[2020] FWC 2671

The attached document replaces the document previously issued with the above code on 1 June 2020.

In paragraph [122], replace the word ‘four’ with the word ‘two.

Associate to Deputy President Sams

Dated 2 June 2020

Fair Work Act 2009
s 394—Unfair dismissal

Rachael Goldberg
v
The Advice Spot t/a The Advice Spot
(U2019/13275)

Application for a remedy for alleged unfair dismissal – termination of employment – part time bookkeeper in small financial/accounting firm – jurisdictional objections – whether employer complied with Small Business Fair Dismissal Code – whether applicant’s dismissal a case of genuine redundancy – applicant claimed real reasons for dismissal were her second pregnancy and moving a family loan out of the business – dismissed by email while overseas – toxic and unbearable work environment – no notice of redundancy – no consideration of alternative options – evidence of applicant preferred over that of respondent – insufficient financial evidence – dismissal was not a case of genuine redundancy – daily meetings not consultation about redundancy – Code not complied with – dismissal harsh, unjust and unreasonable – reinstatement inappropriate – compensation to be ordered – consultation likely to be a short period – Sprigg Formula does not produce a fair result in all the circumstances – compensation order of ten weeks’ pay, plus superannuation – matter concluded.

BACKGROUND

[1] Ms Rachael Goldberg was employed by The Advice Spot Pty Ltd, a small financial/accounting firm in Gymea, New South Wales, owned by Mr Adam Hill. Ms Goldberg was employed under the Banking, Finance and Insurance Award 2010 (‘Banking Award’) as a part-time bookkeeper (25 hours per week) earning a salary of $45,682 per annum and had worked at the firm for 4 years. Ms Goldberg was dismissed on 27 November 2019, when she was on leave overseas in the United States, in an email from Mr Hill, which reads:

‘Hi Rachael

As you know there has been a significant amount of restructuring in the business and we have discussed these changes on many occasions throughout the past 12 months.

Over the past months and particularly over the past week I have carefully considered your role and assessed the current and future workflow of the business. Regrettably there looks to be insufficient work for you in your current role and unfortunately I cannot see any increase in the workflow in the future, if anything, a decrease. I am restructuring the business. With regret, this means that unfortunately I must terminate your employment. This is not an easy decision for me and the decision is not a reflection on your performance. I will give you a reference when you need one and I will be happy to assist you in obtaining new employment.

Based on your length of service, my understanding is that your notice period is 4 weeks. Instead of receiving that notice, you will be paid 4 weeks (sic) pay. You will also be paid your accrued entitlements and any outstanding pay up to and including your last day of employment plus superannuation. I will ask Kristy to calculate your pay and entitlements and come back to you with the exact amounts.

You do not need to come into the office any further and your employment will end immediately. Do not access any part of our system in any way. Please list all items of the business that you currently possess, and we can organize a way for you to return these items. We may need to contact you for certain company information such as passwords, login’s (sic) etc.

I thank you for your valuable contribution during your employment with us and if you would like to discuss this further please let me know.

I wish you and your family all the very best.

Adam’

Ms Goldberg was paid four weeks’ pay in lieu of notice.

[2] Mr Hill maintained that the applicant was dismissed for reasons of genuine redundancy, and he had complied with the Small Business Fair Dismissal Code (the ‘Code’) in effecting her dismissal. On the other hand, it was Ms Goldberg’s (hereafter, the ‘applicant’) view that she had been dismissed due to her second pregnancy, and there had been no changes to the business which would justify Mr Hill’s claim of genuine redundancy being the reason for her dismissal.

[3] On 27 November 2019, the applicant filed an application pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’), in which she sought orders from the Fair Work Commission (the ‘Commission’) for reinstatement, primarily to ensure she qualified for the Federal Government’s paid maternity leave scheme.

[4] The application was originally allocated to Commissioner Riordan. Having convened two conciliation conferences with the parties, from which an apparent settlement of the claim was reached, the matter was ultimately not resolved. On 20 January 2020, Mr Hill (hereafter the ‘respondent’) filed a Form F48 – Application for directions on procedure, in which he objected to Commissioner Riordan further dealing with the matter and requesting the application be referred to another Member for hearing. As a result, the matter was reallocated to me on 21 January 2020. I issued directions for a hearing and listed a further conference in order to explore settlement of the applicant’s claim. Regrettably, the matter did not resolve, and a jurisdictional hearing was held at Wollongong Courthouse on 4 March 2020. At the hearing, Mr Hill appeared for the respondent and Ms Goldberg represented herself. Both parties filed a considerable amount of documentary material, including witness statements.

THE EVIDENCE

[5] The following persons provided written and oral evidence in the proceeding:

•  Mr Adam Hill;

•  Ms Francine Louise Hill, Mr Hill’s wife;

•  The applicant;

•  Ms Kristy Lloyd, a former employee of the Advice Spot Pty Ltd; and

•  Ms Kym Anne Coleman, another former employee of the Advice Spot Pty Ltd.

[6] Given the parties were unrepresented, much of the material filed by them was a mixture of evidence, opinion, submission and irrelevancy. Doing the best I can to disentangle the filed material, I shall refer to all of it under the heading of ‘evidence’.

Statement evidence of the respondent

[7] In support of his claim of genuine redundancy as the reason for the applicant’s dismissal, Mr Hill said that in the past few years he had lost about ~200-250 clients (a list was provided). This was said to have been brought about by the following factors:

[8] Industry changes had required accountants to diversify their business after the industry lost about a third of financial advisers arising from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (‘Hayne Royal Commission’ or ‘Royal Commission’).

[9] Mr Hill added that in 2018, the business did not achieve any of its targets on tax advice, loans or financial planning and no staff bonuses were paid. The applicant, Ms Lloyd and Ms Coleman were obviously ‘very disappointed’. However, they did understand the nature of the tax advice business being greater between 1 July – 31 October 2019 and significantly reduced in November and December. As a result, Ms Lloyd resigned at the end of January 2020 and he engaged a contractor 2 days a week from 11 February 2020. Mr Hill noted that the firm’s biggest client was no longer generating any income, meaning a loss of $30,000 per annum for the business. The applicant had spent considerable time on this client’s work.

[10] It was Mr Hill’s evidence that over the previous 12 months he held numerous discussions with the applicant, at least once a fortnight, to consider moving her into investment advice, personal insurance, superannuation services and home loan and mortgage services, all of which require experience and licensing. The business had paid for the applicant to attend a mortgage course, but the transition period is slow for this work at the beginning and only builds three to four years later.

[11] Mr Hill said he had personally invested heavily in the business, and as a result, his family has one house with a large mortgage and an Australian Tax Office (‘ATO’) tax repayment plan. Mr Hill described his circumstances as follows:

‘Over the past few years I have invested heavily in the business and I am unable to sustain any further losses. Due to a range of factors I have spent/lost a lot of money. In 2019 I attempted to arrange another loan for my wife and I however we were unsuccessful because our income was so low. We own one house with a heavy mortgage. Both Kristy and Rachael seem to fully know all of my financial affairs so my financial situation will not be in dispute.

In July 2019 Rachael organised a tax repayment plan with the ATO and I am still paying it off.

Exhibited to me at the time of swearing my affidavit at pages 6 of my affidavit is a true copy of ATO Tax Debt

•  I am reducing expenses and improving efficiency.

•  The business bank account has historically been very low due to all the expenses.

•  The valuation of the business has declined since the Royal Commission.

•  My wife and I have far less superannuation compared to others of similar age because the business was our superannuation to some extent. I have 2 teenage boys; various animals and I do not have any hidden stash of cash.

•  I am turning my finances around in 2020 as 2018 and 2019 were terrible years.

Exhibited to me at the time of swearing my affidavit at pages 7, 8, 9 of my affidavit is a true copy of CBA TAS bank balance $1,489 as at 12/02/2020 and my mortgage total $813,008’.

[12] Mr Hill provided bank records to demonstrate his personal family circumstances. Ms Lloyd had noted in her statement that ‘over the last few months he has consistently told me that he has no money’. Mr Hill denied not meeting sick leave and superannuation obligations of the employer.

[13] Mr Hill said that his reaction to business changes to save money and improve efficiency, the applicant and Ms Lloyd encouraged him to significantly update his Company software, despite his reservations. The applicant was very much involved in working on its planning, introduction, implementation and training. She had spent many weeks between January – June 2019 where 15-20 hours were expended by her on the project.

[14] The applicant had worked Tuesdays, Thursdays and Fridays from home (to look after her daughter). When she was at the office on Mondays or Wednesdays, there were meetings held on those days every week to have a discussion which included:

• ‘Throughout the past 12 months there have been regular discussions (at least fortnightly) about how difficult business is.

• Throughout the past 12 months there have been regular discussions (at least fortnightly) about the clients that were leaving.

• Throughout the past 12 months there have been regular discussions (at least fortnightly) about how tight cash flow was.

• Throughout the past 12 months there have been regular discussions (at least fortnightly) about changes in the business and the reason to change direction.

• Throughout the past 12 months there have been regular discussions (at least fortnightly) about employment matters, the business not achieving its targets and so no bonuses were paid 2018/2019 and the business could not afford any salary increases 2019.

• Throughout the past 12 months there have been regular discussions (at least fortnightly) about if the business did not achieve its targets I would have to look at a different model.’

[15] Mr Hill noted that despite the applicant and her two witnesses including words such as ‘spiteful’ and ‘revenge’ in their statements, they had acknowledged the regular team meetings were part of the ‘work culture’ i.e. during the meetings they had discussed the ‘direction of the business and workflow’. This did not demonstrate that consultation was perfunctory or non-existent. There was an open and frank discussion in a ‘team of young professionals’.

[16] Mr Hill said that the applicant made no secret of wanting to become a Certified Practicing Accountant (‘CPA’) and had no interest in mortgage broking or financial planning. Mr Hill claimed that he did not want to raise the applicants’ unacceptable attitude and was fearful that Ms Lloyd and Ms Coleman would retaliate. He felt trapped and ‘not in charge’. He said at 13(c) in his statement:

‘There was insufficient work; the team was inefficient; unproductive; the business was losing too much money; Kristy and Rachel had a hostile attitude towards me/their employer and it could not continue. To make matters worse, the fact that I didn't know anything about the IT and they did, more or less mean't (sic) that they could do whatever they wanted.’

He believed the applicant’s attitude changed towards him when in July 2019 he mistakenly removed sick leave accruals from her payslip, and in June 2019, she had believed she was entitled to a pay increase and had wanted to become a CPA. When this was not possible, the applicant was ‘livid’ and her attitude towards him bordered on ‘hatred’. From then on, when she attended his office (2 days a week) she was late 50% of the time.

[17] Mr Hill claimed the applicant was untruthful in her statements in these proceedings and had attempted to mislead the Commission in respect to a second home loan which was sought outside the business, despite already having a loan through the respondent and working on it during work time.

[18] Mr Hill said the applicant had informed him in August 2019 that she was pregnant with her second child. After the birth of her first child he had allowed her to work from home three days a week, but this was not his preference. He claimed she was always difficult to contact at home. Mr Hill denied that the work environment was uncomfortable, and the applicant had never raised this with him. In fact, about two or three years ago, the applicant, Ms Lloyd and Ms Coleman had given him a gift with the words ‘World’s Best Boss’ attached. Mr Hill insisted that the fact the applicant was pregnant had nothing to do with her redundancy. The fact the applicant was contacting the Commission in September 2019, confirms that she was well aware her role was at risk.

[19] Mr Hill referred to an incident on 27 July 2019 concerning the applicant’s request to take a business hard drive home. He had asked her not do so, as there had been an incident in 2011 when the computer system had been hacked and he was now concerned that given the applicant’s hostility towards him, she would have access to all the business’ client details and records. The applicant took it anyway and he told her he was coming to get it. She had handed it back. This was the only time he had attended the applicant’s home in four years. He did not enter the home; they had a brief chat at the door. He did not harass or bully her at the time (seven months ago).

[20] Mr Hill said that when he was considering measures to assist his business efficiency and costs, he decided to reduce staff. He retained Ms Lloyd over the applicant for the following reasons:

Kristy is more experienced than Rachael.

•  Kristy is more knowledgeable than Rachael about tax and accounting matters.

•  Kristy is more knowledgeable about loans and mortgages.

•  Kristy has shifted into the role of assisting me with mortgages.

•  Kristy is prepared to work in the office 4-5 days per week (not from home 3-4 days per week like Rachael).

•  Kristy had been with me for 8 years and was more flexible.

•  It is fair to say that Kristy is more suitable for the reducing tax role than Rachael.

•  I didn't trust Rachael anymore due to her attitude towards me and the business, the fact that she had all my personal login's (sic), I just couldn't continue like that.’

[21] Mr Hill said he decided to make the applicant’s role redundant and he offered Ms Lloyd a new contract. Ms Lloyd continued to work in the business until late January 2020 and when he asked her about signing the new contract, she resigned the next day.

[22] Mr Hill said that in the meeting he had with Ms Lloyd and the applicant on 6 November 2019, he had said:

‘I have closely looked at the work, and there is insufficient work at the moment. Also I can't see the situation changing for many months. You know that financial businesses in general are very vulnerable at the moment due to all the changes from the Royal Commission, and you also know that we have had a bad year. I am unable to pay either of you for any holidays in advance. I need to think about the business model.’

[23] Mr Hill said that in the week after this meeting, the applicant went to the United States for a three-week holiday. During this period, and given his concerns over his business records which the applicant had access to, he had had a real concern for the future viability of the business. He maintained that the applicant’s redundancy was not handled in a ‘harsh or unjust way’.

[24] Mr Hill claimed that from 14 November 2019 – 11 February 2020, the applicant’s role was performed by himself and Ms Lloyd. In fact, Ms Lloyd was working less hours than she had before. The applicant’s role had not been advertised or replaced and Ms Lloyd’s role is now covered two days a week by a contractor. Mr Hill claimed that the applicant’s role wascno longer required due to:

IT improvements 2019

•  Lack of tax return clients

•  Lack of income

•  Loss of clients

•  No need for telephone service

•  Improved internet speed – NBN

•  Not achieving targets

•  Poor cashflow

•  Directional change

•  Loans not much 2019

•  Financial planning not much in 2019’

[25] In response to Ms Coleman’s statement, Mr Hill said that it was ‘nothing more than spiteful revenge’, which had been written in collaboration with the applicant. She was untruthful and had attempted to mislead the Commission, as she was squarely in the applicant’s corner. Ms Lloyd had been well aware that the business had been losing money, but she had been uncooperative and hostile. She had made insulting and defamatory remarks about him. On her own admission, Ms Lloyd was looking for other work from December 2019. Over eight years of her employment, the business had paid Ms Lloyd for:

Diploma Financial Planning

•  Diploma Mortgage broking

•  Accounting courses

•  Insurance courses

•  Study time’

[26] Mr Hill’s wife provided a short statement in which she described feeling uncomfortable around the applicant when she visited the office from July – December 2019. She did not appear very happy and the atmosphere was awkward and tense.

[27] Mrs Hill referred to an incident in December 2019 when she noticed from the applicant’s laptop, that it had contained her husband’s personal emails. Her husband was ‘distraught’ when she told him.

[28] Mrs Hill said that after the applicant’s redundancy, she and her husband discussed Ms Lloyd’s negative attitude and it was decided that she would come into the office 1 or 2 days a week.

[29] In oral evidence, Mrs Hill said that when she had come into the office a few times it was usually for a meeting of about an hour or so. It was on these occasions that she had observed a very toxic environment – the applicant was unhappy and difficult to converse with. Mrs Hill said that she now regards The Advice Spot as her primary employer and otherwise works two days a week for Riding for the Disabled – a program for people with special needs.

[30] In short cross examination, Mr Hill claimed that despite following the Code and the requirements to consult, he had not put anything specific in writing. He agreed the first time the applicant was notified of her redundancy, in writing, was the email of 27 November 2019.

Applicant’s statement

[31] The applicant described her role and duties as follows:

Preparing and lodging tax returns

•  Tax phone appointments

•  Sending tax returns for signing

•  Invoicing clients

•  Following up unpaid invoices

•  Implementing new systems and processes to increase efficiency and cut costs including

•  Xero accounting software to replace Sage software

•  Xero Practice Manager to record hours and timesheets

•  Arranging for email accounts to be moved to a different provider and away from the current IT company

•  Implementing a new cloud-based document management system

•  Providing assistance with loans as required

•  Responsible for most administrative duties

•  Main point of contact for organising appointments between the clients and the business

•  Handling correspondence with the Tax Office, ASIC and other professional organisations

•  Setting up companies and trusts etc

•  Staff training

•  Maintaining multiple business websites

•  Maintaining Social Media page

•  Responsible for IT solutions

•  Provided other support as and when needed’

[32] The applicant’s primary submission was that Mr Hill had not complied with the employer obligation to consult with her about her redundancy. She was advised of her redundancy by email on 27 November 2019 when overseas and was given no opportunity to influence the outcome or respond to Mr Hill’s decision. There was no evidence provided to her of the financial basis for her dismissal. The applicant referred to, and relied on the consultation provisions of the Modern Award to demonstrate Mr Hill had not complied with the Award and her termination of employment was not a ‘genuine redundancy’, as set out in s 389 of the Act. Further, the applicant said that at no time, on her last day of work (13 November 2019), or before proceeding on leave, was her pending redundancy even mentioned. She later learned that Mr Hill had told Ms Lloyd of her dismissal on 27 November 2019.

[33] The applicant said that there were no discussions about major changes in the business which would result in her redundancy and no discussions about any redeployment options or suggestions as to alternative solutions. The applicant claimed that her hours of work actually increased in April 2018 (16 hours) to February 2019 (25 hours). Further, the business had not changed or restructured since she had been first employed in 2015.

[34] It was the applicant’s evidence that two weeks after her dismissal she graduated from university with a Bachelor of Business (Accounting) adding to her Diploma in Finance and Mortgage Broking in 2017. She believed this would have greatly enhanced her contribution to the business. She said she had been actively working in the mortgage area since 2016 and had trained Ms Coleman in this work from December 2016.

[35] The applicant claimed that from Mr Hill’s own evidence, 3 additional persons were brought into the business around 14 June 2019 – which demonstrated no decrease in work. In addition, Mr Hill had said on a number of occasions that he was in a position to be selective with clients and turn away new clients.

[36] The applicant said that her and Ms Lloyd’s accumulated sick leave was removed by Mr Hill because he claimed he could not afford to pay for any extended sick leave. This was restored after the applicant sought advice from the Fair Work Ombudsman (‘FWO’). Further, Mr Hill had consistently failed to provide payslips in breach of his obligation under the Act.

[37] The applicant believed the reasons for her dismissal were her pregnancy and that she had moved a home loan to an outside lender which better met her family circumstances. She further claimed Mr Hill had bullied her both during her employment and after her dismissal, by sending her numerous unsolicited emails, turning up at her home and belittling her in meetings and refusing to pay her loan commissions.

[38] The applicant said that Mr Hill’s conduct and behaviour resulted in the resignation of Ms Lloyd and Ms Coleman. He had also dismissed another employee in September 2016, by email while she was on leave. The applicant said that her termination meant she was not eligible for the Government’s paid parental leave scheme and she had had every intention of returning to work after 18 weeks’ maternity leave (having discussed this with Mr Hill). However, she could not return to work for Mr Hill as he had caused her and her family considerable stress. He had consistently breached his employer obligations and had created an uncomfortable and toxic work environment.

[39] In summary, the applicant said:

‘I previously had requested to be reinstated however I do not believe this to be a suitable option any longer considering the length of time which has passed and that I am currently due to have my second child. The redundancy has already caused myself and my family unnecessary stress and I do not want to be faced with the further stress of having to work for Adam when as demonstrated in this statement ' and through the evidence provided that Adam is not a supportive employer, he does not comply with his legal obligations under the fair work act, does not provide a comfortable work environment, and has unfairly dismissed my employment leaving me in significant financial hardship after 4 years of I dedicated work and commitment to the Advice Spot.’

[40] The applicant sought compensation for her unfair dismissal for notice and payment up to the birth of her second child – due to be born on 13 March 2020.

[41] In conclusion she said:

‘I believe that l was unfairly dismissed and that it was not a genuine redundancy as I reflected in this witness statement and summarised below. I also below the dismissal, the reasons behind the dismissal and Adam's actions to be harsh unjust and unreasonable. I can confirm the following to be a true and accurate measurement of my unfair dismissal:

•  My hours have increased in the last 12 months and do not reflect a downturn in work.

•  I have always provided Adam with a logged work fist showing that there was no lack of work from my position and I was consistently working more than my hours.

•  No consultation took place regarding any major business changes or any effect to my employment. No warning was given prior to my position being made redundant

•  No discussions took place around exploring alternative options to making my employment redundant because I was never notified of the redundancy prior to being made redundant.

•  There is no documentation indicating a business restructure.

•  My role was versatile and constantly changed to meet the business needs.

•  The direction of the business remained unchanged since the commencement of my employment in 2015.

•  I was qualified to do both my current role and to take on a larger role in Mortgage as part of the business I also believe I could have been trained to assist with Financial Planning as I started studying Financial Planning at University as elective units for my Degree. I achieved very high results for the units undertaken while at University.

•  Adam's lack of legal accountability towards issuing payslips, adhering to legal responsibilities regarding employees' rights as listed throughout my witness statement and unfair dismissal of my employment demonstrates the repeat behaviour of Adams accountability towards his legal obligations and commitment to his employees.’

Ms Kristy Lloyd

[42] Ms Lloyd’s evidence largely corroborated the applicant’s evidence as to Mr Hill’s employment practices and conduct and she was very clear that she had taken a deliberate decision to support the applicant’s case. Ms Lloyd had resigned on 29 February 2020 and gave her reasons for doing as:

‘1. The ability to earn commissions through loans and financial planning plus a constant focus on money has resulted in a decrease of ethics and honesty by Adam Hill in my opinion. His primary concern now appears to be focused on how much commission or fees he can receive and uses unethical tactics.

a. Adam trying to talk clients into obtaining higher loans so they can invest any extra with us.

b. clients being placed in bonds they do not understand and Adam reassuring a client he can get their money out in 1 or 2 weeks when he knows it’s at least a month.

c. Trying to cancel and replace insurance policies in a way that will provide him with the most amount of commissions.

d. Lying to a client about an insurance claim we have had paid for another client, when we in fact were not the financial planner in the scenario Adam was discussing.

e. Trying to restructure loan refinances in ways that will provide him with the highest upfront and trail commissions.

f. Adam complaining about loans and financial planning compliance and not wanting to do it and trying to get other staff to do it.

g. Taking $7,000 in loan commissions that was accidentally paid to our bank account on 26th November. When we received the commission he asked me should we tell them and I said yes it is not ours and another broker is probably waiting for it. He said that he thought maybe the person went direct to the bank and they accidentally credited it to his broker account. This indicated to me he intended to keep the money and he said he will wait to see if they notice. Our commission statements now show a negative $7,000, however he has still not made any attempts to pay it back. This became a large red flag for me and was the final incident that I needed out of this company as soon as possible.

2. Office culture & treatment of employees

a. Constant micromanaging of employees and the work. Hours of discussions each day about what is being worked on, him reading every email that is sent to our email addresses and typing what to respond or responding on our behalf when we are not in the office but using our signatures as to imply that we are in the office. Over the past year he has made more of an attempt to mention we are away and someone else will respond. However, he does have full and constant access to our emails. I believe this kind of environment makes career progression difficult if not impossible for employees. He would constantly talk to us about work whenever we would be eating lunch so would rarely have a chance to have an uninterrupted lunch break which we are entitled to.

b. Feeling the constant pressure of never being able to have a day off, even though Adam admitted he can’t afford to pay us our leave entitlements owing.

c. Discussions and employment agreements about extra income we would receive that never occurred.

d. On 26 November 2019, my employment agreement was changed purely to his advantage. Increasing my hours from 37.5 to 40 per week with no increase in pay. Increasing work closure over Christmas from 2-3 weeks to 3-4 weeks and being pressured to take more and more time off at Christmas, even though I was still required to work some days over the Christmas period to keep up with the work during the weeks that suited him.

e. My role to continue to provide Mortgage broking and Financial planning assistance even though I had mentioned on previous occasions I did not want to do this work. He said as he had paid for my courses I needed to assist in these areas. As I am now the only one in the office who knows how to use to Loans software system, Mercury, I knew this meant significant support for loans. He subsequently employed Marie to assist with financial planning as I was uncomfortable doing this work due to limited knowledge of this area.

f. Rachael's redundancy proved what I had been feeling over the past year and that Adam did not care or appreciate his employees and how hard we have worked for him and do everything he asks us to do. He will get rid of us at any opportunity.

g. Over the past few months he has consistently told me he has no money, yet continues to turn away clients or resigns from clients who go elsewhere for loans or if they query their fees. The transition of software systems and the resignation of Kym resulted in less expenses for the business and during my performance meetings he admitted that loans and Financial planning commissions are up and tax is not down by too much. His comments are inconsistent with the workings of the business and he appears to not have any money only when it involves employee entitlements.

3. Questionable dealings with clients that make me uncomfortable

a. Adam constantly saying 'colour it in' and telling clients work took longer than it did so we can charge more. He specifically was unhappy when he said I responded to a client's query too quick and should have make it look like it was more complicated.

b. Trying to not provide clients with too much information about how we calculated tax refunds, rental negative gearing so they are confused and can't take their business elsewhere. When they do request this information for a new accountant Adam often ignores them and then blocks their email so they can't email again.

c. Adam trying to get myself to lie to a client about her tax debts and adjustments he has made and when saying I was not comfortable with this I was intimidated into talking to the client. I was uncomfortable and did not want to talk to the client however Adam is my employer who pays my wage so I did not know what to do. Thankfully, the client never responded to my email requesting a time for a meeting.’

[43] In a reply statement, Ms Lloyd denied colluding with anyone about her statement and believed Mr Hill gave ‘intentionally misleading and deceptive evidence’. She did not consider the business was losing money and pointed to his expensive overseas holidays every year and that his wife and two sons were on the payroll. She believed the business turnover was $550,000 – $600,000 a year.

[44] Ms Lloyd said Mr Hill copied and pasted and reedited her statement not to prove his point, but to mislead the Commission. His wife had only ever come to the office once during the period in which Ms Lloyd was employed with the Company. Ms Lloyd strongly denied doing anything to damage the business and worked extra hours, not less as Mr Hill had claimed. Ms Lloyd believed Mr Hill’s list of lost clients was deliberately misleading, as he deleted clients at will and had said he had too many to handle. Some names were mentioned twice, others had never been clients and at least ten, she had never heard of. Ms Lloyd also said Mr Hill’s largest clients remain his clients.

[45] Ms Lloyd contended that business income was often transferred to Mr Hill’s personal account. Ms Lloyd vehemently denied any discussion about the applicant’s redundancy. Ms Lloyd reaffirmed her claim that Mr Hill had threatened her not to become involved in the applicant’s Commission proceedings. Ms Lloyd said she had already planned to resign before Mr Hill asked about her employment agreement. Ms Lloyd did not believe the applicant’s role no longer existed and she saw no evidence of a loss of income as per the cashflow.

Ms Kym Coleman

[46] Ms Coleman resigned from her employment with the respondent in July 2019 after 3 years of working for Mr Hill. Her reasons for doing so were said to be:

‘1. In our one on one meeting in September 2018, Adam was asking me to sign a new contract. I raised the following with Adam at this time:

a) Adam did not pay superannuation correctly throughout 2018. This was rectified in October/November 2018 after I brought it to his attention

b) Adam did not adhere to his section of the contract where he states that he would pay 25% of upfront commissions. This was rectified in September 2018 after I brought it to his attention.

c) I also discussed my hours. I specified that I was continually working more than 20 hours per week and I could not continue in this way. I continued to have to work more than the hours that I was paid.

2. During another one on one meeting on 27th May 2019, Adam informed me that should work extra hours as he allowed me to work from home, and I was probably doing other things than working. This was despite having implemented detailed timesheets which showed what I was doing for the whole 20 hours I was working. Adam did not believe that these timesheets were correct. This was also despite him regularly calling me outside of my working hours when I was working at home.

3. Adams disregard for compliance and keeping up to date with his Continuing Professional Development. Adam regularly deleted relevant emails from my email account that were related to assisting me in my role -new product webinars, webinars from mortgage providers on how to use their serviceability calculators, changes to financial planning laws, codes, education requirements etc. Adam believed that all of this was a waste of time, and was not required. He also deleted important client emails regarding loan settlements and emails regarding his accreditation with mortgage providers. This was both time wasting and frustrating. Despite raising this issue with him in May 2019, he continued to delete my emails.

4. We had significant ethical differences:

He asked me to tell a client we had negotiated a $2k refund from the Bank from them, when the bank offering these to all new clients for a two month period.

Westpac unconditionally approved a loan which was outside their lending policy. I called Westpac and informed them of their error and the unconditional approval was revoked. Adam was vey angry and told me that we should have discussed this before I made the call. I said that there was no point discussing this, as I was always calling the Bank to let them know of their mistake.

Adam was informing clients to change their address on their license to get a more [favourable] loan for their client.

5. I resigned from role as I lost respect for and trust in Adam, due to all of the points mentioned above.’

[47] In a reply statement, Ms Coleman strongly refuted Mr Hill’s claim that her statement was spiteful and vengeful. Ms Coleman refuted Mr Hill’s claim that ‘money was tight in the business’ and said Mr Hill was attempting to mislead the Commission in this respect. She pointed to his and his family’s frequent overseas travel. Ms Coleman also rejected Mr Hill’s claim that the workplace environment was toxic because of her. She referred to his own comments about her on 16 June 2019:

‘Kym did an outstanding job in her role and was an asset to our organisation… I regularly sought Kym’s views on various financial matters as I respected her opinion… Kym has a pleasant personality strong work ethic and is very trustworthy… And I wholeheartedly recommend her for any endeavour she chooses’.

[48] In cross examination of the applicant, Mr Hill’s laboured questioning frequently began with ‘you [(the applicant)] don’t dispute that’:

•  there were meetings of staff every morning when she was at the office;

•  the business did not meet its 2019 targets and staff could access these targets;

•  she had been responsible for the largest client’s account in February, March and April 2019;

•  the business had lost 250 clients in the relevant period;

•  Mr Hill had organised a tax payment plan for the business;

•  the applicant was responsible for the business IT and it had been updated because the internet connection was poor prior to the NBN connection;

•  Mr Hill had attended her home once in 4 years when she had the company backup computer and he wanted it back. She disputed she took it without permission and believed Mr Hill had harassed her on a Saturday morning. She agreed he did not enter her home and was at the door for about 5 minutes;

•  the workplace environment was toxic and becoming unbearable;

•  she was interested in pursuing a CPA role and she was not a mortgage broker;

•  the business had paid for her mortgage diploma;

•  she and Ms Lloyd had bought him a glass which said ‘World’s Best Boss’;

•  the IT system contained very sensitive client information which, if it got into the wrong hands, could ruin his business and reputation;

•  Ms Lloyd had more experience in accounting, tax, loans and financial planning than her and lived closer to the business than her.

The applicant denied that Mr Hill had ‘bent over backwards’ to allow her to work three days a week from home. She denied Mr Hill having told her on 6 November 2019 that he had to rethink the (business) model and could not pay her annual leave in advance.

[49] In oral evidence, Ms Lloyd confirmed she first learnt of the applicant’s redundancy from Mr Hill on 27 November 2019. He did not mention redundancy or major changes to the business in the previous 12 months. On 27 November 2019, he told her he was making the applicant’s role redundant, because there was not a lot of work over December 2019/January 2020 and he did not want to pay for the quiet period when she was leaving in March anyway. He was also unhappy that the applicant had taken her loan external and away from the business. Mr Hill had never mentioned the business was struggling to acquire new clients.

[50] Ms Lloyd said the morning meetings were about files staff were working on and general discussion and questions of who, and what each staff member was working on. Ms Lloyd understood that the total business income for 2019 was higher than in 2018 and she had not been given the impression that there was insufficient work for the applicant in the business. Ms Lloyd believed that Mr Hill had multiple business bank account(s) to which income was received. Ms Lloyd believed that most of the business expenses appeared to be paid out of a different account to the business account.

[51] In cross examination, Ms Lloyd agreed that all the list of ~250 lost clients, she named only 3 who she believed remained clients (2 of which had changed their names). Ms Lloyd agreed she had updated the income each month and was aware that the business had not met its targets for 2019. She did not accept the business had no money despite Mr Hill consistently telling her so. He had not acted as if it had no money.

[52] Ms Lloyd acknowledged that a new IT system had been introduced and took some time to be transitioned. She agreed Mr Hill was not familiar with the IT systems. Ms Lloyd agreed the office environment was toxic and unbearable. However, Mr Hill was the person responsible for it. He had intimidated and threatened her when he had said to her on 7 December 2019 ‘don’t get involved in the Fair Work case or it won’t be good for you. You need to look after yourself’. She claimed Mr Hill would intimidate her if she did not agree with him and gave an example of when he told her to ring a client when he tried to hide an issue with her tax debt.

[53] Ms Lloyd rejected Mr Hill’s claim that as the Director, he had to take decisive action. Though working for Mr Hill for eight years, Ms Lloyd said it was only in the last year that she had difficulty in coming to work each day. Ms Lloyd agreed that the business paid for her financial planning course and diploma and allowed her to work on it during work time.

Ms Coleman

[54] In oral evidence, Ms Coleman said the daily meetings were for the team to talk about the work for that day, set priorities for the week and to ask questions. Ms Coleman was not aware of major changes at the office which would affect employment and did not believe there was insufficient work for the applicant before she was dismissed. She believed there was a mortgage-based role for the applicant, as she had assisted her in this work in the past. Ms Coleman left the business in July 2019.

[55] In cross examination, Ms Coleman agreed that when she worked in the business, the office environment was not toxic or unbearable. She accepted there had been regular team meetings. It was Ms Coleman’s recollection that the performance of the financial planning and mortgage broking business increased year on year in 2018 and 2019. She stressed she was not referring to targets. Ms Coleman understood the Hayne Royal Commission initially affected the mortgage broking industry. However, from her current experience, it had not affected the financial planning industry, although a number of reforms, including educational requirements, have since been extended. Major changes had been happening for five years.

[56] Ms Coleman believed the applicant was a capable learner. She would be well-positioned as a financial planner as she was studying for another degree. She confirmed the significant IT changes in the business during 2019, but she had had a minor involvement with the Xero system.

SUBMISSIONS

[57] Mr Hill made this final submission:

‘Your Honour, the business employs less than five people.  It has changed its business direction.  It is clear that it was losing money or at least not achieving its targets.  Everybody had access to the targets.  The atmosphere was toxic, unbearable.  We had the Royal Commission.  We changed the entire IT system.  There was lack of trust.  There is quite a lot of accusations that speak for themselves.  Something needed to be done, your Honour.  I didn't have any other choice.  Thank you.’

[58] In answer to a question from me, Mr Hill agreed that he had not provided audited financial statements, but believed all the evidence confirmed that the business targets were not being met.

For the applicant

[59] The applicant submitted that Mr Hill had not provided any evidence to demonstrate her dismissal was a genuine redundancy or that it was not harsh, unjust or unreasonable. Mr Hill had not established her evidence was false. The applicant pointed out that Mr Hill had not provided evidence of the financial state of the business, including of any recent or comparative business tax returns. His only attempt to do so was for income in one week (5 – 12 February 2020), which was after she was made redundant. He had not provided any details of a loss of clients and the lists he had provided had been inaccurate and misleading. The applicant submitted that, in any event, targets were not a condition of her employment contract. Further, Mr Hill had denied her bonuses. He had not properly consulted her, in accordance with the Code or the Award. Nothing had been discussed about changes affecting her employment. the regular morning meetings could not possibly meet the employer’s consultation obligations under the Award. Nothing was put to her about the alleged poor financial state of the business and it wasn’t performing poorly.

[60] The applicant rejected Mr Hill’s claim that she had no desire to be a mortgage broker, as proven by her experience and qualifications. Further, Mr Hill had never mentioned he had distrusted her. He now criticises her, but had said her redundancy was not a reflection of her performance. While acknowledging the work environment was toxic, this does not excuse Mr Hill’s unfair process in dismissing her. Mr Hill also had a lack of accountability for his legal obligations in respect to payslips and other conditions of employment. The applicant reiterated that she believed she was dismissed because of her pregnancy and moving her loan away from the business.

[61] In reply, Mr Hill expressed his concerns that all employees had access to his business records and client details, and he had a right to protect his business. Mr Hill said that he had not been able to pay employees their sick leave entitlements, but eventually did, because he thought the applicant and Ms Lloyd would ‘walk out’. Employees had not been ‘replaced’, and his wife and son continue to help out the business. He did not believe consultation was necessary when someone accuses you of harassment, intimidation, and even sexual discrimination.

CONSIDERATION

[62] Before considering the merits of this application, a number of preliminary matters must be determined, which also go to the respondent’s two objections to the application. An unfair dismissal is defined in 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.

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.

[63] At the outset, I make the following findings:

i. The applicant’s unfair dismissal application was lodged within 21 days after her dismissal on 27 November 2019, as required by s 394(2) and satisfying s 396(a) above.

ii. The applicant was dismissed at the initiative of the employer, as confirmed in the email to her of 27 November 2019 sub-s 385(a) and 386(1)(a).

iii. The applicant was a person protected from unfair dismissal in that:

a. she had completed the minimum employment period set out in ss 382 and s 383 of the Act, being a period of 4 years;

b. a Modern Award applied to her employment; namely, the Banking Award (s 382(3)(b)(ii) of the Act).

iv. The applicant’s dismissal was a case involving the Code, as the respondent had 5 employees at the relevant time (s 385(c)).

[64] It is apparent that the respondent’s primary objection is that the applicant’s dismissal was a case of ‘genuine redundancy’ (s 385(d)). It was also put that the respondent had complied with the Code. If either of these objections are upheld, the applicant’s unfair dismissal claim must be dismissed for want of jurisdiction. However, if both objections are dismissed, then the consequent step is for the Commission to consider and determine whether the applicant’s dismissal was ‘harsh, unjust or unreasonable’, in accordance with s 387 of the Act, and, if so, what remedy should be ordered, pursuant to s 392 of the Act.

[65] The sections of the Act relevant to these objections are s 388 and s 389 as follows:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

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.

Meaning of ‘genuine redundancy’

[66] The definition of ‘genuine redundancy’ is further explained by way of examples, in the Explanatory Memorandum at 1546 to 1553:

‘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

[67] It is apparent that a finding under s 389 of the Act is predicated on three matters:

1. whether the person’s job is no longer required to be performed, because of operational requirements of the enterprise;

2. whether the employer has complied with any obligation in an award or agreement to consult the affected employee/s about the redundancy; and

3. whether it would have been reasonable to redeploy any affected employees.

I will deal with each of these matters in turn after setting out the principles which have been developed by this Commission and the Courts in respect to redundancy, consultation and redeployment.

[68] It is trite to observe that the meaning of the term ‘redundancy’ may vary, depending on the particular industrial context, and/or the text of an applicable industrial instrument. In Amcor Limited v Construction, Forestry, Mining and Energy Union [2005] HCA 10, Gleeson CJ and McHugh J [12] held that:

‘In the industrial context, redundancy of position is not a concept of clearly defined and inflexible meaning.’

[69] A Full Bench of this Commission in Construction, Forestry, Mining and Energy Union (CFMEU); Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU); "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) v Spotless Facility Services Pty Ltd t/a Spotless [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.’

[70] Further, in Hodgson v Amcor Ltd; Amcor Ltd & Ors v Barnes & Ors [2012] VSC 94, Vickery J (‘Hodgson v Amcor’), after summarising the relevant 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’. (endnotes omitted)

[71] In Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 (‘Ulan Coal v Howarth’), a Full Bench of the Commission held at [19]-[20] that:

‘[19] In the present case, the Commissioner appears not to have drawn an appropriate distinction in his reasoning between the “jobs” of the mineworkers who were retrenched and the functions performed by those mineworkers or take proper account of the nature of the restructure at the mine which led to an overall reduction in the size of the non-trades mineworker workforce. The Company restructured its operations in various ways including by outsourcing certain specialised, ancillary and other work and increasing the proportion of trade-qualified mineworkers in underground development and outbye crews. As a result, it was identified that there were 14 nontrades mineworker positions which were surplus to the Company’s requirements. The mineworkers whose employment was to be terminated were determined according to the seniority principle as provided in the Agreement. This did not mean that the functions or duties previously performed by the retrenched mineworkers were no longer required to be performed. It also did not mean that the positions of some of these mineworkers (e.g. in underground crews) did not continue, although those positions might after the restructure be filled by more senior non-trades mineworkers transferred from other parts of the operations or by trade-qualified mineworkers. However fewer non-trades mineworker jobs were required overall at the mine as a result of the operational changes introduced and, for this reason, the jobs of the 14 mineworkers selected for retrenchment could be said to no longer exist.

[20] These circumstances readily fit within the ordinary meaning and customary usage of the expression in s.389(1)(a) of the Act where a job is no longer required to be performed by anyone because of changes in the operational requirements of the employer’s enterprise’

[72] The Full Bench in Ulan Coal v Howarth, after considering relevant authority and the

Explanatory Memorandum, concluded that:

‘It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that (at 308):

What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant… (at 308)

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.’

[73] In Dibb v Commissioner of Taxation (2004) 136 FCR 388; [2004] FCAFC 126 (‘Dibb’) referred to above, the Federal Court said at paras 43 and 44:

‘43. The difficulty in this case has been caused by the aphorism which appears in both paras 12 and 42 of TD 94/12 to the effect that the job, not the employee, becomes redundant. However s 27F speaks of the “bona fide redundancy of the taxpayer”. We consider that it is more accurate to say that an employee becomes redundant when his or her job (described by reference to the duties attached to it) is no longer to be performed by any employee of the employer, though this may not be the only circumstance where it could be said that the employee becomes redundant. Reallocation of duties within an organisation will often lead the employer to consider whether an employee, previously employed to perform specific functions assigned to a particular “job”, will be able to perform any available “job” existing after such reallocation. Even if the employee’s job, defined by reference to its duties, has disappeared, he or she may be able to perform some other available job to the satisfaction of the employer. In that case, no question of redundancy arises. It is only if the employer considers that there is no available job for which the employee is suited, and that he or she must therefore be dismissed, that the question of redundancy arises. If, in good faith, the employer:

•  has reallocated duties;

•  considers that the employee is not suitable to perform any available job, defined

•  by reference to those reallocated duties, existing after the re-allocation; and

•  for that reason, dismisses the employee,

then, for the purposes of s 27F, the employee is dismissed by reason of his or her bona fide redundancy. In the above discussion we have used the word “available” as meaning “vacant”, and the word “suitable” as meaning “within the employee’s capacity”.

44. In the present case, the employer redistributed the duties previously performed by its District Managers and at the same time, added further duties. The job, described by reference to its duties as previously performed by Mr Dibb, ceased to exist. The employer no longer wished to have that job performed by anybody. The work was to be differently distributed. The result was that there was no job for which his skills qualified him. He was “surplus to [AVCO’s] personnel needs”. We consider that the respondent was in error in concluding that Mr Dibb’s dismissal was not by reason of his bona fide redundancy. As a result, the respondent also erred in failing to address the matters prescribed by s 27F. These errors have inevitably deprived Mr Dibb of the benefit conferred by Subdiv AA upon a person receiving a bona fide redundancy payment as part of an ETP.’

[74] It would seem logical and understandable, that the Commonwealth Parliament considered the history of the meaning of redundancy, as expressed in the early authorities, when it crafted the statutory meaning used in s 389 of the Act.

Employer’s obligation to consult

[75] The meaning of the word ‘consult’, was considered by the Full Bench in Consultation Clause in Modern Awards [2013] FWCFB 10165. At [30]-[33], 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. ...”

[32] We respectfully adopt his Honour’s observations. Similar to the obligation to accord a person procedural fairness, the precise content of an obligation to consult will depend on the context. The extent and significance of a proposed change, in terms of its impact on the affected employees, will have a bearing on the extent of the opportunity to be provided. Hence a change of limited duration to meet unexpected circumstances may mean that the opportunity for affected employees to express their views may be more limited than would be the case in circumstances where the proposed change is significant and permanent. It is also relevant to note that while the right to be consulted is a substantive right, it does not confer a power of veto. Consultation does not amount to joint decision making.

[33] Some of the ordinary incidents of a requirement to consult are reflected in s.145A(2), that is:

•  ‘to provide information about the change; and

•  to provide an opportunity for affected employees to give their views about the impact of the change; and

•  to consider any views about the impact of the change that are given by the employees’.

[76] In Maswan v Escada Textilvertrieb t/a ESCADA [2011] FWA 4239 (‘Maswan’), Watson VP held at [39]:

‘[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in the procedure such that renders the termination unfair in the circumstances. Here the decision appears open to the employer to make. The failure to consult is not a trivial matter. But it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.’.

[77] It is notorious that the word ‘consultation’, is arguably the most oft debated word in the industrial relations lexicon (perhaps, ‘reasonable’ being another). It has been the subject of considerable judicial and Commission exegeses. That said, it is important to note that despite the views of some uninformed litigants, consultation does not mean agreement. However, nor does it simply mean an exchange of information; nor is it a mere formality or triviality; see: Maswan above. Consultation must be meaningful, open, and transparent and involve a reasonable and realistic consideration of each other’s views.

Witness evidence

[78] For a relatively short jurisdictional point and straightforward unfair dismissal claim, there was a voluminous amount of material filed by both parties which was repetitive, and for the most part, a reflection of the one issue they all agreed on; namely, the toxic and unpleasant workplace environment that appeared to have commenced about a year earlier and accelerated in the few months before the applicant’s dismissal. Mr Hill claimed the evidence of the applicant, Ms Lloyd and Ms Coleman, was spiteful, vengeful and a product of them collaborating to unfairly paint him in the worst possible light. The applicant, Ms Lloyd and Ms Coleman responded that they had only been telling the truth and Mr Hill had misled the Commission, was untruthful and loose with his own evidence. He selectively edited their evidence in an attempt to portray their comments as supporting his case, when it actually did the opposite, when read in full and in context.

[79] Of course, this case is not about some intensive investigation into Mr Hill’s business and employment practices, however from my observation of Mr Hill in the proceedings and from his accusatory documentary material (bolded, unnecessarily highlighted, and repeated), in my view, Mr Hill had a propensity for exaggeration, hyperbole and implausible explanations and defences for inexplicable decisions. In short, he was not a convincing advocate of his own case.

[80] That said, it was obvious that the applicant’s supporting witnesses are her friends and were plainly hostile to Mr Hill (whether for good reason, or otherwise, is not for me to judge), but they had plausible and believable reasons for resigning from the business, having experienced varying levels of similar conduct and attitude of Mr Hill which the applicant described. Of course, providing critical evidence about one’s former employer, is usually far more cautious, restrained and circumspect than when evidence is provided by existing employees, whose future might not be so bright, after swinging the proverbial ‘baseball bat’ at their employer.

[81] On the other hand, in my opinion, the evidence of the applicant and her supporting witnesses, was not the product of collaboration between them. On an objective view, while the themes are the same, their statements and conclusions are not similar, as to demonstrate improper collaboration. Ms Coleman’s reasons for resigning were different to Ms Lloyd. She had even said she was not angry with Mr Hill and did not hate him – she was just disappointed with how she and the applicant had been portrayed and treated by him. Moreover, Mr Hill was not able to shake the applicant or the support persons, who were in the stressful position of being questioned, in the witness box, by their former employer. Mr Hill did not discredit their evidence (although he was proud to claim he had) and I found them to be honest and straightforward witnesses, whose evidence generally had a ‘ring of truth’ about it.

[82] While I can attribute and discount some residual resentment and colourful language from their evidence, on the key questions, I found their evidence to be consistent with how I found Mr Hill’s conduct of his case. I would add that his cross examination of the applicant and the witnesses told me more about him, rather than his clumsy and ‘smart alecky’ selective attempts to discredit them – it was not at all persuasive.

[83] For these reasons, I did not find Mr Hill to be a credible witness. Where his evidence conflicts with the applicant and her supporting witnesses, it is their evidence which I prefer.

Was the applicant’s dismissal a case of genuine redundancy?

[84] As mentioned earlier, there are essentially three sub questions to s 389 of the Act, which must be satisfied for the jurisdictional objection to be sustained:

(a) Was the applicant’s job no longer required to be performed by anyone because of the operational requirements of Mr Hill’s business?

(b) Did Mr Hill comply with the consultation requirements of the Award in respect to the applicant’s redundancy?

(c) Would it have been reasonable in all the circumstances to redeploy the applicant within the business, or an associated entity of the business?

[85] The applicant maintained that these three questions were not established by the evidence and therefore s 389 had not been satisfied and Mr Hill’s objection could not be upheld.

[86] As the objector in this matter, the onus was on Mr Hill to provide cogent and reliable evidence of the financial difficulties he claimed were the reason for the applicant’s redundancy. In the usual case, this will require the production, sometimes on a confidential basis, of the financial records of the business, including audited business tax returns, bank statements or a registered accountant’s evidence of the state of the business finances and the like. On the state of the material relied on by Mr Hill, I cannot be satisfied that he has discharged this onus to the appropriate evidentiary standard.

[87] Making broad industry-wide generalisations and referring to media reports of the impact on the finance industry as a consequence of the Hayne Royal Commission, providing lists of client names with no supporting details, relying on a one-week snapshot from a single bank account and two single page loan account extracts, does not meet what is required to satisfy the Commission of the state of the business’s finances. Mr Hill placed great emphasis on his claim that the business targets were not being achieved. However, this submission proves nothing about the actual state of the business’s finances. Targets are not a tangible or reliable indicia of business profitability or otherwise. To demonstrate the obvious, an employer could set utterly unrealistic targets and because these targets were obviously not achievable, claim the company was not performing.

[88] The evidence of the applicant and Ms Lloyd and Ms Coleman, was that they had understood that the business income actually increased in 2019 from 2018, and in addition, Mr Hill had diverted business income to his personal accounts to fund expensive overseas holidays and to pay his wife and son for work they had not performed for the business. While I have no reason to doubt the beliefs of the applicant and her witnesses, this must be qualified by their own personal opinions of Mr Hill. Further, I do not consider the applicant’s submissions as to the state of the business’ finances to be supported by cogent or verifiable evidence. The applicant of course, could have sought the complete financial records of the business through a Notice to Produce, but given she was unrepresented, I acknowledge she was not familiar with the Commission’s rules and procedures. In any event, she wisely focussed on the lack of consultation about her redundancy, to demonstrate that s 389 was not complied with. This was her best and most potent argument.

[89] That said, the Commission can only rely on the evidence which is provided by the parties and cannot advise a party how to run their case; let alone run it for them. It would be entirely improper for me, notwithstanding my misgivings about the state of the evidence, to effectively steer a party in a way that ensures they put their best evidentiary case forward. That is not to say that the Commission could not have taken steps to inform itself of the state of the respondent’s finances (s 590 of the Act); however, this would have required the Commission to undertake a forensic analysis of the businesses’ financial records. In any event, this case, as will be seen shortly, can be determined by a less time consuming and problematic route.

[90] In respect to s 389(1) of the Act, it would seem, at least from that part of Mr Hill’s evidence, which was not challenged, that he has not replaced either the applicant, Ms Lloyd or Ms Coleman, that the jobs and functions they have performed have been distributed to a contractor, Mr Hill himself and maybe his wife and son.

[91] Despite my broader misgivings, this would prima facie, fit the example of redundancy as explained in the Explanatory Memorandum at [66] above.

[92] Turning then to consultation as required by the Award, the obligation on the employer is to consult with employees when a definite decision is taken to make major changes in its structure, which is likely to have significant effects on the employees. Such consultation requires notice to the employees, engagement with them through discussion about the introduction of the changes, the likely effects of the changes and measures to mitigate the adverse effects of the changes.

[93] On any objective analysis, none of these steps were undertaken by Mr Hill. It cannot be disputed that the definite decision to make the applicant’s job redundant was made on 27 November 2019 in a meeting Mr Hill had with Ms Lloyd. The applicant was informed of the decision that day, by email while she was overseas on leave. There was no discussion with her, let alone a discussion of her likely termination, at any time prior to her proceeding on leave. There was no discussion with her after the 27 November 2019 email and she did not return to work.

[94] Mr Hill’s contention was that the employees were not only aware of the state of the business’s finances, but that it was discussed at regular morning meetings, and these meetings met the requisite consultation for the purposes of the Award. Such a submission is nonsense. Firstly, no definite decision in its proper context, was made at any time prior to the applicant’s receipt of the 27 November 2019 email. That was the day of the definite decision and no steps were taken to consult with her before or after that date. It was fait accompli.

[95] Secondly, to suggest that regular morning meetings was consultation for the purposes of the Award is absurd – it is just usual, unexceptional business practice. There was no evidence of any discussion of the likelihood of redundancies, or even of any change in business focus requiring a restructure. I accept that these meetings were just as the applicant and her witnesses characterised them – commonplace pre-work discussions in a small office, about work allocation, weekly projections and updates of files and questions and discussion. To elevate such meetings to consultation about redundancy, flies in the face of logic and reality and, frankly, is a submission which is perverse and nonsensical.

[96] Accordingly, I am well satisfied that s 389(1)(b) of the Act has not been complied with. Axiomatically, the applicant’s dismissal was not a case of genuine redundancy. Mr Hill’s jurisdictional objection is dismissed.

[97] It is unnecessary, therefore, to determine whether it would have been reasonable to redeploy the applicant to another role in the business. For completeness, this consideration requires a genuine discussion about options, including maybe, reduced hours, working in a different finance field or any number of other innovative suggestions. As the 27 November 2019 email was the beginning and the end of any so-called ‘consultation’, including about redeployment, this statutory obligation was also not met by Mr Hill.

Reliance on the Code

[98] Seemingly, in a desperate attempt to come up with any defensible explanation for the applicant’s dismissal, Mr Hill relied on compliance with the Code as being a further jurisdictional objection.

[99] It is difficult to reconcile Mr Hill’s ‘genuine redundancy’ objection with the Code, which is predicated on a dismissal for either misconduct or a person’s capacity to do the job; noting the email of 27 November 2019 in which he stated the applicant’s redundancy was not a reflection on her performance.

[100] As neither of these criteria applied to the applicant, even on Mr Hill’s evidence, reliance on the Code simply cannot arise. Mr Hill’s reliance on the Code is legally and conceptually misplaced. The Code objection is irrelevant and dismissed.

[101] I am satisfied that Mr Hill has not made out any jurisdictional objections, such as to disqualify the applicant from pursuing her unfair dismissal rights under ss 387 and 392 of the Act. It is to these matters which I now turn; firstly, as to a consideration of whether the applicant’s dismissal was unfair, pursuant to s 387 of the Act. Section 387 reads as follows:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

[102] The meaning of ‘valid reason’ in s 387(a) is drawn from the judgement of Northrop 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 [Peterson] 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)’

[103] All of the criteria in s 387 of the Act must be taken into account when the Commission considers whether a particular dismissal is unfair. The notion of ‘taking into account’ a matter (such as those described in s 387 of the Act) connotes a genuine consideration of the relevant section and the apportionment of the appropriate weight of each criterion in the circumstances. In Construction, Forestry, Mining and Energy Union v Hamberger and Another (2011) 195 FCR 74, Katzmann J pointed out that ‘[t]o take a matter into account means to evaluate it and give it due weight’ and that ‘mere advertence will not be enough’. That said, it must also be steadily borne in mind that all of these matters must be considered in totality. That this is so is obvious from the Explanatory Memorandum to the Fair Work Bill 2008 where at para 1541, it reads:

‘1541. FWA must consider all of the above factors in totality. It is intended that Fair Work Act 2009 will weigh up all the factors in coming to a decision about whether a dismissal was harsh, unjust or unreasonable and no factor alone will necessarily be determinative.’ (my emphasis)

Whether there was a valid reason for the applicant’s dismissal (s 387(a))

[104] Given that s 387(a) as to ‘valid reason’ refers to ‘a person’s capacity or conduct’, neither of which is advanced by Mr Hill in this case, then it would seem this factor is, at best, a neutral consideration. While the applicant believed that her dismissal was due to her pregnancy and Mr Hill’s unhappiness with her moving a loan from the business, I am not comfortably satisfied based on the evidence that those were the reasons for her dismissal; although I can understand why she may believe it to be so.

[105] On the other hand, Mr Hill seems to have created a post-facto argument not properly articulated, developed or supported, that the working environment was so toxic and that the applicant’s knowledge of, and access to his business records and clients, posed a risk to his business viability and reputation. This view does not sit well with the language and tenor of the 27 November 2019 email, in which he states the applicant’s redundancy was not a reflection of her performance.

[106] In any event, to the extent this was a reason for the applicant’s dismissal, it is not supported by evidence; merely assumptions. It is fanciful, prejudiced and not well founded; see: Selvachandran. In my view, there was no ‘valid’ reason for the applicant’s dismissal.

Whether the person was notified of that reason (s 387 (b))

[107] The only time the applicant was notified of the alleged reason for her dismissal (redundancy) was when it was made effective by the 27 November 2019 email. If the other reasons referred to above were the real reasons, then the applicant was never notified of them. Either way, this factor tells in favour of a finding of unfairness.

Whether the person was given an opportunity to respond to any reasons related to her capacity or conduct (s 387(c))

[108] Similarly, this criterion relates to the conduct or capacity of the applicant and does not arise where the reason is for redundancy. Even accepting the reason of redundancy was a valid one, the applicant was given no opportunity to respond, and certainly had no opportunity to respond to any other unstated reasons at the time. This factor tells in favour of a finding of unfairness.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal (s 387(d))

[109] Given the applicant was given no warning of her dismissal, a request for a support person in meetings to assist in any discussion relating to her dismissal, is moot. This is a neutral factor in this case.

If the dismissal related to unsatisfactory performance by the person--whether the person had been warned about that unsatisfactory performance before the dismissal (s 387 (e))

[110] There is no evidence of any concern of the employer as to the applicant’s performance, as he concluded in the 27 November 2019 email. This is also a neutral factor in this case.

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 the degree to which the absence of dedicated human resource managements specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal (s 387(f)-(g))

[111] 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 hopelessly cavalier and perfunctory manner disclosed in this case. The dismissal was manifestly unfair. The respondent’s approach in denying the applicant proper and fair procedures cannot be put down to mere naivety or ignorance. It was deliberate and calculated. Mr Hill has been in business for a long time and had employed a number of persons over this period. The size of the employer’s business and lack of industrial relations expertise is no excuse for the lack of any fair procedure and the failure to comply with Award obligations in this case. It ill behoves any business person to treat an employee in the manner he treated the applicant. These factors tell in favour of a finding of unfairness.

Other relevant matters (s 387 (h))

[112] I have taken into account the applicant’s period of service and her current limited prospects for future job opportunities as a consequence of the birth of her second child. These matters tell in favour of a finding of unfairness, based on harshness. The applicant was notified of her dismissal in an email from Mr Hill sent to her when she was on leave on 27 November 2019 (see [1] above). Not for the first time, have I had occasion 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, might pose a serious risk to Company property, 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.’

[113] Pursuant to s 387 of the Act, and in light of the telling factors in favour of such a finding, I am satisfied the applicant’s dismissal was ‘harsh, unjust and unreasonable’, both in substance and procedure. I turn now to remedy.

[114] 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 on the viability of the respondent’s enterprise;

(d) the effect of any order as to any findings of misconduct by the applicant;

(e) the upper limit of compensation; and

(f) specific matters not to be taken into account.

[115] 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.

Appropriate remedy

[116] 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. I do not consider that reinstatement is appropriate in this case, given the appalling treatment of the applicant by the respondent. This finding leads to a consideration of compensation.

[117] 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. In Balaclava Pastoral Co Pty Ltd t/a Australian Hotel Cowra v Nurcombe [2017] FWCFB 429, the Full Bench said 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)

[118] In a more recent Full Bench decision, Hanson Construction Materials Pty Ltd v Pericich [2018] FWCFB 5960 (‘Hanson’), it has been made clear that the Sprigg Formula is not to be applied in a rigid manner. At [39], the Full Bench said:

‘[39] 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)

Effect of the order on the viability of the respondent’s business

[119] Given the order I propose to make, I do not consider that the order will adversely affect Mr Hill’s business (s 392(2)(a)). There was no request for an order of compensation to be paid by instalments (see: s 393 of the Act).

[120] The applicant’s service in the business was four years. This is neither a short nor a lengthy period of service.

[121] The applicant has not obtained alternative employment and is unlikely to do so until the end of the maternity leave she proposes to take.

[122] In accordance with other decisions of the Commission, including my own in Mt Pleasant v McCormick, and accepting Mr Hill’s submission that the reason for her dismissal was redundancy, which he did not consult with her about, I conclude that a further period of two weeks, after the applicant had returned from leave and was due to return to work on 4 December 2019, would have been appropriate to comply with the consultation provisions in the Award.

This equates to 2 weeks at $650 = $1,300.

[123] I make no deduction for contingencies and note the applicant was not entitled by statute (the National Employment Standards) to any redundancy pay based on service of at least eight weeks’ pay, due to the enterprise being a small business. As there was no misconduct of the applicant, there is no deduction made on that score (s 392(3)). The order I intend to make contains no component by way of compensation for shock, distress, humiliation or other analogous hurt (s 394(4)).

[124] In applying the principle in Hanson, and in consideration of all of the circumstances of the case, I consider that the application of the Sprigg formula, produces an inappropriate and unjust outcome.

[125] I consider that an order of ten weeks’ pay, plus 9.5% superannuation, should be made in this case.

CONCLUSION

[126] For the aforementioned reasons, I am satisfied the dismissal of the applicant by the respondent on 27 November 2019 was ‘harsh, unjust and unreasonable’, within the meaning of the Act, for which compensation should be ordered. Finally, s 381(2) of the Act, is a significant and overarching object of Part 3-2 and is expressed in these terms:

381 Object of this Part

(1) The object of this Part is:

(a) to establish a framework for dealing with unfair dismissal that balances:

(i) the needs of business (including small business); and

(ii) the needs of employees; and

(b) to establish procedures for dealing with unfair dismissal that:

(i) are quick, flexible and informal; and

(ii) address the needs of employers and employees; and

(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.

Note: The expression “fair go all round” was used by Sheldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95

ORDERS

[127] Pursuant to s 392 of the Act, I make the following orders:

1. The respondent is to pay the applicant the amount of $6,500 plus $247 in superannuation in respect to her unfair dismissal.

2. The amounts in Order 1 are to be paid within 21 days of today.

3. Proceedings in matter U2019/13275 are otherwise concluded.

DEPUTY PRESIDENT

Appearances:

The applicant appeared for herself

Mr A Hill for the respondent

Hearing details:

2020:

Wollongong

4 March 2020.

Printed by authority of the Commonwealth Government Printer

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