DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Joshua Smith
v
Johnny's Tyre Service Pty Ltd
(U2017/9356)

Unfair dismissal - no valid reason for dismissal - harsh, unjust and unreasonable dismissal - compensation Ordered.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was lodged at Sydney on 28 August 2017. The application was made by Joshua Alexander Smith (the applicant) and the respondent employer is Johnny’s Tyre Service Pty Ltd (ABN: 77 612 257 673) (the employer).

[2] The application indicated that the date that the applicant’s dismissal apparently took effect was 8 August 2017. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.

[3] The matter was not resolved at conciliation, and it has proceeded to arbitration before the Fair Work Commission (the Commission) which has involved a Hearing conducted in Sydney on 8 December 2017.

[4] At the Hearing, each of the Parties were essentially unrepresented. The applicant’s partner, Ms C Maskiell, assisted the applicant with the conduct of his case. Ms Maskiell called the applicant as a witness to provide evidence in support of his unfair dismissal claim, and she also gave evidence herself as a witness.

[5] The employer was represented by Ms J Hoban, the partner of the employer’s Director, Johnny Arthur Gulla. Ms Hoban called Mr Gulla as a witness, and she also gave evidence herself as a witness. Ms Hoban also introduced evidence from one further witness, Mr Gonzalez.

Factual Background

[6] The applicant and the employer’s Director, Mr Gulla, were very good friends. The applicant commenced a second period of employment with the employer in February 2016. The applicant was engaged in a position that was described as an on-call casual tyre fitter.

[7] The employer is a small business that has employed, at maximum, only several employees. Up until July 2017, the employer’s operation was conducted from business premises located at Railway Street in the Sydney suburb of Emu Plains.

[8] There was no documentation connected with the employment of the applicant and his wages were paid in cash. The work arrangements for the applicant appeared to be very flexible and essentially involved Mr Gulla telephoning the applicant and advising him of particular tyre fitting work that he was required to conduct. The substantial amount of tyre fitting work that was performed by the applicant was undertaken at various locations where the relevant vehicles that required tyre fitting services were situated.

[9] In July 2017, the employer was being evicted from its Railway Street business premises. On 11 July 2017, the applicant and Mr Gulla were involved in cleaning up and removing possessions and materials from the Railway Street premises. In the late afternoon and early evening of 11 July, Mr Gulla instructed the applicant to undertake tyre fitting work on vehicles that were firstly located at Mount Druitt and subsequently at Glendenning.

[10] Later in the evening of 11 July, Mr Gulla instructed the applicant to return to the Railway Street premises and to meet him there so that he could help Mr Gulla clean up the rest of the material that needed to be removed prior to eviction. At some point, either the applicant or Mr Gulla lit a fire in a fire pit/drum into which unwanted items were burnt rather than removed from the site. The applicant threw a container of accelerant on the fire which exploded and ignited the applicant’s clothing.

[11] The applicant suffered significant burn injuries to his upper body and arms before the fire was extinguished by Mr Gulla. An ambulance was called, and the Fire Brigade and Police attended the site. The applicant was taken by ambulance to hospital where he was treated for his severe burn injuries. The applicant remained in hospital for a period of about seven days, and he had to return for regular ongoing treatment up until at least 8 August 2017.

[12] During the period of the applicant’s convalescence there were a series of discussions and other communications between Mr Gulla and the applicant. These communications became strained as the applicant indicated that he would make a claim for workers compensation in respect to the fire incident of 11 July. Mr Gulla had no record that he employed the applicant, (nor apparently anyone else), and therefore he was very concerned about the implications of any workers compensation insurance claim that might be made by the applicant.

[13] During one of these increasingly tense discussions between Mr Gulla and the applicant, Mr Gulla verbally advised the applicant that he could not return to work for the employer. Although Mr Gulla asserted that he subsequently retracted what he described as his “heat of the moment” dismissal of the applicant, the employment and friendship relationship had been fractured, and subsequently the applicant filed his claim for unfair dismissal.

[14] Liability in respect of the workers compensation claim made by the applicant was, in due course, accepted. The applicant has received relevant workers compensation benefits save and except for a period of three weeks which, for some indiscernible reason, was not the subject of claim in respect of lost wages.

[15] The applicant has not sought reinstatement as a remedy for his alleged unfair dismissal but has instead sought payment of compensation amounting to the three weeks which were not paid as workers compensation benefits, together with the monetary gap between the workers compensation payments and the full remuneration he would have received. The applicant has been assisted by a rehabilitation provider in his pursuit of alternative employment. However, he has not managed to secure alternative employment.

The Case for the Applicant

[16] Ms Maskiell, who assisted and spoke for the applicant, made some oral submissions during the Hearing, and she provided documentary material in the form of an outline of submissions together with written reply submissions. Ms Maskiell submitted that the dismissal of the applicant was unfair.

[17] The submissions made by Ms Maskiell asserted that the employer had attempted to suggest that the applicant had not been dismissed and then subsequently changed its position and introduced the suggestion that the applicant had been dismissed due to serious misconduct regarding the fire incident on 11 July. Ms Maskiell submitted that the applicant had been dismissed verbally by Mr Gulla, and that the dismissal had not been retracted at any stage.

[18] Ms Maskiell submitted there had been a complete breakdown of the relationship between the applicant and his employer, Mr Gulla. Ms Maskiell also said that the position that had been put by the employer contained inconsistencies. Ms Maskiell indicated that at one stage the employer suggested that at the time of the incident on 11 July the applicant was not an employee of the employer but was working for another Company of which he is part owner.

[19] The further submissions made on behalf of the applicant included details of the calculations that established the loss of wages that the applicant had experienced as a result of the absence of any workers compensation for a three week period, and the difference between the weekly figures paid as workers compensation compared with the applicant’s ordinary remuneration. The total difference was calculated to be an amount of $8,112.00 gross.

[20] In summary, Ms Maskiell submitted that the dismissal of the applicant was unfair. Ms Maskiell clarified that the applicant was seeking financial compensation of the amount of $8,112.00 as remedy for his unfair dismissal.

The Case for the Employer

[21] The employer was represented by Ms Hoban who submitted that the dismissal of the applicant was not unfair. Ms Hoban had filed a written outline of submissions which she supplemented with further oral submissions.

[22] The submissions made by Ms Hoban asserted that the employer had reason for the dismissal of the applicant. The submissions made on behalf of the employer stated, inter alia, that;

“The reason Joshua Smith was verbally but not formally dismissed was due to the serious misconduct of a workplace injury caused by Joshua Smith himself which took place at Johnny’s Tyre Service Pty Ltd & Turbo Auto Detailing Pty Ltd premises in Emu Plains on the 11/07/2017.”

[23] Further, the submissions made by the employer asserted that the applicant had been informed as to the reason why he was dismissed and that he had been given an opportunity to respond to the dismissal. It was further asserted that when advised of his dismissal the applicant had indicated that he was intending to resign from employment in any event.

[24] It was further submitted by the employer that after the serious misconduct incident of the night of 11/7/2017, there were several heated conversations between Johnny Gulla and Joshua Smith regarding Joshua Smith’s position with Johnny’s Tyre Service Pty Ltd. The employer’s submissions included the contention that in one such heated discussion Johnny Gulla terminated Joshua Smith’s position due to the serious misconduct incident.

[25] The submissions made by the employer also challenged the amount of compensation that the applicant was seeking as an outcome for his unfair dismissal claim. Further, the employer made submissions which indicated that the period for which the applicant was claiming a full loss of remuneration should have involved the applicant providing proper medical certificates to cover that period so that the insurance provider could properly consider the claim. The applicant had not provided that material and the employer should not be responsible for the applicant’s failure to inform the insurance provider.

[26] The further oral submissions made by Ms Hoban confirmed that the applicant had been dismissed by Mr Gulla verbally in the heat of the moment. Ms Hoban said that Mr Gulla was remorseful for his decision and that he advised the applicant of that on several occasions and told him that he could have his job back. From this submission it was inferred that any amount of compensation that might be provided to the applicant should be reduced as a result of his conduct in firstly not pursuing the insurance provider, and secondly not accepting the offer to return to work.

[27] In summary, the submissions made by the employer asserted that there was a valid reason to terminate the employment of the applicant, and that the employer had subsequently attempted to retract the dismissal.

Consideration

[28] The unfair dismissal provisions of the Act include section 385 which stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. These elements are:

(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.

[29] In this case, there was no dispute that the matter was confined to a determination of that element contained in subsection 385 (b) of the Act, specifically, whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

(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.

S. 387 (a) - Valid Reason for the Dismissal Related to Capacity or Conduct

[30] The reason for the applicant’s dismissal, as was stated in the submissions made by the employer, was that of serious misconduct involving the applicant setting himself on fire on the evening of 11 July 2017. There were significant contests in the evidence about the circumstances of the fire incident that occurred on 11 July. The applicant said that Mr Gulla had directed him to throw the container of accelerant on the fire, while Mr Gulla said that he had on at least two occasions, told the applicant to extinguish the fire.

[31] Notwithstanding the different versions of the events that led to the applicant setting himself on fire on the night of 11 July, there was a manifest absence of control by the employer of the circumstances as they existed at the time. The employer should not have permitted the fire at all. The evidence strongly suggested that at the time of the fire incident both the applicant and Mr Gulla were actively engaged in activity as pyromaniacs.

[32] Consequently, on the night of 11 July, both the applicant and Mr Gulla were engaged in a foolish and dangerous activity. However, the applicant did not intentionally set himself on fire. Mr Gulla, as the employer, had the responsibility to ensure that the fire was not lit in the first place, and in the alternative, that it was extinguished straightaway. Instead, the evidence strongly suggested that the employer was aware that there was a fire pit/drum at the premises, and that it had been used on previous occasions which prompted the attendance of the Fire Brigade.

[33] In these circumstances, it cannot be accepted that the conduct of the applicant, whereby he accidentally set himself on fire, could properly represent serious misconduct. In any event, there was some considerable period of delay between the time at which the alleged serious misconduct occurred, 11 July, and the heated conversation during which the applicant was verbally dismissed by Mr Gulla. This delay supports that the reason for the dismissal was connected with the applicant’s claim for workers compensation in relation to the fire incident rather than his actual conduct during the incident.

[34] Consequently, the true reason for the applicant’s dismissal was his refusal to comply with the requests of Mr Gulla to either not make a workers compensation claim at all, or to alternatively make the claim against the Company that the applicant was part owner of namely, Turbo Auto Detailing Pty Ltd. The following extract from transcript when Mr Gulla was asked about the fire incident of 11 July, provided a revealing insight into his state of mind:

“MS MASKIELL:  Yes, I would.  I'll start with Joshua's injuries.  Joshua's injuries is what's classed as a notifiable incident, which means that it's your responsibility to report it.  Are you able to tell us why it was not reported by you and it had to be reported by Joshua?---With his injury?

Yes?---Well, I believe that at the time I didn't believe it had anything to do with my company as the fire has nothing to do with the company, with your tyres we don't light fires.  Also, I was paying Josh cash, do [sic] I didn't know if the insurance would ever cover that at all.” 1

[35] It is clear from the evidence that, somewhat shamefully, the employer has sought to avoid any responsibility for the fire incident of 11 July. Even if the applicant was acting directly contrary to the instructions of Mr Gulla, (although the evidence does not support that proposition), the applicant was clearly engaged by the employer at the time that he was seriously injured. It was highly regrettable to observe the efforts made by Mr Gulla to suggest, as he did in his statement to the insurance investigators on 9 August 2017, that; “The Claimant was not under our employment at the time of the injury. He was working for Turbo Auto Detailing.” 2

[36] In summary, the evidence has established that the applicant was dismissed because he made a workers compensation claim against the employer in respect to the fire incident of 11 July 2017. Consequently, such reason for dismissal does not represent a valid reason.

S. 387 (b) - Notification of Reason for Dismissal

[37] The employer provided only verbal notification of dismissal. The absence of any written notification of the reason for dismissal was consistent with the complete absence of any records regarding the employment of the applicant or other employees. The absence of such records appears to have been part of the intended concealment of the employment specifically designed to avoid taxation and other regulatory obligations. Evidence of this deliberate concealment was supported by various aspects of the evidence but it can be most notably exampled by the following text message that was provided to the applicant by Mr Gulla:

“Just remember you were on cash and we’re both going to get in a lot of trouble if tax agent find out just keep that in mind if you hurt yourself doing a tire I can understand compensation but this was your stupid fault no one else” 3

S. 387 (c) - Opportunity to Respond to any Reason Related to Capacity or Conduct

[38] The applicant and Mr Gulla had numerous conversations in the period immediately following the fire incident of 11 July. These conversations clearly traversed the question of whether the applicant would make a workers compensation claim against the employer. However, these conversations could not represent an acceptable opportunity to respond to a properly articulated reason for dismissal.

S. 387 (d) - Unreasonable Refusal to Allow a Support Person to Assist

[39] There was no evidence regarding the participation of a support person during any of the conversations that culminated with the dismissal of the applicant. However, it appeared that many of these conversations were witnessed by the respective partners of the applicant and Mr Gulla.

S. 387 (e) - Warning about Unsatisfactory Performance

[40] There was no aspect of unsatisfactory work performance associated with the dismissal of the applicant. Consequently this factor has no relevance to the circumstances of this case.

S. 387 (f) - Size of Enterprise Likely to Impact on Procedures

[41] The employer is a small business, and accommodation has been made for a significant level of informality to be provided in respect to employment related matters. However, such accommodation could not extend to any condonation of the total absence of documentation regarding employment.

[42] The evidence has disclosed that the absence of any documentation surrounding the employment of the applicant (including payment of cash in hand), was part of a deliberate scheme designed to conceal the employment so as to avoid taxation and other regulatory requirements.

S. 387 (g) - Absence of Management Specialists or Expertise Likely to Impact on Procedures

[43] As a small business the employer did not have any dedicated human resource management specialists or other expertise. Allowance for informality and a degree of flexibility with procedures regarding employment related matters would ordinarily be provided. However, in circumstances where the employer has acted to avoid relevant regulatory requirements, no leniency for inexperience or ignorance could provide any justification for unlawful conduct.

S. 387 (h) - Other Relevant Matters

[44] There are no other relevant matters identified as providing aspects of consideration that should properly influence the determination of the claim. In particular, the determination of the matter has not been influenced by the suggestion that the applicant may have a claim regarding alleged outstanding entitlements.

Conclusion

[45] In this case, the reason that the employer provided for the dismissal of the applicant involved alleged serious misconduct. That misconduct involved the applicant accidentally setting himself on fire whilst cleaning out the work premises prior to eviction. However, upon a proper and objective analysis of the evidence, the real reason for dismissal was that the applicant made a claim for workers compensation against the employer.

[46] Therefore, the reason for the dismissal of the applicant was unlawful and invalid.

[47] The procedure that the employer adopted when it dealt with the applicant’s workplace accident and the subsequent workers compensation claim, was improperly influenced by its pre-existing tax and regulatory avoidance scheme.

[48] In summary, the dismissal of the applicant was without valid reason involving established misconduct or capacity inadequacy. Further, the dismissal arose from circumstances that involved an unreasonable and unjust process that arose from the improper and unlawful business practices adopted by the employer. Consequently, upon analysis of the various factors that are identified in s. 387 of the Act, an objective and balanced evaluation of all of the relevant circumstances has provided compelling basis to establish that the dismissal of the applicant was harsh, unjust and unreasonable. Therefore, the applicant’s claim for unfair dismissal remedy has been established.

Remedy

[49] The applicant did not seek reinstatement as a remedy for his unfair dismissal. In the circumstances reinstatement would not be an appropriate remedy.

[50] I have decided that compensation would be an appropriate remedy for the applicant’s unfair dismissal, and I turn to the factors which involve the quantification of any amount of compensation.

[51] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that have been established in the Full Bench Decisions of; Sprigg v Paul’s Licensed Festival Supermarket 4 and, Smith and Ors v Moore Paragon Australia Ltd 5 and, more recently, the case of McCulloch v Calvary Health Care Adelaide6.

[52] Firstly, I confirm that an Order for payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[53] Secondly, in determining the amount of compensation that I Order, I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[54] There was no evidence provided which established that an Order of compensation would impact on the viability of the employer’s enterprise. However, I have recognised that the employer is a small business, and it can be inferred from evidence that it was being evicted from its business premises, that it may have experienced some financial difficulties.

[55] The applicant had almost 18 months service in his second period of employment. The applicant would have been likely to have received remuneration of approximately $1,126.00 per week if he had not been dismissed.

[56] There was evidence to suggest that the employment of the applicant would not have continued for a significant period of time. In particular, the applicant confirmed that he was “thinking about” 7 resigning from employment.

[57] Following the dismissal, the applicant has unsuccessfully sought alternative employment. The applicant has, understandably, been restricted in his pursuit of alternative employment because of the injuries sustained in the fire incident of 11 July 2017. The applicant has been in receipt of workers compensation wage payments.

[58] Thirdly, in this instance there was no established element of misconduct of the applicant which contributed to the employer's decision to dismiss.

[59] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[60] Fifthly, the amount Ordered does not exceed the compensation cap as prescribed by s. 392 (5) of the Act.

[61] The applicant was not paid any notice upon termination. The applicant’s dismissal was essentially summary in nature.

[62] Consequently, for the reasons outlined above I have decided that an amount approximating with 3 week’s remuneration should be provided as compensation to the applicant. That amount is $3,378.00. Accordingly, separate Orders [PR599514] providing for remedy in these terms will be issued.

[63] Finally, in view of the evidence and findings made regarding the employer’s deliberate implementation of a scheme to conceal the employment of the applicant, (and presumably others), so as to avoid taxation and other regulatory obligations, a copy of this Decision, the transcript of proceedings, and Exhibits, shall be forwarded to the Investigations Branch of the Australian Taxation Office.

COMMISSIONER

Appearances:

Ms C Maskiell appeared for the applicant.

Ms J Hoban appeared for the employer.

Hearing details:

2017.

Sydney:

December, 8.

 1   Transcript of proceedings @ PN 341 and PN 342.

 2   Exhibit 3 @ paragraph 29.

 3   Exhibit 9 – page 3, text message @ 10:16am.

 4   Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 5   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

 6   John McCulloch v Calvary Health Care Adelaide, (Ross P, Hatcher VP and Gostencnik DP), [2015] FWCFB 873.

 7   Transcript of proceedings @ PN 196.

Printed by authority of the Commonwealth Government Printer

<PR599513>