissal Code
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.”
[54] In this case, the employer asserted that the summary dismissal of the applicant was consistent with the SBFD Code. Specifically, the employer relied upon the terminology contained in the Summary Dismissal part of the SBFD Code. There was no suggestion that the dismissal of the applicant should be assessed against the Other Dismissal provisions of the SBFD Code, nor, in the absence of any notice or payment in lieu of notice, could the dismissal of the applicant be considered to be anything other than a summary dismissal.
[55] The employer asserted that the reason for the summary dismissal of the applicant was serious misconduct associated with the conduct of the applicant when viewed by Mr Engelman in the CCTV footage from the Bondi gym. The CCTV footage showed the applicant spending a substantial part of his working time on his mobile phone, including at the reception desk when he should have been directly supervising vigorous, full physical contact, martial arts/self-defence training. In such circumstances, the employer contended that the conduct of the applicant represented misconduct that was sufficiently serious to justify immediate dismissal.
[56] The employer asserted that the dismissal of the applicant accorded with the first sentence of the SBFD Code which is repeated: “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.” Consequently, the jurisdictional objection raised by the employer had as its foundation, the contention that Mr Engelman believed that the applicant’s conduct was sufficiently serious to justify immediate dismissal, and that the belief of Mr Engelman was established upon reasonable grounds.
[57] In this instance, the dismissal of the applicant was clearly summary in nature in that the employer did not provide notice or payment in lieu of notice, and the dismissal was immediate in effect when it was confirmed in the letter of dismissal dated 23 May 2018. However, the evidence clearly established that Mr Engelman anticipated, and he was indeed desirous of the applicant’s employment continuing for a further two week period, albeit that the work of the applicant would be subject to stricter supervision.
[58] The following evidence involving the text message exchange between the applicant and Mr Engelman on the afternoon of 21 May 2018, has provided an incisive reflection of the true belief that Mr Engelman had in respect to the conduct of the applicant and upon which the summary dismissal was based:
“1: 55PM I CANNOT TEACH TODAY, I AM FULL OF EMOTIONS - CAN YOU DO THE TRAINING?
1:56 OKAY. I WILL DO THE TRAINING. BUT YOU ARE THERE WITH ME IN THE GYM.
2:32 YOU WILL TRAIN THE KIDS TODAY. AND THEN YOU WILL BE ON THE MATS WITH ME AND JUBRIL. THE LAST THING YOU NEED NOW IS TO GET CLOSED. WE CONTINUE FORWARD, STAY BUSY. DEDICATE YOURSELF TO LEAVE A GOOD LEGACY HERE. FOCUS ON THE POSITIVE.
2:33 SOON YOU WILL BE IN ISRAEL WITH THE FAMILY. THERE YOU CAN TAKE CARE OF YOUR WOUNDS. NOW THERE IS WORK TO DO.
2:34 SEE YOU THERE AT 4:00. I DON’T HAVE A KEY.” 2
[59] It is relevant to consider this evidence in the context of the application of the SBFD Code having regard for the Full Bench Decision in the case of Ryman v Thrash Pty Ltd (Thrash). 3 In particular, paragraphs [43] to [46] inclusive of the Full Bench Decision in Thrash should be carefully examined, considered and applied in respect of the evidence that Mr Engelman clearly wanted the applicant to attend for work on 21 May 2018, and for two further weeks.
[60] By way of the application of the Authority established by the Full Bench Decision in Thrash, and as may be paraphrased from paragraph [45] of Thrash, the desire of Mr Engelman for the applicant to attend for work on 21 May 2018 and beyond, cannot be reconciled with the holding of a belief that he had committed serious misconduct justifying immediate dismissal. For Mr Engelman to send the applicant a text message which inter alia, stated “NOW THERE IS WORK TO DO” he clearly demonstrated that he did not genuinely believe that the applicant’s conduct was sufficiently serious to justify immediate dismissal.
[61] Consequently, the conduct for which the applicant was summarily dismissed was not treated by the employer as misconduct sufficiently serious to justify his immediate dismissal but rather it permitted further employment of at least two weeks and then presumably termination with the requisite notice was anticipated. The employer could not subsequently endeavour to portray the seriousness of the applicant’s conduct as sufficiently serious to justify immediate dismissal when it was clear that Mr Engelman wanted the applicant to keep working, albeit for a fixed period and under stricter supervision.
[62] The summary dismissal of the applicant was not consistent with the Summary Dismissal provisions of the SBFD Code as the evidence has disclosed that the employer did not genuinely believe that the applicant’s conduct was sufficiently serious to justify immediate dismissal. Further, the dismissal of the applicant could not be assessed against the Other Dismissal provisions of the SBFD Code because the dismissal was summary in nature, that is, it did not involve any notice, or any payment in lieu of notice, and it was implemented with immediate effect. Consequently, the dismissal of the applicant was not consistent with the SBFD Code.
[63] As the dismissal of the applicant was not consistent with the SBFD Code, the matter has required further consideration in respect to that element contained in s. 385 (b) of the Act, being whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria 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.
[64] The applicant was dismissed as a direct result of the employer’s discovery of his regular and extensive use of his mobile phone at times when he should have been directly supervising vigorous, full physical contact, martial arts/self-defence training. When properly considered in the context of the inherent risks associated with the Krav Maga martial arts/self-defence training, and the prior warnings provided to the applicant about his mobile phone use that might distract him from direct supervision, there was a valid reason for the dismissal of the applicant related to his conduct.
[65] The applicant sought to defend his conduct on the basis that his personal knowledge of the individuals that were supposed to be under his direct supervision could undertake particular training techniques without that supervision and without any elevated risk. This proposition must be firmly and unequivocally rejected.
[66] The evidence clearly established that the applicant was responsible for supervising activities that involved vigorous, full physical contact, martial arts/self-defence training and which frequently involved young people. The risk associated with these activities could not be reduced because of the applicant’s personal judgement of the particular personalities and other attributes of the individuals that were involved. The liability for any injury that may have occurred could not be avoided or diminished because of the personal assessment made by the applicant. In any event, the employer was entitled to require the applicant to properly discharge his responsibilities for direct supervision of the activities notwithstanding any personal consideration that he may have had about the absence of any need for such direct supervision.
[67] The applicant also asserted that the reason for his dismissal involved a malicious motivation on the part of Mr Engelman to avoid payments to the applicant that would flow from the finalisation of their profit sharing arrangement. The evidence clearly established that there was a profit-sharing arrangement that was anticipated to provide direct financial benefit to the applicant. However, there was evidence that in the period between February and May 2018, the employer incurred costs of $7,565.00 associated with its support for the applicant’s pursuit of Australian permanent residency. These are hardly the actions of an employer that had embarked upon a malevolent plan to dismiss the applicant in order to avoid payments that were anticipated to flow from the profit-sharing arrangement.
[68] In passing, it should be recognised that the dismissal of the applicant did result in there being no finalisation of the profit-sharing arrangement, and that it appeared that there may have been outstanding amounts owed to the applicant which have not been paid by KMDI. Of course, any appropriate finalisation of amounts that may be owed from the profit-sharing arrangement could not be pursued in these proceedings, and instead this issue might represent a matter of personal integrity requiring the exercise of good conscience on the part of the individuals involved.
[69] It should also be noted that it was to the applicant’s credit that he acknowledged his wrongdoing when inter alia, he stated; “I completely admit that my behaviour was wrong, okay? If it even warrants dismissal if wrong once, so - but not immediate dismissal, not summarily, not without process, at all, especially in my situation.” 4 The applicant’s admissions have to a certain extent, acknowledged that there was valid reason for his dismissal, and his initial preparedness to sign the pre-prepared resignation letter further reflected that acknowledgement.
[70] Therefore, the evidence has established that the employer had valid reason to dismiss the applicant when it discovered his regular and extensive use of his mobile phone at times when he should have been directly supervising the Krav Maga training.
[71] The employer notified the applicant of his dismissal and the reason for that dismissal in the termination of employment letter dated 23 May 2018.
[72] The employer did not provide any proper opportunity for the applicant to respond or provide any form of explanation for the conduct for which he was dismissed. The meeting that the applicant and Mr Engelman attended on 21 May 2018 was scheduled for the purpose of discussion regarding finalising the profit share arrangements. The applicant was given no prior warning that the meeting would instead involve the examination of the historical CCTV footage from the Bondi gym, and his conduct that was revealed in that footage and for which he would be dismissed.
[73] It may be argued that the applicant’s conduct as was revealed in the CCTV footage, would not be open to some form of explanation or other response that could displace that conduct as sound and justifiable basis for dismissal. However, the adoption of a proper process that alerted the applicant to the issues of concern, and provided him and Mr Engelman with an opportunity to make considered responses and balanced decisions rather than hasty ones, may have led to an outcome that involved some alternative course of action rather than the summary dismissal of the applicant.
[74] There was no opportunity for the applicant to have a support person present during the meeting that was held on 21 May 2018. Mr Engelman had made the decision to dismiss the applicant before he had heard from the applicant, and he should have alerted the applicant to the nature of his concerns that had arisen from the review of the CCTV footage, and given the applicant an opportunity to have a support person to assist him at the meeting of 21 May 2018.
[75] Although the dismissal of the applicant was not for unsatisfactory performance, the applicant had been warned about the misconduct for which he was subsequently dismissed.
[76] The employer has been considered to be a small business employer and appropriate recognition for a degree of informality and flexibility in respect to employment related procedures has been provided.
[77] There was no evidence that the employer had dedicated human resource management specialists. However, the absence of human resource management specialists and the level of informality that would understandably exist in a small business enterprise, could not justify the adoption of an unnecessarily hasty procedure whereby the decision to dismiss was taken without providing any proper opportunity to hear from the applicant.
[78] The applicant was employed under specific arrangements involving a subclass 457 Visa and these arrangements significantly restricted his capacity to find alternative work in Australia in his specialised field. Although Mr Engelman had initially made arrangements for the applicant to return to Israel following the termination of his employment, the circumstances changed when the applicant retracted his resignation. Unfortunately, there appeared to be no further consideration given to the particular circumstances that would be faced by the applicant when he was summarily dismissed. Indeed, the summary dismissal of the applicant was initially implemented with the employer making a conscious decision to withhold payment to the applicant of his accrued entitlements.
[79] The Re-Hearing of this unfair dismissal claim has firstly involved consideration of the application of the Small Business Fair Dismissal Code (the SBFD Code). The applicant was dismissed with immediate effect, and not paid any amount in lieu of notice. Upon analysis, the evidence has established that the employer did not hold any genuine belief that the applicant’s conduct was sufficiently serious to justify his immediate dismissal.
[80] In such circumstances, I have determined that the summary dismissal of the applicant was not consistent with the relevant provisions of the SBFD Code. The Other Dismissal provisions of the SBFD Code were not applicable to the circumstances of the summary dismissal of the applicant. Therefore, the dismissal of the applicant was not consistent with the SBFD Code.
[81] Further consideration has involved an analysis of the criteria found in s. 387 of the Act so as to provide any satisfaction that the dismissal of the applicant was harsh, unjust or unreasonable. In this regard, the evidence has established that there was valid reason for the dismissal of the applicant.
[82] The procedure that the employer adopted whereby it did not provide the applicant with a proper opportunity to respond to the reasons that related to his dismissal, involved a process that was unnecessarily hasty and unreasonable. Further, the employer elevated the severity of the applicant’s conduct beyond its own genuine contemplation, and it implemented a summary dismissal in circumstances that warranted at the highest, a dismissal with the requisite notice. Consequently, the summary dismissal of the applicant as opposed to dismissal with notice, was unnecessarily harsh. In addition, the particular circumstances of the applicant involving his employment via a subclass 457 Visa, and which severely restricted the prospects for securing any alternative employment, were not given due consideration by the employer and further rendered the applicant’s summary dismissal to be harsh.
[83] In summary, the dismissal of the applicant was firstly not consistent with the SBFD Code. Secondly, although there was valid reason for the dismissal of the applicant involving established misconduct, the employer adopted an unreasonable process including the absence of a proper opportunity for the applicant to be heard before the decision to dismiss was made. Thirdly, the implementation of a summary dismissal as opposed to dismissal with notice, was entirely inconsistent with the employer’s genuine contemplation of the severity of the misconduct for which the applicant was dismissed. Fourthly, the particular personal circumstances of the applicant were not properly considered by the employer when it decided to summarily dismiss the applicant.
[84] Consequently, upon careful analysis and balance of all of the various factors that are identified in s. 387 of the Act, an objective and balanced evaluation of all of the relevant circumstances has provided compelling basis to establish that the dismissal of the applicant was harsh, and unreasonable. Therefore, the applicant’s claim for unfair dismissal remedy has been established.
[85] The applicant has not sought reinstatement as a remedy for his unfair dismissal. In the circumstances, particularly as the employment relationship has been irreparably damaged by the unfortunate personal difficulties that have emerged between the applicant and Mr Engelman, reinstatement would not be an appropriate remedy.
[86] In the circumstances, I am satisfied that reinstatement of the applicant would be inappropriate, and that payment of compensation would represent an appropriate remedy for the applicant's unfair dismissal. I now turn to the factors which involve the quantification of any amount of compensation.
[87] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidance that can be identified from the Full Bench Decisions of, inter alia; Sprigg v Paul’s Licensed Festival Supermarket 5 (Sprigg); Smith and Ors v Moore Paragon Australia Ltd 6 and more recently, the cases of; McCulloch v Calvary Health Care Adelaide7; Balaclava Pastoral Co Pty Ltd v Nurcombe;8 and Hanson Construction Materials v Pericich9 (Pericich).
[88] Firstly, I confirm that an Order for payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.
[89] Secondly, in determining the amount of compensation that I Order, I have 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.
[90] There was no evidence provided which established that an Order of compensation may impact on the viability of the employer’s enterprise.
[91] The applicant had been employed for a period of about two years and eight months. The applicant would have been likely to have received remuneration of approximately $1,154.00 per week if he had not been dismissed.
[92] There was evidence upon which to conclude that the employment of the applicant would not have continued beyond the two-week period that had been initially proposed by Mr Engelman. Further, the evidence clearly indicated that the applicant would have anticipated payment of remuneration equivalent to four weeks in lieu of notice at the time of dismissal.
[93] For the purposes of calculation of remuneration that the applicant would have received or would have been likely to receive if he had not been dismissed, I have notionally considered that the employment of the applicant would have continued for at least a further six weeks. Therefore, the total remuneration that would have been received in the notional period of six weeks following dismissal amounted to a figure of $6,924.00.
[94] The total amount of remuneration received in alternative employment, as identified, and that which may be reasonably likely to be earned between dismissal and the making of the Order for compensation, has been calculated to be $0.00.
[95] Thirdly, in this instance I have not been convinced that the established misconduct of the applicant should operate so as to make any reduction to the amount of compensation to be provided to the applicant.
[96] 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.
[97] Fifthly, the amount Ordered does not exceed the compensation cap as prescribed by s. 392 (5) of the Act.
[98] Consequently, for the reasons outlined above, taking into account all of the circumstances of the case, and having cognisance so as not to apply the approach taken in the Decision in Sprigg in a rigid, determinative manner, as was cautioned in the Decision in Pericich, I have decided that the amount of compensation to be provided to the applicant should be calculated making no deduction from the anticipated further remuneration of $6,924.00; the resultant figure is therefore $6,924.00 gross.
[99] Accordingly, separate Orders [PR713683] providing for unfair dismissal remedy in these terms will be issued.
COMMISSIONER
Appearances:
Mr S Markovitch appeared unrepresented.
Mr P Moorhouse of Counsel with Ms N Town from Bradbury Legal appeared for the employer.
Hearing details:
2019.
Sydney:
September, 26.
Printed by authority of the Commonwealth Government Printer
<PR713682>
1 Exhibit 2 – Attachment “K”.
2 Exhibit 9 – Attachment “R-2”.
3 Jeremy Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services, (Hatcher VP, Kovacic DP and Bissett C) [2015] FWCFB 5264.
4 Transcript @ PN998.
5 Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.
6 Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.
7 John McCulloch v Calvary Health Care Adelaide, (Ross P, Hatcher VP and Gostencnik DP), [2015] FWCFB 873.
8 Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra v Darren Nurcombe, (Hatcher VP, Gostencnik DP and Cribb C) [2017] FWCFB 429.
9 Hanson Construction Materials Pty Ltd v Darren Pericich, (Ross P, Masson DP and Lee C), [2018] FWCFB 5960.