[2017] FWC 2958 [Note: An appeal pursuant to s.604 (C2017/3516) was lodged against this decision - refer to Decision dated 25 July 2017 [[2017] FWC 3815] for result of appeal.]
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Ashley Duddington
v
Mario and Clara Enterprises Pty Ltd and Morgan Trading Pty Ltd
(U2016/15256)

DEPUTY PRESIDENT BULL

PERTH, 13 JUNE 2017

Application for an unfair dismissal remedy. Small Business Dismissal Code not complied with. Dismissal unfair, compensation to be considered.

[1] Mr Ashley Duddington (the applicant/Mr Duddington) the Restaurant Manager for the restaurant trading as Oscar’s Restaurant Currambine (Oscar’s) claims that on 13 December 2016, 1 he was unfairly dismissed from his employment without notice. Mr Duddington had commenced work at Oscar’s on 1 May 2015. Mr Duddington represented himself before the Fair Work Commission (the Commission).

[2] The claim of unfair dismissal is opposed by the respondent who was represented by Mr Nagy Morgan with the assistance of an Arabic interpreter. Mr Morgan stated he was the owner of the business and submitted that Mr Duddington was terminated due to a number of performance and conduct issues. Mr Morgan advised the Commission at the conclusion of the hearing that he was not prepared to make an offer to settle the claim.

[3] The first issue arising in this application is the true identity of the applicant’s employer.

[4] A second issue arises as to whether the respondent, as a small business employer, employing less than 15 employees, dismissed the applicant in compliance with the Small Business Fair Dismissal Code.

[5] Thirdly, if the Code was not complied with, the Commission is required to determine whether the applicant was dismissed unfairly and if so, what if any compensation should be awarded.

Identity of the employer

[6] Mr Duddington filed his complaint naming Oscars Restaurant trading as Oscars Restaurant as the employer.

[7] When eventually received, 2 the employer’s response signed by Mr Morgan referred to Morgan Trading and Mario and Clara Enterprises Pty Ltd trading as Oscar’s Restaurant Currambine (Western Australia) as the employer and trading name respectively.3

[8] During the first day of hearing there was an apparent agreement by all parties that the employer was the Morgan and Mansour Family Trust and the Morgan Family Trust ABN 31 378 377 138. The parties were advised by the Commission that a trust does not have the status of a separate legal personality and cannot be a party to legal proceedings. 4 Subsequently Mr Morgan was requested to file a copy of the Trust Deed but failed to do so.5

[9] Mr Duddington was advised by the Commission that to enliven the Commission’s jurisdiction the employer needed to be a national system employer as defined by the Fair Work Act 2009 (the Act).

[10] The jurisdiction of the Commission in respect of an unfair dismissal application is restricted to where the employee is employed by a national system employer which must be a constitutional corporation. An extended meaning of national system employer to cover unincorporated employers applies where a State has, before 1 July 2009, referred its powers to the Commonwealth for the purposes of paragraph 51 (xxxvii)6 per s. 30B of the Act. Unlike some other states7, the State of Western Australia has not referred its powers under s. 30B.

[11] On 16 May 2017, Mr Duddington made an application to change the name of the respondent to Mario and Clara Enterprises Pty Ltd and Morgan Trading Pty Ltd.

[12] In support of this variation application Mr Duddington provided a copy of a document titled Australian Taxation Office Tax Agent Portal – Report 8 which states the employer of the applicant for the financial year 2015-16 as Mario and Clara Enterprises Pty Ltd and Morgan Trading Pty Ltd.

[13] Mr Morgan did not oppose the amendment application and during day two of the hearing agreed that the employers as named by Mr Duddington are the correct employers of the applicant.

[14] Mr Morgan did not dispute the newly named employers were constitutional corporations in the sense that they were not trading corporations. As such there was no submission that the named employers were not national system employers, thereby enlivening the jurisdiction of the Commission. Pursuant to s.586 of the Fair Work Act 2009 (the Act) the application is amended to the extent that the true legal employer is correctly identified as per the request of the applicant.

Submissions of respondent

[15] Mr Morgan, despite directions and email advice from the Commission, did not file a witness statement or an outline of submissions. Mr Morgan requested listed hearing dates based on needing to speak to his business partner Mr Wahid Mansour. Mr Mansour did not appear at the hearing however his signature appears to be contained on the applicant’s Employee Separation Certificate together with that of Mr Morgan.

[16] Mr Morgan advised the Commission that the applicant was employed as the Restaurant Manager and was paid a total of $1,200 gross per week by way of $600 into the applicant’s bank account and $600 in cash at Mr Duddington’s request. 9 This evidence was contrary to the Employer Response that he had previously filed which stated that the applicant received $600 a week and did not receive any other monetary amount.10

[17] Mr Morgan stated that the applicant was advised of his termination on 28 November 2016 and told his employment would finish in two weeks, being 12 December 2016. 11

[18] Mr Morgan’s written response (Form F3) stated that the applicant had been provided with two warnings, that the applicant had received customer complaints about whistling during service, that the applicant was the subject of a complaint from one staff member, that the applicant engaged in shouting at the owner inside the restaurant and that the applicant had sent the owner a threatening message. 12

[19] In support of the respondent’s defence Ms Katelyn Ralls was called to give evidence about a complaint she made on 26 March 2016, regarding the applicant having physically manhandled her to prevent her from taking food out to customers, which she found unacceptable. 13 Mr Morgan stated at the hearing that he asked the applicant to apologise to Ms Ralls over this incident.

[20] Mr Morgan’s written employer response 14 also stated that the applicant had been made genuinely redundant; however he was unable to support this assertion and appeared to misunderstand the meaning of redundancy.15 It is noted that the Employment Separation Certificate completed by the employer states that the reason for separation was a ‘Shortage of Work’.16 The certificate also states that the applicant’s employment ceased on 10 December 2016.

[21] It was submitted by Mr Morgan that the applicant had a bad attitude towards customers and towards himself; he was also concerned that the applicant at times whistled while at work. None of these issues were canvassed in any detail in the Employer Response and neither the Commission nor the applicant had the benefit of a witness statement or outline of submissions from the respondent. Mr Morgan also advised at the hearing that he had heard from other staff that the applicant was looking for another job. The manner in which Mr Morgan expressed his concerns to the Commission was as follows:

[22] Mr Morgan stated that it was for these reasons that he told the applicant on 28 November 2016, that he would not be working anymore and provided him with 2 weeks’ notice, although he stated that he did not make this information public as no one else needed to know. 17 Mr Morgan stated in cross examination that he had personally crossed the applicant’s name off the shift roster where it had indicated he was rostered to work after 13 December 2016. The applicant was not provided with a written notice of termination as required under s.117(1) of the Fair Work Act 2009.

[23] Mr Morgan stated he was unable to locate the warnings that the applicant had been given however they were in the ‘system.’ Mr Morgan did not address the alleged threatening message he raised in his written employer response.

[24] Mr Morgan’s prime concern appeared to be that the applicant had on a number of occasions asked him to leave the restaurant, which Mr Morgan considered disrespectful. Mr Morgan stated that while having advised the applicant and staff that he had retired and that the applicant was to run the restaurant, he was still entitled to attend his own business and should not be told to leave by the applicant. It was difficult to identify from Mr Morgan’s evidence the causal link in time between this conduct and Mr Duddington’s dismissal either on 28 November or 13 December 2016.

Submissions of Mr Duddington

[25] Mr Duddington stated that he had been employed with the respondent since 1 May 2015 and worked full time 40 to 45 hours per week as the Restaurant Manager until he was instantly dismissed on 13 December 2016. 18

[26] Mr Duddington stated that on commencement of employment he was not given an option, but was told that he would receive $600 paid into his bank account each week and a further $600 a week in cash. 19

[27] It was Mr Duddington’s evidence that his dismissal was due to making inquiries regarding superannuation and holiday pay which occurred a few weeks before his termination. Mr Duddington stated to Mr Morgan that he had not received any superannuation since commencing employment. Mr Morgan replied that he was working on paying the superannuation. Mr Duddington stated that when he asked Mr Morgan whether he could take annual leave he was told by Mr Morgan that as he hadn’t taken annual leave in the year it was accrued, it did not accumulate. 20 Mr Duddington advised that he has taken separate action seeking to recover the alleged unpaid superannuation and annual leave.

[28] Mr Duddington stated that on messaging one of the staff, he was told his name had been crossed off the shift roster as of Monday 12 December 2016. He stated that on Tuesday 13 December he had a meeting with Mr Morgan at the restaurant where he was informed by Mr Morgan that he was no longer employed. Mr Morgan provided no explanation and no notice. His termination was effected by his name being crossed off the roster. Mr Duddington stated that he queried whether superannuation and holiday pay would be paid and was told by Mr Morgan that he would not receive these payments. Mr Duddington then returned his key.

[29] Mr Duddington did not deny that he had told Mr Morgan on a number of occasions to leave the restaurant. He stated he did this on the basis that Mr Morgan had said he had retired and would not be returning and left him in charge. He stated that Mr Morgan still attended the restaurant and would stand behind the till and put staff on edge; as a result he asked him to leave as per his understanding of their arrangement.

[30] Mr Duddington stated that over the last month he had obtained casual work, earning around $750 a week for working a 30 hour week. He otherwise had been without work for 4 months while making every effort to seek alternative employment. He stated he had attended a job interview for the position of a restaurant manager at ‘Crown’ but otherwise had been unsuccessful in securing immediate employment. Mr Duddington provided a copy of his ‘Seek’ profile indicating he had applied for 31 positions. 21

[31] At the hearing Mr Duddington stated that he had never been spoken to about his whistling and stated that he did not whistle and he believed this might have been the practice of other staff. Mr Duddington said he had never received any formal written warnings and had apologised for the incident in March 2016 concerning Ms Ralls.

[32] Mr Duddington also denied that he had been circulating his resume to other employers while still employed at Oscar’s.

[33] Ms Shae Woodward, who had worked as a waitress at Oscar’s for the duration of Mr Duddington’s employment, provided a witness statement and gave evidence. Ms Woodward stated that she received a text message from Mr Duddington on 13 December informing her that he had just been told he was no longer working at Oscar’s as of that day for no apparent reason. 23

[34] Ms Woodward stated she was only ever paid cash at a flat rate of $21.00 per hour and received no penalty payments and was unable to fill out a tax return reflecting her income from Oscar’s. Ms Woodward did not recall the applicant ever whistling while at work.

Small Business Employer and Small Business Fair Dismissal Code

[35] Section 394(1) of the Act provides that a person who has been dismissed may apply to the Fair Work Commission for an Order under Division 4 of the Act granting a remedy for unfair dismissal.

[36] Section 385 of the Act provides as follows:

(My underline)

[37] Section 396 of the Act requires that before considering the merits of an application for an unfair dismissal remedy, the Commission must decide a number of threshold issues.

(My underline)

[38] Mr Morgan submitted that the employer engaged less than 15 employees. On this basis the respondent meets the definition of a small business employer 24 in respect to an unfair dismissal claim and is able to plead that if the dismissal is consistent with the Small Business Fair Dismissal Code (the Code), it is not unfair. Although Mr Morgan did not specifically make this submission it is a consideration that the Commission must have regard to.

[39] Thus in accordance with s.396(c), the Commission must decide whether the dismissal was consistent with the Code. If the dismissal is consistent with the Code, then it cannot be held to be unfair.

[40] The Code is referred to at s.388(2) of the Act. The Code contains the following terms:

[41] Mr Morgan’s evidence was that he provided the applicant with 2 weeks’ notice of his termination, whereas Mr Duddington states he was summarily terminated at a meeting on 13 December 2016.

[42] The Commission had great difficulty with much of Mr Morgan’s evidence which was at times contradictory and evasive in the sense that no clear answer was provided to certain relevant questions, even making allowances for language difficulties. Mr Morgan did not submit that the applicant’s conduct was sufficient to justify summary termination.

[43] On the other hand, Mr Duddington accepted where the evidence was not in his favour, although he provided his own explanation for each particular circumstance, namely the incident with Ms Ralls and his requests on a number of occasions that Mr Morgan leave the restaurant.

[44] Where the evidence is in conflict I prefer that of Mr Duddington. His evidence was that he was only advised of his termination on 13 December 2016. This submission was supported by the evidence of Ms Woodward and also by the witness statement of Ms Westgarth, although she did not give evidence. 25

[45] I find that the applicant was summarily terminated and that the reason provided for the summary termination does not meet the test outlined in the Code as being sufficiently serious to justify immediate dismissal. The alleged conduct is not in the same genre as theft, fraud, violence, or serious breaches of safety. Mr Morgan referred to the applicant whistling while at work, having a bad attitude and customer complaints. This being the case, the termination of employment was not consistent with the Code in regard to summary termination.

[46] This then leaves the question as to whether the termination was consistent with the Code requiring notice to have been provided. Termination with notice under the Code requires some minimal procedural aspects to be complied with. For example did the employer give the employee a reason why they were at risk of being dismissed? Were they warned verbally or in writing that they risked being dismissed if there was no improvement? Was an opportunity to respond to the warning provided and did the employee have a reasonable chance to rectify the problem.

[47] Mr Morgan maintained that warnings had been provided to Mr Duddington but could not substantiate his submission that written warnings had been provided, stating first that they were all in the ‘system computer’ and then that they weren’t kept. 26 Irrespective of whether written or verbal warnings were issued, Mr Morgan did not submit that Mr Duddington was ever told that his job was in jeopardy.

[48] I accept that Mr Duddington was spoken to by Mr Morgan regarding the complaint of Ms Ralls some eight months before his the termination of employment. 27

[49] Having regard to the above I do not consider that the employer has complied with the Code in respect to terminating an employee with lawful notice. As such the test to be applied as to whether the termination was unfair reverts to s.387 of the Act.

[50] Section 387 of the Act sets out the factors the Commission must take into account in considering whether the dismissal was harsh, unjust or unreasonable:

(h) any other matters that FWA considers relevant.

[51] The above matters are considered below.

(a) Whether there was a valid reason related to capacity or conduct for the dismissal

[52] In Parmalat Food Products Pty Ltd v Wililo 28, the Full Bench held:

[53] In respect of the alleged whistling by the applicant while at work, I find that there is insufficient evidence to substantiate that it was the applicant himself that engaged in this practice.

[54] There was no evidence provided by Mr Morgan relating to an alleged threatening message sent by Mr Duddington to Mr Morgan.

[55] In respect of seeking work elsewhere, it does not, without more, provide a valid reason for dismissal. In any event Mr Duddington denied this allegation and Mr Morgan could only state that he had heard it from other employees. As was stated by Northrop J in Selvachandran v Petron Plastics Pty Ltd 29 a valid reason should be sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason.30

[56] The incident in respect to Ms Ralls was conceded by the applicant to have occurred although Mr Duddington cast it in a different light. More importantly, the incident occurred some 8 months earlier without any clear admonishment of the applicant by the employer, and there was no evidence of a written warning. Other than to show a pattern of misbehaviour, it cannot be used as the reason for termination.

[57] The Employer Response made reference to warnings under the name of Mr Wahid Mansour as ‘Oscar’s Restaurant owner, but as stated above he did not give evidence, the written warnings were not produced and Mr Duddington denied that he had received any such warnings.

[58] Of the reasons provided by Mr Morgan to justify the termination of employment of the applicant, the evidence only supported the fact that Mr Duddington had on a number of occasions asked Mr Morgan to leave the restaurant, which Mr Morgan found offensive and disrespectful.

[59] As stated by Mr Morgan, despite being retired he is entitled to look after his business, which includes attending the restaurant. To be told by his Restaurant Manager to leave the restaurant on a number of occasions is not conducive to the maintaining of an employment relationship; on this basis I find that there was a valid reason for Mr Duddington’s termination.

(b) Whether the person was notified of that reason

[60] In Crozier v Palazzo Corporation Pty Ltd  31 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

[61] As I found that the alleged meeting on 28 November 2016 did not occur, and as Mr Morgan did not state to Mr Duddington on 13 December 2016 the reason for his termination, I find that Mr Morgan was not notified of the reason/s for his termination. I accept Mr Duddington’s evidence that no reason was provided on the day of his termination, Mr Duddington was not spoken to about asking Mr Morgan to leave the restaurant and not asked about his alleged whistling or about his intentions to work elsewhere.

(c) Whether the person was given an opportunity to respond to any reason related to the capacity or conduct

[62] Mr Duddington was not provided with an opportunity to respond to the reasons for his termination.

(d) Any unreasonable refusal to allow the person to have a support person present to assist at any discussions relating to dismissal

[63] There was no refusal to allow Mr Duddington a support person however the circumstances surrounding his termination did not create an opportunity for a support person to be requested or refused.

(e) If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[64] Mr Duddington stated that he had not received any formal warnings regarding his performance, and that the restaurant had been performing well under his management. Mr Morgan did not produce any evidence to suggest the restaurant had not performed well. While stating that warnings had been provided, none were effectively evidenced in writing, nor were they corroborated. Mr Morgan simply stated that Mr Duddington had a bad attitude toward him. Mr Duddington was not provided with an opportunity to respond or given a reasonable chance to rectify his conduct.

(f) The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

[65] The size of the employer’s business no doubt adversely impacted the manner in which the applicant’s termination was effected, which I have had regard for.

(g) The degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal

[66] The termination of employment was effected in a procedurally unfair manner and carried out without the benefit of any human resource expertise. The absence of dedicated human resource management specialists or expertise in the enterprise had a substantial impact on how the applicant’s termination was effected and this has been taken into consideration.

(h) Any other relevant matters

[67] Mr Duddington argues that he was terminated shortly after inquiring about non-payment of superannuation and the taking of his annual leave. While Mr Morgan denies these enquiries related to the reason for Mr Duddington’s termination, it is not an unreasonable conclusion to be drawn by Mr Duddington as he says he was not spoken to about any performance issues. However is also not unreasonable for Mr Morgan to have concluded that Mr Duddington’s conduct was disrespectful in asking him to leave his own business on a number of occasions.

[68] Whilst I am satisfied that the applicant’s conduct in requesting Mr Morgan to leave the restaurant was a valid reason for his dismissal, this does not make the dismissal fair. As stated by the Full Bench in Container Terminals Australia Limited v Toby 32 at paragraph 15

[69] Taking into consideration all the matters in s.387 I find that the termination was unfair, being unjust and unreasonable on the basis that Mr Duddington was:

Remedy

[70] Section 390(3) of the Act only allows the Commission to order the payment of compensation where the Commission is satisfied that reinstatement is inappropriate and the payment of compensation is appropriate in all the circumstances.

[71] No party sought reinstatement as a remedy and I accept that reinstatement is not appropriate in this matter. Mr Duddington sought compensation for loss of wages.

[72] Section 392 of the Act sets out the criteria for determining amounts of compensation. The parties are provided with seven days from the date of this decision to file any written submissions regarding s.392 and s.393 of the Act. A copy of the relevant sections of the Act is provided to the parties for their assistance.

al of the Fair Work Commission with member's signature

DEPUTY PRESIDENT

Appearances:

Mr Duddington on his own behalf

Mr Morgan on behalf of the respondent

Hearing details:

2017

March 30

May 23

 1   The respondent states in its Employer response that the dismissal took effect on 12 December 2016

 2   Mr Morgan initially declined to file an employer response. He advised by phone on 25 January that he would participate in conciliation but will not submit an F3

 3   See Business Name Extract from ASIC

 4   Principles of the Law of Trusts Ford and Lee LBC 1983 at 39

 5   Commission email of 22 May 2017

6 Section 51(xxxvii) of the Constitution provides a mechanism through which state parliaments can refer powers over matters to the Commonwealth Parliament. The Commonwealth Parliament is consequently provided the power to make laws with respect to those referred matters, but only for those states from which the matter is referred.

7 For example on 25 September 2009, at a meeting of the Workplace Relations Ministerial Council the NSW government signed an agreement to refer its powers to the Commonwealth for the purposes of creating a national industrial relations system. The state parliament of NSW then enacted the Industrial Relations (Commonwealth Powers) Act 2009 No 115 to give legislative effect to this agreement.

 8   Exhibit A1

 9   PN109

 10   Form F3

 11   Form F3

 12   Form F3

 13   Witness Statement of Katelyn Ralls, Exhibit R1

 14   Form F3

 15   PN385

 16   Witness Statement of Ashley Duddington, Exhibit A2

 17   PN181

 18   Exhibit A2

 19   Exhibit A2

 20   Exhibit A2, PN405

 21   Exhibit A2

 22   See also PN419

 23   Witness Statement of Shae Woodward, Exhibit A3

 24   Fair Work Act 2009 (Cth) s.23(1)

 25   See PN228-9

 26   PN243-4

 27   Mr Duddington also accepted this at PN418

 28   [2011] FWAFB 1166

 29   (1995) 62 IR 371

 30   (1995) 62 IR 371 at 373

 31   (2000) 98 IR 137

 32   Print S8434

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