| [2019] FWC 62 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s 394 - Application for unfair dismissal remedy
Mr Jason Thomas
v
MWS Pty Ltd
(U2018/2306)
DEPUTY PRESIDENT SAMS |
SYDNEY, 9 JANUARY 2019 |
Application for an unfair dismissal remedy – allegation of serious misconduct – alleged theft of Company property; namely, three unopened bottles of discarded liquor – Small Business Fair Dismissal Code – Code not complied with – no valid reason for dismissal – no theft involved – no proper investigation – failure to observe procedural fairness – dismissal harsh, unjust and unreasonable – reinstatement sought and ordered – lost remuneration ordered – final orders to be made.
BACKGROUND
[1] This decision will determine an application filed on 6 March 2018 by Mr Jason Thomas (‘the applicant’), pursuant to s 394 of the Fair Work Act 2009 (‘the Act’). Mr Thomas seeks an unfair dismissal remedy (reinstatement and lost remuneration) following his dismissal by MWS Pty Ltd (‘the respondent’) on 23 February 2018.
[2] The applicant commenced employment with the respondent on 1 February 2013. He was advised he had been dismissed in a letter from the respondent’s solicitors, EK Lawyers on 23 February 2018, on the basis of an allegation of serious misconduct; namely, the theft of company property. This allegation had also been conveyed to the applicant in a letter from EK Lawyers of 14 February 2018 suspending him and inviting his response to the allegation; essentially a ‘show cause’ letter. It was alleged that the stolen property was three bottles of liquor which the applicant had retrieved from a large esky on the respondent’s premises after having been discarded, three months earlier following a Melbourne Cup function in 2017.
[3] In its F3 Response to the application, Mr Dale Edwards, General Manager, raised two objections to the matter being determined by the Fair Work Commission (‘the Commission’); firstly, that the applicant was a Manager and not an employee; and secondly, that the applicant’s dismissal was consistent with the Small Business Fair Dismissal Code (‘the Code’) as the respondent was a small business, as defined under the Act. The first objection was ultimately not pressed by the respondent.
[4] Nevertheless, the application was listed before a Commission Conciliator on 3 April 2018 and it was anticipated that the matter had been settled. However, on 25 May 2018, EK Lawyers advised the Commission that the matter had not settled. The matter was then remitted to me for hearing and determination. In accordance with my usual practice, I listed the matter for a further ‘face to face’ conciliation conference on 2 August 2018. The application was not resolved and proceeded to hearing on 10 October 2018. At the hearing Mr E Young of Counsel appeared for the applicant and Mr N Kirby, Solicitor, Edward Kirby Lawyers appeared for the respondent, with both parties granted permission to be represented by lawyers, in accordance with s 596 of the Act.
Identity of the employer
[5] At the commencement of the proceedings, Mr Young raised a preliminary matter as to the true identity of the respondent, as the applicant’s last pay slip disclosed the employer as MWS Pty Ltd. Mr Kirby confirmed Metwide Communication was the employer of the applicant for some years, until he was offered and declined an offer of a contract with another entity, MWS Pty Ltd. Mr Kirby said that Metwide Communications continues to be registered and is a company in control of his client. At the conclusion of the proceedings, Mr Young pressed that the Commission grant leave to amend the application to name MWS Pty Ltd as the respondent to the application. Mr Kirby opposed this course as his instructions were that the respondent is Metwide Communications, a business name, but without an ACN. In light of all the respondent’s documents, including its F3 and its evidence, in which it references MWS Pty Ltd as the respondent, I intend to amend the application to identify MSW Pty Ltd as the respondent to this application. Nevertheless, it is common ground that both entities are small businesses and the Code is relevant to this case. I will proceed to determine the matter on that basis.
[6] The following persons provided statements and oral evidence in the proceeding:
• Mr Jason Thomas – the applicant;
• Mr Mohammad Rizwan – Radio Technician;
• Mr Dale Edwards – General Manager.
[7] The applicant said that in December 2012 he had agreed to sell his business, Jet Wireless, to Mr Keith Williams, the owner of Metwide Communications. In respect to the transaction, the applicant was to receive a 10% bonus in the first year and further incentives in the form of shares based on strong performance. To date, he has never received any bonuses or shares. He subsequently commenced employment with the respondent as the Network and Engineering Manager on 1 February 2013 and signed a contract which provided:
• a salary of $90,000 plus 9% superannuation;
• a lease of a vehicle for full private and business use;
• mobile phone and home internet; and
• credit card for all work related expenses.
[8] At the time of his dismissal he was paid a fixed remuneration salary of $135,000, including superannuation.
[9] In his statement, the applicant raised a number of incidents leading up to his dismissal. These are outlined below.
The Warning Letter
[10] On or about 10 April 2015, the applicant undertook a project for a customer. During this time, the applicant received a telephone call from his wife, who stated that she was unwell and asked if he could return home early to look after the children. The customer had no issue with him doing so, and he left early for home that day. Shortly thereafter, he received an email threatening the termination of his employment. He decided to return to Queensland and complete the project. On 13 April 2015, Mr Keith Williams, the Managing Director of Metwide Communications and Mr Dale Edwards met with him to discuss his early departure from the unfinished project. During the meeting, he was informed that he would be issued with a ‘warning’ letter. He declined to sign the letter on the basis that he had sought approval from the customer and had explained the circumstances. He was later advised that a warning letter would not be issued.
Work Performance
[11] The applicant said that on or around July 2017, he was informed by Mr Williams that his salary would be reduced from $130,000 to $90,000, due to poor work performance. When the applicant asked for specifics, Mr Williams informed him that he had refused to undertake work at a customer site. He claimed that he had declined the task due to other work commitments and that accepting the task would adversely impact on completing the other work. Mr Williams later called the applicant to apologise to him, after speaking with a number of colleagues who supported his version of events.
Incident concerning Ms Kate Hinton
[12] The applicant said that in or around October 2017, a colleague, Ms Kate Hinton, had stated words to the effect of, ‘I am on the Women’s Football Team.’ Later that day, and in the presence of Ms Hinton he had said words to the effect ‘Kate is on the lingerie football team.’ The incident resulted in a formal complaint against him by Ms Hinton. However the matter settled at mediation after he apologised and said he had no intention to upset or offend her.
Revised Employment Contract
[13] The applicant claimed that on or around 11 December 2017, a number of staff were issued with a revised employment contract by Mr Edwards, including him. All staff were informed that their current employment would be terminated if they did not sign the revised contract. He requested a copy of the contract to be emailed to him, so that he could seek legal advice. Mr Edwards agreed. However, he did not receive the revised contract and the matter was not raised again until February 2018 — two months later.
The ‘theft’ incident
[14] It was the applicant’s evidence that on 7 February 2018 he was asked by a colleague, Mr Mohammed Rizwan, if he could help decide whether the contents of a large esky should be discarded. Mr Rizwan had informed him that the esky and its contents had been around since Melbourne Cup Day the previous year. Upon inspection, the applicant observed the esky to be filled to level, with mostly empty bottles of alcohol and non alcoholic drinks. In his evidence, the applicant maintained that his inspection of the esky was brief and merely ‘cursory’. Due to mould which had formed on the inside of the esky, as well as the terrible smell emanating from it, he suggested to Mr Rizwan that the esky be discarded. Mr Rizwan and another staff member agreed. Mr Rizwan then consulted with Mr Edwards who authorised the disposal of the esky’s contents.
[15] Later, Mr Rizwan asked him to assist with the disposal of the esky’s contents into an external dumpster. The applicant agreed. During the disposal, he noticed three bottles of alcohol; namely, a bottle of Johnny Walker Red Label scotch whiskey, a bottle of Jack Daniels and a bottle of Jim Beam. He recalled that one of the bottles had been opened, but was mostly full. The other two bottles remained sealed and unopened. He said he had not noticed these bottles when inspecting the esky earlier. He retrieved the bottles from the dumpster, cleaned them, and took the bottles home with a view to consume them at a later time. He did so openly, in full view of Mr Rizwan. He had not intended to steal anything from the respondent and had acted in good faith. However, in hindsight, he said he should not have taken the bottles without permission and it was thoughtless of him to do so. He did not steal from the employer and was not untrustworthy.
[16] The applicant rejected Mr Rizwan’s evidence that he had noticed the full bottles much earlier than when he had claimed. The mould and stench led him to believe that whatever was in the esky could not be safely consumed. He did not know there were unopened bottles of spirits in the esky.
[17] In oral evidence the applicant described the dimensions of the esky. It was actually a big blue box about two metres long, a metre deep and a metre high. At the time, it was three quarters full of bottles. He described the smell from the esky as ‘rancid’.
[18] The applicant said he had secured alternative employment on 27 August 2018, on a salary of $80,000 plus superannuation. Before this he had also worked a few odd jobs, for which he had received $6000 to $7000.
[19] The applicant had replied to the letter suspending his employment in which he said, inter alia:
“Dear Keith,
Thank you for the opportunity to respond to the allegations of theft that have been levelled against me.
I would like to bring to your attention that the bottles of alcohol were disposed of by another employee under direction by the General Manager of the company. This was done due to the risk of items being contaminated as they were left in an “esky” since the Melbourne cup event on the 6th of November 2017. The concern was that mould or bacteria may have grown or spread on the bottles which were left in the water inside the esky over the 4 month period.
Working nearby I was asked by the employee disposing of the alcohol if I could help lift the esky as it was very large and extremely heavy. Using a forklift the other employee picked up the esky and moved it to a position above the dumpster outside, and I assisted to lift and tip the esky’s contents into the dumpster.
After this I noticed three bottles of alcohol which I collected from the bin at my own risk and put in my car at the end of the day.
The key points to consider are:
The company had discarded the alcohol at the direction of the General Manager.
They were recovered from the garbage bin outside the building.
This in no way amounts to theft as the goods have been abandoned.
I ask that I be re-instated to my job as I have not stolen anything from the company.
I have always taken my role in the company seriously and would never intentionally steal form the company. If the taking of abandoned foods offends the company in any way I am willing to commit not to do so ever again.
With respect to my new contract, I have been attempting to engage Metwide Communications regarding my contract. As the new contract reduces my rights I am seeking to negotiate this with Metwide. Please note that my employer cannot vary my contract without consent and that it is unlawful to dismiss me for exercising my workplace right to refuse such a contract.
Kind regards,
Jason Thomas”
[20] In cross examination, the applicant reaffirmed his version of events on 7 February 2018. He added that he understood Mr Edwards had said to dump the contents of the esky, but keep the esky. He agreed that in his response letter to the show cause notice, he did not mention inspecting the esky or saying the whole thing should be thrown out. He said that it would have been simpler to have asked permission at the time, but he did not realise the consequences. He now agreed he was thoughtless at the time. He had not believed it was necessary to report the unopened bottles, because they had been told to discard the contents of the eksy by the General Manager. As to his own position as a Manager, and a person in authority, he believed he only had authority when it suited higher management.
[21] The applicant agreed he had attended a meeting on 22 February 2018 by telephone and had admitted taking the bottles. He had not been asked to return or replace them. He acknowledged he had made some comments (not accusations) about the Managing Director during the meeting, which he now regretted. These comments went to other persons using company resources for personal use at home. He had said “Well, if I’m a thief, does that make them a thief too?”
[22] During cross examination, I asked if the alleged theft had been reported to Police. Mr Kirby, on instructions, said a formal complaint to Police had been made. Mr Young strongly protested that this information was not disclosed anywhere in the respondent’s evidence.
[23] In re-examination, the applicant was asked whether he had been told what the ‘compelling and overwhelming evidence’ that the respondent had as to his guilt. He said he was never told what this evidence was, other than they had witness statements. He was never shown any statements or told who had made them.
[24] On or around 7 February 2018, Mr Rizwan was approached by a co-worker, Ms Kate Hinton, about what to do with the esky that contained leftover drinks from Melbourne Cup day, as there was an odour coming from the esky. The applicant came over, picked up a couple of bottles and said ‘These are all no good. I reckon they need to be chucked out.’ Mr Rizwan asked Ms Hinton to contact Mr Edwards to ask what should be done with the esky and its contents. A few minutes later, Ms Hinton returned and told him to keep the esky, but ‘throw out the drinks’. Mr Rizwan said that later that day, he used the forklift to bring the esky to the secured bin outside the factory doors. He asked the applicant to help him tip the bin and he did so. When the contents were in the bin, the applicant removed a couple of bottles of spirits and took them to his car.
[25] In cross examination, Mr Rizwan said that the bin (150 litres) was filled to level with all sorts of bottles. The lid was able to close. He said that there was mould in it which had caused an unpleasant foul odour. He said that when the applicant had come over, he picked up a beer bottle and looked at it. Mr Rizwan claimed that it was possible to see some of the bottles at the bottom of the esky, even though the esky was filled with bottles. He then agreed he could not see accurately to the bottom. Mr Rizwan said that the applicant did not try to hide the bottles from him and simply walked off with them. He agreed he did not try to stop him, or say anything about stealing company property.
[26] In re-examination, Mr Rizwan said that the first time he drank alcohol was with the applicant and he knew much more than he did about alcohol. This was why he had asked him if the content of the esky should be kept.
[27] Mr Edwards described the structure of his business and that it employs 10 regular employees at the time of the applicant’s dismissal.
[28] Mr Edwards received the following text message from Kate Hintonon 2 February 2018:
‘Hi Dale!!
Can we throw the ice box with all the alcohol in it? It smells horrible and Mo [Mohammed] and Jason said it can’t be fixed because of the mould’
Mr Edwards then received a follow up phone call from Ms Hinton and he replied:
‘If it is that bad and Jason said it can’t be fixed, get rid of the drinks, but not the esky itself’.’
[29] Mr Edwards claimed he was unaware of the contents of the esky, as he was not in the office and he relied on the information from the applicant, conveyed to him by Ms Hinton.
[30] Mr Edwards attended a meeting with the applicant by telephone on 22 February 2018, which also included Mr Kirby and Mr Williams. Mr Edwards claimed that the applicant:
(a) admitted to taking the goods from the respondent;
(b) admitted to saying to other staff that the contents of the esky could not be saved and was not fit for consumption;
(c) admitted to removing a number of bottles from Metwide Communications bin;
(d) admitted to taking these bottles home and failing to return the items to the respondent.
(e) accused the Managing Director of Metwide Communications Pty Ltd and MWS Pty Ltd of stealing property from those companies; .
(f) made accusations towards [Mr Edwards] regarding alleged theft of company property;
(g) claimed that as a shareholder and a manager that he was entitled to take property from the Company, without consent or approval from me or the Managing Director.
[31] Mr Edwards put that the applicant had specialised knowledge on the functioning of the customer’s equipment. He had failed to demonstrate that knowledge by his actions on 7 February 2018. Accordingly Mr Edwards had lost trust and confidence in his advice about Company equipment being retained, repaired or discarded.
[32] Mr Edwards highlighted earlier incidents for which the applicant had been subject to disciplinary action. These were
(a) In April 2015, the applicant refused to sign a remediation plan based on a discussion about his underperformance.
(b) In December 2017, the applicant was alleged to have sexually harassed a female staff member (Ms Hinton). Mediation was provided about appropriate workplace behaviour.
(c) Around 12 February 2018, the applicant had breached the Company’s leave policy by taking leave, without permission or completing a leave form.
Despite these matters Mr Edwards’ decision to dismiss the applicant was based only on the theft of Company property.
[33] In further oral evidence in chief, Mr Edwards said the applicant was directly responsible for two employees as Manager for maintaining and implementing projects and providing advice on radio installations and commissioning. Mr Edwards described what the applicant had said about him and the Managing Director, Mr Williams during their meeting on 22 February 2018.
[34] In cross examination, Mr Edwards agreed that he had had cameras installed at Mr Williams’s home by MWS technicians and purchased by a related entity.
[35] Mr Edwards said he had been told that the contents were unusable and mouldy. He understood Mr Rizwan also had this view. He said he decided to tell Ms Hinton to retain the esky, as it was worth $600-$700, despite knowing it was mouldy. Mould can be removed.
[36] Mr Edwards claimed he had included his comments on the applicant’s past disciplinary record in response to the applicant’s claim of a ‘clean record’. He agreed the incident occurred on 7 February 2018, but he was not told of the theft by Mr Rizwan until 14 February 2018. He then immediately sought and received ‘multiple statements from multiple employees that substantiated the theft’; from Mr Rizwan, Ms Hinton and Ms Amanda McAdam. He claimed that he had shown the applicant these statements. Mr Edwards accepted that it was reasonable for the applicant and Mr Rizwan to have believed the contents of the esky should be thrown out.
[37] As to the incident with Ms Hinton, Mr Edwards did not accept it was minor. He agreed the applicant had apologised and mediation had resolved the matter (reluctantly). As to taking time off without approval, Mr Edwards said even if it was time off in lieu, such leave had to be approved. He accepted the applicant had taken time off in lieu many times before, without approval, which is why the approval process had been put in place.
[38] Mr Edwards said that he sought to have the applicant sign a new employment contract in December 2017. He refused to sign it. He denied he was unhappy or annoyed about his refusal. He could not recall a conversation where the applicant asked ‘what happens if I don’t sign’ and his response was ‘well then, you won’t work here anymore’. He denied he was ‘itching to sack’ the applicant because he would not sign the new contract and had used the alleged theft as a ‘wonderful opportunity to sack him’. Mr Edwards claimed that all the contents of the esky remained the property of the Company which is why it was locked.
[39] Mr Young submitted that the essential facts in this case are not in contention. The applicant was summarily dismissed in a letter dated 23 February 2018 from Mr Edwards’ lawyers. The reason for dismissal was Mr Edwards’ belief that the applicant had stolen company property, namely three bottles of liquor from a putrid esky. The respondent relied on its alleged compliance with the Code to claim the applicant’s dismissal was not unfair.
[40] Mr Young referred to an ‘interesting aspect’ of the evidence, being the show cause letter from the respondent’s solicitors and the deliberate comment:
‘Our client relies upon your theft of company property as the basis of the termination’.
This wording clearly indicates a decision to dismiss the applicant had already been made on 14 February 2018.
[41] Mr Young referred to the evidence of both the applicant and Mr Rizwan as to the dimensions of the esky, the state of its contents and that the unopened liquor was at the bottom of the esky. He submitted that even on the respondent’s evidence at its highest, there was no valid reason for the applicant’s dismissal and the suggestion that the respondent had lost faith in the applicant because of a once off minor issue, was not sustainable.
[42] Mr Young relied on the factual, legal and common-sense meaning of ‘theft’ to rebut any notion that the applicant had engaged in theft. The applicant had relied on Mr Edwards’ instruction to discard the contents, but keep the esky. By so doing, nobody owned the property in the esky and if nobody owned it, no one can steal it; see: Doodeward v Spence (1908) 6 CLR 406.
[43] Mr Young emphasised that Mr Edwards actually conceded the applicant (and Mr Rizwan) held a reasonable belief at the time, that the contents of the esky should be discarded. He did not attempt to hide his removal of the liquor and did so openly in front of Mr Rizwan.
[44] Mr Young submitted that Mr Edwards now conveniently disbelieves the applicant and had constructed a reason to dismiss him, when the real reason was the applicant’s refusal to sign a new employment contract a couple of months earlier with substantially inferior terms and conditions.
[45] Mr Young put that plainly the Code had not been complied with, as Mr Edwards could not have held a belief on reasonable grounds that the applicant’s conduct warranted summary dismissal. This was so because:
(a) there is no evidence that MWS reported the alleged theft to the police;
(b) if it held a belief of theft, it would have done so;
(c) a person simply saying that s/he holds a belief is not necessarily conclusive if the surrounding objective evidence indicates otherwise;
(d) at the time of dismissal, Mr Edwards was aware of Mr Thomas:
(i) not having taken the 3 bottles until they were outside the premises;
(ii) not taking the bottles until after they were in the dumpster; and
(iii) Mr Thomas said in writing that he considered the bottles to be abandoned and the he had no intention to steal.
(e) As to the second step of the belief being objectively reasonable and there being a reasonable investigation:
(i) if it is found that MWS genuinely held a belief that Mr Thomas had stolen the 3 bottles, it was not a belief held on reasonable grounds for the same reasons as set out for the first step; and
(ii) in addition, there is almost no evidence of any investigation having been done into the alleged theft at all (let alone a reasonable investigation), or what such investigation involved.
[46] Mr Young set out the criteria to be taken into account under s 387 of the Act and said that there was no valid reason for the dismissal. The respondent had not discharged its onus to prove theft of anything and there was a denial of procedural fairness in that:
• there was no investigation of the alleged misconduct;
• the applicant was never shown any of the alleged witness statements; and
• the decision had been made before giving the applicant an opportunity to respond to the show cause letter.
[47] Mr Young drew a significant contrast between the applicant’s evidence and the evidence of Mr Rizwan and Mr Edwards. The applicant was straightforward, thoughtful and considered. He had admitted his conduct and was contrite.
[48] Mr Young said that Mr Rizwan’s evidence was tainted by his astonishing claim that he could see through dozens of labelled bottles, some dark, to the bottom of the esky. As to Mr Edwards’ evidence, Mr Young described him as evasive. He twisted and squirmed, gave gratuitous evidence, or gave answers that had nothing to do with the question. This demonstrated a person seeking to retrospectively justify his decision to cover up the real reason he wanted the applicant gone.
[49] Mr Young observed that the respondent did not even ask for the return or replacement of the alleged stolen property. It just kept repeating words, like ‘stolen’, ‘theft’, ‘untrustworthy’.
[50] Mr Young submitted that the applicant had been harshly, unreasonably and unjustly dismissed in an extreme manner and was entitled to the primary remedy of reinstatement and back pay. No deduction should be made for misconduct, because the applicant had not misconducted himself. He had mitigated his losses and secured alternative employment, but on much lesser remuneration than his employment at MWS.
[51] In the alternative, if reinstatement is considered inappropriate the maximum compensation, according to s 392 of the Act and the ‘Sprigg’ formula should be awarded.
[52] Mr Kirby put that this is not just a simple matter of the applicant retrieving liquor from the esky. The applicant had unique skills in the business to provide advice about whether equipment should be retained or thrown out.
[53] Mr Kirby drew a distinction between the time the applicant might have held a belief the property was of no commercial value and the point he realised there was unopened liquor in the esky and take it. It was accepted the property had a value to the respondent. He argued that what he did was wrong and thoughtless. Moreover, it was not for the respondent to request the return of the liquor; the applicant should have volunteered to do so, and did not do so.
[54] As to reinstatement, this is a very small employer and the question must be whether reinstatement is workable. As to the fraud allegation, Mr Kirby said that this went to whether the applicant knowingly gave wrong advice that all of the contents of the esky were irretrievable.
[55] Mr Kirby submitted that it was incorrect to suggest Mr Edwards seized the opportunity to dismiss the applicant. The historic issues Mr Edwards referred to could have justified a more vigorous response to discipline the applicant; but this did not happen. That said, Mr Kirby confirmed the respondent did not rely on these historic matters to justify its reason for his dismissal. In any event, these matters were only raised in response to the applicant’s assertion of a ‘clean record’.
[56] In answer to queries from me as to whether the decision to dismiss had been made in the ‘show cause’ letter, because it requires the return of all Company property when the dismissal had not yet been affected, Mr Kirby said that Mr Edwards had been relying on witness statements that the theft had occurred.
[57] In reply, Mr Young asked the Commission to draw a Jones v Dunkel inference in relation to the respondent’s failure to call evidence from the two other persons said to have provided statements to Mr Edwards, particularly Ms Hinton. In respect to Mr Edwards, Mr Young reaffirmed that he simply should not be believed. He was not an honest or believable witness. As to the historic incidents, Mr Young said that none of them would have justified dismissal, which is why the respondent had not acted on them. Rather, Mr Edwards saw an opportunity to sack the applicant for theft and ‘grabbed it with both hands’.
[58] Regrettably, Mr Edwards was an evasive, uncooperative and ultimately, unconvincing witness. For the most part, his evidence was self-serving and/or exaggerated in order to justify ‘making mountains out of molehills’. Although delivered confidently, almost every answer he gave in cross examination was qualified or unresponsive to the question asked, or he added the answer with riders designed to bolster his inherently weak case and cast the worst possible light on the applicant.
[59] His frequent refrains of the applicant’s ‘theft’ ‘stealing’ and ‘untrustworthiness’ are no better examples of a case either crafted with little thought or attention to the reality of the relevant circumstances, or at worst, deliberately designed with a mala fide intent. There can hardly be a more serious allegation against an employee than theft of company property. It has the potential to damage an employee’s reputation and career, not to mention the possibility of criminal charges. Although I accept that Mr Edwards only had to have a belief on reasonable grounds, that the conduct has occurred such as to justify the applicant’s immediate dismissal (under the Code), serious allegations of this kind, amounting to criminal activity, should not be thrown around, like confetti, without any sound basis or proper investigation.
[60] Mr Edwards’ quick readiness to respond to questions with irrelevant or unresponsive answers, stands in curious contrast to his answers about whether he had threatened the applicant around December 2017 with losing his job if he did not sign an inferior contract. He simply avoided a direct answer by claiming he could ‘not recall’ doing so. The applicant insists these threats were made and this was the real reason for his dismissal. Given my overall opinion that Mr Edwards was not a credible witness, I accept the applicant’s evidence on this score.
[61] For the same reasons, I do not accept Mr Edwards’ evidence that he had shown the applicant three witness statements which corroborated to his alleged theft. Given the meeting with the applicant was by phone, it is a little difficult to see how the applicant was shown the statements. In addition, Mr Edwards made no reference to the statements in his own statement evidence filed in the proceedings. More significantly, those statements were never sought to be tendered in evidence, and apart from Mr Rizwan (who, by the way, never said he had previously provided a statement to Mr Edwards),the other two alleged witnesses were not called by the respondent in support of its case. Although Mr Young invited me to draw a Jones v Dunkel inference from this failure – which I do – I think the real reason is that no such statements exist, and likely never did. This was yet another example of the respondent’s case being caught in a mire of false allegations, wild exaggeration and hyperbole.
[62] In addition, Mr Edwards said he only raised the historic allegations because the applicant had claimed in his F2 that he had a ‘clean’ record. He did not use these words; he said he had a ‘good’ record. This was correct. Like the descriptions of the disciplining incidents themselves, I believe that not only was Mr Edwards rather careless with his use of language, his real intention was to give the impression that the applicant was a person with a poor disciplinary record which should count towards proving his theft. This was false, or at best misleading.
[63] While Mr Young is critical of Mr Rizwan’s evidence concerning what he could see in the bottom of the esky, I do not consider much turns on this evidence, notwithstanding I find it difficult to believe that Mr Rizwan could see to the bottom of a very large esky, filled to the brim with empty and half empty bottles of different colour, shape and labelling and sitting in putrid, mouldy water. In any event, Mr Rizwan’s evidence did not materially contradict the essential facts, and did not assist the respondent’s case. Ultimately, nor was Mr Rizwan’s evidence of any help in the Commission’s determination of the essential and relevant questions in this case.
[64] On the other hand, I found the applicant to be a credible witness whose evidence had a ‘ring of truth’ about it. He did not shy away from his hindsight view that he should have sought permission to take the liquor. His evidence was both believable and convincing. To the extent necessary, I prefer the applicant’s evidence where it is in conflict with Mr Edwards’ evidence.
Statutory provisions and relevant authorities
[65] Before turning to the merits of the case, the Commission must deal with a number of preliminary matters under s 396 of the Act. That section reads:
396 Initial matters to be considered before merits
The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:
(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.
[66] Mr Thomas’ unfair dismissal application was lodged on 6 March 2018. As he was dismissed on 23 February 2018, his application was lodged within the 21-day statutory time period set out in s 394(2) of the Act.
[67] Mr Thomas is a person protected from unfair dismissal in that:
i. he had completed the minimum employment period set out in ss 382 and 383 of the Act, namely 5 years; and
ii. his remuneration was below the high income threshold (s 382(b)(iii) of the Act).
[68] Section 385 of the Act sets out four jurisdictional prerequisites which must be satisfied in order for the Commission to find that a person was unfairly dismissed. By the use of the conjunction ‘and’ joining subsections (a), (b), (c) and (d) it is clear that each of the four requirements must be satisfied for a person to be unfairly dismissed. The section is set out as follows:
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.
[69] For present purposes, I am satisfied that the applicant was dismissed (subsection (a)) and his dismissal was not a case of genuine redundancy (subsection (d)). The question of whether the applicant’s dismissal was ‘harsh, unjust or unreasonable’ would need to be considered subsequent to a positive conclusion as to the preliminary matter, that his dismissal was not consistent with the Small Business Fair Dismissal Code (the ‘Code’). This question is the essential basis of this case and I shall now explain the significance of the Code in this matter.
[70] I begin with setting out the terms of the Code below:
Commencement
The Small Business Fair Dismissal Code comes into operation on 1 July 2009.
Summary dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.
Procedural matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.
[71] It is apparent that the Code applies to a dismissal by an employer with fewer than 15 employees (at the time of the dismissal) in two circumstances – summary dismissal (usually for serious misconduct) and dismissal for poor performance (capacity to do the job) or conduct (which is not serious misconduct). A significant difference between the two circumstances is that the former does not require notice or warning to an employee and the latter requires warnings to the employee and opportunities for the person to respond and improve on any shortcomings in behaviour or conduct.
[72] There is no doubt that the applicant’s dismissal was without notice based on Mr Edwards’ belief that he was guilty of serious misconduct (theft). He was dismissed in the letter from Mr Edwards’ lawyer on 23 February 2018. Viewed in this way, the applicant’s dismissal falls under the summary dismissal limb of the Code. Should the dismissal be found to be inconsistent with the Code, but the serious allegations are ultimately found to have been proven, it would seem highly likely that a positive finding of a valid reason for his dismissal would follow. However, that is not the test for the purposes of establishing whether there has been compliance with the Code. I shall come back to this crucial consideration shortly.
[73] Before leaving the statutory provisions, s 12 of the Act defines ‘serious misconduct’ as having ‘the meaning prescribed by the Regulations’. That is referable to reg 1.07 of the Fair Work Regulations 2009, which is expressed as follows:
‘1.07 Meaning of serious misconduct
(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
(2) For subregulation (1), conduct that is serious misconduct includes both of the following:
(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b) conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer’s business.
(3) For subregulation (1), conduct that is serious misconduct includes each of the following:
(a) the employee, in the course of the employee’s employment, engaging in:
(i) theft; or
(ii) fraud; or
(iii) assault;
(b) the employee being intoxicated at work;
(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.
(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.’
[74] Mr Edwards relies on his belief that the applicant had engaged in ‘theft’, and presumably, this amounted to ‘wilful or deliberate behaviour … inconsistent with the continuation of the contract of employment’. The seminal case – indeed the first Full Bench Decision which considered the Code – was Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (‘Pinawin’). After setting out a number of passages from two earlier single Member decisions about the application of the Code, the Full Bench of Fair Work Australia (as the Commission was then styled), said at paras [29]-[31]:
‘[29] We believe that the approach and observations in these two decisions are correct. There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.
[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.
[31] The question we need to consider in this case is whether Mr and Mrs Pinawin believed on reasonable grounds that Mr Domingo’s conduct was sufficiently serious to justify immediate dismissal [my emphasis].’
[75] Continuing, para [38] reads:
‘[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well. They directly observed his behaviour. They believed that he had made lifestyle choices that involved drug-taking and this directly related to his capacity to perform his work. His work involved close personal dealings with clients. At the time they made their decision, Mr Domingo was hospitalised. They were conscientious in considering the grounds for summary dismissal in regulatory material available on the internet. In these unusual circumstances we are of the view that the employer, when considering Mr Domingo’s recent erratic and unusual behaviour, formed the belief that Mr Domingo had engaged in conduct that justified immediate dismissal on reasonable grounds. Our conclusion should not be seen as one that would necessarily be reached in all cases of out of hours misconduct or drug-taking [my emphasis].’
[76] Pinawin continues to be cited with approval in decisions of the Commission. Pinawin is authority for the proposition that, unlike a summary dismissal where the Code is irrelevant, the Commission is not required to find that serious misconduct occurred and that the allegations of serious misconduct against the dismissed employee had been proven. Under the Code, the tests are only that:
• the employer held a reasonable belief that the employee’s conduct was sufficiently serious to justify immediate dismissal; and
• that belief was based on reasonable grounds.
Self-evidently, both of these tests do not require findings of unfairness, in a statutory sense, within the meaning of s 387 of the Act, unless the Code has not been complied with.
[77] That said, the Full Bench of the Commission had further occasion to consider the Code and the conclusions in Pinawin. In Ryman v Thrash Pty Ltd [2015] FWCFB 5264 (‘Ryman’), the Full Bench, after expressing the view that the summary dismissal section of the Code is ‘very poorly drafted’ (with which I respectfully agree), because it uses discordant expressions such as ‘without notice or warning’, ‘immediate dismissal’ and ‘summary dismissal’ synonymously, nevertheless went on to say at paras [37]-[41]:
‘[37] Notwithstanding that the Code, and its accompanying checklist, were apparently designed to be read as “stand alone” documents by small business employers, we prefer the view that the reference to “serious misconduct” is to be read as bearing the meaning in reg.1.07. The types of conduct expressly referred to in the Code as constituting serious misconduct are all encompassed by the reg.1.07 definition, so no direct inconsistency is apparent. The fact that the checklist invites inclusion of “some other form of serious misconduct” suggests that the identified types of conduct were not meant to be exhaustive, and it is otherwise difficult to conclude that they were meant to be exhaustive given that they do not include other types of behaviour which may well constitute misconduct justifying summary dismissal, such as sexual harassment, bullying or significant non-compliance with a lawful and reasonable direction. And, as earlier discussed, the lack of any recognised meaning at law of the expression “serious misconduct” means that the definition in reg.1.07 is necessary to give the expression a clear content.
[38] We therefore consider that the “Summary dismissal” section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in reg.1.07.
[39] To be clear, nothing stated above is to be taken as suggesting that in relation to such a dismissal it is necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal not to be unfair. As was explained in Pinawin T/A RoseVi.Hair.Face.Body v Domingo:
“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”
[40] Whether the employer had “reasonable grounds” for the relevant belief is of course to be determined objectively.’
[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:
(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.
(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element [my emphasis, endnote omitted].’
See also: Grandbridge Limited v Wiburd [2017] FWCFB 6732
[78] I intend to apply, the principles set out in Pinawin, as reaffirmed in Ryman, and in a recent decision of the Full Bench in Grandbridge Limited v Wiburd [2017] FWCFB 6732 to the facts and circumstances of this case.
[79] It is relevant that the applicant has never denied removing the three bottles of liquor for his personal consumption. He did so in full view of another employee (who did not query his actions) and after receiving permission form Mr Edwards to discard the contents of the esky. Mr Edwards made no effort to establish whether the contents were valuable or not, and only considered the esky was worth saving. The applicant accepts, in hindsight, that he should have sought permission to take the liquor. When viewed in this way, the real issues are whether this conduct was ‘theft’ and whether Mr Edwards had a belief on reasonable grounds that the applicant had engaged in ‘theft’.
[80] Of course, the notion of ‘theft’ is not usually associated with a person openly, and in front of work colleagues, removing the contents of a putrid esky, which both he and Mr Rizwan believed should have been discarded and Mr Edwards agreed with their view.
[81] It is unnecessary to consider Mr Young’s submissions concerning the legal criminal definition of ‘theft’ and his reference to a rather macabre High Court authority in Doodeward v Spence and the principles of waiver when a person’s property is discarded; save to observe that it is telling that there was no evidence, by way of a Police COP reference number and certainly no evidence of any Police follow up on Mr Edwards alleged Police complaint. I suspect because, in my view, the circumstances here could in no way be considered to be ‘theft’ in a strict legal sense, let alone as a matter of plain common-sense. I doubt that the Police received such a complaint (which I consider unlikely), they would have even bothered to take the matter any further.
[82] If this was a matter of such grand larcenic proportions, it beggars belief that the respondent did not demand recompense, or at the very least, return or replacement of the liquor. To suggest it was up to the applicant to do so, as a ‘gesture of goodwill’ is nonsense. Moreover, I suspect that even if he had, it would have made not a skerrick of difference to Mr Edwards’ determination to dismiss him. It is possible, if not likely, that the real reason Mr Edwards wanted to dismiss the applicant was because he had refused to sign a new employment contract in December 2017 and the ‘theft’ allegation was a convenient opportunity to dismiss him; after all, why would there be any reference in the ‘show cause’ letter to his refusal to sign a new contract, if it did not figure at all in Mr Edwards thinking? However, it is unnecessary for me to express a concluded view on this matter, as the stated reason was not a valid one, as I explain shortly.
[83] It follows from the above, that I do not consider Mr Edwards had reasonable grounds for his belief that the applicant’s conduct was sufficiently serious to justify his immediate dismissal (in the words of the Code).
[84] I am fortified to this conclusion by Mr Edwards’ own admission that the applicant and Mr Rizwan had a reasonable belief that the contents of the esky should be discarded. In my judgment, there would have been very good reason to believe that the contents of an esky, which have been untouched for over three months, were mouldy and stunk, and their condition were such that there was nothing of value to salvage in the bottom of the esky. As the esky had seemingly sat unattended as a trash can, but had been moved around, with so many empty bottles in it, it is also reasonable to believe that the unopened bottles of liquor had also been discarded. It follows that I find that the Code was not complied with.
[85] Section 387 of the Act sets out each of the matters the Commission is required to take into account when determining this question. The section reads as follows:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(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.
[86] All of the criteria in s 387 of the Act must be taken into account when the Commission considers whether a particular dismissal is unfair. Nevertheless, it must be steadily borne in mind that no one matter is to be attributed any greater weight than another. That this is so is obvious from the Explanatory Memorandum to the Fair Work Bill 2008 at para 1541, which reads:
‘1541. FWA must consider all of the above factors in totality. It is intended that Fair Work Act 2009 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.’
[87] The meaning of valid reason in s 387(a) is drawn from the judgement of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 (‘Selvachandran’). This meaning has been considered and applied by members of the Commission and its predecessors for many years. For example, in Rode v Burwood Mitsubishi Print R4471, a Full Bench of the then Australian Industrial Relations Commission (‘AIRC’) discussed the meaning of valid reason in the context of the relevant provisions of the Workplace Relations Act 1996, citing Selvachandran. The following is an extract from the Full Bench’s decision at para [17]:
“[17] In relation to the meaning of “valid reason” the following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd are relevant:
“Section 170DE(1) refers to a ‘valid reason, or valid reasons’, but the Act does not give a meaning to those phrases or the adjective ‘valid’. A reference to dictionaries shows that the word ‘valid’ has a number of different meanings depending on the context in which it is used. In The Shorter Oxford Dictionary, the relevant meaning given is: ‘2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.’ In The Macquarie Dictionary the relevant meaning is ‘sound, just or wellfounded; a valid reason’.
In its context in s 170DE(1), the adjective ‘valid’ should be given the meaning of sound, defensible or wellfounded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must `be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, when considering the construction and application of a s 170DC.”
[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).
[19] We agree with the appellant’s submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.”
See also: Nettleford v Kym Smoker Pty Ltd (1996) 69 IR 370.
[88] Given my earlier conclusions, I am not satisfied that there was a valid reason for the applicant’s dismissal. The applicant had not conducted himself in a way that justified his dismissal. He had not been guilty of theft. In addition, the applicant’s dismissal disclosed a manifest denial of procedural fairness.
[89] To highlight the importance of procedural fairness issues, I cite three authorities on the subject in an unfair dismissal case. In Crozier v Palazzo Corporation Pty Limited t/as Noble Storage and Transport (2000) 98 IR 137 (‘Crozier v Palazzo’), a Full Bench of the AIRC said at para [73]:
‘As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment.’
[90] In Wadey v YMCA Canberra [1996] IRCA 568, Moore J made clear that an employer cannot merely pay ‘lip service’ to giving an employee an opportunity to respond to allegations concerning the employee’s conduct. His Honour said:
‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’
[91] Nevertheless, procedural fairness steps should be applied in a commonsense and practical way. In Gibson v Bosmac Pty Ltd (1995) 60 IR 1 (‘Gibson’), Wilcox CJ said at 7:
‘Ordinarily, before being dismissed for reasons related to conduct or performance, an employee must be made aware of the particular matters that are putting his or her job at risk and given an adequate opportunity of defence. However, I also pointed out that the section does not require any particular formality. It is intended to be applied in a practical, commonsense way so as to ensure that the affected employee is treated fairly. Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section.’
[92] It goes without saying that any issue/s of procedural unfairness may not be of such significance as to outweigh the substantive reason/s for an employee’s dismissal, particularly in cases of misconduct where the proven misconduct is of such gravity as to outweigh any other considerations such as age, length of service, employment record or contrition. That is certainly not the case here.
[93] Subsections (b)-(e) of s 387 are generally accepted as matters going to procedural fairness, or in other words, natural justice. I set out below each of my findings on these sections:
[94] The applicant was notified of the reason for his dismissal at least in the termination letter of 23 February 2018. The reason was not a valid reason.
[95] The applicant was given no reasonable opportunity to respond to, or explain his conduct. Dismissing an employee for serious misconduct, even under the Code and without notice, requires at least some measure of inquiry into the allegations, which must include putting allegations directly to the employee and giving the employee a reasonable opportunity to respond. There was no evidence of any genuine inquiry or investigation of the applicant’s conduct. In my view, for the reasons already expressed, the applicant was not shown the three witness statements said by Mr Edwards to corroborate his guilt, even if they existed, which I doubt.
[96] More significantly, when issued with the ‘show cause’ letter on 14 February 2018, it is plainly obvious that the respondent had already decided to dismiss him and it was merely ‘paying lip service’ to providing an opportunity for him to respond. The respondent’s case in this respect was hopelessly flawed as demonstrated by its own words. The ‘show cause’ letter stated:
‘Our client relies upon your theft of company property as the basis of the termination’.
On any objective reading of this sentence, one can only find that the decision as to the applicant’s guilt had been decided at least by 14 February 2018 and the employer ‘just went through the motions’ of providing him an opportunity to respond. This is further exemplified by the show cause letter requirement that he return all company property and equipment. I ask rhetorically, why would the employer demand return of property before deciding whether the employee’s explanation for his conduct might have rebutted the ‘show cause’ allegations and he might not be dismissed. For my own part, I have never seen such a grossly inaccurate and predetermined letter, masquerading as a ‘show cause’ letter, when in truth the decision had been made. This finding tells in favour of a finding of unfairness.
[97] The applicant was accompanied by his wife as support person during the telephone meeting on 22 February 2018. That said, I do not believe that a phone meeting is the optimal form of meeting about such a serious matter. It would have been preferable to have a ‘face-to-face’ meeting. This is a neutral factor.
[98] This is a neutral factor in the case, given the reason for dismissal was claimed to be related to misconduct, and any historic disciplinary matters were not factors in the decision to dismiss. In any event, I accept that the applicant’s evidence about these matters and even if it was said that they should be taken into account, I would decline to do so.
[99] I accept unreservedly, that the respondent is a small employer, with little or no human resources or industrial relations expertise. However, at all relevant times, including in the telephone meeting, the respondent had the advice of its lawyer. While I accept that the respondent gave its instructions to its lawyer, the process was such an appalling, clumsy and careless exercise that I doubt any competent industrial/employment lawyer would have advised the respondent in the manner for which its conduct is the subject of such obvious criticism. This is particularly so in respect to the drafting of the ‘show cause’ letter. This factor tells in favour of a finding of unfairness.
[100] The applicant acknowledges his mistake and his contrition was genuine. The applicant had a well-paid job and had worked with the respondent for five years. There is no cogent evidence that his performance was unsatisfactory. I have taken these matters into account.
[101] For all the above reasons, I am satisfied that the applicant’s dismissal on 23 February 2018 was harsh, unjust and unreasonable, within the meaning of s 387 of the Act. His dismissal was significantly, substantively and procedurally unfair.
[102] The remedies for an unfair dismissal are set out at s 390 of the Act as follows:
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.
[103] It is plain from a reading of s 390(3) above that the legislature intended to give primacy to reinstatement in circumstances where an employee has been unfairly dismissed and the Commission is required to exercise a discretion as to any orders in respect to remedy. Lest there be any doubt as to this proposition, one of the objects of Part 3-2 of Ch 3, dealing with unfair dismissal, states:
‘(c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.’
[104] I also refer to what was said by the Full Bench of the Commission in Colson v Barwon Health [2014] FWCFB 1949, where at para [29], it was said:
‘[29] The passages from which the sentences relied on by the Appellant are extracted clearly indicate that the Deputy President understood and applied the statutory requirements in respect of reinstatement, as does the broader context of his decision. The Deputy President noted the primacy of reinstatement as a remedy for an unfair dismissal. His observations about primacy did no more than state that consideration of reinstatement against the test of whether it is inappropriate was required (and a finding that it is inappropriate is required) before compensation in lieu could be ordered and does not provide licence to search for a reason to order an employee’s reinstatement when that is not appropriate. The requirement to find that reinstatement is inappropriate before considering compensation in s.390 of the Act gives effect to the emphasis on reinstatement in s.390(1)(c) of the Act [footnote omitted].’
[105] In Nguyen v Vietnamese Community in Australia [2014] FWCFB 7198, the Full Bench of the Commission recently discussed the meaning of ‘inappropriate’ in the context of s 390 and helpfully summarised the relevant case law as to a loss of trust and confidence telling against an unfairly dismissed employee’s reinstatement. At paras [20]-[21], the Full Bench said:
‘[20] The most common argument advanced in support of the proposition that reinstatement is inappropriate is the proposition, variously expressed, that there has been a loss of trust and confidence such that it would not be feasible to re-establish the employment relationship.
[21] In Perkins v Grace Worldwide (Aust) Pty Ltd the Full Court of the Industrial Relations Court considered the effect of a loss of trust and confidence on the question of the “practicability” of a reinstatement remedy and said:
“Trust and confidence is a necessary ingredient in any employment relationship... So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.
At the same time, it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee’s employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court’s finding on that question in the resolution of an application under Division 3 of Part VIA of the Act.
If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of a loss of confidence in the employee.
Each case must be decided on its own merits. There may be cases where any ripple on the surface of the employment relationship will destroy its viability. For example the life of the employer, or some other person or persons, might depend on the reliability of the terminated employee, and the employer has a reasonable doubt about that reliability. There may be a case where there is a question about the discretion of an employee who is required to handle highly confidential information. But those are relatively uncommon situations. In most cases, the employment relationship is capable of withstanding some friction and doubts. Trust and confidence are concepts of degree. It is rare for any human being to have total trust in another. What is important in the employment relationship is that there be sufficient trust to make the relationship viable and productive. Whether that standard is reached in any particular case must depend upon the circumstances of the particular case. And in assessing that question, it is appropriate to consider the rationality of any attitude taken by a party.
It may be difficult or embarrassing for an employer to be required to re-employ a person the employer believed to have been guilty of wrongdoing. The requirement may cause inconvenience to the employer. But if there is such a requirement, it will be because the employee’s employment was earlier terminated without a valid reason or without extending procedural fairness to the employee. The problems will be of the employer’s own making. If the employer is of even average fair-mindedness, they are likely to prove short-lived. Problems such as this do not necessarily indicate such a loss of confidence as to make the restoration of the employment relationship impracticable.”’
[106] The Full Bench continued at [27]:
‘[27] The following propositions concerning the impact of a loss of trust and confidence on the question of whether reinstatement is appropriate may be distilled from the decided cases:
• Whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is appropriate but while it will often be an important consideration it is not the sole criterion or even a necessary one in determining whether or not to order reinstatement.
• Each case must be decided on its own facts, including the nature of the employment concerned. There may be a limited number of circumstances in which any ripple on the surface of the employment relationship will destroy its viability but in most cases the employment relationship is capable of withstanding some friction and doubts.
• An allegation that there has been a loss of trust and confidence must be soundly and rationally based and it is important to carefully scrutinise a claim that reinstatement is inappropriate because of a loss of confidence in the employee. The onus of establishing a loss of trust and confidence rests on the party making the assertion.
• The reluctance of an employer to shift from a view, despite a tribunal’s assessment that the employee was not guilty of serious wrongdoing or misconduct, does not provide a sound basis to conclude that the relationship of trust and confidence is irreparably damaged or destroyed.
• The fact that it may be difficult or embarrassing for an employer to be required to re-employ an employee whom the employer believed to have been guilty of serious wrongdoing or misconduct are not necessarily indicative of a loss of trust and confidence so as to make restoring the employment relationship inappropriate.
[28] Ultimately, the question is whether there can be a sufficient level of trust and confidence restored to make the relationship viable and productive. In making this assessment, it is appropriate to consider the rationality of any attitude taken by a party [footnotes omitted].’
[107] I readily acknowledge, of course, that the respondent is a very small business. Plainly, the same considerations going to restoring a workable and practical relationship after the unpleasantness of litigation between an employer and employee, do not arise where the employer is a medium to large business. It is matter of relevant concern where, as here, the applicant seeks reinstatement as the primary remedy. On the other hand, Mr Edwards’ evidence as to the applicant’s skills, equipment knowledge and technical expertise is an acknowledgement of his value to the business. On balance, I consider there is no overwhelming or conclusive reason why the applicant should not be reinstated. Given the primacy placed on reinstatement of an unfairly dismissed employee, it is appropriate outcome in this case. The evidence of inappropriateness of reinstatement, such as it was, from Mr Edwards (loss of trust and confidence and the seriousness of the allegations) ‘rings rather hollow’ considering my conclusions as to the manifest injustice suffered by the applicant as a consequence of his dismissal and my conclusion the applicant had not engaged in any theft of company property.
[108] The applicant obtained alternative employment and has been paid a lesser rate of pay to that which he was earning before his dismissal. He has also earnt remuneration from casual work. Accordingly, I propose to make consequential orders for the payment by the respondent to the applicant for all lost remuneration between 23 February 2018 and his reinstatement, less any income earned him during this period. I agree with Mr Young that the applicant’s acknowledgement of a mistake in taking the liquor without permission was made in good faith. It does not constitute misconduct for which some deduction might be made for lost remuneration.
[109] A further order will be made that the applicant’s continuity of service shall not be taken to have been broken by his dismissal.
[110] I am satisfied that the statutory command in s 381(2) of the Act, to ensure a ‘fair go all round’ is reflected by the orders I intend to make in this case.
[111] The applicant’s reinstatement to his former position shall take effect within 21 days of today, or such other date as may be agreed by the parties.
[112] The parties are directed to prepare draft agreed orders reflecting my conclusions and to file the orders with my Chambers within seven days. Any disagreement as to calculations of lost remuneration to be paid will be determined by the Commission, if required. The matter is otherwise concluded.
DEPUTY PRESIDENT
Appearances:
E Young of Counsel for the applicant.
N Kirby, Solicitor for the respondent.
Hearing details:
Sydney.
2018.
October 10.
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