[2010] FWAFB 8868 |
FAIR WORK AUSTRALIA |
REASONS FOR DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
SENIOR DEPUTY PRESIDENT KAUFMAN |
MELBOURNE, 2 DECEMBER 2010 |
Appeal against decision [2010] FWA 7385 of Commissioner Williams in relation to an application seeking an unfair dismissal remedy - permission - whether in the public interest - whether dismissal at initiative of employer - whether compensation excessive or unreasonable.
Background
[1] This is an application by Industrial Automation Group Pty Ltd (the appellant) for permission to appeal and, if permission is granted, an appeal against a decision and order of Commissioner Williams on 23 September 2010 granting a remedy to Mr Martin Darke (the respondent in this matter) in respect of the unfair termination of his employment.
[2] Mr Darke was employed by the appellant for just over 12 months ending in early April 2010. During the course of two meetings, the second of which was held at 2.40 pm, conducted on 6 April 2010 exchanges occurred between Mr Darke and the appellant’s Managing Director, Mr de Graaf, which led to the cessation of the employment contract between the parties.
[3] The context for those discussions also involved a dispute between these individuals as to whether there was an oral agreement, in addition to a written contract of employment. The written contract provided for an annual salary of $30,000. Mr Darke contended that the oral agreement was that his actual salary was to be $50,000 with $20,000 (40%) of it, to be paid on the first anniversary of his employment.
[4] At first instance, Mr Darke, who was self represented, contended that he was dismissed by the appellant in the context of its refusal to honour the alleged oral agreement and that this dismissal was unfair.
[5] It was put to the Commissioner by Mr de Graaf, who appeared for the appellant, that Mr Darke had resigned his employment voluntarily, and that the alleged oral agreement had never been made.
[6] The matter before the Commissioner proceeded on the basis that the appellant was a small business 1 within the meaning of the Fair Work Act 2009 (the Act). This was not in issue before us.
The decision of the Commissioner
[7] We observe that the hearing before the Commissioner proceeded with some difficulty given that neither party was represented.
[8] Mr de Graaf did not cross-examine Mr Darke about his claims about the oral agreement. It was clear, however, from Mr de Graaf’s own evidence and the written material filed that the alleged agreement was in dispute.
[9] The Commissioner found that Mr Darke had been dismissed by the appellant within the meaning of s.386 of the Act. In reaching that conclusion, he indicated that he preferred the evidence of Mr Darke and made findings in the following terms:
“[24] In cases such as this where there is a disagreement between two witnesses about the central factual matters the Tribunal is to make findings of fact on the balance of probabilities. In this instance where there is a conflict of evidence between Mr Darke and Mr de Graaf I have concluded that on the balance of probabilities the evidence of Mr Darke is correct. Mr Darke’s evidence was detailed, comprehensive, supported by various documents and given in an open and at times self-critical manner and is to be preferred over the very limited evidence of Mr de Graaf.
[25] Consequently then I find that when Mr Darke was first employed there was an agreement between him and Mr de Graaf that 40% of his salary of $50,000 would be paid at a later date, being the anniversary of his commencement.
[26] Some time after the employment began Mr Darke’s working days were reduced to three per week with a proportional reduction in his weekly salary.
[27] I further find that in a discussions between Mr Darke and Mr de Graaf on 6 April 2010 at around 8.20 a.m. Mr de Graaf said that there was no way Mr Darke could continue to be employed and that they would have to come to some financial arrangement.
[28] At a second meeting around 2.40 p.m. the same day Mr de Graaf did ask Mr Darke whether he wished to continue working for the respondent to which he replied “No”. Mr de Graaf then said that that there was then no room for mediation and he would put together a proposal, however, no proposal was ever provided to Mr Darke by the respondent.
[29] I find that the applicant did not at any stage say that he was leaving his employment or was resigning.
[30] I find that after this discussion Mr Darke returned to his office. Later that afternoon Mr de Graaf came to Mr Darke’s office and handed him the letter dated 6 April 2010 which says that Mr de Graaf has accepted Mr Darke’s resignation effective immediately.”
[10] The Commissioner subsequently concluded as follows:
“[35] Given the facts that I have found above, is it correct to conclude as the respondent submits that the applicant resigned?
[36] The critical events are those of 6 April 2010 in particular the second meeting that day around approximately 2.40 p.m. between Mr Darke and Mr de Graaf. Whilst I accept Mr Darke’s detailed evidence of this meeting it seems there is not a dispute in any event between the parties about what was asked of him and what his response was.
[37] During the meeting between Mr de Graaf and the applicant, Mr Darke did agree that he no longer wished to continue working for the respondent. Mr Darke had not raised this issue - Mr de Graaf did. Mr Darke was replying to a direct question asked by Mr de Graaf in the context of Mr de Graaf having said in the earlier meeting that day that there was no way that Mr Darke could continue to be employed and that they would have to come to some financial arrangement.
[38] Mr Darke did not say he was ending his employment. Mr Darke’s negative response to the question by Mr de Graaf could rightly be taken as an indication that Mr Darke was not intending to remain in employment indefinitely but was going to leave in the future, but that is not the same as concluding that Mr Darke was tendering his resignation.
[39] Mr de Graaf’s letter to Mr Darke dated 6 April 2010 includes the following statement, “Although disappointed by that decision I have decided to accept your resignation effective immediately .”
[40] This statement shows that the respondent was acting to end the applicant’s employment at a time of its choosing, that being immediately. It was this letter from the respondent to Mr Darke that terminated the employment. I conclude then that the respondent did by giving this letter to Mr Darke on its initiative terminate the applicant’s employment. This conclusion is supported by the further statement in the respondent’s letter that the respondent will pay the applicant a two week separation payment. This is consistent with the respondent ending the employment of the applicant by making such a payment rather than giving notice. If the applicant had resigned the respondent would not be required to make this payment.
[41] In the alternative if I am wrong on this and the respondent did not terminate the employment then given there was an agreement made at the time the employment commenced that the respondent would pay to Mr Darke 40% of his $50,000 salary on the first anniversary of his employment but that Mr de Graaf repeatedly denied there was any such amount owing to Mr Darke and refused to participate in mediation of the disagreement, I accept this left the applicant with no choice but to resign. The respondent was not only refusing to pay the amount of outstanding salary but was also obviously only willing to continue the employment on the basis of paying 60% of the agreed salary for the three days per week. In these circumstances and having unsuccessfully attempted to resolve the matter directly with the managing director there was no other real choice but for the applicant to leave the employment.
[42] I point out that in this application it is not the Tribunal’s role to determine the contractual rights of the parties but rather whether the facts that have been identified do demonstrate that there was conduct or a course of conduct of the respondent that forced the applicant to resign.
[43] If there was a resignation by the applicant then I am satisfied that the facts of this matter are such that the applicant was forced to resign because of the conduct or a course of conduct engaged in the by the employer and so the applicant has been dismissed within the meaning of s.386(1)(b).
[44] In this case then I reject the jurisdictional objection pursued by the respondent. The applicant was dismissed within the meaning of s.386 of the Act.”
[11] The Commissioner then set out the terms of s.387 Criteria for considering harshness etc, discussed the reason for the dismissal, the process leading to that point and the size of the appellant’s business, and concluded as follows:
“[52] Taking into account the above criteria I do find that the dismissal of the applicant was unjust and unreasonable in particular because there was no valid reason for the dismissal.”
[12] The Commissioner then also concluded that the dismissal was not consistent with the Small Business Fair Dismissal Code. 2 As to remedy, for reasons set out in the decision the Commissioner determined that compensation of $4,500 gross was appropriate. We note that this involved a payment of three months’ salary, based on the lower, $30,000 p.a. salary figure that was actually being paid by the appellant at the time of the cessation of the employment.
The submissions on appeal
[13] The appellant, which was represented before us by Mr Kutasi, an industrial advocate from the National Electrical Contractors Association, contended that there were “significant errors of fact” in the decision under appeal. These were said to be largely based upon the approach adopted by the Commissioner to the consideration of, and weight given to, each party’s evidence. Further, the appellant argued that the written contract should have been found to have represented the full terms of the employment contract and that the evidence of Mr de Graaf should have been preferred in any event.
[14] The appellant contended that the finding of a dismissal within the meaning of the Act was an “error of fact” on a number of bases including that the payment made by the employer upon “resignation” should not have been treated as being indicative of a termination at its initiative. In addition, the discussion during the 2.40pm meeting should have been interpreted as meaning that Mr Darke no longer wanted to work for the appellant and had therefore resigned.
[15] In that light, the appellant contended that it was in the public interest to grant permission to appeal having regard to the findings regarding the binding nature of the written employment contract and the “erroneous” findings of the Commissioner as to the conduct of the parties.
[16] The appellant also argued that the Commissioner made a number of “errors of law” concerning the amount of compensation he awarded. In particular, it contended that he failed to consider each of the matters required by s.392 of the Act and may have considered extraneous matters. Further, the appellant contended, in effect, that the compensation of three months was excessive when considered in the context of the six month maximum under the Act (s.392(6)) and decisions of Fair Work Australia in other unfair dismissal matters (particularly given that the Applicant had only worked for the Respondent for slightly in excess of 12 months).
[17] Mr Darke continued to represent himself in these proceedings. He supported the decision at first instance and explained why there was an unfair dismissal that warranted an award of compensation. We note that in so doing, he also made a number of statements as to alleged facts that were not in evidence before the Commissioner. We have not had regard to those matters.
The approach required by the Act to an appeal in an unfair dismissal matter
[18] In general terms, s.604 of the Act provides the foundation for an application for leave to appeal in matters determined by Fair Work Australia including unfair dismissal matters. However, s.400 of the Act modifies the approach in such matters and this was discussed by the Full Bench in GlaxoSmithKline Australia Pty Ltd v Colin Makin 3 in the following terms:
“[1] This appeal starkly raises the issue of when permission to appeal a decision made under Part 3 -2 - Unfair Dismissal of the Fair Work Act 2009 (the Act) may be granted. Section 400(1) of the Act provides that permission to appeal against a decision made under the part may not be granted unless Fair Work Australia considers that it is in the public interest to do so. As the Explanatory Memorandum noted, the effect of s.400 is to make the process for permitting appeals from unfair dismissal decisions different from the general grounds in s.604 in two respects. First by making it a prerequisite for granting permission to appeal that it is in the public interest to do so and, secondly, where permission is granted and the appeal is based on an error of fact, to the extent that it is so based, that it can only be made on the ground that the decision involved a significant error of fact.
[2] Section 400 of the Act reads:
400 Appeal rights
(1) Despite subsection 604(2), FWA must not grant permission to appeal from a decision made by FWA under this Part unless FWA considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by FWA 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.
[3] Prior to the introduction of the Act the manner in which an appeal against an unfair dismissal decision proceeded was the same as with appeals from other decisions, but only on the grounds that the Australian Industrial Relations Commission was in error in deciding to make the order. The conventional grounds for granting leave to appeal otherwise applied under the Workplace Relations Act 1996, being whether the decision was attended by sufficient doubt to warrant its reconsideration or whether substantial injustice would result if leave were refused. However, even absent the conventional grounds, if the Commission was of the opinion that the matter was of such importance that it was in the public interest that leave should be granted the Commission was required to grant leave. Alternatively, leave could be granted if error could be demonstrated.
[4] It can be seen that a significant change to the granting of permission to appeal was wrought by the introduction of the Act.
...
[26] Appeals have lain on the ground that it is in the public interest that leave should be granted in the predecessors to the Act for decades. It has not been considered useful or appropriate to define the concept in other than the most general terms and we do not intend to do so. The expression ‘in the public interest’, when used in a statute, classically imports a discretionary value judgment to be made to be made by reference to undefined factual matters, confined only by the objects of the legislation in question.
[27] Although 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, it seems to us that none of those elements is present in this case.”
[19] This approach was also adopted by the Full Bench in Graham Randall v Australian Taxation Office 4 and we respectfully agree.
[20] We must not grant permission to appeal in this matter unless we consider that it is the public interest to do so. Further, to the extent that there is an appeal based upon an error of fact, the error as found must be significant in order to attract the intervention of the Full Bench.
[21] The appeal substantially raises two grounds. First, that there was no dismissal within the meaning of the Act. Leaving aside the appellant’s characterisation of that issue as being an “error of fact”, this is in reality a jurisdictional matter involving both fact and law. In that light, it is appropriate that we consider whether the Commissioner erred in relation to that finding. 5 If so, the Tribunal lacked the jurisdiction to make the consequential findings and the public interest might well be enlivened.
[22] The second aspect is the correctness of the finding that the dismissal was unfair and if so, the extent of the remedy. In our view, given the particular grounds of this appeal these are considerations that in general terms attract the well known approach adopted in House v R: 6
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
Was there an error in finding that there was a dismissal at the initiative of the employer within the meaning of the Act?
[23] Section 386 of the Act relevantly defines “dismissed” as follows:
“386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
The Commissioner found that the circumstances were such that a dismissal at the initiative of the employer had taken place on two alternative bases.
[24] On one hand, the Commissioner held that the comments made by Mr Darke at the 2.40pm meeting did not on their face amount to an unambiguous statement of resignation.
[25] On the other hand, the Commissioner held that if the appellant had not directly terminated the employment contract, Mr Darke’s resignation was a constructive dismissal because the appellant’s conduct left Mr Darke with no choice but to resign. This latter construction relied on the Commissioner’s acceptance of the existence of the oral agreement and the appellant’s refusal to comply with it. This, the Commissioner said, amounted to a repudiation of the contract of employment, which the Applicant accepted.
[26] We have reviewed the findings made by the Commissioner supporting these conclusions and consider that these findings were properly reached and that no error was made in that regard.
[27] In our view, the finding that Mr Darke’s statement that he no longer wished to work for the respondent, on its face, did not amount to a resignation, was provided further contextual support by reference to the earlier meeting on that same day. Mr de Graaf had stated at that earlier meeting, “that there was no way Mr Darke could continue to be employed and that they would have to come to some financial arrangement”. 7 This evidence had gone unchallenged.
[28] Further, the finding of the existence of the oral agreement appears to us to have been properly determined (on the basis of credit) and was also free of error.
[29] The Commissioner first considered the evidence before him, assessed the credibility of the evidentiary narratives provided by both parties, and then reached a conclusion, drawn on the balance of probability, that the agreement had come into existence. The Commissioner then determined, appropriately in our view, that the appellant’s refusal to comply with the agreement represented a repudiation of a fundamental term of the contract, which Mr Darke accepted by way of the words he used in the 2.40pm meeting.
[30] In so finding, we note that the extract of Mr Darke’s evidence cited in the decision is a compilation of various parts of his witness statement.
[31] Accordingly, we are satisfied that there was no error in relation to the finding that there was a dismissal within the meaning of the Act.
The Small Business Fair Dismissal Code
[32] The Commissioner found that the dismissal of Mr Darke was not consistent with the Small Business Fair Dismissal Code, as set out at s.388 of the Act.
[33] Although this issue was only raised in passing by the appellant, and was not agitated in the proceedings before the Commissioner, the conduct and nature of the dismissal was such that compliance with the Code could not be demonstrated. This finding was clearly open to the Commissioner on the evidence before him.
[34] We add, however, that because of s.385 and s.396 of the Act, whether a dismissal is consistent with the Code should be dealt with as a preliminary matter that should be determined prior to the consideration of whether the dismissal was unfair. In this case, the fact that the issue of compliance with the Code was dealt with as part of the overall merit has not resulted in error, however, it is generally appropriate to deal with any relevant preliminary matters before moving to determine the merit and related matters.
Was there an error in finding that the dismissal was unfair?
[35] The appellant contends in effect that the loss of trust and confidence in the relationship, whereby Mr Darke considered that he was dealing with a liar and that there was no longer a mutual understanding of the obligations of the employment contract, demonstrated that a valid reason for dismissal existed.
[36] ‘Valid’ in this context means whether there was a sound, defensible or well founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where both have rights and privileges and duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly. 8
[37] Although the Commissioner did not expressly discuss all of the considerations at s.387(a) to s.387(h) of the Act, he did cite the statutory provisions and considered most of the substantive provisions relevant to the matter before him. It is tolerably clear that the Commissioner had significant regard to the statutory directions. It was also not a ground of this appeal that any deficiency in these respects would have led to a different outcome.
[38] On that basis, we do not find a reviewable error in relation to this aspect.
Was there an error in relation to the award of compensation?
[39] The appellant contends that the Commissioner did not consider each of the seven criteria established by s.392(2) and that such was required by the Act. Section 392 relevantly provides 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), FWA 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 FWA considers relevant.
[40] The appellant contends in particular that the financial circumstances of the appellant are a relevant consideration and an assessment of these facts should have led to a reduction in the amount of compensation ordered. Further, it argues that compensation of three months, given Mr Darke’s length of service, in the context of awards made in other unfair dismissal cases, and the maximum compensation available under the Act, was excessive.
[41] Finally, the appellant contends that the Commission failed to consider the extent to which Mr Darke had sought to mitigate his losses and that evidence provided at the stay application was such that he had gained employment approximately three months after his dismissal. In that light, it was said, the compensation was excessive, particularly given the two weeks ex gratia payment made at the time of the cessation of employment.
[42] The approach adopted by the Commissioner occurred in the context of a case with limited evidence in relation to compensation.
[43] However, the Commissioner considered and discounted the prospect of reinstatement and this was not agitated upon appeal. He noted the financial state of the business and the need to ensure that the order does not damage the viability of the business. We note in that regard that little if anything was put by the appellant to assist the Commissioner in that regard.
[44] The Commissioner also noted Mr Darke’s length of service and he took the view that Mr Darke had intended to continue his employment indefinitely. The evidence before the Commissioner made this conclusion open to him. The Commissioner also considered the amount that he would have received had he not been dismissed and, in that context, used the rate of salary that was being paid without regard to the oral agreement.
[45] The Commissioner then noted that there was no evidence of attempts to mitigate his losses and concluded, having regard to all of the circumstances of the case, that an award of three months’ salary was appropriate.
[46] The only considerations not expressly dealt with by the Commissioner are those associated with the remuneration that Mr Darke had earned, or was likely to have earned, from employment, between the time of dismissal and the making of the order. The two weeks ex gratia payment is one such matter that might have been considered and it is not clear from the decision how, or if, that has been taken into account. We are of the view that even if the Commissioner could be said to have erred in this respect (a matter on which we express no view) the public interest would not be enlivened.
[47] Reasonable minds may differ in relation to the weight to be accorded any one factor in relation to determining an appropriate amount of compensation under s.392 of the Act. We discern no error in the Commissioner’s conclusion and see no need to interfere with his finding in this regard.
[48] The appellant now seeks to rely upon evidence of subsequent employment obtained by Mr Darke 9. We make the obvious point that this was not evidence that was before the Commissioner and we have not had regard to it.
Conclusion
[49] We find that it is not in the public interest that permission to appeal should be granted in this matter. The application for permission to appeal is refused and the appeal is dismissed.
[50] The stay order 10 issued on 26 October 2010 is also hereby rescinded.
SENIOR DEPUTY PRESIDENT
Appearances:
K Kutasi with M Nazareth representing the Appellant.
M Darke on his own behalf.
Hearing details:
2010.
Perth:
9 November.
1 As defined by s.23 of the Act.
2 The Code is established pursuant to s.388 of the Act and is relevant in this matter given the size of the appellant.
3 [2010] FWAFB 5343, 23 July 2010, per Kaufman SDP, Ives DP and Spencer C.
4 [2010] FWAFB 5626, 4 August 2010, per Watson VP, Kaufman SDP and Asbury C.
5 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47
6 (1936) 55 CLR 499 at pp.504-505
7 [2010] FWA 7385 at par [27].
8 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation, per Ross VP, Williams SDP, Foggo C, 15 June 2004 PR948009
9 This evidence was provided a part of the stay proceedings in this matter.
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