[2016] FWC 9007
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.394—Unfair dismissal

Eric Zsembery
v
Republic Events Australia
(U2016/9882)

VICE PRESIDENT WATSON

MELBOURNE, 15 DECEMBER 2016

Application for relief from unfair dismissal – whether dismissal consistent with the Small Business Fair Dismissal Code – whether dismissal harsh, unjust or unreasonable – valid reason –notification of reason – opportunity to respond – quantum of compensation.

[1] This decision is an amended version of a decision given on transcript on 8 December 2016 in relation to an unfair dismissal application under s.394 of the Fair Work Act 2009 (the Act) by Mr Zsembery arising from the termination of his employment with Republic Events Australia (Republic Events).

[2] The application before the Commission is made by Mr Eric Zsembery alleging that the termination of his employment on 15 July 2016 was an unfair dismissal within the meaning of s.385 of the Act. That definition contains four elements. It is not in dispute that Mr Zsembery has been dismissed and it is not in dispute that the dismissal was not a case of a genuine redundancy.

[3] The issues remaining for determination are whether the dismissal was harsh, unjust or unreasonable and whether the dismissal was inconsistent with the Small Business Fair Dismissal Code. The issue of consistency with the Small Business Fair Dismissal Code should be considered at the outset.

[4] I am satisfied on the evidence before me that Republic Events is a small business and the Small Business Fair Dismissal Code applies to this termination. It is necessary to consider the terms of that code. The relevant part of that code in relation to this dismissal is not “summary dismissal”. It falls under the heading of “other dismissal”. The Small Business Fair Dismissal Code says:

[5] There are other matters relating to procedural matters which are not relevant in the circumstances of this case.

[6] Mr Zsembery was dismissed for the reasons that are set out in the letter of 15 July 2016. Those reasons relate to events which occurred at certain unspecified dates during the earlier part of the year. The matters include an allegation of theft (which should correctly refer to a time in February of 2016 rather than March 2016 as the letter of termination indicates) an incident about reporting damage to a forklift cage, repeatedly smoking on company premises despite being told not to, and failing to follow directions of senior company staff. There has been extensive evidence in relation to those events.

[7] The issue, however, in relation to the Small Business Fair Dismissal Code is that where someone is terminated by a small business it should not come out of the blue. It must be preceded by written or verbal warnings and a clear indication that the employee risks being dismissed if there is no improvement. The matters that were relied upon for termination do not involve a single aspect or unsatisfactory performance. They deal with a variety of different matters. They were subject to discussions and counselling at various times, but it cannot be said, on the evidence before me, that Republic Events warned Mr Zsembery that his performance needed to improve, and that he risked being dismissed if there was no improvement.

[8] The termination appears to have been triggered by a final incident on 4 July 2016 when Mr Zsembery left work at 3:00pm when there was a clear expectation that he and other employees would continue at work until sufficient work was performed on that day. A discussion occurred in relation to that matter over the telephone which involved an element of aggression by both Mr Costello and Mr Zsembery.

[9] The termination was decided upon because that event was something of a last straw arising from a deteriorating work ethic by Mr Zsembery. However, the evidence does not establish that an appropriate warning about the deterioration of work ethic was given, and that a proper opportunity was given to him to address the matters of concern, rectify the problems, and understand the requirements of the employer.

[10] For that reason I do not find that the dismissal was consistent with the Small Business Fair Dismissal Code. However, I must also deal with the argument of Republic Events that the termination was not harsh, unjust or unreasonable.

[11] The criteria for addressing harshness are set out in s.387 of the Act, and I address each of those matters. The first is whether there was a valid reason for the dismissal relating to Mr Zsembery’s capacity or conduct. I have indicated the reasons for the termination. I consider that there was a deterioration in work ethic and there were instances of behaviour including OH&S matters which involved unsatisfactory performance. I have mentioned the final straw of leaving work prior to the completion of work on that day, and the heated conversation that occurred between Mr Costello and Mr Zsembery afterwards.

[12] In my view, it could be said that there is a valid reason for the dismissal relating to the deterioration of the work ethic, however those reasons are not strong. The matters involved a disparate range of issues and those issues occurred over a period of some months. There was no clear guidance given to Mr Zsembery about the need to improve such that he would understand the expectations of him. Nevertheless I find, as a matter of fine balance, that there was a valid reason for the dismissal.

[13] The next issue is whether Mr Zsembery was notified of that valid reason. He was notified of his termination in the letter of 15 July 2016. He was also notified of an investigation into his conduct and work performance in an email of 5 July 2016. I consider that those communications constitute notification of the valid reason.

[14] The next related factor is whether Mr Zsembery was given an opportunity to respond to any reason relating to his capacity or conduct. On the evidence before me I find that he was not. The events early in the year regarding Puma runners were the subject of discussions at the time, and an apology was made. It was said that taking the runners was a misunderstanding and nothing further was done in relation to that event after it occurred. The other events occurred over subsequent months and appear to be a matter of deterioration and poor work ethic manifested by a variety of conduct issues. The conduct issues were of a relatively minor nature certainly compared to questions of theft.

[15] When the company suspended Mr Zsembery on pay it did not then take the opportunity to indicate its considerations and provide him with an opportunity to respond to those matters. There are always different sides to a story and different explanations that might have been given. It may have been the intention of Republic Events to provide an opportunity at the meeting on 15 July 2016 between Mr McLoghlin and Mr Zsembery. The evidence before me establishes that the decision to terminate was communicated without that opportunity being given.

[16] The next factor concerns the refusal to allow a support person and there is no suggestion that any such refusal occurred.

[17] The next factor relates to whether the employee had been warned about unsatisfactory performance before the dismissal. There is some evidence of counselling about smoking and other matters. I find on the evidence that the communications to Mr Zsembery regarding the various areas of unsatisfactory performance and the need to improve were not subject to appropriate warnings. I take that factor into account in considering the overall fairness of the dismissal.

[18] The next two factors relate to the size of the employer’s enterprise, the impact on procedures in effecting the dismissal, and the absence of dedicated human resource management specialists that might impact on the procedures in effecting the dismissal. Republic Events is a small business with a small number of employees. It does not have dedicated human resource management specialists. I note there was a mention in the evidence of advice being received in relation to the letter of termination. I take into account the small size of the employer’s business and the lack of internal expertise in considering the overall fairness of the matter.

[19] I also am required to consider any other matters I consider relevant. The length of Mr Zsembery’s service of approximately 18 months in total, firstly as a casual employee, and then as a full-time employee is relevant. The issue of whether alternative disciplinary sanctions could have been applied in lieu of dismissal and all the other circumstances of Mr Zsembery’s employment disclosed by the evidence are also relevant considerations.

[20] I consider that the fine line of whether there is a valid reason for the dismissal combined with significant procedural defects in relation to this matter render the dismissal unreasonable. It is not necessary that I address the question of whether it is also harsh or unjust. It is a conclusion which is consistent with my conclusion in relation to the Small Business Fair Dismissal Code. The Small Business Fair Dismissal Code is intended to present a lower bar to employers dismissing employees if they are small businesses. As I found this business failed that test under the lower bar, it follows that the business also fails the test under the higher bar of whether the termination is harsh, unjust or unreasonable.

[21] I therefore turn to the question of remedy. Reinstatement is not sought and I do not consider it appropriate to order reinstatement. I do consider it appropriate to order compensation. That compensation must be assessed by reference to s.392 of the Act and case law establishes an approach consistent with the application of those criteria.

[22] There is no real issue as to the viability of the employer’s enterprise although it is a small business.

[23] The length of Mr Zsembery’s service was a total of 18 months including an initial period of casual employment.

[24] The next issue concerns the remuneration Mr Zsembery would have received if he had not been dismissed. I have regard to the finding that as a matter of balance there was a valid reason for dismissal. I also rely on the finding that there was a deterioration in work ethic and there was dissatisfaction, both from Mr Zsembery and Republic Events with each other. It appears to me that it was inevitable that the employment would have been terminated not long after the termination date. I do not think that employment would have continued for a considerable period, and given my findings as to the procedural defects, I do not consider that employment would have continued longer than a further two months if the employment had not been terminated at that time.

[25] I take into account efforts to mitigate the loss suffered, and I note that Mr Zsembery was unfit to work on a considerable number of occasions after the termination of his employment. He only obtained paid employment for one shift between the time of his termination and the present time. I do not consider that those efforts were as fulsome as they could be expected to have been for someone who lost employment in those circumstances. I have taken into account the remuneration that was earned and is likely to be earned prior to the payment of compensation, and all other relevant considerations. I also take into account the conduct of Mr Zsembery which contributed to the termination of his employment.

[26] Taking into account all of those matters, I propose to make an order of compensation of four weeks’ pay. The payment should be made at the base rate applicable to Mr Zsembery’s employment which is $31.50 per hour. I assume that a normal ordinary hour week would be 38 hours. The compensation should be 38 hours x $31.50 multiplied by four weeks. From that amount should be the deduction of taxation in accordance with law. An order [PR588588] to that effect is published with this decision.

VICE PRESIDENT

Appearances:

Mr E Zsembery, Applicant.

Mr D Finn of counsel on behalf of Republic Events Australia.

Hearing details:

2016.

Melbourne.

8 December.

Final written submissions:

Mr Zsembery on 25 October 2016.

Republic Events Australia on 25 November 2016.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR588585>