| [2020] FWCFB 6117 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
Joao Miguel Ferreira Caldas da Costa
v
EIM Training Pty Ltd
(C2020/4807)
VICE PRESIDENT HATCHER |
SYDNEY, 24 NOVEMBER 2020 |
Appeal against decision [2020] FWC 2926 of Commissioner Simpson at Brisbane on 10 June 2020 in matter number U2019/10069.
[1] Mr Joao Miguel Ferreira Caldas da Costa has lodged an appeal, for which permission to appeal is required, against a decision of Commissioner Simpson issued on 10 June 2020 1 (decision) in which the Commissioner granted Mr da Costa’s application for an unfair dismissal remedy against EIM Training Pty Ltd (EIM Training). The Commissioner determined that Mr da Costa’s dismissal was unfair, declined to order the remedy of reinstatement, which was not sought by Mr da Costa, and instead ordered that he be paid compensation in two instalments to the amount of $21,374.00 gross, taxed according to law and 9.5% superannuation.2 Mr da Costa contends in his appeal that the Commissioner erred in his consideration and calculation of the compensation amount awarded.
[2] In circumstances where the current COVID-19 pandemic limits the capacity of the Commission from conducting in-person hearings, the Commission inquired of the parties whether they were prepared to have the question of permission to appeal and the merits of the appeal determined on the basis of written submissions and without conducting a hearing. Both parties consented to this course. It was considered that the question of permission to appeal and the merits of the appeal could be adequately determined without the parties making oral submissions for consideration. Accordingly, the appeal has been conducted without holding a hearing pursuant to s 607(1) of the Fair Work Act 2009 (Cth) (FW Act).
[3] Briefly, the background to the matter is as follows. Mr da Costa was employed by EIM Training as a Trainer and Assessor - Electro Technology from 3 June 2013. He was summarily dismissed for serious misconduct at a meeting on 9 September 2019. He was provided a termination letter later that day.
[4] In the decision under appeal, the Commissioner found that Mr da Costa’s dismissal was harsh, unjust and unreasonable “on the basis that EIM did not have a valid reason and also failed to afford Mr da Costa procedural fairness in the manner in which it arrived at the decision to dismiss him”. 3
[5] In determining the appropriate unfair dismissal remedy, the Commissioner first noted that Mr da Costa did not seek reinstatement and instead sought financial compensation, including for notice he was not given. The Commissioner was satisfied on the facts of the case that reinstatement would be inappropriate. 4
[6] The Commissioner then turned to determining the appropriate compensation. In doing so, he applied the formula in Sprigg v Paul's Licensed Festival Supermarket 5 (Sprigg formula) and took into account the matters requiring consideration under s 392 to assess compensation in the following manner:
(1) He estimated that, had Mr da Costa not been dismissed, he would have remained in employment for at least a further 12 weeks, and would have earned $23,532.00 (12 x $1,961). His estimate in this regard was based on the deterioration of the employment relationship between the parties. 6
(2) He deducted $2,158 from this amount for remuneration earned by Mr da Costa in the six months following his dismissal. 7 The Commissioner said in this respect:
“[153] Mr da Costa said that in the six months following his dismissal the only income he has earned was on 25 February 2020, in the amount of $2,158.00. That amount deducted from $23,532.00 equals $21,374.”
(3) The compensation amount was to be paid in two separate instalments, given the financial challenges faced by EIM Training at that time and due to “the fact of Mr Bottrall having suffered a major injury and being unable to assist Ms Bottrall in managing the business at this difficult time”. 8
(4) No adjustments were made for income reasonably likely to be earned by Mr da Costa between the making of the order and actual compensation, Mr da Costa’s efforts to mitigate the loss, or his length of service. The Commissioner also determined that it was not necessary to make deductions on account of the compensation cap or for engaging in misconduct, as neither of these considerations were applicable in the matter. 9
[7] In respect of the deterioration of the employment relationship, the Commissioner said:
“…It should be noted that Mr da Costa had been employed by EIM for a considerable period, however it is also the case that in the months leading up to the termination of Mr da Costa the relationship between Mr da Costa and EIM was becoming increasingly sour. Whilst the written warning issued in August was not generally relied upon by EIM to support the decision to terminate Mr da Costa, the issue that was the subject of the warning does point to increasing tension between Mr da Costa and his employer.
[145] The evidence also indicates that as Mr da Costa had not agreed to sign a new contract of employment, all issues between the parties in relation to working hours going forward were not settled.
[146] Mr da Costa gave evidence that he told Mr Bottrall at the meeting on 9 September 2019 that his wife had made the complaint to ASQA. Ms Moniz remains an employee of EIM however it seems from the evidence of Ms Bottrall the question of what disciplinary measures EIM intends to take in regard to Ms Moniz remain in abeyance whilst Ms Moniz is on maternity leave. Had Mr da Costa not been dismissed on 9 September 2019, and EIM turned its attention to Ms Moniz at that time instead that is likely to have also increased the tension in relationship between Mr da Costa and EIM.
[147] It is also apparent that EIM holds a view that Mr da Costa and his wife have enjoyed a windfall they were not entitled through the TOIL arrangement that operated from 2017 until 2019. Whilst it is not a matter for these proceedings EIM made reference to potential recovery proceedings against Mr da Costa in its material filed. This would also have remained an ongoing issue had Mr da Costa remained in employment and was likely to put further pressure on the employment relationship.”
[8] The Commissioner determined that the compensation amount was to be calculated on the rate of $1,961.00 gross per week according to Mr da Costa’s contract of employment, given that EIM Training had foreshadowed an intention to change the hours of work arrangements and due to the uncertainty of overtime payments continuing. Mr da Costa disputed this amount, submitting he earned $10,000 more than the contracted amount in the previous financial year. He also submitted that he earned $61,592.00 ($2,368 per week) in the six months prior to his termination, including overtime. 10
[9] Mr da Costa’s appeal grounds, in summary, contend that the Commissioner erred in the following respects:
(1) in concluding that he would have remained in employment for a further 12 weeks and accordingly setting 12 weeks’ pay as the base value for the assessment of compensation in circumstances where Mr da Costa believed he would have remained in employment until June 2023, which was not challenged by EIM Training;
(2) in incorrectly applying the Sprigg formula to determine appropriate compensation, as the Commissioner had deducted $2,158 in earnings from the compensation amount obtained by casual employment which commenced on 25 February 2020 (24 weeks after the dismissal);
(3) in excluding the last two days of Mr da Costa’s employment in the calculation of compensation for which, he had contended and EIM Training did not dispute, he had not been paid;
(4) in determining the anticipated period of employment had Mr da Costa not been dismissed when compared to past decisions of the Commission;
(5) in determining the amount of compensation awarded compared to a “fair redundancy where the Employer acted in goodwill and followed the legislation and laws”; and
(6) in determining the amount of compensation on a weekly base rate of $1,961 as opposed to the amount contended by Mr da Costa ($2,368), which was not in dispute between the parties.
[10] In his appeal submissions, Mr da Costa submits that:
• permission to appeal should be granted because the decision “sets a dangerous precedent” in that it would allow EIM Training to summarily dismiss other employees and not follow correct procedures on dismissal with little consequence, manifests a clear injustice, misapplies the Sprigg formula, and is inconsistent with other decisions of the Commission;
• he had intended to remain in his employment with EIM Training until June 2023 (194 weeks), when he would have become entitled to long service leave, and this assertion was not addressed in EIM Training’s submissions or witness statements so should have been adopted by the Commissioner as it was not in dispute;
• the casual employment he commenced on 25 February 2020 should not have been taken into account, as it is “extremely unlikely the applicant would have left his job at EIM training in the 43 weeks after dismissal and thus any value less than 44 should not be awarded and should be considered a significant error of fact” (underlining in original);
• the Commissioner had made a significant error of fact in deducting the $2,158 earned during Mr da Costa’s casual employment, as these earnings do not fall within step two of the Sprigg formula: “remuneration earned by the employee since their dismissal until the end of the anticipated period of employment” (underlining added). The anticipated period of employment was determined to be 12 weeks, and Mr da Costa noted that he did not commence this casual employment until 25 February 2020, which was 24 weeks after his dismissal;
• the last two days of his employment remain unpaid and should have been included in the compensation amount, and this fact was not in dispute between the parties;
• when compared to past decisions of the Commission in similar cases, the compensation amount is plainly unjust, particularly in circumstances where he was found to not have engaged in any misconduct, he worked for EIM Training for more than six years, and he was paid no notice;
• had he been made redundant instead, he would have received a greater monetary amount, as the National Employment Standards stipulate that he would have been entitled to 11 weeks redundancy pay and 4 weeks of notice;
• the Commissioner should have used the base salary ($2,368 per week) he proposed to calculate the amount of compensation owed, which was not in dispute; and
• EIM Training still operates classes that require overtime from their trainers and Mr Bottrall had claimed he would continue to pay overtime.
[11] In respect of the anticipated period of employment determined by the Commissioner, Mr da Costa submits that the following cases demonstrate he should have been awarded more than 12 weeks:
• Horn v Shark Lake Food Group Pty Ltd 11 – the anticipated period of employment was determined as 8 months, in circumstances where the applicant had been employed for a period of less than 4 years and had some obvious conflict with his employer; and
• Dawson v Railway Transport Services Pty Ltd t/a Cartage Australia 12 - the anticipated period of employment was determined as 6 months, in circumstances where the applicant had a level of dissatisfaction with his work and had been employed for a period less than 7 months.
[12] EIM Training submitted in response:
• permission to appeal should be refused because the appeal is not in the public interest and does not identify any significant error of fact in the decision but rather expresses an overall dissatisfaction with the compensation awarded;
• Mr da Costa had not demonstrated a significant error of fact;
• no cogent reasons were identified to substantiate the submission that that the Commissioner was wrong to have relied on the factors he identified in determining Mr da Costa’s anticipated period of employment had he not been dismissed;
• the determination of the anticipated period of employment is a speculative element, as was noted by the Commissioner in the decision, and in any event, Mr da Costa did not give evidence that he would have continued to work for EIM Training until June 2023 and failed to address the increasing tension between the parties in making this estimate;
• in respect of the alleged error in deducting remuneration earned since dismissal, there was no evidence before the Commissioner to support that the amount earned by Mr da Costa in his casual employment was after the end of the anticipated of employment;
• in respect of the alleged error in not including two days of unpaid wages, Mr da Costa had claimed he was “on call” for the last two days of his employment, no particularity was given in his evidence before the Commissioner as to the work he was actually performing at this time, and the Commissioner was correct to disregard this element of Mr da Costa’s claim;
• in any event, the deductions made to the compensation amount are “relatively modest” and do not give rise to a significant error or fact;
• the two cases cited by Mr da Costa turned on their own facts, and the legal principles applied by the Members in those cases are not disharmonious with those applied by the Commissioner nor do they represent a diversity of decisions requiring guidance from the Full Bench;
• the submission alleging error in determining Mr da Costa’s base salary is misleading and should not be accepted because the base value proposed by the appellant (being $2,368 per week) was expressly disputed by EIM Training at the hearing before the Commissioner; and
• the Full Bench should be particularly cautious in permitting appeals on the question of quantum only, such as this appeal matter, to “promote the finality of litigation in relation to all issues”.
[13] An appeal under s 604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker.13 There is no right to appeal and an appeal may only be made with the permission of the Commission.
[14] This appeal is one to which s 400 of the FW Act applies. Section 400 provides:
(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.
[15] In the Federal Court Full Court decision in Coal & Allied Mining Services Pty Ltd v Lawler and others, 14 Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s 400 as “a stringent one”. The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.15 A Full Bench of the Commission, in GlaxoSmithKline Australia Pty Ltd v Makin, identified some of the considerations that may attract the public interest:
“… the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 16
[16] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.17 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.18
[17] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal. 19 However it is necessary to engage with those grounds to consider whether they raise an arguable case of appealable error.
[18] We consider that, in respect of the second contention of error identified in paragraph [9] above, the grant of permission would be in the public interest because Mr da Costa has identified a patent error of principle in the Commissioner’s assessment of compensation. It is well established that “Monies earned after the end of the ‘anticipated period of employment’ … are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.” 20 As earlier set out, the Commissioner in paragraph [153] of the decision deducted $2,158.00 from the compensation amount on the basis of Mr da Costa’s evidence that he earned this amount on 25 February 2020. This was outside the anticipated period of employment, since Mr da Costa was dismissed on 9 September 2019 and the period of further employment but for the dismissal was assessed by the Commissioner as being only 12 weeks. The deduction of this amount was therefore an error. In respect of this ground of the appeal, we grant permission to appeal and uphold the appeal.
[19] In respect of the other contentions of error set out in paragraph [9] above, we do not consider that the grant of permission to appeal would be in the public interest because these contentions lack sufficient merit and raise no question of law, principle or general application. The first and fourth contentions concern the Commissioner’s assessment of the anticipated period of further employment but for the dismissal for the purpose of the s 392(2)(c) compensation criterion. The assessment required involves elements of speculation and conjecture, since it is necessarily based on a counter-factual scenario and requires the exercise of an evaluative judgment. 21 Mr da Costa has not demonstrated any reasonably arguable case of appealable error in the Commissioner’s assessment in this respect. Mr da Costa’s subjective belief as to how long he would have remained in employment if not dismissed cannot be determinative in circumstances where an objective assessment is required. Nor are decisions of the Commission in which the anticipated period of employment was assessed based on particular facts demonstrative of any error in the decision under appeal.
[20] The third contention of error involves, as we comprehend it, an allegation of non-payment of wages for two days prior to the termination of Mr da Costa’s employment taking effect. This has no relevance to the assessment of compensation for loss arising from Mr da Costa’s dismissal. The fifth contention has no merit. Mr da Costa was not dismissed because his position became redundant, and there is no basis for the compensation amount to be assessed by reference to the redundancy payment he might have received had he been made redundant. In relation to the sixth contention of error, the Commissioner made it plain in paragraph [149] of the decision that he understood that Mr da Costa’s earnings in the six months prior to his dismissal included a substantial amount of overtime, but in paragraph [150] set out the reasons why he considered it unlikely that this would have continued had Mr da Costa not been dismissed, and on that basis determined in paragraph [151] that he would assess anticipated earnings by reference to Mr da Costa’s base contractual rate of remuneration. No arguable case of error in this reasoning process has been identified.
Conclusion
[21] In respect of the second contention of error set out in paragraph [9] above, we grant permission to appeal and uphold the appeal. We consider that the appropriate course to rectify the error identified is to make a further order, pursuant to s 607(3)(b) of the FW Act, for EIM Training Pty Ltd to pay Mr da Costa the amount incorrectly deducted by the Commissioner, namely $2,158.00 (less any tax required to be deducted by law) and superannuation contributions of $205.00 in respect of that amount. An order to this effect is issued in conjunction with this decision.
[22] Because we are not satisfied that the grant of permission to appeal in respect of the other contentions of error set out in paragraph [9] above would be in the public interest, permission to appeal must be refused in accordance with s 400(1).
VICE PRESIDENT
Determined on the basis of written submissions:
Mr da Costa – 10 and 27 July 2020.
EIM Training – 24 July 2020.
Printed by authority of the Commonwealth Government Printer
<PR724555>
3 [2020] FWC 2926 at [139]
4 Ibid at [141]
5 Print R0235, (1998) 88 IR 21
6 [2020] FWC 2926 at [144], [148] – [151]
7 Ibid at [153]
8 Ibid at [162]
9 Ibid at [154] – [156], [160]
10 Ibid at [149] – [152]
13 This is so because on appeal the Commission has power to receive further evidence, pursuant to s 607(2); see Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47, 203 CLR 194, 99 IR 309 at [17] per Gleeson CJ, Gaudron and Hayne JJ
14 [2011] FCAFC 54, 192 FCR 78, 207 IR 177 at [43]
15 O’Sullivan v Farrer [1989] HCA 61, 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch [2011] HCA 4, 243 CLR 506 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54, 192 FCR 78, 207 IR 177 at [44]-[46]
16 [2010] FWAFB 5343, 197 IR 266 at [27]
17 Wan v AIRC [2001] FCA 1803, 116 FCR 481 at [30]
18 Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089, 202 IR 388 at [28], affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler [2011] FCAFC 54, 192 FCR 78, 207 IR 177; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663, 241 IR 177 at [28]
19 Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]
20 Ellawala v Australian Postal Corporation Print S5109, [2000] AIRC 1151. See also Bowden v Ottrey Homes Cobram and District Retirement Villages [2013] FWCFB 431, 229 IR 6 at [34] and Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206 at [19]
21 See Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206 at [16]-[17]