DECISION

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

Mr Todd De La Torre
v
Coastwide Engineering Pty Ltd
(U2018/4540)

Application for an unfair dismissal remedy.

[1] Mr Todd De La Torre (the Applicant) made an application for an unfair dismissal remedy on 1 May 2018. The Applicant claims that he was unfairly dismissed by Coastwide Engineering Pty Ltd (the Respondent) on 24 April 2018.

[2] The Applicant commenced employment with the Respondent in 2010 as a qualified Boilermaker. The Applicant was promoted to be an Estimator in 2011/2012 and to the role of Projects Co-Ordinator in 2013.

[3] The Respondent is a contract engineering company based in the Illawarra region of NSW. It provides fabrication and engineering services to 40-50 clients. The Respondent employs approximately 100 employees. The Respondent operates under the Manufacturing and Associated Industries and Occupations Award 2010, but appears to have an in-house agreement in relation to its employees’ rates of pay.

[4] Leave was granted in accordance with section 596 of the Fair Work Act 2009 (the Act) for the Applicant to be legally represented. Mr M Mandicos from RMB Lawyers represented the Applicant at the hearing on 3 and 31 August 2018. Mr Glenn Fredericks, of counsel, was assisted by Mr Mandicos at the Jurisdictional Hearing on 21 August 2018. Mr A Powter from the Australian Industry Group represented the Respondent throughout the proceedings.

[5] The Applicant attested to a witness statement on his own behalf. The Respondent relied on witness statements from Mr Ray Sampson – Director, Mr Victor Borg – Site Manager, Mr Andrew Zonneveld – Accounts Manager and Mr Rod Davis – Occupational Health and Safety Officer.

Background and Evidence

[6] In August 2017, the Applicant’s wife commenced working in a business known as Isagenix. Isagenix is a weight loss meal replacement formula which is purchased and distributed through a pyramid selling arrangement – which is now known as network marketing, but adopts the pyramid selling model. The Applicant admitted to helping his wife with this business but only in his spare time after hours. The Applicant claimed that his wife earns approximately $65,000 per annum from the business.

[7] Mr Borg claimed that the Applicant’s performance has deteriorated over the last 9 months i.e. from approximately September/October 2017. Mr Borg stated that the Applicant would regularly arrive late to work or leave early. Mr Borg stated that in March this year, in relation to the Isagenix business, the Applicant told him:

“I’m making two and a half grand at the moment and by April it will be five thousand a week.” 1

[8] Mr Zonneveld testified that the Applicant had told him how well he was going in making money running the Isagenix business: 2

“The Applicant himself told me how well he was going in making money running their business. I also heard from other managers and co-workers that the Applicant was pushing selling the Isagenix products and that he was telling others how you could make money on it.”

[9] Mr Borg testified that, by April 2018, he had been involved in a number of conversations with the Applicant on the basis that the Applicant’s focus did not appear to be on his job at Coastwide.

[10] On 15 March 2018, the Applicant requested a meeting with Mr Borg to advise him that he had been offered a job with a major competitor of the Respondent, for more money and less responsibility. On the basis that the remuneration for the role was equivalent to that of Mr Borg’s salary, Mr Borg advised the Applicant to accept the new role.

[11] On 20 March 2018, the Applicant had failed to organise for a Supervisor to work on a project commencing the following day. To rectify this oversight, the Applicant proposed sourcing the Supervisor from an ongoing project at Port Kembla Coal Terminal. Management at Port Kembla Coal Terminal challenged the Applicant and voiced their disapproval at this proposition. Mr Borg claims that the Applicant said to this client:

“we don’t run our business to suit your needs.”

[12] Port Kembla Coal Terminal is the biggest client of the Respondent. Port Kembla Coal Terminal management were allegedly upset at being spoken to in this manner.

[13] Mr Borg attested that he had the following conversation with the Applicant on 21 March;

“During a meeting with the Applicant on Wednesday 21^st March 2018, I raised my concerns about the Applicant’s actions wit Port Kembla Coal Terminal Project and how he had spoken to the client. I recall having a conversation with the Applicant with words to the following effect:

Borg: “What was the reason talking to the customer in that manner when we could have done it differently like I did?”

De La Torre: “I wanted him to do the job and I cannot see any reason why he could not do the job.”

Borg: “I’ve made other arrangements to get another supervisor to do the job without stopping our valuable customer’s project.”

De La Torre: “A client cannot dictate to us how we run our business.”

Borg: “Do you need some time off. You don’t seem focused and your mind seems all over the place.”

About a half hour after our meeting the Applicant called me and asked if it was ok for

him to go home early, which I said: “that’s fine, go home and chill out and think about

what’s happening and whether you want your future to be running your business.” 3

[14] On 22 March 2018, the Applicant went on pre-arranged annual leave. The Applicant and his wife travelled to the Gold Coast to attend an Isagenix Conference where they received a joint award. This award was based on the value of the product that they sell and the commission that they receive.

[15] The Applicant was due back at work on 27 March 2018. The Applicant advised the Respondent that he had caught a bug on the plane trip home. The following day, 28 March, the Applicant provided a medical certificate for the period up until 4 April 2018.

[16] On 3 April 2018, the Applicant called Mr Borg on two occasions. Mr Borg claims that the Applicant advised him that he was going to resign and work full time on the Isagenix business. There was then a discussion about being paid out. The Applicant claims that he was offered a redundancy package. Mr Borg denies offering the Applicant a redundancy payout.

[17] On the same day, the Applicant also enquired with the payroll officer Mr Zonneveld about the value of his redundancy package. Mr Zonneveld attested that the following conversation occurred:

“19. On Tuesday 3^rd April 2018, it was the company’s picnic day and I had attended the office as I had to send a statement to BlueScope Steel I would not normally be in the office that day.

20. When I was in the office I received a call on my mobile phone from the Applicant at approximately 9.10am. I recall we had a conversation with words to the following effect:

Zonneveld: ‘Hello’

De La Torre: ‘Hi Andrew, I ringing to let you know that I’m resigning as I’m going to go and pursue my other business’.

Zonneveld: ‘Ok, I wish you well.’

De La Torre: ‘When do I get my payout?’

Zonneveld: ‘You don’t get a payout, you are resigning’

De La Torre: ‘I thought I’d get a payout like a redundancy’

Zonneveld: ‘No you are not being made redundant, you are resigning and your job is not redundant either.’

De La Torre: ‘well I thought I was going to get a payout’.

Zonneveld: ‘No you don’t get one when you resign. You better talk to Victor as he’s your manager.’

De La Torre: ‘Ok’

The conversation ended and I made a note as to the discussions.” 4

[18] Mr Sampson testified he had been advised that, on or around 22 March 2018, the Applicant contacted the Payroll Clerk as to how much sick leave he had outstanding.

[19] In the afternoon of 4 April 2018, the Applicant attended a meeting that he had requested with Mr Borg. The Applicant was accompanied by Mr Rod Davis as his support person to the meeting. Whilst Mr Davis did not make contemporaneous notes of this meeting, it was accepted that the notes that Mr Davis recently compiled were accurate. Mr Davis summarised the meeting in the following manner:

“Todd De La Torre and I attended Victor Borg's office with Todd starting the conversation off with the question as to why an offer of redundancy in which Todd had accepted had been withdrawn. Victor’s reply was to say that he did not want to make Todd's job redundant and if Todd wished to leave Coastwide Engineering that Todd would be able to resign, Todd's reply was to say that he would not resign.

Victor stated that he believed Todd had not been honest regarding a job offer from another company, Todd rejected these suggestions saying that he had always been open and honest and carried out the role of Projects Coordinator the best of his ability.

Victor Borg proceeded to inform Todd that he believed that outside work commitments he is involved in has had a negative impact on his job and work standards in the role of Projects Coordinator and therefore if Todd was to continue as an employee of Coastwide that he would have to continue as a trades boilermaker.

Todd then stood from his chair and said fine I will see you next Monday, Todd proceeded to leave Victor Borg's office. Meeting concluded.”  5

[20] Mr Davis accepted that the Applicant had asked him whether Mr Borg could simply demote him in the manner contemplated and that he had replied that he could. Mr Davis testified that the Applicant stood up and said “Fine, see you Monday”. The Applicant did not attend for work as promised on 9 April 2018. Despite dropping his phone sim card into the office on 6 April 2018, the Applicant continued his sick leave from 5 April to 12 April 2018.

[21] The Applicant was then asked whether he wanted to be put on the work roster as a Boilermaker at BlueScope from 16 April 2018. The Applicant responded “ok”. The Applicant did not turn up for this shift. The following text discussion occurred between the parties:

“Monday, 16 Apr, 6:15am

Todd you coming to work today?

Won’t be in today

Ok

Please advise before lunchtime if your [sic] in tomorrow or not please thx

Won’t be in this week

Oh ok

Please advise before Friday this week if your [sic] in on Monday 23/4 please”  6

[22] The Applicant provided a further medical certificate (which was dated 24 April 2018) for the period of 13 April – 24 April 2018.

[23] On 13 April 2018, the Applicant’s legal representative sent correspondence to the Respondent which in part said:

“13 April 2018

Dear Mr Sampson

…

1. Background

We are instructed that:

1.1 our client has been employed by Coastwide Engineering Pty Ltd (Coastwide) for approximately 8 years;

1.2 for the last 5 years our client was employed by Coastwide as a Projects Coordinator;

1.3 Coastwide has recently informed our client that his position has been changed to that of a Tradesman. The position:

a. is a significant demotion;

b. has resulted in Coastwide removing from our client’s possession the mobile phone and tool of trade vehicle previously provided by Coastwide to him in the Projects Coordinator role; and

c. has resulted in a significant reduction in our client’s remuneration.

2. Legal principles

It is clearly established legal principle that a significant demotion is a repudiation of the employment contract by the employer resulting in a constructive dismissal.

…

Under a constructive dismissal the employee is entitled to the payment of a notice period and redundancy entitlement as well as outstanding leave entitlements.

3. Next steps

3.1 please provide your written acknowledgment that our client has been made redundant by Coastwide and confirm in writing our clients notice, redundancy and leave entitlements;

3.2 if we do not receive a response to point 3.1 by 5.00pm Wednesday 18 April 2018, or you provide a response that does not acknowledge our clients redundancy or does not provide for the correct notice, redundancy and leave entitlements for our client:

a. we are instructed to commence legal action seeking orders that Coastwide’s actions amount to a constructive dismissal and affirm our clients right to payment for notice, redundancy and leave entitlements; and

b. we reserve the right to pursue alternative action against Coastwide including but not limited to seeking an adverse action ruling under the general protections provided by the Fair Work Commission.

Yours faithfully

Michael Mandicos” 7

(my emphasis)

[24] Mr Sampson responded on 18 April 2018:

“18 April 2018

Attn: Mr Michael Mandicos

In response to your letter regarding Todd De La Torre, I advise the following for your information.

On 3^rd April 2018 at 9.10am, my employee Mr Andrew Zonneveld received a phone call from Mr De La Torre, informing Andrew he was leaving his employment at Coastwide to pursue his own business fulltime. He then preceded to Ask Andrew “when can I get my redundancy money?” Andrew replied “there is no redundancy applicable”.

Andrew then informed Mr De La Torre to contact his Manager Victor Borg.

Mr De La Torre then phoned Vic Borg his Manager at approximately 9.30am on 3^rd April 2018. He told Vic he was leaving Coastwide to work full time with his Isagenix business and wanted to know if he could be paid out including redundancy. Vic advised Todd his job with Coastwide was not being made redundant.

Mr De La Torre then informed Vic if that was the case he could not leave. Immediately following his phone call Mr De La Torre went on sick leave. To this date he is still on sick leave.

On 22^nd Mach 2018, Todd enquired by phone as to how much sick leave he had accrued and was told he currently had 134.75 hours.

Regards

Mr Ray Sampson

Director” 8

[25] On 19 April 2018, the Applicant’s legal representative sent further correspondence to the Respondent, which said:

“19 April 2018

Dear Mr Sampson

…

We refer to your letter dated 18 April 2018.

So we can determine next steps without delay can you please confirm the following by close of business 20 April 2018:

1. That Mr De La Torre remains employed by Coastwide Engineering Pty Ltd (Coastwide); and

2. Mr De La Torre’s terms of employment with Coastwide remain unchanged to those in place at the commencement of 2018. For clarification we include the following as a non-exhaustive list of the terms of employment:

a. financial remuneration;

b. non-financial benefits including provision of a work mobile phone and tool of trade vehicle;

c. job title, that being Projects Coordinator;

d. internal reporting arrangements, that being who Mr De La Torre reports to and who reports to Mr De La Torre.

Based on the responses provided we will confirm our instructions regarding legal action.

…” 9

[26] Mr Sampson responded in the following manner:

“Dear Michael

In response to your email on the 19.4.18

We advise the following to your questions in regards to Todd De La Torre.

1. as of today’s date Todd still remains an employee of Coastwide Engineering.

2. due to other factors not disclosed to you by Todd he has been relegated back to the position of a boilermaker which was his position prior to becoming a job coordinator.

a. Financial remuneration is that of a high boilermaker

b. Motor vehicles are only provided for work related activities, not provided as a part of any employment remuneration (generally not for private use) as are mobile phones.

c. job title now boilermaker due to other issues that Todd has obviously not told you, commencing on the 15.3.18.

d. Todd reports directly to Victor Borg and no one else.

Ray Sampson” 10

[27] The Applicant lodged his unfair dismissal application on 1 May 2018. The Applicant has never been dismissed, nor has he resigned. The Respondent claims that he is still on the books. The Commission, as presently constituted, sought submissions on the jurisdictional capacity of the Commission to determine an unfair dismissal application when an employee has not been dismissed and has not resigned. This jurisdictional hearing was conducted on 21 August 2018.

[28] The Applicant claims that the Commission does have jurisdiction on the basis that the Applicant was entitled to view his demotion as repudiating his contract of employment.

[29] In response to a question from the Commission as currently constituted, Mr Powter accepted that there is no power or capacity under the Modern Manufacturing Award for the Respondent to demote the Applicant.

[30] It is not in dispute that there were differences in the rate of pay and conditions of employment between the Applicant’s appointed role as a Projects Co-Ordinator and the role of a High Boilermaker. The Applicant’s demotion resulted in a 20% reduction in wages, a return to “working on the tools” on a full time basis as well as the loss of the use of a company vehicle and company mobile phone.

[31] The Respondent argued that the Applicant had accepted the demotion by his actions and comments by advising Mr Borg immediately after he had been advised of his demotion on Wednesday, 4 April 2018, “Fine. I will see you Monday” and secondly by accepting an offer by the Labour Co-ordinator to work at BlueScope on 16 April 2018. The Respondent submitted that at no time did the Applicant object to his demotion or seek to negotiate an alternate supervisory role.

[32] The Respondent also submitted that the Applicant maintained the capacity to still earn the same level of remuneration as his co-ordinator rate of pay. The Respondent accepted that the Applicant would however, have to work an additional 12-13 hours of overtime every week to make up this shortfall.

[33] Relevantly, section 386 of the Act states:

“Meaning of dismissed

(1) A person has been dismissed if:

(a) the person's employment with his or her employer has been terminated on the employer's initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(my emphasis)

[34] In Charlton v Eastern Australian Airline Pty Ltd, 11 the Full Bench of the Commission held:

“[32] Consistent with the decision in Boo Hwa Chan, a termination of employment occurs when a contract of employment is terminated. This necessarily occurs when the employment relationship comes to an end. However, it can also occur even though the employment relationship continues. Where a contract of employment has been terminated, but the employment relationship continues, this will be because a new contract of employment has come into existence. Therefore, whether the appellant’s demotion involved his employment being “terminated by the employer” within the meaning of s.170CE turns on whether his contract of employment was terminated notwithstanding the continuing employment relationship. This question is answered by reference to general law principles relating to the termination of contracts of employment, unconstrained by the Convention.

[33] The question of when a demotion constitutes a termination of employment within general law principles relating to termination of contracts of employment, unconstrained by the Convention, was given careful consideration by the Full Court of the Supreme Court of South Australia in Advertiser Newspapers Pty Ltd v IRC & Grivell…

[34] Unless the contract of employment or an applicable award or certified/workplace agreement authorises an employer to demote an employee, a demotion, not agreed to by the employee, that involves a significant reduction in remuneration will amount to a repudiation of the contract of employment. If that repudiation is accepted, either expressly or by conduct, then the contract of employment is terminated. If, in such circumstances, the demoted employee then remains in employment with the employer, this occurs pursuant to a new contract of employment in respect of the demoted position. It may be noted that where the employment continues with the employee allegedly acquiescing in a reduction in salary or other terms of employment, difficult questions may arise as to whether the continued employment involves the continuation of the original contract of employment (but with the employer breaching that contract by paying the reduced salary), a consensual variation of the terms of the original contract or the termination of the original contract and a substitution of a new contract of employment.” 12

(my emphasis)

[35] In A Gerrard v UPS Pty Ltd, 13 Commissioner Eames considered the circumstances where demotion of an employee would constitute dismissal:

“[52] The reasoning which underlies the principle that demotion constitutes dismissal was outlined by the Industrial Relations Court of South Australia in Russian v Woolworths (SA) Pty Ltd (Jennings SJ, Cawthorne and Parsons JJ, (1995) 64 IR 169), a decision referred to by Mr Troeth inter alia it stated:

"If one party purports to terminate the contract otherwise than in accordance with the terms of the contract that amounts to a repudiation of the contract by that party. This is so because the repudiation evinces an intention of that party to be no longer bound by the contract. The other party then has the option of accepting the repudiation thereby regarding the contract as at an end and in the case of a contract of employment seeking a remedy for the wrongful termination of the contract or electing to treat the contract as a continuing one seeking a declaration that it continues in restraining the other party from acting as if the contract was at an end."

[36] The High Court decision of Visscher v The Honourable President Justice Giudice, 14 provides further that repudiation of an employment contract by an employer does not take effect until there is acceptance of the repudiation by the employee:

“[81] Teekay's notice of rescission did not automatically bring the contract appointing Mr Visscher a Chief Officer to an end. It was necessary that Mr Visscher accept the repudiation before the contract could be terminated. Nothing said in Automatic Fire Sprinklers Pty Ltd v Watson suggests any different contractual principle as applying to a contract of employment. In order to decide whether Teekay had repudiated Mr Visscher's contract of employment in January and February 2004 it was necessary for the AIRC to determine the true contractual position between the parties at that time. It was necessary then to determine whether what was said by Teekay at that time amounted to a repudiation such that the termination of the employment relationship could be said to be at its initiative; or whether it amounted to a demotion within the meaning of s 170CD(1B). The correct legal starting point was not that Teekay had rescinded the agreement. Neither the Commissioner nor the Full Bench of the AIRC asked the correct question, as to the contract under which the parties continued after September 2001. This was an error going to jurisdiction.”

[37] In Elgammal v BlackRange Wealth Management Pty Ltd, 15 a Full Bench of the Commission held:

“[13] …It is adequate for us to indicate that we accept that when considering whether an employer has repudiated the contract the test is not the employer’s actual intention, judged subjectively, but whether the conduct of the employer, judged objectively by reference to the effect on a reasonable person evinced an intention to no longer be bound by the contract.”

[38] It is worth noting that at no stage did the Applicant complain to the Respondent about his demotion. The Applicant never argued that the actions of the Respondent were unfair or inappropriate. When told that his ongoing employment as as boilermaker he simply said “fine”. His only subsequent line of enquiry was in relation to his new rate of pay.

[39] I accept that the Respondent did not intentionally repudiate the Applicant’s employment. The Respondent, as a sign of good faith, provided the Applicant with alternate employment. However, this is not the test.

Consideration

[40] I have taken into account all of the submissions of the parties.

[41] I am satisfied and find that the actions of the Respondent by reducing the Applicant’s salary by 20%, by withdrawing the Applicant’s use of a company car and company mobile phone and the reduced status of the Applicant’s role by moving the Applicant from a staff position to a tradesman was a significant reduction in the terms and conditions of the Application’s employment resulting in the Applicant being demoted. I am satisfied that a reasonable person, faced with these circumstances, would see the employment relationship at an end. I have taken this into account.

[42] It is extraordinary that the Respondent submits that the Applicant is still “on the books”. The Applicant has not reported for work or been paid since the last week in April. It is also relevant that the Respondent has not attempted to contact the Applicant post 26 April 2018 to enquire in relation to his availability or his intended return to work. There has certainly been no enquiry from the Respondent in relation to the prospect of the Applicant abandoning his employment.

[43] I have taken into account that there is no legal capacity for the Respondent to demote the Applicant in the Manufacturing and Associated Industries and Occupations Award 2010.

[44] I accept the evidence of Mr Sampson and the submission by Mr Powter that the Respondent is an “old fashioned company” that tries to do the right thing by all of its employees. I also accept that the Respondent has given the Applicant plenty of latitude in relation to his performance and family issues. If the Respondent had simply dismissed the Applicant for his poor performance issues as a Projects Co-ordinator, rather than attempting to look after him by providing him with on–going employment, then this matter may have been determined in an alternate manner.

Conclusion

[45] I find that the Applicant has been demoted by the Respondent. As a result, I find that the Commission has jurisdiction to determine the application.

[46] Following the obiter in Elgammal, I find that the Respondent has repudiated the contract of employment of the Applicant.

[47] Adopting the reasoning in Charlton, I find that the Respondent had no legal capacity to demote the Applicant. As a result, the dismissal of the Applicant was harsh and unjust.

[48] I find that the Applicant has been unfairly dismissed.

Remedy

[49] The Applicant was originally seeking the payment of a redundancy entitlement. The Commission has no authority to order such a payment. The final submission on remedy from the Applicant was for an order of $45,000 which equates to 26 weeks’ pay.

[50] The Respondent argued that it had not unfairly dismissed the Applicant. The Respondent submitted that if the Commission found that this was not the case, that the awarding of compensation is purely discretionary and that, based on all of the facts of this case, little or no compensation should be awarded.

[51] Section 392 of the Act states:

“Section 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.

Consideration

[52] I have taken into account that the Applicant claims that his annual family income has been substantially reduced to only $65,000. 16

[53] I note that $65,000 is the amount that the Applicant states that he and his wife earn from the Isagenix business. I note, though, that this quantum is at odds with the Applicant’s comments to his fellow employees of the Respondent. However, the Applicant’s financial statements are not in evidence before the Commission. I also note that the Applicant has not looked for full time work since the end of April 2018 and currently works 2 days per week; earning an average of $1200 per week. When calculated as an annual salary, the Applicant’s casual income equates to $64,400, thereby giving the Applicant’s family an annual income of $129,400, almost double the annual family income suggested by the Applicant. I would also expect that, if not now then in the future, the Applicant, or his wife, would be able to increase the income derived from the Isagenix business due to the additional support that the Applicant is now providing his wife in running the business. This support may be by the provision of child care or actually working in the on-line business. I have taken this into account.

[54] I have taken into account that the Applicant appears to have deliberately exhausted his personal leave (all covered by doctor’s certificates), including the backdating of a medical certificate, obtained on 24 April 2018, to cover the period of 13 April to 24 April 2018. I note that this occurred after the Applicant made enquiries in relation to his personal leave credit in late March 2018 and that the Applicant did not attend for work again after he made this enquiry.

[55] I note the contents of the Applicant’s representative’s letter to the Respondent on 13 April 2018 (at [23] above). This correspondence clearly states that the actions of the Respondent are viewed by the Applicant as a significant demotion, a repudiation of the employment contract and a constructive dismissal. The Applicant sought the payment of “notice, redundancy and leave entitlements”. It is clear from the terms of this correspondence that the Applicant accepted that his employment contract had been repudiated by the Respondent as of this date i.e. 13 April 2018. I have taken this into account.

[56] I have taken into account the undisputed evidence of Mr Davis, which corroborated Mr Borg’s evidence, that Mr Borg advised the Applicant at the meeting on 4 April 2018, that if the Applicant was to continue his employment with the Respondent then it would be as a boilermaker tradesman. I have previously noted that the Applicant asked Mr Davis if the Respondent could take this course of action and subsequently agreed to work as a boilermaker before concluding the meeting.

[57] I have taken into account the positive Facebook posts that were displayed on the Applicant’s Facebook page in relation to the sale of his house, the on-going success of the Isagenix business and the lifestyle change in “chasing the sun” in a campervan with his family.

[58] I note that the Applicant commenced ongoing casual employment from 7 May 2018 at the ordinary rate of $40 per hour. I have taken into account that the Applicant has not sought full time employment since his termination and that his hourly rate at the Respondent’s business as a Projects Co-ordinator was $35.28 per hour, a base rate of approximately $70,000 per annum.

[59] I have taken into account that the Applicant is no longer seeking reinstatement and that reinstatement is opposed by the Respondent.

[60] I have taken into account all of the provisions of section 592. I am confident that my findings will not have an adverse impact on the viability of the Respondent’s business.

[61] In Ellawala v Australian Postal Corporation, 17 a Full Bench of the Commission refined the Sprigg18 formula to the following issues:

“1. Estimate the remuneration the employee would have received if they had not been dismissed. Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment i.e. the anticipated period of employment.

2. Deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment.

3. Deduct an amount for contingencies…

4. Consider the impact of taxation and adjust the figure accordingly.

5. Assess the figure against the compensation cap. If the amount is more than the compensation cap it should be reduced to the compensation cap.”

[62] On 4 April 2018, the Respondent, in reality, gave the Applicant an option. The Applicant was no longer going to be employed by the Respondent as a Projects Co-Ordinator but that if he wanted to continue to work for the Respondent then it would be as a tradesman. In other words, the applicant was told “you’re sacked from your current role but there is another job here at a lower rate if you want it”. As a result, had the applicant not accepted the boilermaker role, then his employment would have been terminated on 4 April 2018 and the Applicant would not have received any additional remuneration from the Respondent. However, there is no doubt that the actions of Mr Borg lack any semblance of procedural fairness. The Applicant was entitled to have the accusations about his poor performance as a co-ordinator put to him in writing and be given the opportunity to respond. To simply take away his role without a proper investigation is blatantly unfair. I have taken this into account.

[63] I have taken into account that the Applicant was paid sick leave from 16 April to 24 April 2018. This was an error on the part of the Respondent on the basis that the Applicant accepted the repudiation of his contract on 13 April 2018 by his correspondence.

[64] I have decided to make no deduction for contingencies on the basis that the Applicant would have been terminated on 4 April 2018 if he had not accepted Mr Borg’s offer of a demotion.

[65] The Applicant has not been paid any notice payments. The Applicant has been employed with the Respondent for 9 years. In accordance with section 117 of the Act, the Applicant was entitled to 4 weeks’ pay in lieu of notice.

Conclusion

[66] I am in no doubt that the applicant no longer wishes to work for the Respondent. The applicant and his wife have developed a business with the potential to earn $250,000 per annum. I accept the evidence of Mr Borg that the Applicant’s mind did not appear to be focussed on his role with the Respondent.

[67] Due to the fairly unique circumstances of this case, any payment calculated under the Sprigg formula fails to provide a financial outcome for the Applicant on the basis that the Applicant’s employment was going to be terminated if he did not accept his demotion. The parties have not made any submissions as to whether the decision to terminate the Applicant’s employment as a Project Co-ordinator was harsh, unjust or unreasonable.

[68] I have decided to award the Applicant four weeks’ pay as compensation for his unfair dismissal.

[69] I have decided not to order any further payment to the Applicant on the basis that he was, relatively quickly, able to find on-going casual employment on 7 May 2018. The Applicant has not mitigated his losses by seeking full time employment. The Applicant made a conscious decision not to seek full time employment so that he could provide support to his wife and her business instead. I also note that the Applicant was inadvertently paid sick leave up until 24 April 2018 and paid for the public holiday on 25 April 2018.

[70] Having earlier found that the Applicant’s contract of employment has been repudiated by the Respondent and that the Applicant was unfairly dismissed, I find that the Applicant is entitled to be paid four weeks’ wages as compensation.

[71] I so Order.

COMMISSIONER

 1   Exhibit 10 – witness statement Victor Borg PN8.

 2   Exhibit 12 – witness statement Andrew Zonneveld at PN14.

 3   Exhibit 10 – witness statement Victor Borg PN16.

 4   Exhibit 12 – witness statement Andrew Zonneveld at PN19 – 20.

 5   Exhibit 11 – witness statement of Rod Davis annexure A.

 6   Exhibit 6 – group text message.

 7   Exhibit 13 – witness statement of Ray Sampson annexure A.

 8   Exhibit 13 – Annexure C.

 9   Exhibit 13 – Annexure D.

 10   Exhibit 13 – Annexure E.

 11   PR972773.

 12   Ibid at PN32-34.

 13   A Gerrard v UPS Pty Ltd [2004] AIRC 249 (PR944681) at [52].

 14   Visscher v The Honourable President Justice Giudice [2009] HCA 34 at [81].

 15   [2011] FWAFB 4038.

 16   Transcript 31 August 2018 PN561.

 17   Ellawala v Australian Postal Corporation [2000] AIRC 1151.

 18   Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21.

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