| [2020] FWC 3915 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Rachael Freebairn
v
Dandiie Pty Ltd ATF the DM & IT Moore Family Trust, TJL Business Advisors Pty Ltd ATF the Lumtin Family Trust, and Profitwatch Pty Ltd ATF the Rosemark Trust T/A TJL Business Advisors and Accountants (U2020/4230)
DEPUTY PRESIDENT SAUNDERS |
NEWCASTLE, 27 JULY 2020 |
Application for an unfair dismissal remedy – jurisdictional objection – genuine redundancy – failure to comply with consultation obligations – dismissal unfair – compensation ordered.
[1] Ms Freebairn was employed as an Administrative Assistant by the respondent in a professional financial services partnership trading as TJL Business Advisors and Accountants (TJL) from 21 August 2013 until 22 April 2020. TJL contends that Ms Freebairn’s dismissal was a genuine redundancy within the meaning of s 389 of the Fair Work Act 2009 (Cth) (Act). Ms Freebairn denies that assertion and contends that her dismissal was harsh, unjust and unreasonable.
[2] Ms Freebairn filed her unfair dismissal application in the Fair Work Commission (Commission) against TJL on about 6 April 2020 (Application).
[3] I decided that it was appropriate to hold a determinative conference rather than a hearing in this matter. In making that decision, I had regard to the views of the parties, together with the fact that a determinative conference would be the most effective and efficient way to resolve this matter. The determinative conference was conducted, by telephone, on 20 July 2020.
[4] Ms Freebairn gave evidence at the determinative conference. TJL adduced evidence from Mr Damian Moore, Audit and Assurance Director of TJL.
[5] Section 396 of the Act sets out four matters which I am required to decide before I consider the merits of the Application.
[6] There is no dispute between the parties and I am satisfied on the evidence that:
(a) the Application was made within the period required in s 394(2) of the Act;
(b) Ms Freebairn is a person protected from unfair dismissal; and
(c) TJL did not press its contention that Ms Freebairn’s dismissal was consistent with the Small Business Fair Dismissal Code. That was, in my view, an appropriate concession given that the Small Business Fair Dismissal Code does not capture economic dismissals, including redundancy situations. 1
[7] In relation to the fourth initial matter which I am required to consider, there is a dispute between the parties regarding whether Ms Freebairn’s dismissal was a genuine redundancy. Accordingly, I must decide that question before I consider the merits of the Application.
[8] Section 389 of the Act defines genuine redundancy as follows:
“389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.”
[9] “Associated entity” has the meaning given by s 50AAA of the Corporations Act 2001 (Cth).
[10] It is necessary to determine whether TJL no longer required the job of Ms Freebairn to be performed by anyone because of changes in the operational requirements of TJL’s enterprise. 2
[11] A job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employer’s organisation, to a particular employee”. 3 Where there has been a reorganisation or redistribution of duties, the question is whether the employee has “any duties left to discharge”.4 If there is no longer any function or duty to be performed by that person, their job becomes redundant.5 For example, an employer may redistribute all the tasks done by a particular person between several other employees, resulting in the person’s job no longer existing.
[12] An employee’s job may still be genuinely made redundant when there are aspects of the employee’s duties still being performed by other employees. 6 The test is whether the job previously performed by the employee has survived the restructure or downsizing, not whether the duties have survived in some form.7
[13] The reference to “changes in the operational requirements of the employer’s enterprise” in s 389(1)(a) of the Act includes circumstances where an employer restructures its business to improve efficiency, productivity, sales, revenue or some other aspect of performance. The operational circumstances of a business which may give rise to a redundancy will reside in the direct knowledge of the employer. The evidentiary onus is on the employer to provide direct evidence about the nature of the employee’s job and why it is no longer required to be performed as a result of changes in the operational requirements of the employer’s enterprise.
[14] If a dismissal is found to be a genuine redundancy within the meaning of the Act, issues such as unfair selection procedures for redundancy are not relevant, because they go to the merits of the claim that the applicant was dismissed harshly, unjustly or unreasonably. 8
[15] It is clear on the evidence that there were changes in the operational requirements of TJL’s business in March 2020. In particular, TJL suffered a significant reduction in its revenue as a consequence of the impact of COVID-19 on the businesses of TJL’s clients. As a result, TJL needed to reduce its operational costs. TJL also had a reduction in the work available for administrative staff. These factors meant that TJL needed to reduce the hours of work of its administrative staff. A number of TJL’s administrative staff had their hours of work reduced as a consequence of these changes.
[16] I accept that Ms Freebairn’s duties and responsibilities were divided amongst the remaining administrative staff after the termination of her employment. TJL has recently advertised for a new Administrative Assistant, but that is only because one of its administrative staff recently resigned.
[17] For the reasons set out above, I am satisfied on the balance of probabilities that the real reason for Ms Freebairn’s dismissal was the redundancy of her role as Administrative Assistant and that TJL no longer required Ms Freebairn’s role of Administrative Assistant to be performed by anyone because of changes in the operational requirements of TJL’s enterprise.
[18] For there to be a genuine redundancy within the meaning of s 389 of the Act, TJL must have complied with any obligation in a modern award or enterprise agreement to consult about the redundancy.
[19] There is no dispute between the parties, and I accept on the evidence, that Ms Freebairn was covered by the Clerks – Private Sector Award 2020 (Clerks Award) during her employment with TJL. Clause 38 of the Clerks Award governs consultation. It provides:
“38. Consultation about major workplace change
38.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i) the introduction of the changes; and
(ii) their likely effect on employees; and
(iii) measures to avoid or reduce the adverse effects of the changes on employees; and
(c) commence discussions as soon as practicable after a definite decision has been made.
38.2 For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
38.3 Clause 38.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
38.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).
38.5 In clause 38 significant effects, on employees, includes any of the following:
(a) termination of employment; or
(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c) loss of, or reduction in, job or promotion opportunities; or
(d) loss of, or reduction in, job tenure; or
(e) alteration of hours of work; or
(f) the need for employees to be retrained or transferred to other work or locations; or
(g) job restructuring.
38.6 Where this award makes provision for alteration of any of the matters defined at clause 38.5, such alteration is taken not to have significant effect.”
Relevant facts
[20] On 18 March 2020, a staff meeting was held by TJL with all staff, including Ms Freebairn, to discuss the ongoing impact of COVID-19 on TJL’s business. I accept Mr Moore’s evidence that at that meeting staff were informed that TJL was considering ways to ensure the ongoing viability of its business, TJL foreshadowed that there was a possibility that staff may be directly affected, and TJL advised staff that they would be kept informed as the situation changed and developed. I also accept Ms Freebairn’s evidence that at the 18 March 2020 meeting, Mr Lumtin, one of the partners in the business, informed administrative staff that if there was a lockdown they would be required to take annual leave and would receive annual leave in advance if they did not have sufficient accrued annual leave to take during any lockdown.
[21] A further meeting was held with staff on 23 March 2020. Ms Freebairn did not attend that meeting because she was on annual leave to assist her daughter.
[22] On the morning of 25 March 2020, Mr Moore met with the other two partners in the practice and discussed the impact of COVID-19 on TJL’s business and what options were available to maintain the viability of TJL’s business over the coming months. In that meeting, a decision was made to reduce the hours of administrative staff as a necessary step to address the impact of the pandemic.
[23] At 4:30pm on 25 March 2020, Mr Moore met with Ms Freebairn and Ms Jessica Jugovac, Office Manager of TJL and personal friend of Ms Freebairn, to discuss the impact of the pandemic. Ms Freebairn was the first administrative employee to whom Mr Moore or any of the other partners of the business spoke about the changes that would need to be made to address the impact of COVID-19. Ms Freebairn was spoken to first because she only worked on Monday, Tuesday and Wednesday and Mr Moore knew he would not be able to speak to Ms Freebairn again, in person, until the following week. Ms Freebairn did not ask to have a person other than Ms Jugovac attend the meeting to support her. At the meeting, Mr Moore told Ms Freebairn that COVID-19 was having a significant impact on the business. Mr Moore also told Ms Freebairn that dramatic decisions had to be made to keep the business viable on an ongoing basis. I also accept that Mr Moore informed Ms Freebairn that all administrative staff in the business would be impacted. Mr Moore showed Ms Freebairn calculations he had undertaken which demonstrated that Ms Freebairn would be better off financially if she did not remain in employment with TJL and instead received JobSeeker, which was more than Ms Freebairn’s net weekly pay. Mr Moore explained that this was why Ms Freebairn’s position had been selected for redundancy. Mr Moore asked Ms Freebairn if she had any questions, comments or suggestions, and Ms Freebairn said she did not. Mr Moore then made the decision to terminate Ms Freebairn’s employment on the grounds of redundancy and provided her with a letter stating that she would be on annual leave next week and her employment would terminate on 3 April 2020.
[24] Mr Moore also told Ms Freebairn at the meeting on 25 March 2020 that they had a ‘gentleman’s agreement’ that if the business recovered and TJL could have Ms Freebairn back in employment, then TJL would definitely look to put her back on. The meeting on 25 March 2020 concluded at approximately 4:45pm.
[25] I accept Mr Moore’s evidence that had Ms Freebairn informed him during the meeting on 25 March 2020 that she was interested in exploring the possibility of working reduced hours, instead of being dismissed, then he would have taken any such suggestion into consideration and discussed those options with the other partners in the practice.
[26] There is a dispute on the evidence as to when, during the meeting on 25 March 2020, Mr Moore provided Ms Freebairn with an Employment Separation Certificate. Ms Freebairn contends that Mr Moore provided it to her at the commencement of the meeting on 25 March 2020. Mr Moore says he provided it to her towards the end of the meeting, at the same time as he provided the termination letter to Ms Freebairn. I prefer Mr Moore’s evidence in relation to this issue. It would be an odd decision to provide an employee with an Employment Separation Certificate at the start of a meeting and then provide the termination letter at the end of the meeting. Further, I accept that Mr Moore only provided the termination letter to Ms Freebairn towards the end of the meeting, at which time he made the decision to terminate her employment. I find that Mr Moore did not make an irreversible decision to terminate Ms Freebairn’s employment prior to the meeting on 25 March 2020.
[27] On 27 March 2020, Ms Freebairn sent an email to Mr Moore, taking issue with, inter alia, the requirement for her to use her annual leave in the period leading up to her dismissal. Upon receipt of this email, Mr Moore realised his error and sent a revised termination letter to Ms Freebairn on 2 April 2020, giving her 4 weeks’ notice and informing her that she was not required to work during the notice period. In the result, Ms Freebairn’s employment with TJL came to an end on 22 April 2020.
Consideration re compliance with consultation obligations
[28] TJL accepts, rightly in my view, that it did not comply with its obligation under clause 38.2 of the Clerks Award to provide information, in writing, to Ms Freebairn about the changes, including their nature, expected effect on employees, and any other matters likely to affect employees. The requirement in clause 38.2 is to provide such information, in writing, “for the purposes of the discussion under clause 38.1(b)”. The obvious purpose in providing such information, in writing, to employees is to give them an opportunity to understand the changes and to enable them to make sensible suggestions and ask relevant questions about the changes in the discussions with their employer. Ms Freebairn was not afforded that opportunity in this case.
[29] The letter provided to Ms Freebairn towards the end of the meeting on 25 March 2020 did not meet the requirements of clause 38.2 of the Clerks Award because (a) it was given after the decision had been made to terminate Ms Freebairn’s employment, rather than for the purpose of the discussion required by clause 38.1, and (b) it did not provide all relevant information about the changes, including their nature, expected effect on employees, and any other matters likely to affect employees.
[30] I am also satisfied that TJL did not comply with its consultation obligations under clause 38.1 of the Clerks Award. The trigger for an employer to give notice of changes to employees who may be affected by the changes and to hold discussions with the employees is the making of a “definite decision”. The only “definite decision” made by TJL in this case was the decision it made on the morning of 25 March 2020 to reduce the work hours of administrative staff in response to the COVID-19 pandemic. Accordingly, the discussions TJL had with all staff on 18 March 2020 did not satisfy, or contribute in the satisfaction of, its consultation obligations under clause 38.1 of the Clerks Award because the trigger for the discussions had not occurred, and did not occur until the morning of 25 March 2020.
[31] In the period of about 15 minutes from the commencement of the meeting on 25 March 2020 to the provision of the termination letter to Ms Freebairn towards the end of that meeting, I accept that Mr Moore discussed with Ms Freebairn the introduction of changes, namely reduced work hours for administrative staff, and the reason for those changes, namely COVID-19, but Mr Moore did not discuss with Ms Freebairn measures to avoid or reduce the adverse effects of the changes on employees. This obligation is not met by merely asking employees whether they have any questions, comments or suggestions. Nor is it met by informing an employee, as happened in this case, that the employee will be marginally better off financially by being dismissed and in receipt of JobSeeker payments than by remaining in employment on reduced hours. I accept that Mr Moore genuinely believed that Ms Freebairn would have been marginally better off from a financial perspective by being in receipt of JobSeeker payments. However, Mr Moore accepts that he did not ask or suggest to Ms Freebairn that one potential option available to reduce the adverse effects of the changes on Ms Freebairn was for her to reduce her days of work from three days per week to two days per week. I accept Ms Freebairn’s evidence that she would have accepted such an offer had it been made or suggested to her. It is this kind of option which a proper consultation period, certainly one exceeding 15 minutes, is aimed at achieving. Indeed, this is the kind of solution that TJL reached with other administrative employees in late March 2020.
[32] For the reasons stated, I find that TJL did not comply with its obligations in the Clerks Award to consult with Ms Freebairn about her redundancy.
[33] For the purposes of section 389(2) of the Act, the Commission must consider whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. There must be an appropriate evidentiary basis for such a finding. 9 The word “redeployed” in section 389(2) of the Act should be given its ordinary and natural meaning, which is to “transfer to another job, task or function”.10
[34] If an employer wishes to rely on the “genuine redundancy” exclusion in section 389 of the Act, then it would ordinarily be expected to adduce evidence, on the question of redeployment, as to whether there was a job or a position or other work within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee. Such evidence would usually include the steps taken by the employer to identify other jobs, positions or work which could be performed by the dismissed employee. 11
[35] Whether it would have been reasonable in all the circumstances for the person to be redeployed, directs attention to the circumstances which pertained when the person was dismissed. 12 However, the circumstances leading up to the time the employee was dismissed may, in particular cases (such as where there has been a redeployment period for an employee prior to their dismissal), be relevant to a determination of whether it would have been reasonable in all the circumstances for the employee to have been redeployed.13
[36] In determining whether redeployment would have been reasonable a number of matters may be relevant, including:
(a) whether there exists a job or position or other work to which the employee can be redeployed; 14
(b) the nature of any available position; 15
(c) qualifications required to perform the job; 16
(d) the employee’s skills, qualifications and experience. The employee should have the skills and competence required to perform the role to the required standard either immediately or within a reasonable period of retraining; 17 and
(e) the location of the job in relation to the employee’s residence and the remuneration which is offered. 18
[37] Where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other applicants, it might subsequently be found that the resulting dismissal is not a case of genuine redundancy. 19
[38] It is important, however, to appreciate that, because there is a requirement to assess the reasonableness of redeployment “in all the circumstances”, it is not possible to establish binding or decision rules concerning the application of section 389(2) of the Act in all cases; the circumstances of each particular case must be considered. 20
[39] I accept Mr Moore’s evidence that there were no alternative positions into which Ms Freebairn could have been redeployed in TJL’s enterprise, or the enterprise of any associated entity of TJL, because there were no potentially suitable alternative roles available. Mr Moore’s evidence in that regard is supported by the fact that other administrative staff in TJL’s business had their hours of work reduced in about late March 2020, albeit their hours were increased back to pre-COVID-19 levels after the JobKeeper program came into effect.
[40] Because TJL did not comply with its consultation obligations under clause 38 of the Clerks Award, TJL’s dismissal of Ms Freebairn was not a case of genuine redundancy within the meaning of s 389 of the Act. I therefore reject TJL’s jurisdictional objection to the Application.
Harsh, Unjust or Unreasonable
[41] Because Ms Freebairn’s dismissal was not a genuine redundancy within the meaning of s 389 of the Act, I must take into account, in determining whether the dismissal was harsh, unjust or unreasonable, the matters set out in s 387 of the Act.
Section 387(a) – valid reason related to capacity or conduct
[42] If an employee has been dismissed because of changes to the operational requirements of their employer’s enterprise, the reason for the dismissal will not be related to the employee’s capacity or conduct. It follows that, in those circumstances, there will not be a valid reason for the dismissal related to the employee’s capacity or conduct, and s 387(a) should be regarded as a neutral matter with respect to the question of whether the dismissal was harsh, unjust or unreasonable. 21
[43] However, if the employee was dismissed because of changes to the operational requirements of their employer’s enterprise and it was not reasonable in all the circumstances for the employer to redeploy him or her, they are matters which should be considered under s 387(h) of the Act and are telling against a conclusion that the dismissal was harsh, unjust or unreasonable. 22
[44] For the reasons set out above, I am satisfied that Ms Freebairn was dismissed because of changes to the operational requirements of TJL’s enterprise. Accordingly, s 387(a) is a neutral factor in this case.
Section 387(b) – notification of reason
[45] Section 387(b) relates to notification of “that reason”, being a reason related to the person’s capacity or conduct. 23
[46] Because the reason for the termination of Ms Freebairn’s employment was the redundancy of her job and such a reason is not related to her capacity or conduct, s 387(b) is a neutral factor in relation to the question of whether Ms Freebairn’s dismissal was harsh, unjust or unreasonable. 24
Section 387(c) – opportunity to respond
[47] Section 387(c) is also predicated on there being a reason for dismissal related to the capacity or conduct of the employee. 25
[48] It follows that s 387(c) is a neutral factor in relation to the question of whether Ms Freebairn’s dismissal was harsh, unjust or unreasonable. 26
Section 387(d) – support person
[49] TJL did not unreasonably refuse to allow Ms Freebairn to have a support person present to assist at any discussions relating to her dismissal. Ms Jugovac was present during Ms Freebairn’s discussion with Mr Moore on 25 March 2020. Although Ms Jugovac was the Office Manager of TJL, I consider that she was an appropriate support person because she was a personal friend of Ms Freebairn. In any event, Ms Freebairn did not request that a support person other than Ms Jugovac be present during her meeting with Mr Moore on 25 March 2020. Accordingly, s 387(d) is a neutral factor in relation to the question of whether Ms Freebairn’s dismissal was harsh, unjust or unreasonable. 27
Section 387(e) – warning about unsatisfactory performance
[50] Ms Freebairn’s dismissal did not relate to any unsatisfactory performance by her. It follows that s 387(e) is also a neutral factor in relation to the question of whether Ms Freebairn’s dismissal was harsh, unjust or unreasonable. 28
Section 387(f)&(g) – size of enterprise and dedicated human resource management specialists
[51] TJL is a relatively small employer. It did not have any dedicated human resource management specialists or expertise in its enterprise at the time it decided to terminate Ms Freebairn’s employment on the grounds of redundancy. In my view, these matters had an impact on the procedures followed in effecting Ms Freebairn’s dismissal. In particular, I accept that Mr Moore had Ms Freebairn’s best financial interests in his mind when he undertook calculations to determine whether Ms Freebairn would have been better off on JobSeeker than in employment with TJL on reduced hours. However, in the context of a relatively small business, the absence of human resource expertise resulted in the consultation discussions being very short and not exploring the measures that might have been available to avoid or reduce the adverse effect of TJL’s need to reduce the hours of work of its administrative staff. In all the circumstances, I accept TJL’s argument that these factors (s 387(f) & (g)) weigh, to some extent, in support of TJL’s argument that Ms Freebairn’s dismissal was not harsh, unjust or unreasonable.
Section 387(h) – other relevant matters
[52] Ms Freebairn was employed by TJL for about six and a half years. There is no suggestion that there were any deficiencies in her performance or conduct. This weighs in Ms Freebairn’s favour, as does the fact that the financial impact of Ms Freebairn’s dismissal has been significant. Ms Freebairn has not obtained alternative employment following her dismissal. She has withdrawn money from her superannuation fund to live on since her dismissal. Ms Freebairn has not applied for JobSeeker or other government payments because she believed that such payments may have impacted her unfair dismissal claim or other alleged entitlements to redundancy pay, long service leave and annual leave loading. Ms Freebairn was informed during the determinative conference that her claims in relation to those entitlements are not within the jurisdiction of the Commission.
[53] There were sound, defensible and well-founded reasons for Ms Freebairn’s dismissal, namely TJL no longer required Ms Freebairn’s job to be performed by anyone because of changes to the operational requirements of TJL’s enterprise. Those changes were, in my view, both rational and justified; they were made in a bona fide attempt to reduce costs in circumstances where TJL had suffered a significant reduction in its revenue as a consequence of the impact of COVID-19 on its clients. Further, there were no reasonable redeployment opportunities available for Ms Freebairn. These matters weigh against a conclusion that the dismissal was harsh, unjust or unreasonable. 29
[54] TJL’s material failure to comply with its consultation obligations under the Clerks Award is also a relevant matter which should be considered pursuant to s 387(h) of the Act. 30 However, a failure to consult does not necessarily mean a dismissal was harsh, unjust or unreasonable.31 The weight to be given to a failure to consult depends primarily on the degree to which, if any, the absence of proper consultation led to any unfairness in practice.32
[55] Unlike the situation in cases such as Maswan (at [39]) and Smith v Alice Care Care Centre Pty 33 (at [53]), I am not satisfied in the particular circumstances of this case that if consultation in accordance with the requirements of the Clerks Award had occurred, “it would have made no difference to the ultimate outcome”.34 Had proper and meaningful consultation taken place with Ms Freebairn in accordance with the requirements of clause 38 of the Clerks Award, I am satisfied on the balance of probabilities that either Ms Freebairn or TJL would have suggested or proposed the option of Ms Freebairn reducing her days of work from 3 per week to 2 per week and TJL would have put such alternative arrangements in place, with the result that Ms Freebairn would have retained her employment with TJL, just as other administrative staff employed by TJL did.
[56] Further, I am satisfied that a proper consultation period would have extended to at least the end of March 2020, at which time the JobKeeper scheme was announced. 35 Mr Moore gave evidence that if “JobKeeper had been announced before these discussions took place [on 25 March 2020], it is possible that there would have been a different outcome”.36 Mr Moore also gave evidence that TJL qualified for the JobKeeper scheme and its administrative staff who had had their hours of work reduced at the end of March 2020 subsequently had their pre-COVID-19 hours of work restored and they received their usual wage (assuming it was higher than the JobKeeper allowance), paid by TJL but contributed towards by the federal government. I am satisfied that if TJL had complied with its consultation obligations under clause 38 of the Clerks Award, Ms Freebairn would have been returned to her 3 days per week from early April 2020 and received payment equal to the $1,500 JobKeeper allowance each fortnight, which is higher than Ms Freebairn’s usual gross fortnightly remuneration.37 Having regard to these matters, I find that if TJL had complied with its consultation obligations under the Clerks Award, it would have made a considerable difference to the ultimate outcome – Ms Freebairn would have remained in employment and received the JobKeeper allowance, rather than be dismissed. This weighs in favour of Ms Freebairn’s contention that her dismissal was unfair in all the circumstances.
[57] In assessing the fairness of Ms Freebairn’s dismissal, I have also taken into account the fact that in about late March 2020, TJL, like very many businesses and employees, was enduring a difficult, uncertain and stressful time as a consequence of the impact of COVID-19. TJL was required to make difficult decisions to address a significant decline in its revenue, while also managing the health and welfare of its employees at work. This meant that decisions were made quickly and processes that would otherwise have taken a longer period of time were truncated.
Conclusion on harsh, unjust or unreasonable dismissal
[58] After considering each of the matters specified in s 387 of the Act, my evaluative assessment is that TJL’s dismissal of Ms Freebairn was harsh and unreasonable. Although TJL had a valid reason to reduce the hours of administrative staff and it was dealing with a very difficult situation in late March 2020, TJL’s failure to comply with its consultation obligations in relation to Ms Freebairn meant that reasonable and fairly obvious measures to address the adverse effects of the need to reduce the hours of administrative staff were not discussed with Ms Freebairn. In the result, Ms Freebairn was dismissed in circumstances where I am satisfied on the balance of probabilities that compliance with TJL’s consultation obligations would have resulted in Ms Freebairn remaining in employment for a period of time, supported by the JobKeeper program which was announced by the government in late March 2020.
Remedy
[59] Having found that Ms Freebairn was protected from unfair dismissal, and that her dismissal was harsh and unreasonable, it is necessary to consider what, if any, remedy should be granted to her. Ms Freebairn did not seek the remedy of reinstatement. I accept that it would be inappropriate to reinstate Ms Freebairn in all the circumstances, particularly in light of the reduced need for administrative staff in TJL’s business arising from the closure of its Taree office and the obvious breakdown in trust and confidence between Ms Freebairn and TJL following her dismissal. I will address the impact of the closure of the Taree office further below.
[60] Section 390(3)(b) of the Act provides the Commission may only issue an order for compensation if it is appropriate in all the circumstances. A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied. 38
[61] Having regard to all the circumstances of the case, including the fact that Ms Freebairn has suffered financial loss as a result of her unfair dismissal, I consider that an order for payment of compensation to her is appropriate.
[62] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms Freebairn. In assessing compensation, I am required by s 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection.
[63] I will use the established methodology for assessing compensation in unfair dismissal cases which was set out in Sprigg v Paul Licensed Festival Supermarket 39 and applied and elaborated upon in the context of the current Act by Full Benches of the Commission in a number of cases.40 The approach to calculating compensation in accordance with these authorities is as follows:
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
Step 5: Apply the legislative cap on compensation.
Remuneration Ms Freebairn would have received, or would have been likely to receive, if she had not been dismissed (s 392(2)(c))
[64] Like all calculations of damages or compensation, there is an element of speculation in determining an employee’s anticipated period of employment because the task involves an assessment of what would have been likely to happen in the future had the employee not been dismissed. 41
[65] I am satisfied on the balance of probabilities that if Ms Freebairn had not been dismissed on the grounds of redundancy on 22 April 2020, which was the conclusion of her notice period, she would have been given four weeks’ notice of termination on the grounds of redundancy on 20 April 2020, such that her employment would have terminated at the conclusion of the four week notice period on 18 May 2020. My reasons for making this finding are as follows.
[66] First, for the reasons stated above, I am satisfied that if TJL had complied with its consultation obligations Ms Freebairn would have remained working for TJL after 25 March 2020. In particular, I am satisfied that a proper consultation process would have resulted in Ms Freebairn having her days of week reduced from three days a week to two days a week, as happened with other administrative staff. In addition, consistent with the experience of other administrative staff employed by TJL, once the JobKeeper package was announced in late March 2020, I am satisfied on the balance of probabilities that from early April 2020 Ms Freebairn would have had her days of work increased back to three days per week and she would have received payment of $1,500 per fortnight, equivalent to the JobKeeper allowance, which was more than her usual gross remuneration of $1,152.18 per fortnight (for three days work a week).
[67] Secondly, prior to the impact of COVID-19, TJL had made a decision to close its Taree office on 30 June 2020. As a consequence of the impact of COVID-19 on TJL’s business, it made a decision to close its Taree office at an earlier time. Mr Moore explained in his oral evidence that TJL ceased using its Taree office by the end of April 2020. TJL’s written submissions stated that TJL “needed to close its Taree office and this office did close on and from 18 May 2020 to reduce outgoing expenses”. 42 Ms Freebairn worked at both TJL’s Taree office and its Forster office. Earlier in 2020, Ms Freebairn worked at least two days a week at the Taree office and the balance of her hours at the Forster office. As worked wound down at the Taree office, Ms Freebairn worked one day a week at the Taree office and two days a week at the Forster office. Mr Moore gave evidence, which I accept, that the closure of the Taree office reduced TJL’s need for administrative staff. Mr Moore also gave evidence that the likelihood is that Ms Freebairn’s job would have been made redundant by the end of April 2020 had a decision not been made in late March 2020 to make her position redundant. Having regard to Ms Freebairn’s work at the Taree office and the need for TJL to reduce its administrative staff on the closure of the Taree office, I accept that the closure of the Taree office would have resulted in the redundancy of Ms Freebairn’s position. As to the timing of that decision, TJL ceased to use its Taree office by the end of April 2020 and it closed the office on 18 May 2020. In my view, it is more likely than not that TJL would have made its decision in mid April 2020 to make Ms Freebairn’s position redundant and would have given Ms Freebairn four weeks’ notice of termination on 20 April 2020, such that her employment would have terminated at the conclusion of the four week notice period on 18 May 2020, being the date the Taree office was closed. It is possible that Ms Freebairn could have been kept in employment by TJL after 18 May 2020 and paid an amount equivalent to the JobKeeper allowance of $1,500 per fortnight, but TJL had no ongoing need for an additional administrative employee and I satisfied on the balance of probabilities that TJL would have been likely to bring Ms Freebairn’s employment to an end on the grounds of redundancy on 18 May 2020.
[68] In the period from the commencement of the JobKeeper scheme on 1 April 2020 until the termination of her employment on 22 April 2020, Ms Freebairn would have received a payment of $1,500 per fortnight (equivalent to the JobKeeper allowance) had she remained working for TJL. In addition, during the period from 23 April 2020 until the alternative termination dated of 18 May 2020, Ms Freebairn would have received a payment of $1,500 per fortnight (equivalent to the JobKeeper allowance). The period from 1 April 2020 until 18 May 2020 is 6 weeks and 5 days. Accordingly, $5,032.50 (6.71 weeks x $750/week = $5,032.50) is the remuneration that Ms Freebairn would have received, or would have been likely to receive, if she had not been dismissed.
Remuneration earned (s 392(2)(e)) and income reasonably likely to be earned (s 392(2)(f))
[69] In the period from 1 April 2020 until 22 April 2020, Ms Freebairn received her usual gross remuneration of $1,152.18 per fortnight. That equates to 3.2 weeks at $576.09 per fortnight = $1,843.49. That is the only remuneration Ms Freebairn received from 1 April 2020 until 18 May 2020.
[70] Thus, my view is that $3,189.01 is the gross amount of remuneration Ms Freebairn would likely have earned had she not been dismissed by TJL and instead continued to be employed by TJL until the conclusion of a four week notice period commencing on 20 April 2020 and concluding on 18 May 2020 ($5,032.50 - $1,843.49 = $3,189.01). This calculation is intended to put Ms Freebairn in the position she would have been in but for the termination of her employment. 43
Viability (s 392(2)(a))
[71] No submission was made on behalf of TJL that any particular amount of compensation would affect the viability of TJL’s enterprise.
[72] My view is that no adjustment will be made on this account.
Length of service (s 392(2)(b))
[73] My view is that Ms Freebairn’s period of service with TJL (about 6.5 years) does not justify any adjustment to the amount of compensation.
Mitigation efforts (s 392(2)(d))
[74] The evidence establishes that Ms Freebairn made reasonable efforts to obtain alternative employment following her dismissal on 22 April 2020. In particular, Ms Freebairn sought employment within her region but, unsurprisingly in the current environment, has not been able to obtain alternative employment.
[75] In all the circumstances, my view is that Ms Freebairn acted reasonably to mitigate the loss suffered by her because of the dismissal and I do not consider it appropriate to reduce the compensation on this account.
Any other relevant matter (s 392(2)(g))
[76] It is necessary to consider whether to discount the remaining amount ($3,189.01) for “contingencies”. This step is a means of taking into account the possibility that the occurrence of contingencies to which Ms Freebairn was subject might have brought about some change in earning capacity or earnings. 44 Positive considerations which might have resulted in advancement and increased earnings are also taken into account.
[77] The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision. 45
[78] Because I am looking in this matter at an anticipated period of employment which has already passed (until 18 May 2020), there is no uncertainty about Ms Freebairn’s earnings, capacity or any other matters during that period of time.
[79] In all the circumstances, my view is that it is not appropriate to discount or increase the figure of $3,189.01 for contingencies.
[80] Save for the matters referred to in this decision, my view is that there are no other matters which I consider relevant to the task of determining an amount for the purposes of an order under s 392(1) of the Act.
[81] I have considered the impact of taxation, but my view is that I prefer to determine compensation as a gross amount and leave taxation for determination.
Misconduct (s 392(3))
[82] Ms Freebairn did not commit any misconduct, so my view is that this has no relevance to the assessment of compensation.
Shock, distress or humiliation, or other analogous hurt (s 392(4))
[83] I note that in accordance with s 392(4) of the Act, the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation cap (s 392(5)-(6))
[84] The amount of $3,189.01 is less than half the amount of the high income threshold immediately before the dismissal. It is also less than the total amount of remuneration to which Ms Freebairn was entitled in her employment with TJL during the 26 weeks immediately before her dismissal. In those circumstances, my view is that there is no basis to reduce the amount of $3,189.01 by reason of s 392(5) of the Act.
Instalments (s 393)
[85] No application has been made to date by TJL for any amount of compensation awarded to be paid in the form of instalments.
[86] In my view, the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate. Accordingly, my view is that there is no basis for me to reassess the assumptions made in reaching the amount of $3,189.01. 46
[87] For the reasons I have given, my view is that a remedy of compensation in the sum of $3,189.01 (less taxation as required by law) in favour of Ms Freebairn is appropriate in the circumstances of this case. An order will be made to that effect [PR721284].
DEPUTY PRESIDENT
Appearances:
Ms Freebairn, appearing on behalf of herself
Mr S Penning, Solicitor, appearing on behalf of TJL
Hearing details:
2020.
Newcastle (telephone):
20 July 2020.
Printed by authority of the Commonwealth Government Printer
<PR721283>
1 Groszek v Toyvision International Pty Ltd [2015] FWC 697 at [37]
2 Section 389(1)(a) of the Act
3 Jones v Department of Energy and Minerals (1995) 60 IR 304 (Jones) at 308 per Ryan J; applied in Ulan Coal Mines Limited v Howarth [2010] FWAFB 3488; (2010) 196 IR 32 (Ulan Coal 1) at [17]
4 Ibid
5 Ibid
6 Dibb v Commissioner of Taxation (2004) 136 FCR 388 at 404-5
7 Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27] per Hamberger SDP
8 Johnston v Blue Circle Southern Cement Pty Ltd (2010) 202 IR 121 at [48]
9 Technical and Further Education Commission T/A TAFE NSW v Pykett [2014] FWCFB 714; (2014) 240 IR 130 (TAFE) at [36]
10 Ibid at [25]
11 Ibid at [36]-[37]; Teterin & Ors v Resource Pacific Pty Limited t/a Ravensworth Underground Mine [2014] FWCFB 4125; (2014) 244 IR 252 (Teterin) at [28]-[29]
12 TAFE at [24] & [35]; Ulan Coal Mines Ltd v Honeysett [2010] FWAFB 7578; (2010) 199 IR 363 (Ulan Coal 2) at [28]
13 Bhalla v Welltech Total Water Management [2014] FWC 7565 at [55]
14 Ulan Coal 2 at [28]
15 Ibid at [28]
16 Ibid at [28]
17 Ibid at [28] & [34]
18 Ibid at [28]
19 Ibid at [34]
20 Teterin at [35]
21 UES (Int’l) Pty Ltd v Harvey [2012] FWAFB 5241 (UES) at [42]; Ventyx Pty Ltd v Murray [2014] FWCFB 2143 (Ventyx) at [142]
22 UES at [33] & [47]
23 UES at [43]; Ventyx at [143]
24 UES at [43]; Ventyx at [143]
25 UES at [43]; Ventyx at [144]
26 UES at [43]; Ventyx at [144]
27 UES at [44]
28 UES at [45]; Ventyx at [146]
29 UES at [33] & [47]; Ventyx at [149]-[150]
30 UES at [48]
31 UES at [49]; Maswan at [39]; Ventyx at [151]-[162]
32 Gomes v OE & DR Pope Pty Ltd [2014] FWC 8342 at [59] per Hampton C
33 Ltd [2013] FWC 9093 (Alice Car Care Centre)
34 Alice Car Care Centre at [53]
35 Ex R2 at [70]
36 Ex R2 at [59]
37 Ex R1 at p11
38 Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17]
39 (1998) 88 IR 21
40 Tabro Meat Pty Ltd v Heffernan [2011] FWAFB 1080; Read v Golden Square Child Care Centre [2013] FWCFB 762; Bowden v Ottrey Homes Cobram [2013] FWCFB 431
41 Double N Equipment Hire Pty Ltd v Humphries [2016] FWCFB 7206 at [16]-[17]
42 TJL’s written submissions dated 7 July 2020 at [10]
43 Bowden at [24], citing Ellawala v Australian Postal Corporation Print S5109 at [35]
44 Ellawala v Australian Postal Corporation Print S5109 at [36]
45 Enhance Systems Pty Ltd v Cox PR910779 at [39]
46 Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [32]