DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Belinda Morris
v
Community Caring Pty Ltd T/A Carers That Care
(U2017/6386)

Application for an unfair dismissal remedy – redundancy not genuine – valid reason – dismissal harsh, unjust or unreasonable – compensation awarded.

Summary

[1] On 15 June 2017, Ms Belinda Morris lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) in relation to the termination of her employment with Community Caring Pty Ltd T/A Carers That Care (CTC) on 2 June 2017.

[2] On 29 June 2017, Ms Nina Hadges Managing Director of CTC lodged a Form F3 Employer Response which contended that:

● Ms Morris was informed of the dismissal on 26 May 2017.
● The dismissal took effect on 2 June 2017.
● At the time of the dismissal CTC employed 34 persons.
● Ms Morris’s employment was covered by the Clerks – Private Sector Award [MA000002].
● No jurisdictional objections were noted.
● Ms Hadges contended that due to the pending loss of clients, CTC was not in a position to generate enough funds to sustain Ms Morris’ full time wage and she was given one weeks’ notice.
● Ms Hadges believed that Ms Morris had commenced working for Enhance Lifestyle.
● Ms Hadges provided a letter of termination dated 26 April 2017 addressed to Ms Morris which referred to one weeks’ notice being provided.

[3] A conciliation conference was conducted on 30 June 2017 but the matter did not resolve.

[4] The matter was listed for a telephone directions conference before me on 17 July 2017. Ms Hadges and Ms Morris attended. Directions were issued for the filing of submissions and witness statements. Ms Morris’ material was due by 27 July 2017 and CTC’s by 3 August 2017 with any material in reply from Ms Morris due by 10 August 2017. The hearing was listed for 22, 23 and 24 August 2017. At the directions conference, Ms Hadges stated that Ms Morris’ employment ceased as a result of negligence when performing her duties.

[5] Ms Morris submitted material in accordance with the directions. CTC did not submit any material despite a reminder being sent via email from my chambers at 11:18am on 3 August 2017.

[6] The matter was listed for a non-compliance conference on 4 August 2017. CTC did not attend.

[7] On 4 August 2017, the Commission advised CTC, by email, that if its material was not received by 11 August 2017 the matter would be determined on the papers based on the material before the Commission. Ms Morris advised she would seek legal advice and was invited to submit any additional material by 10 August 2017.

[8] On 10 August 2017, CTC was sent a reminder via email from my chambers that submissions were due the next day. CTC did not file any further material.

[9] Ms Morris submitted a witness statement and a submission, and witness statements from:

● Ms Jeanette Hallam - previously CTC Finance Payroll Manager;
● Ms Pamela Dignon - previously CTC Office Administrator;
● Ms Tracy-Anne Cope - previously CTC Support Worker;
● Mrs Leeanne Gaskin – Registered Nurse, First Aid Trainer and Support Worker at CTC.

[10] Much of the previous material contained in the statements was in support of Ms Morris’ work performance or character and the witnesses’ disappointment that their employment ceased on April and May 2017.

[11] Ms Morris submits that:

● She commenced employment with CTC as a casual Office Administrator on 28 May 2014 and accepted full time employment on 1 July 2014.
● She did not receive any warnings concerning her work performance.
● On 10 May 2017, Ms Hadges verbally advised her and Ms Dignon that CTC would be closing in two weeks.
● Her fellow co-workers were subsequently notified that they were being made redundant.
● On 26 May 2017, she was advised her employment would cease.
● She was not given the opportunity to respond as Ms Hadges would not have a discussion with her.
● Ms Morris contends that CTC remained open post her dismissal but closed on 10 July 2017.
● Ms Morris has secured casual employment.

[12] The payslips filed by CTC indicate that Ms Morris was paid $40,725.36 per annum.

Was the dismissal a genuine redundancy?

[13] Section 385 of the Act states:

“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.”

[14] Section 389 of the Act states:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[15] Ms Morris’ role was covered by the Clerks—Private Sector Award 2010 (the Award) [MA000002]. Clause 8 of the Award relevantly states:

“8.1 Consultation regarding major workplace change

(a) Employer to notify

(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

(ii) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).

(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”

Consideration

[16] It has not been contended that Ms Morris is not protected from unfair dismissal pursuant to s.382 of the Act.

[17] In its Form F3 Employer Response CTC contended that due to the pending loss of clients, CTC was not in a position to generate enough funds to sustain Ms Morris’ full time wage. When I consider the information contained in the witness statements, it appears that the reason why Ms Morris was dismissed was due to CTC’s financial situation. I note that most of the witnesses called by Ms Morris were also dismissed due to the impending closure of the business. CTC did not present any evidence to support the contention made at the directions conference that Ms Morris was negligent in the performance of her duties.

[18] Whilst the witness evidence is that the business closed on 10 July 2017, I note that it remains registered, its website continues to operate and it continues to take telephone calls in the name of CTC. Furthermore, on 17 July 2017, Ms Hadges appeared at the directions conference on behalf of CTC.

[19] I find that Ms Morris’ dismissal was not due to her work performance but due to financial difficulties experienced by CTC which led it to reduce headcount.

[20] There is no evidence before me that CTC complied with the consultation requirements of clause 8 of the Award and I find that no written information was provided to Ms Morris which would comply with the requirements of clause 8.1(b)(iii) of the Award.

[21] The onus is on CTC to satisfy me that the dismissal was a genuine redundancy as defined in s.389 of the Act.

[22] Whilst it appears that Ms Morris was dismissed as a result of her job no longer being required to be performed because of changes in the operational requirements of the business, it is clear to me that the consultation obligations required by s.389(1)(b) of the Act have not been met.

[23] There is insufficient information before me to determine if s.389(2) of the Act has been breached by CTC.

[24] I find that the dismissal cannot be regarded as a genuine redundancy within the meaning of s.389 of the Act.

[25] I now turn to consider whether the dismissal was harsh, unjust or unreasonable pursuant to s.387 of the Act.

Was the dismissal harsh, unjust or unreasonable?

[26] Pursuant to s.387 of the Act, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account:

“387 Criteria for considering harshness etc.

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

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

(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; and

(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; and

(h) any other matters that the FWC considers relevant.”

Valid reason - s.387(a)

[27] Notwithstanding its formulation under a different legislative environment, I have adopted the definition of a valid reason set out by Northrop J in Selvachandran v Peteron Plastics Pty Ltd¹ which requires the reason for termination to be “sound, defensible or well founded.”

[28] I have found Ms Morris was dismissed as a result of her job no longer being required to be performed because of changes in the operational requirements of the business.

Notification of valid reason and opportunity to respond - s.387(b) and (c)

[29] Ms Morris was not notified in writing of the reason for her dismissal, however, she was advised verbally on 10 May 2017 that the business would be closing in two weeks’ time.

Any unreasonable refusal by the employer to allow Ms Morris to have a support person present to assist at any discussions relating to dismissal - s.387(d)

[30] Ms Morris does not appear to have requested a support person.

Warnings relative to unsatisfactory performance - s.387(e)

[31] There is no credible evidence that suggests Ms Morris was dismissed due to unsatisfactory performance.

Size of the employer’s enterprise and absence of dedicated human resources support - ss.387(f) and (g)

[32] CTC did not make any submissions on this topic, I note that it employed 34 persons and there is no material before me that indicates CTC had any internal HR support.

Other matters considered relevant - s.387(h)

[33] I note that had Ms Morris’ employment been terminated by way of redundancy, she would have been entitled to notice and redundancy pay for her 2 years and 11 months of full time service. CTC paid one weeks’ notice.

[34] I have found that CTC failed to consult with Ms Morris in the manner required by the Award.

Conclusion

[35] The Explanatory Memorandum to the Act² explains the approach of the Commission in considering the elements of section 387:

“FWA must consider all of the above factors in totality. It is intended that FWA will weigh up all the factors in coming to a decision about whether a dismissal was harsh, unjust or unreasonable and no factor alone will necessarily be determinative.”

[36] In Byrne and Frew v Australian Airlines Pty Ltd, ³ the following observations made by McHugh and Gummow JJ are relevant to my conclusion:

“It may be that the termination is harsh but not unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[37] Having considered each of the factors detailed in s.387 of the Act, I have concluded that the termination of Ms Morris’ employment was harsh, unjust or unreasonable.

Remedy

[38] The relevant provisions of Division 4 of Part 3-2 of the Act state:

“Division 4—Remedies for unfair dismissal

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) the FWC may make the order only if the person has made an application under section 394.

(3) the FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

…

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), the FWC 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 the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. Disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[39] The prerequisites contained in ss.390(1) and (2) have been met in this case.

[40] Ms Morris did not seek reinstatement and I am satisfied that it is not appropriate in this case.

[41] Section 390 of the Act makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all the circumstances.

[42] I now turn to whether compensation in lieu of reinstatement is appropriate.

[43] A recent Full Bench in McCulloch v Calvary Health Care Adelaide⁴ confirmed, in general terms, that the approach to the assessment of compensation, as undertaken in cases such as Sprigg v Paul’s Licensed Festival Supermarket,⁵ remains appropriate.

[44] Section 392(2) of the Act requires the Commission to take into account all of the circumstances of the case including the factors that are listed in paragraphs (a) to (g). Without detracting from the overall assessment required by the Act,⁶ it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.

The effect of the order on the viability of the employer - s.392(a)

[45] Whilst it appears that CTC may be subject to financial stress, there is no material before me which suggests that the viability of the CTC would be affected by an award of compensation.

The length of Ms Morris’s service with the employer - s.392(b)

[46] Ms Morris was employed by CTC as a full time employee for 2 years and 11 months.

The remuneration Ms Morris would have received, or would have been likely to receive if she had not been dismissed - s.392(c)

[47] This involves, in part, a consideration of the likely duration of Ms Morris’ employment in the absence of what I have found to be an unfair dismissal.

[48] There were no issues concerning Ms Morris’ work performance which would have adversely impacted on her continued employment.

[49] In the circumstances, it is reasonable to assess compensation in this matter on the basis that Ms Morris would have remained in employment for a further period of 7 weeks.

The efforts of Ms Morris to mitigate the loss suffered by her because of the dismissal - s.392(d)

[50] Ms Morris submitted that she commenced seeking alternative employment as soon as she was given notice of her dismissal. There was no submission by CTC that I should discount any award as a result of this.

Remuneration earned by Ms Morris during the period between the dismissal and the making of the order for compensation s.392(e)

[51] Ms Morris has not identified any post dismissal earnings. There was no submission by CTC that I should discount any award as a result of this. Ms Morris’ notice does not appear to have been paid in lieu.

The amount of any income likely to be earned by Ms Morris during the period between the making of the order for compensation and the actual compensation s.392(f)

[52] The period over which the compensation has been calculated expired prior to the making of the order for compensation and, accordingly, whilst Ms Morris may have received additional income it is not appropriate to further discount the award.

Any other matter that the FWC considers relevant s.392(g)

[53] In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

Conclusion

[54] The maximum compensation limit in this case would be the lesser of 26 weeks remuneration or $68,350. 7 The amount of compensation awarded is less than that amount.

[55] Taxation is to be paid on the amount determined.

[56] The compensation confirmed below is also appropriate having regard to all of the circumstances of this matter and the considerations specified by the Act.⁸

[57] I award compensation in the amount of $5,482.26 to be paid within 14 days.

[58] An Order 9 reflecting this decision will be issued.

COMMISSIONER

Hearing details:

Determined on the papers.

Final written submissions:

10 August 2017.

1 (1995) 62 IR 371 at 373

² Explanatory Memorandum to the Fair Work Bill 2008

3 Byrne and Frew v Australian Airlines Pty Ltd [1995] HCA 24

4 [2015] FWCFB 873

5 (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge [2013] FWCFB 431

6 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446

 7   Section 392(5) of the Act

8 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446, [32]

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