| [2015] FWCFB 5264 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
VICE PRESIDENT HATCHER |
|
Appeal against decision [[2015] FWC 3942] of Commissioner Cambridge at Sydney on 12 June 2015 in matter number U2015/33.
Introduction
[1] Mr Jeremy Ryman has applied for permission to appeal and appealed a decision of Commissioner Cambridge issued on 12 June 2015 1 (Decision). In the Decision the Commissioner dismissed Mr Ryman’s application for an unfair dismissal remedy against his former employer, Thrash Pty Ltd trading as “Wisharts Automotive Services” (Wisharts). The basis upon which the Commissioner did so was that Wisharts was a small business to which the Small Business Fair Dismissal Code (Code) applied, that Mr Ryman’s dismissal was a summary dismissal, and that the dismissal accorded with the summary dismissal requirements of the Code. Mr Ryman contends that the Decision was in error, in that his dismissal was not a summary dismissal for the purpose of the Code, did not otherwise comply with the provisions of the Code, and was harsh, unjust and unreasonable.
[2] The application for permission to appeal was heard on 25 August 2015. After hearing submissions from the parties, we issued an ex tempore decision granting permission to appeal. We did so on the basis that the appeal raised a question of general importance and application, namely what dismissals are dealt with by the “Summary dismissal” section of the Code. As we discuss later, two aspects of the dismissal in this case gave rise to that question: first, the dismissal was accompanied by a payment in lieu of notice and, second, the dismissal occurred some weeks after the instance of misconduct upon which it was based. The question has not yet been considered at the Full Bench level.
Factual background
[3] The basic facts of the matter are relatively straightforward. Wisharts operates an automotive service and repair business in Orange in New South Wales. It is a family business operated by Mr Craig Wishart and Mrs Margaret Wishart. At the time of Mr Ryman’s dismissal it had about five employees. Mr Ryman worked for the business as a motor mechanic, having commenced employment in 2011. He was regarded as competent in his work, and there was no criticism of his work performance.
[4] Mr and Mrs Wishart organised an end of year drinks function to commence after the cessation of work at 3.00pm on Friday 19 December 2014. At about 2.00pm that day Mrs Wishart asked Mr Ryman what food and drink he would like at the function. His reply was a matter of contest. The version which the Commissioner preferred was that Mr Ryman said: “I’m not fucking going because I’m not fucking drinking with Captain Klepto”. Mr Ryman’s version, which the Commissioner did not accept, was that he simply said “Nothing thanks. I don’t think I’ll go”. Thereafter an argument broke out, and Mr Wishart intervened. Wisharts contended that Mr Ryman accused their son and his fellow employee, Mr Daniel Wishart, of theft, and generally acted in an abusive, aggressive and intimidatory manner. Mr Ryman denied this. Mr Wishart eventually told Mr Ryman to finish work forthwith and to complete the task he was undertaking the following Monday. Mr Ryman thereupon left work and did not attend the function.
[5] Mr Ryman did not attend for work on Monday 22 December 2014. At 6.57am that day he sent a text message to Mr Wishart informing him that he would be absent from work because he was attending to his business interests at a hotel in Rankins Springs, some 300 kilometres away. Mr Ryman did not attend for work the following day (Tuesday 23 December 2014), and provided no notice of or explanation for his absence. The business closed down for the Christmas/New Year break at the end of that day, and did not re-open until 5 January 2015.
[6] When Mr Ryman attended for work on 5 January 2015, he found that the lock on the gate had been changed, meaning that he was unable to gain access. When Mr and Mrs Wishart later arrived, they allowed Mr Ryman to access the site, only for Mr Wishart to inform him, ominously, that “We need to talk”. Mr Wishart then said words to the effect that after the 19 December 2014 incident and Mr Ryman’s failure to attend for work on the two following working days, he took it that Mr Ryman had decided he did not wish to work for Wisharts any longer. Mr Wishart then left, and Mr Ryman asked Mrs Wishart if he had been dismissed, which she answered in the affirmative.
[7] Later that day Mr Ryman asked for a separation certificate, which Mrs Wishart said she would provide to him. She also told him he would be paid three weeks’ pay in lieu of notice, although the circumstances in which this statement was made were contested. Mr Ryman’s version was that he asked “Do you want me to work out my notice, or are you going to pay me in lieu?” Mrs Wishart’s version was that he asked her: “Will you be paying my 3 weeks’ notice?”
[8] There was no dispute that 5 January 2015 was the effective date of the termination of Mr Ryman’s employment. The separation certificate which he subsequently received was dated 7 January 2015. It identified the reason for dismissal as “serious misconduct/yelling/swearing witnessed by customers & other staff”.
The Decision
[9] The Commissioner determined that the Summary Dismissal section of the Code was relevant for the following reasons:
“[50] In this instance the employer paid the applicant an amount equivalent to three weeks’ notice. However, apart from this payment, the dismissal contains all of the elements usually associated with a summary dismissal. In particular, the reason for the dismissal involved serious misconduct and the implementation of the dismissal although it was delayed because of the absence of the applicant from the workplace, was summary in nature. That is, the applicant was verbally advised of his dismissal without there being any contemplation of explanation or defence.
[51] The applicant’s solicitor argued that because there had been payment of a period of notice, the dismissal was not a summary dismissal and should not be assessed against those terms of the Code that are relevant to summary dismissal. In my view this proposition would impose an unrealistic and unintended rigidity on any application of the Code.
[52] A dismissal which is for reason of serious misconduct and which might appropriately justify termination without notice or warning, should still be properly assessed as a summary dismissal notwithstanding that an employer, for whatever reason, decided to make payment of an amount in respect to notice. Broadly speaking, the Code establishes requirements for dismissal without notice or warning which represent a less stringent evidentiary basis upon which any serious misconduct is established when compared to the evidentiary basis that applies for a medium/large business. Similarly, the Code sets out less stringent requirements for other dismissals than those which apply to a medium/large business.
[53] That part of the Code which deals with summary dismissal is concerned with the evidentiary basis upon which a small business employer establishes serious misconduct. While the other dismissals part of the Code introduces a less stringent set of procedural requirements than applies to a medium/large business. The requirements that are mentioned in the Code as being relevant to cases of other than summary dismissal will invariably have little or no relevance to circumstances where a dismissal is made without notice or warning and is based upon serious misconduct. It would be contrary to the spirit and intent of the Code if, when a small business employer decided to pay an amount in lieu of notice in respect to a dismissal for serious misconduct, it was required to satisfy the procedural requirements of the other dismissals part of the Code.
[54] Therefore, although the dismissal of the applicant was not strictly a summary dismissal because an amount was paid in lieu of notice, in all other respects the dismissal was manifestly in the character of a summary dismissal. In particular the dismissal was, in the employer’s view, for reason of serious misconduct justifying the immediate termination of employment at the soonest practical opportunity. Consequently, it is appropriate to apply that part of the Code which relates to summary dismissal to the circumstances of the dismissal of the applicant.”
[10] In relation to whether the Summary Dismissal section of the Code was complied with, the Commissioner identified three operative components which needed to be satisfied. First, the Commissioner was satisfied on the basis of the reason for dismissal given in the separation certificate that Wisharts held the belief at the time of dismissal that Mr Ryman had engaged in serious misconduct on 19 December 2014 consisting of intimidation, yelling and swearing. Second, he found that the belief was held on reasonable grounds given that Mr and Mrs Wishart had witnessed the behaviour in question, so that no investigation of the incident was required. Third, the Commissioner found that Wisharts believed that Mr Ryman’s conduct was sufficiently serious to justify immediate dismissal. In this connection the Commissioner said:
“It is important to recognise that the wording of the Code is directed towards the belief that the employer had, as opposed to any independent, objective assessment about whether the particular conduct was sufficiently serious to justify immediate dismissal.” 2
[11] The Commissioner rejected the proposition that the delay in dismissing Mr Ryman counted against the existence of a genuine belief that his conducted merited summary dismissal. He attributed the initial delay to Mr and Mrs Wishart’s “shock, distress and bewilderment” about Mr Ryman’s behaviour, and found that the Wisharts formed the view over the weekend following the incident that Mr Ryman should be dismissed for what occurred. The failure to dismiss Mr Ryman on 22 or 23 December 2014 despite his absence was, the Commissioner found, regrettable but he went on to say:
“[69] It should be recognised that as a small business employer, being justifiably unfamiliar with the most appropriate approach to dealing with an event such as the 19 December incident, it is understandable that Mrs and Mr Wishart felt some relief that they might avoid a difficult and unpleasant dismissal of an employee just before Christmas. However, importantly, the conviction to dismiss and the genuineness with which the employer held this view were reflected by evidence of the employer changing the locks on the gates to the business premises on 24 December.
[70] The subsequent delay until the dismissal was implemented on 5 January 2015 can be properly attributed to the applicant's scheduled absence from the workplace.
[71] The delay between the occurrence of the misconduct on 19 December and the dismissal on 5 January is attributable to reasonable and acceptable factors and significantly included the absence of the applicant from the workplace rather than any lack of conviction in the mind of the employer as to the seriousness of the applicant's misbehaviour. “
[12] The Commissioner found that the dismissal was consistent with the Code. However he determined that “for abundant caution and completeness” he should also “resolve the factual contests surrounding the 19 December incident”. 3 He found that Mr Ryman’s evidence, considered in totality, “was unreliable and must be rejected accordingly”4, and found:
“[82] Consequently, I have determined the factual contests surrounding the 19 December incident in favour of the employer's version of that event. Therefore, that incident would represent serious and wilful misconduct sufficient to justify the summary dismissal of the applicant. Further, although the dismissal of the applicant involved some procedural deficiencies those matters would not operate to militate against the valid reason for dismissal so as to render it unfair.”
[13] The Commissioner concluded:
“[88] If, in the alternative, the Code was not applicable, an examination and consideration of the various criteria contained in s. 387 of the Act would result in a determination that the dismissal of the applicant was not harsh, unjust or unreasonable.
[89] Therefore upon either basis, the application for unfair dismissal remedy must be dismissed and an Order to that effect will be issued accordingly.”
Submissions
[14] Mr Ryman submitted that because he had not been dismissed immediately after the incident on 19 December 2014 and when he was dismissed he was paid three weeks’ pay in lieu of notice, he was not summarily dismissed or dismissed without notice or warning. Having been paid the amount in lieu of notice (which was equal to the entitlement to notice in s.117 of the Fair Work Act 2009 (FW Act), it could not be said that he was dismissed “without notice”, and the Commissioner’s acceptance that the dismissal was not strictly a summary dismissal meant that it was not open to him to apply the Summary Dismissal provisions of the Code.
[15] Alternatively Mr Ryman submitted that if the Summary Dismissal provisions of the Code did apply, it was not complied with because Mr and Mrs Wishart did not genuinely believe that the dismissal was sufficiently serious to justify immediate dismissal. That they did not genuinely hold that belief was demonstrated by their view that they were obliged to make a payment in lieu of notice, their failure to dismiss or decide to dismiss Mr Ryman until some time after the 19 December 2014 incident, the evidence which demonstrated that they wanted him to attend for work on 22 and 23 December 2014 and the relatively minor nature of the misconduct.
[16] The dismissal did not, Mr Ryman submitted, comply with the “Other Dismissals” part of the Code because there was no prior warning and opportunity to rectify conduct. The Code not having been complied with, there should have been a finding that the dismissal was harsh, unjust and unreasonable. Taking the case of Wisharts at its highest, a single instance of intemperate conduct did not provide a valid reason for dismissal, and additionally Mr Ryman was denied procedural fairness. Even if there was a valid reason, Mr Ryman submitted that the dismissal was harsh in all the circumstances having regard to his previous unblemished record and the financial and personal consequences of the dismissal. He sought reinstatement together with compensation for lost earnings as a remedy.
[17] Wisharts submitted that the Commissioner was correct in determining that the summary dismissal section of the Code applied. Mr Ryman was dismissed for misconduct, and the payment to him of three weeks’ pay in lieu of notice was not made because Wisharts believed it was legally obliged to do so, but because it had agreed to do so. It referred to the decision of Sams DP in Williams v Dtarawarra Pty Ltd 5 that a gratuitous payment in lieu of notice did not prevent a dismissal for misconduct being considered under the summary dismissal section of the Code. The dismissal was delayed because of Mr Ryman’s non-attendance at work on 22 and 23 December 2014 and the subsequent Christmas/New Year closedown, and he was dismissed at the first available opportunity upon his return to work.
[18] That there was a genuine belief that Mr Ryman had engaged in serious misconduct warranting summary dismissal was demonstrated, Wisharts submitted, by the reaction to Mr Ryman’s behaviour on 19 December 2014 and Mr Wishart’s subsequently formed intention to dismiss Mr Ryman on 22 December 2014. The belief was reasonable in the circumstances given the aggressive and intimidatory nature of Mr Ryman’s conduct. There was no need for an investigation because the owners of the business had witnessed the behaviour in question.
[19] Alternatively, Wisharts submitted that the dismissal was not harsh, unjust or unreasonable. On the basis of the findings of fact made by the Commissioner, the conduct of Mr Ryman on 19 December 2014 was abusive, aggressive and intimidating and consequently constituted a valid reason for dismissal. There was no basis to displace the Commissioner’s findings, particularly as they were based on an adverse view of Mr Ryman’s credit. The Commissioner was correct to find that any procedural difficulties in the dismissal did not render it unfair. The penalty of dismissal was not disproportionate to Mr Ryman’s serious misconduct. Further in the alternative, Wisharts submitted that if, on any rehearing of the matter, the dismissal was found to be unfair, it should not result in any remedy being granted.
Relevant legislative provisions
[20] Section 385 of the FW Act sets out four requirements each of which must be satisfied in order for the Commission to find that a person has been unfairly dismissed:
385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.
[21] Relevant to s.385, s.388 provides:
388 The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.
(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:
(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and
(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.
[22] Section 23 provides a definition of a “small business employer” for the purpose of the FW Act. Relevantly, s.23(1) provides that “A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time”. There was no dispute that Wisharts was a small business employer at the time of Mr Ryman’s dismissal.
[23] The Code declared by the Minister pursuant to s.388(1) is as follows:
Summary dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.
Procedural matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
[24] Although not actually part of the Code, accompanying the version of the Code published by the Australian Government is a “Checklist” designed to serve as a tool to aid compliance with the Code. Questions 4 and 5 in the Checklist provide:
“4. Do any of the following statements apply?
I dismissed the employee because I believed on reasonable grounds that: |
YES |
NO |
a. The employee was stealing money or goods from the business. |
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b. The employee defrauded the business. |
|
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c. The employee threatened me or other employees, or clients, with violence, or actually carried out violence in the workplace. |
|
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d. The employee committed a serious breach of occupational health and safety procedures. |
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5. Did you dismiss the employee for some other form of serious misconduct?
Yes
No
If Yes, what was the reason?”
[25] Section 12 of the FW Act defines “serious misconduct” as having “the meaning prescribed by the regulations.” Regulation 1.07 of the Fair Work Regulations 2009 (Regulations) provides:
1.07 Meaning of serious misconduct
(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
(2) For subregulation (1), conduct that is serious misconduct includes both of the following:
(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b) conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer’s business.
(3) For subregulation (1), conduct that is serious misconduct includes each of the following:
(a) the employee, in the course of the employee’s employment, engaging in:
(i) theft; or
(ii) fraud; or
(iii) assault;
(b) the employee being intoxicated at work;
(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.
(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.
Consideration
Did the “Summary dismissal” section of the Code apply?
[26] The first issue to be determined is whether Mr Ryman’s dismissal was of a type to which the “Summary dismissal” section of the Code applies. It is necessary to make the observation at the outset that this issue is not easy to resolve because the Code generally, and this section of the Code in particular, is very poorly drafted. Three different expressions are used to describe the class of dismissals dealt with in the section: “Summary dismissal” (in the section heading, as well as in an apparent cross-reference in the last paragraph of the Code), dismissals “without notice or warning”, and “immediate dismissal”. These expressions are not entirely synonymous. Further, and in a rather disjunctive way, the last three of the four sentences of this section of the Code are concerned with serious misconduct, which must be taken to be also indicative of its subject matter. These four aspects of the Code require some analysis.
[27] The expression “summary dismissal”, notwithstanding that it has been described as one of a number of “confusing and ambiguous terms” developed by employment lawyers in connection with termination of employment contracts 6, has a reasonably well understood meaning at law. It refers to a dismissal without notice arising from a breach of an essential term of the employment contract, a serious breach of a non-essential term of the contract, or conduct manifesting an intention not to be bound by the contract in the future on the part of the employee.7 Misconduct on the part of the employee is not the only circumstance which may give rise to the employer’s right of summary dismissal. In Rankin v Marine Power International Pty Ltd, the Victorian Supreme Court (Gillard J) referred to “misconduct, disobedience, incompetence or negligence” as constituting possible bases for summary dismissal8 (although disobedience to lawful and reasonable directions might be regarded as a species of misconduct).
[28] It is not the case that “serious misconduct” operates as a fixed standard for the determination of the type of conduct by the employee which may warrant summary dismissal. This was discussed in Sharp v BCS Infrastructure Support Pty Limited 9 (in the context of s.387 of the FW Act) as follows:
“[34] It may be accepted that an assessment of the degree of seriousness of misconduct which has been found to constitute a valid reason for dismissal for the purposes of s.387(a) is a relevant matter to be taken into account under s.387(h). In that context, a conclusion that the misconduct was of such a nature as to have justified summary dismissal may also be relevant. Even so, it is unclear that this requires a consideration of whether an employee’s conduct met a postulated standard of “serious misconduct”. In Rankin v Marine Power International Pty Ltd Gillard J stated that “There is no rule of law that defines the degree of misconduct which would justify dismissal without notice” 10 and identified the touchstone as being whether the conduct was of such a grave nature as to be repugnant to the employment relationship.11 “Serious misconduct” is sometimes used as a rubric for conduct of this nature, but to adopt it as a fixed standard for the consideration of misconduct for the purpose of s.387(h) may be confusing or misleading because the expression, and other expressions of a similar nature, have been considered and applied in a variety of contexts in ways which are influenced by those contexts. In McDonald v Parnell Laboratories (Aust) Pty Ltd12 Buchanan J said:
‘[48] The terms ‘misconduct’, ‘serious misconduct’ and ‘serious and wilful misconduct’ are often the subject of judicial and administrative attention as applied to the facts of particular cases but there is relatively little judicial discussion about their content and meaning. Naturally enough, when the term ‘serious misconduct’ is under consideration an evaluation of what conduct represents ‘serious’ misconduct is influenced by the (usually statutory) setting in which the phrase must be given meaning and applied. Frequently, for example, the question at issue is whether an employee is disentitled by reason of his or her conduct to a statutory entitlement (eg. in New South Wales, where Ms McDonald was employed, see Long Service Leave Act 1955 (NSW) s 4(2)(a)(iii); Workers Compensation Act 1987 (NSW) s 14(2).’”
[29] The payment of a sum in lieu of notice is not consistent with a summary dismissal, understood in the way explained above. Such a payment is best characterised as compensation for the remuneration that an employee would have received if the employee had been afforded the period of notice to which he or she was entitled. If the employer has a right to summarily dismiss, there cannot be any entitlement to notice, and no basis therefore for a payment in lieu of notice.
[30] The operative effect of the “summary dismissal” section of the Code is conveyed by the first sentence, which identifies the circumstances in which “[i]t is fair for an employer to dismiss an employee without notice or warning…”. The reference to dismissal “without notice or warning” in the Code is confusing. A dismissal “without notice”, understood literally, means a dismissal in relation to which no period of notice is provided. A dismissal that is accompanied by a payment in lieu of notice, as well as a summary dismissal, is usually regarded as a dismissal without notice. 13 That points to a lack of synonymity between a summary dismissal and a dismissal without notice. An alternative view might be that a dismissal “without notice” was intended to mean a dismissal in relation to which no payment in lieu of notice has been provided as well as no actual notice provided. That would resolve the synonymity problem. However it is not a reading which readily arises from the words actually used.
[31] It is unclear whether a dismissal “without warning” was intended to mean something different from a dismissal “without notice”. Presumably the warning referred to is a warning that dismissal is going to occur sometime in the future, in which case a dismissal without notice and a dismissal without warning are probably the same thing. However if the warning is of the possibility that dismissal might occur, then things get more complicated. Although, absent an express contractual term to the contrary, there is no obligation at law upon an employer to afford an employee a right to be heard in relation to any allegation of misconduct, incompetence or negligence which might lead to summary dismissal, most employers (including small business employers) would in accordance with modern industrial relations practice probably do so. Where a dismissal results, there might be a question in that circumstance as to whether the employer has in some sense warned the employee of the dismissal. Alternatively, the “warning” contemplated might be a warning that if certain conduct is repeated or performance is not improved, dismissal will follow. There is no necessary inconsistency between the issue of such a warning and a subsequent summary dismissal, but arguably such a dismissal may not be characterised as one “without warning”.
[32] An immediate dismissal is one which takes effect immediately. That would include a summary dismissal in the sense earlier discussed, but it would also include a dismissal with a payment in lieu of notice which is intended to have immediate effect.
[33] There is therefore discordance between the expressions used to describe the relevant class of dismissals covered by the “Summary dismissal” section of the Code, particularly in relation to whether the section includes dismissals with immediate effect accompanied by a payment in lieu of notice. Further guidance is required from the remaining part of the section in order to attempt to identify its intended target.
[34] As earlier stated, the balance of the “Summary dismissal” section of the Code is concerned with aspects of “serious misconduct”. There is a logical disjunction between the first sentence and the remaining three sentences, in that the connection or relationship between them is left unexplained. For the reasons discussed, the class of dismissals described in the first sentence (and the heading) are not, on their face, confined to dismissals for serious misconduct, but the next sentence and those that follow appear only to deal with serious misconduct. That must be taken as a pointer to the subject matter of the “Summary dismissal” section of the Code.
[35] The apparent purpose of the second sentence is to define the expression “serious misconduct”. Two interrelated difficulties arise in this respect. First, the use of the word “includes” makes it difficult to discern whether the definition is meant to be exhaustive or simply to make it clear that the identified matters may constitute serious misconduct. Second, it is not clear whether the effect of the sentence is to displace the definition of “serious misconduct” in s.12 of the FW Act and reg.1.07 of the Regulations. Section 13(1)(b) of the Legislative Instruments Act 2003 (Cth) provides that expressions in a legislative instrument (such as the Code) have the same meaning as in the enabling legislation as in force from time to time (here, the FW Act) “unless the contrary intention appears”. The question arises whether the second sentence, in attempting to define “serious misconduct”, exhibits an intention that the definition in s.12 and reg.1.07 not apply.
[36] It is frankly not possible to arrive at an interpretation of the “Summary dismissal” section of the Code which neatly resolves all these difficulties and inconsistencies. It is likely that the drafter(s) of the Code did not have a complete understanding of the terminology which they used to give expression to their intention. Accordingly the best we can do is to give effect to that intention so far as it may broadly be discerned from the Code as a whole. In that connection we consider that two things are apparent:
(1) The “Summary dismissal” section of the Code is concerned with dismissals which have immediate effect, not dismissals on notice. That is the consistent element of the various expressions used to describe the relevant class of dismissals.
(2) The section is likewise concerned with dismissals made on the basis of serious misconduct. The focus on “serious misconduct” must be taken as identifying the subject matter, notwithstanding that there is no explicit connection between the class of dismissal described and the matter of serious misconduct.
[37] Notwithstanding that the Code, and its accompanying checklist, were apparently designed to be read as “stand alone” documents by small business employers, we prefer the view that the reference to “serious misconduct” is to be read as bearing the meaning in reg.1.07. The types of conduct expressly referred to in the Code as constituting serious misconduct are all encompassed by the reg.1.07 definition, so no direct inconsistency is apparent. The fact that the checklist invites inclusion of “some other form of serious misconduct” suggests that the identified types of conduct were not meant to be exhaustive, and it is otherwise difficult to conclude that they were meant to be exhaustive given that they do not include other types of behaviour which may well constitute misconduct justifying summary dismissal, such as sexual harassment, bullying or significant non-compliance with a lawful and reasonable direction. And, as earlier discussed, the lack of any recognised meaning at law of the expression “serious misconduct” means that the definition in reg.1.07 is necessary to give the expression a clear content.
[38] We therefore consider that the “Summary dismissal” section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in reg.1.07.
[39] To be clear, nothing stated above is to be taken as suggesting that in relation to such a dismissal it is necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal not to be unfair. As was explained in Pinawin T/A RoseVi.Hair.Face.Body v Domingo 14:
“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”
[40] Whether the employer had “reasonable grounds” for the relevant belief is of course to be determined objectively.
[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:
(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.
(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.
[42] In this case, Mr Ryman’s dismissal occurred with immediate effect - that is, without the provision of any actual notice - on the ground of serious misconduct. The fact that he was paid an amount said to be in lieu of notice, or that the dismissal occurred some days after the conduct to which it related, does not alter the position in this respect. His dismissal therefore fell to be considered under the “Summary dismissal” section of the Code in accordance with the Pinawin principles. There was no error on the part of the Commissioner on this issue.
Did Wisharts believe that Mr Ryman had engaged in conduct sufficiently serious to justify immediate dismissal?
[43] Whether Mr and Mrs Wishart, as the controlling minds of the employer 15, genuinely held the belief that Mr Ryman’s conduct on 19 December 2014 justified immediate dismissal is a question of fact. On this issue, their evidence was marked by significant inconsistency. In their evidence in chief (that is, in their witness statements), Mr and Mrs Wishart both stated that they made up their minds to dismiss Mr Ryman on the weekend immediately following the 19 December 2014 incident. Their failure to dismiss him until 5 January 2015 was explained by them as resulting from Mr Ryman’s failure to attend for work on the only two intervening work days, namely 22 and 23 December 2014. However, they also gave evidence that clearly contradicted this - in particular, they gave evidence that they had work which they wished Mr Ryman to perform on 22 and 23 December 2014, and that they had not made a final decision to dismiss him by that time. In this respect, the following exchange in the cross-examination of Mr Wishart is significant (underlining added):
“Now, sir, you have just given evidence and you say in your statement that you and Marge - Mrs Wishart - had made a decision on the weekend after the 19th that you were going to finish Mr Ryman as soon as possible?---I was going to talk to Jeremy, yes.
But you wanted him at work on the 22nd?---Yes, I wanted him there.
You wanted him to do work on that day?---Yes.
Okay?---He still had jobs to do.
He still had jobs to do?---Yes.
You wanted him at work on the 23rd as well, didn’t you?---23rd - - -
The day after the 22nd, the Tuesday?---Yes.
You say, sir, at paragraph 29 of your statement that you were waiting for him on the 22nd and 23rd of December to complete a job?---Yes.
The fact of the matter is, sir, that you and Mrs Wishart had not made a decision - - -?---Not 100 per cent.
- - to terminate Mr Ryman after the 19th, had you?---Not 100 per cent, no.
Okay. You told me before that you decided to finish him up as soon as he was back at work. Paragraph 29 of your statement, sir - I apologise, it’s in fact paragraph 25. You say that you have to let him go on the Monday; that was your decision?---Yes, I was going to have a discussion with him and let him go.
Yet, sir, you’re telling me - - -?---I was expecting him to turn up on the Monday.
Right?---During the course of that morning we were going to have a yarn to Jeremy.
Right, but you were going to put him to work on the Monday, weren’t you?---I expect him to turn up there to do the job.
And on the Tuesday as well?---On the Tuesday.
Now, sir, your evidence is that Mr Ryman engaged in such horrific and horrendous conduct on the 19th that you didn’t want him at work at all?---I was quite relieved, actually, when he said he wasn’t coming.
But you accept, don’t you, that you also wanted him at work to do work?---Yes.
I put it to you, sir, that the reason that you wanted him at work and that you would have been happy for him to have gone to work on the 22nd and the 23rd was because Mr Ryman did not behave and carry on as you say he did on the 19th because had he behaved as you say he did on the 19th, you wouldn’t have wanted him anywhere near the workplace, would you?---We definitely had to talk to Jeremy and that was going to be the first time since the 19th to talk to him on the Monday.
Now, sir, on the 19th - - -?---He had one job to do, which Jeremy then didn’t complete on the Friday.
You wanted him there on the 22nd and 23rd?---It was a job that he could only do and I had no-one else in the workshop that could do that.” 16
[44] The evidence of Mr Steven Penrose, another Wisharts employee, was also to the effect that Mr Ryman was expected to attend and perform work on 22 December 2014. Mrs Wishart also gave evidence in cross-examination that it was not until sometime after Christmas that the decision was made to terminate Mr Ryman’s employment. 17 It was not until 24 December 2014 that Mr Wishart changed the lock on the front gates so that Mr Ryman could not access the site over the Christmas/New Year break.
[45] In our view, the desire for Mr Ryman to attend for work on 22 and 23 December 2014 to perform “a job that he could only do” cannot be reconciled with the holding of a belief that he had committed serious misconduct justifying immediate dismissal on 19 December 2014. The evidence gives rise to a different inference, namely that it was only after Mr Ryman failed to attend for work on 22 and 23 December 2014 that a view was formed that the employment relationship had irretrievably broken down and should be terminated. Mr Wishart’s conveyal of the dismissal to Mr Ryman on 5 January 2015 emphasised the importance of the absences from work as much as the conduct on 19 December 2014 in the reason for dismissal. Mr Wishart’s own description of what he said was as follows (emphasis added):
“… We need to talk. You know I’m going to be having a lot of time off this year and I need my staff to get along with each other. After the incident before Christmas and then not showing up for work I assume you’ve made up your mind you don’t want to work for us. It’s best for everyone if you hand in your keys and fuel card and we part on good terms.”
[46] The Commissioner simply relied upon what was stated in the separation certificate as evidence for the belief held by the employer. 18 Indeed the Commissioner regarded this element of the Pinawin principles as something that could “usually be easily established”19, even though in this case there was a vigorous contest about it. In our view, the Commissioner erred in failing to take into account the evidence we have referred to above, and that led to him making the wrong finding. The evidence demonstrates that Mr and Mrs Wishart did not decide to dismiss Mr Ryman immediately after the 19 December 2014 incident, that they wished him to attend for work on 22 and 23 December 2014 to perform a task which only he could do, and it was only his non-attendance which compelled them to the final conclusion that his employment had to be terminated. That was the sentiment which was conveyed to Mr Ryman as the reason for his dismissal on 5 January 2015. The separation certificate, which post-dated the dismissal, did not properly reflect the whole of the reasons for the dismissal. Wisharts did not in fact hold the belief that Mr Ryman’s conduct on 19 December 2014 was misconduct which in and of itself was sufficiently serious to justify dismissal.
[47] Section 400(2) of the FW Act provides that an appeal from an unfair dismissal decision on a question of fact can only be made on the ground that the decision involved a significant error of fact. The error of fact here was obviously a significant one, because it founded the Commissioner’s further conclusion that the dismissal was consistent with the Code. The correct finding of fact which we have identified required the alternative conclusion, namely that the Code had not been complied with.
[48] Because the Commissioner determined to dismiss Mr Ryman’s application for an unfair dismissal remedy on the basis of the erroneous conclusion that the Code had been complied with, the Decision must be quashed. We note that the Commissioner expressed the alternative conclusion that, if the Code had not been complied with, the dismissal was not harsh, unreasonable or unjust. We doubt that it was open to the Commissioner to embark upon a consideration of whether the dismissal was unfair having found that the Code was complied with. In any event, it is clear that in doing so the Commissioner failed to consider and make findings about the matters required to be taken into account by s.387. That amounts to a failure to properly exercise the jurisdiction.
[49] It will be necessary therefore for us to re-determine Mr Ryman’s unfair dismissal remedy application. We do so on the basis of our conclusion that the dismissal was not consistent with Code (noting that Wisharts accepted that the “Other dismissal” section of the Code was not relevant).
Rehearing - was Mr Ryman’s dismissal harsh, unjust or unreasonable?
[50] Section 387 of the FW Act requires the Commission, in considering whether a dismissal was harsh, unjust or unreasonable, to take into account a number of matters specified in paragraphs (a) to (h) of the section. We will deal with each of these matters in the rehearing of Mr Ryman’s unfair dismissal remedy application in turn below. It is first necessary however to identify the factual basis upon which we intend to proceed.
[51] As earlier noted, the Commissioner rejected the evidence of Mr Ryman concerning the 19 December 2014 incident, and accepted the version of events portrayed in the evidence of the witnesses called by Wisharts (namely Mr and Mrs Wishart, Mr Penrose and Mr Timothy Swain). The Commissioner had the advantage of seeing and hearing the evidence as it unfolded in its entirety, and could observe the demeanour of the witnesses as they gave their evidence. Mr Ryman has not in his appeal made any substantive challenge to the Commissioner’s finding in this respect. Accordingly we will determine whether Mr Ryman’s dismissal was harsh, unjust or unreasonable based upon the evidence of the Wisharts’ witnesses insofar as the 19 December 2014 incident is concerned. In terms of the relevant facts concerning Mr Ryman’s conduct following 19 December 2014, there is no real dispute as to the facts.
Paragraph 387(a)
[52] The 19 December 2014 incident involved the following:
[53] In relation to Mr Ryman’s non-attendance at work on 22 and 23 December 2014, the relevant matters are:
[54] We are satisfied that the above conduct, taken as a whole, constituted a valid reason for Mr Ryman’s dismissal. In the context of a very small business in which functional personal relationships and the shared performance of necessary work were essential in order for the business to be able to operate effectively, Mr Ryman’s conduct on 19, 22 and 23 December 2014 rendered the continuation of his employment untenable.
Paragraphs 387(b) and (c)
[55] Mr Ryman was not notified of the reason for his dismissal prior to it being effected, and consequently he was not given an opportunity to respond. That on its face amounted to a denial of procedural fairness. However that is mitigated in this case by the fact that the decision-makers were witnesses to the conduct on 19 December 2014, with the result that an investigation of the matter was not likely to advance their knowledge of what occurred. In a larger business, such a situation might be characterised as involving an unfair conflict of interest, but it was unavoidable in a business with only five employees.
Paragraph 387(d)
[56] Because there were no discussions about the dismissal prior to the dismissal being effected, no issue of attendance by a support person arises.
Paragraph 387(e)
[57] There was no issue with the quality of Mr Ryman’s work performance, so the issue of whether he was given a warning does not arise.
Paragraphs 387(e) and (f)
[58] The small size of the Wisharts business, and the absence of dedicated human resource management specialists and expertise, undoubtedly had a significant impact on the procedures followed in effecting the dismissal – particularly in relation to the denial of procedural fairness.
Paragraph 387(h)
[59] Relevant matters weighing in favour of a finding that Mr Ryman’s dismissal was at least harsh are that he had been employed by Wisharts for three and a half years, that his work performance was accepted to be satisfactory, that his disciplinary record apart from one minor matter was unblemished, and that he had been unable to secure full-time work since his dismissal to the financial detriment of himself and his family.
Conclusion
[60] Having weighed up all the matters required to be considered under s.387, we have come to the conclusion that Mr Ryman’s dismissal was not harsh, unjust or unreasonable. Had Mr Ryman’s conduct occurred in the context of a significantly larger business, we may have come to a different conclusion. In a larger business, Mr Ryman’s loss of temper on 19 December 2014 followed by his unauthorised absence on the next two working days may have had little impact on the operation of the business. However in the context of a very small family business, Mr Ryman’s conduct had serious consequences. In circumstances where Mr Ryman had irreparably damaged his personal relationship with the owners of the business, Mr and Mrs Wishart, and his fellow mechanic Mr Daniel Wishart, and had demonstrated that he could not be relied upon to attend for work when needed, the conclusion that his continuing employment was not viable could not be considered to be unfair. Mr Ryman’s unfair dismissal remedy application must therefore be dismissed.
Orders
[61] We order as follows:
(1) The appeal is upheld.
(2) The Decision is quashed.
(3) Mr Ryman’s unfair dismissal remedy application is dismissed.
VICE PRESIDENT
Final written submissions:
16 September 2015 and 9 October 2015 – Appellant
28 September 2015 – Respondent
<Price code C, PR570064>
2 Decision at [65]
3 Decision at [75]
4 Decision at [81]
5 [2011] FWA 5091 at [92]
6 Irving, The Contract of Employment at 10.5
7 Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at [237]-[260]; Langer v Robert Quinn t/a Pyrmont Car Store [2014] FWC 7460 at [38]; Neil and Chin, The Modern Contract of Employment at 11.130; Irving, The Contract of Employment at 10.4
8 (2001) 107 IR 117
10 Ibid at [240]
11 Ibid at [250]-[257]
12 (2007) 168 IR 375
13 See McCarry, Termination of Employment Contracts by Notice, (1986) 60 ALJ 78 at 79; Siagian v Sanel Pty Ltd (1994) 122 ALR 333 at 352-353; Akee v Link-Up (Queensland) Aboriginal Corporation [2015] FWC 555 at [10]-[11]
14 [2012] FWAFB 1359, (2012) 219 IR 128
15 The relevant effect of s.793(2) of the FW Act is that the state of mind of Mr and Mrs Wishart in deciding to dismiss Mr Ryman can be attributed to Thrash Pty Ltd.
16 Transcript 14 April 2015, PNs 1016-1035
17 Transcript 14 April 2015, PNs 1430-1431
18 Decision at [57]
19 Decision at [56]
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