| [2020] FWC 6486 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Genevieve Buratto
v
Peter Sheppard Footwear Pty Ltd
(U2020/7825)
COMMISSIONER HARPER-GREENWELL |
MELBOURNE, 16 DECEMBER 2020 |
Application for an unfair dismissal remedy - remedy.
[1] Ms Genevieve Buratto (the Applicant) made an application for an unfair dismissal remedy. The matter was heard and determined and I issued a decision 1 (the Substantive Decision) in which I found that Ms Buratto’s termination by Peter Sheppard Footwear Pty Ltd (the Respondent, PS Footwear) was harsh, unjust or unreasonable. PS Footwear did not file submissions pertaining to remedy, nor did they address remedy in their closing submissions. I was therefore unable to determine remedy. I advised the parties that directions would be issued following my decision with respect to the filing of submissions addressing remedy.
[2] Directions were issued, PS Footwear sought an extension of time for filing, the extension was granted. The parties each filed written submissions addressing remedy. In the directions the parties were notified that, subject to any objections, I intended to determine the issue of remedy on the papers, however if either party sought to be heard they could advise my Chambers. Neither party made a request to be heard.
[3] Ms Buratto submits that considering the circumstances leading to her termination of employment, the relationship and trust between the Ms Buratto and PS Footwear has been tarnished. She submits that reinstatement is therefore an inappropriate remedy and that compensation should be ordered instead. 2
[4] PS Footwear submits that there has been a breakdown in the relationship between the parties such that reinstatement would be an inappropriate remedy. It submits the Respondent has lost trust and confidence in Ms Buratto due to her knowingly and blatantly choosing to disregard her contractual obligations to the Respondent and engaged in misconduct. 3 PS Footwear note the Substantive Decision found there was a valid reason for Ms Buratto’s termination of employment due to misconduct, and submit that as Ms Buratto’s misconduct directly relates to the performance of her duties, she gave unconvincing evidence and seemingly failed to appreciate the gravity of her conduct and impact on the Respondent despite holding a senior role of Assistant Store Manager, the Respondent does not consider there to be any scope for restoring the necessary element of trust and confidence between the parties.4
[5] PS Footwear also submits that if Ms Buratto was reinstated, the Respondent would have concerns about her willingness to comply with its lawful and reasonable instructions and relying on her to attend for rostered shifts. For that reason they doubt the employment relationship can be repaired. 5
[6] Finally, PS Footwear submit that reinstatement would be inappropriate in the circumstances given Ms Buratto’s submission that the relationship between the parties has been tarnished and she does not wish to be reinstated. 6
Consideration
[7] The Fair Work Act 2009 (Cth) (the Act) provides the following with respect to remedy:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[8] Section 390(3) of the Act provides that the Commission must not order the payment of compensation unless it is satisfied both that reinstatement of the person is not appropriate, and that it considers an order for the payment of compensation to be appropriate in all the circumstances of the case.
[9] Ms Buratto does not seek reinstatement and PS Footwear do not think reinstatement is an appropriate remedy in the circumstances. It is unlikely the parties would be able to establish a productive and cooperative relationship. It is in those circumstances that I do not consider reinstatement would be appropriate or practical. In the circumstances I consider compensation to be appropriate.
[10] Section 392 of the Act sets out the criteria to which I must give regard in determining any amount of compensation I might order PS Footwear to pay Ms Buratto. Section 392 provides as follows:
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.”
[11] I will consider each of these criteria in succession below.
The effect of the order on the viability of the employer’s enterprise
[12] Ms Buratto submits that the Commission ought to not place any concerns in respect to the question on the effect of the order on the viability of the Respondent’s business. 7 Ms Buratto submits that the materials provided by the Respondent is strictly limited to their in-store sale records for their store at 271 Collins Street, Melbourne, and that they have not provided any supporting information to properly assist the Commission in this factor.8 Ms Buratto contends PS Footwear has not addressed records of their online sales, assets and liability or of their sales in their other stores across Australia.9
[13] Ms Buratto further submits that, due to Melbourne’s lockdown laws as a result of Covid-19, it is obvious that in-store sales will be reduced to nil as the stores were not open, however online purchases were still available. Ms Buratto argues that according to the Australian Finance Review, since Covid restrictions were imposed online purchases (e-commerce) has grown exponentially. 10
[14] PS Footwear submits that as a result of the Covid-19 pandemic and Government related restrictions (particularly in Victoria) which commenced around March 2020 the Respondent had to entirely close its stores. The Melbourne CBD store was closed between approximately 25 March to 15 May 2020 and again between 9 July and 28 October 2020. The Respondent submits they effectively ceased trading its brick and mortar operations during those times as the stores are their main source of sales and income. 11
[15] PS Footwear submits that as a consequence of the store closures, their sales revenue this year is down by approximately 70% compared to last year, providing the Respondent’s weekly sales and foot traffic figures at the Melbourne CBD store in 2020 compared to 2019. 12 Further, the store closures resulted in all employee’s initially being stood down without pay or asked to consider reducing their hours. It submits that the Respondent’s management teams currently remain on reduced hours and wages, of generally 3 days per week, to ensure the Respondent survives the impact of the pandemic.13
[16] PS Footwear submits that qualifying for the JobKeeper subsidy scheme on around April 2020 is the only reason they have been able to afford to keep employees, with 73 of the Respondent’s approximately 96 employee’s receiving JobKeeper, with the remaining 23 ineligible. 14 They provided recent figures for the period 28 September to 8 November 2020 the Respondent is paying each fortnight in terms of employee entitlement that JobKeeper is not able to subsidise, and contend that the very limited funds the Respondent has available are being used to pay the reduced amounts it is required to continue to pay employees to keep them employed, as well as the Respondent’s debts and operational costs.15
[17] PS Footwear contends that any form of monetary compensation to Ms Buratto will create significant financial difficulties for the Respondent and affect its ability to meet its financial obligations to third parties. It will also risk the potential for the Respondent to increase working hours for existing employees to their full time/ordinary hours now that restrictions in Victoria are easing and stores can reopen. 16 The Respondent contends it has very limited cash reserves and has only survived the pandemic to date due to Federal Government subsidies such as JobKeeper.17
[18] Whilst I accept that PS Footwear has not provided evidence of its online sales revenue, it is eligible to receive JobKeeper and therefore it is accepted that the business has suffered a downturn in revenue for the applicable JobKeeper qualifying periods. I make adjustment to any order for compensation that I might make on the account of the financial downturn experienced during the Covid-19 shutdown period.
Length of the person’s service with the employer
[19] Ms Buratto had been employed by the Respondent for approximately three years and 11 months. 18
[20] Ms Buratto contends that as her length of service was almost four years and that no discount should be applied due to length of service. 19 They note that this length of time is double the duration in comparison to the length of service in Varani (Varani) v Independent Advocacy in the Tropics Incorporated T/A Independent Advocacy Townsville20, the decision referred to by the Respondent in its submissions, and as such no discount ought to be applied.21
[21] PS Footwear referred to the decision of Varani in which Senior Deputy President Richards said that a period 20 months was not a lengthy period. 22 In his decision the Senior Deputy President was not inclined to reduce any order for compensation.
[22] PS Footwear also submits that Ms Buratto’s length of service further demonstrates the gravity of her misconduct, given that she would have or ought to have been well aware of her contractual relations. 23
[23] Ms Buratto has served not an insignificant amount of time as an employee of PS Footwear. I make no adjustment to compensation on the basis of length of service.
Remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed.
[24] Ms Buratto submits she was working 35 hours per week with a weekly earning of about $794.50 plus 9.5% superannuation contribution. 24 She submits she would have continued in her employment if it was not for the termination of employment. Further, considering there was an ongoing pandemic at the time, Ms Buratto submits she was very mindful of employment security.25
[25] PS Footwear submits that from approximately 30 March 2020 to the date of her dismissal, Ms Buratto was receiving only JobKeeper payments, amounting to $750 (gross) per week, having been stood down pursuant to a JobKeeper enabling direction as a result of store closures. 26 As of 27 September 2020, the Respondent submits its JobKeeper payments were reduced to $600 (gross) per week per employee (JobKeeper 2.0). Further, despite Victoria recently coming out of lockdown, the Respondent submits there are significant restrictions in place impacting the Respondent and its ability to allocate hours to employees, including restrictions on the number of staff and customers that can be at any one store.27
[26] PS Footwear submit that as Ms Buratto stated on 15 May 2020 that she did not wish to return to work, had she not been dismissed effective 18 May 2020 the Respondent contends that she would have continued to receive only the JobKeeper payment amount. 28
[27] PS Footwear also submit that, due to Ms Buratto’s blatant disregard for her contractual obligations and her unsatisfactory explanation for her failure to provide notice or communicate with the Respondent between 18 May and 22 May 2020, had she not been dismissed on 18 May 2020 Ms Buratto would likely have been dismissed in the days following. 29 The Respondent submits that had a more detailed approach been taken prior to dismissal, Ms Buratto would likely have only been employed for a maximum period of one week before her employment would have been terminated for this conduct.30
[28] Ms Buratto made clear that she did not wish to work at the Melbourne store. I have formed the view that had Ms Buratto not presented a medical certificate and had been fit for work she would have continued to refuse to attend for duty. This would ultimately have resulted in her employment coming to an end within a matter of weeks. If I am wrong about this, I still hold the view that Ms Buratto’s employment would have ended within a period of two weeks given that she neglected her obligation to contact her employer and provide reasons for her absence in a timely manner.
[29] In the period that Ms Buratto would have remained in employment she would have earned a gross amount of $1589.00.
The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal
[30] PS Footwear submits that Ms Buratto has failed to show that she has adequately mitigated her losses. 31 It submits she has only applied for jobs sporadically once every month or so. They also submit that the JobSeeker subsidy is available to unemployed people looking for work and Ms Buratto has not provided any evidence of attempts to receive JobSeeker.32
[31] Ms Buratto contends that she has made numerous attempts to seek alternative employment, submitting many job applications since the termination of her employment for roles she finds that fits her skillset, however, she has been unsuccessful and is still currently unemployed. 33 In response to the Respondents contentions Ms Buratto filed further evidence of attempts she had made to obtain employment.
[32] I am satisfied that Ms Buratto has made a sufficient effort to mitigate her losses.
The amount of remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation.
[33] I have adopted the approach of the Full Bench of the AIRC in Ellawala v Australian Postal Corporation 34 as follows:
“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. We refer to this period as the “anticipated period of employment”. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the “anticipated period of employment” are deducted. An example may assist to illustrate the approach to be taken.
In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first 12 months after termination (that is $36,000) is deducted from the Commission’s estimate of the applicant’s lost remuneration. Monies earned after the end of the “anticipated period of employment”, 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.”
[34] Ms Buratto submits she has not received any remuneration from other employment or work from the period between her dismissal to when she filed her remedy submissions on 9 November 2020, and therefore no discount ought to be applied. 35 In respect to remuneration earned from social security payments, Ms Buratto submits that the Full Bench in McCulloch v Calvary Health Care Adelaide36 made it clear that the Commission and its predecessors believe social security payments do not constitute ‘remuneration earned from employment … or other work’ for the purposes of s.392(d).37 Ms Buratto further submits that any reference to JobSeeker is irrelevant, that the most recent consideration of this issue can be observed Jarvis v Crystal Pictures Pty Ltd38 in which Cloghan C declined to make any deduction on account of the receipt of Centrelink payments, for the following reasons:
“[74] I should note for the benefit of both parties that Ms Jarvis advised that during between her termination of employment and 15 April 2010, she received Centrelink payments. Ms Jarvis did not disclose the amount received. For my purposes under s.392(e) of the Act, I do not consider Centrelink payments as “…remuneration earned by [Ms Jarvis] from employment or work during the period between the dismissal and the making of the order for compensation”. Further, I do not consider it “relevant” for the purposes of s.392(g) of the Act, as it would be inappropriate for Australian taxpayers to effectively subsidise compensation (foregone wages) payable to an employee, where the employer has instantly dismissed that employee unfairly.”
[35] Accordingly, Ms Buratto submits that no discount ought to be applied.
[36] I am satisfied that Ms Buratto has not made any additional earnings during the period from her termination to the making of this order. I therefore make no deductions for earning from the compensation order.
Any amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation.
[37] Neither party made any submissions that go towards any income likely to have been earned during the period between making of the order and the actual compensation. The compensation order will be made payable within 30 days. It is not likely that Ms Buratto would have any additional earnings in the period from the order being made and the payment in compliance with the order
Any other matter that the FWC considers relevant.
[38] I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.
Misconduct -s.392(3)
[39] Section 392(3) of the Act provides that if the Commission is satisfied that the applicant’s misconduct contributed to the employer’s decision to dismiss them, the Commission must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
[40] Ms Buratto submits that any contribution ought to be limited to 10% as the circumstances arose from the misconduct was mainly due to her illness. 39 She contends that the Respondent made no other attempts to contact her emergency contact details nor use other form of method to contact her.40 Ms Buratto submits that prior to the incident in question the parties had always communicated via email, being their main method of communication and that the Respondent was aware Ms Buratto was responsive via email. She maintains she never received text messages and phone calls from the Respondent.41
[41] Ms Buratto submits that the Respondent was aware since March 2020 that her address had changed, however made no attempts to seek a further updated address or otherwise. 42 The termination notice was issued by email and by no other form of communication (text, phone
or post). Ms Buratto submits that this displays that the Respondent clearly knew what form of communication would reach her and elected to issue their termination notice via email instead of any other form. 43
[42] In response to the four cases relied on by the Respondent in their submissions, Ms Buratto submits that those cases are distinguished as the facts are materially different to the present case. She submits that, of the four cases relied on, the only case that may have similarity is Howard-Colla v AMJK Pty Ltd T/A Bloom Bar & Lounge 44 in respect of the misconduct, but note that the Member made no reduction for misconduct in this regard.45
[43] Ms Burrato also submits that in the present case, the Respondent did not pay the Applicant any additional monies (i.e notice in lieu) other than her leave entitlements at the time of termination. 46
[44] PS Footwear submit that given that it was found in the Substantive Decision that there was a valid reason for Ms Buratto’s termination of employment due to misconduct, any compensation that may be considered appropriate should be reduced to zero, or otherwise considerably reduced to no more than 1 weeks’ pay. 47 The Respondent referred to four decisions of the Commission from the last two years where compensation was significantly reduced because the applicant engaged in misconduct and there was a valid reason for dismissal.48
[45] Further, PS Footwear submits it did not attempt to mail communication to Ms Buratto as in March 2020 it had tried to send mail (payslips) to the postal address she had provided, which was returned to the Respondent with a note saying “not at address”. Accordingly, the Respondent assumed the Applicant had not provided her correct or current postal address. 49
[46] PS Footwear submits that Ms Buratto had worked at the Camberwell store before it was closed and her main form of communication with the Store Manager there was always via text messages and/or phone calls. This was because the ability to check emails is very limited due to the Respondent requiring its employees to focus their time on the shop floor serving customers. 50 PS Footwear submits it is the Respondent’s standard practice (consistent with industry practices) that the main form of communication between employees and their managers is to be via a phone call and if that fails, via text message, and Ms Buratto was well aware of this, having been employed by the Respondent for more than 3 years and having occupied an Assistant Store Manager role.51 The Respondent submits that Ms Buratto’s evidence regarding not receiving phone calls or text messages from the Respondent in the days prior to her dismissal was not accepted by the Commission in the Substantive Decision, which they submit suggests a wilful or deliberateness to her failure to attend work when rostered to do so, at a time when the Respondent was experiencing (and continues) to experience an economic crisis. PS Footwear submits this should be considered in determining the amount by which Ms Buratto’s compensation should be discounted on account of her misconduct.52
[47] In the Substantive Decision I found that Ms Buratto had breached her contractual obligation owed to her employer and that her behaviour was misconduct. Ms Buratto’s misconduct was a valid reason for termination of her employment. I therefore deduct 10% for misconduct bringing the total compensation order amount to $1430.10 gross.
[48] The compensation amount ordered is reduced by a further 10% to ensure the effect of the order does not affect the viability of PS Footwears enterprise, leaving an amount of $1287.09.
[49] The compensation amount that I have determined is less than the compensation cap of 26 weeks’ pay. It is not an amount that is clearly excessive or clearly inadequate. To minimise the potential risk of cashflow problems for the business, the compensation order will be made payable within 30 days.
[50] An order for the payment of compensation will be issued separately.
COMMISSIONER
Final written submissions:
Applicant: 9 November 2020
Respondent: 18 November 2020
Applicant reply: 24 November 2020
Printed by authority of the Commonwealth Government Printer
<PR725098>
2 Applicant’s Outline of Submissions on Remedy at [2]
3 Respondent’s Remedy Submissions at [1]
4 Ibid at [2]
5 Ibid at [3]
6 Ibid at [4]
7 Applicant’s Reply Submissions on Remedy at [3]
8 Ibid at [1]
9 Ibid
10 Ibid at [2]
11 Respondent’s Remedy Submissions at [5]
12 Ibid at [6] and Appendix A
13 Ibid at [7]
14 Ibid at [8]
15 Ibid at [8] – [9]
16 Ibid at [9]
17 Ibid at [10]
18 Applicant’s Outline of Submissions on Remedy at [3] and Respondent’s Remedy Submissions at [11]
19 Applicant’s Outline of Submissions on Remedy at [3] and Applicant’s Reply Submissions on Remedy at [4] – [5]
21 Applicant’s Outline of Submissions on Remedy at [4]
22 [2011] FWA 1633 at [92]
23 Respondent’s Remedy Submissions at [13]
24 Applicant’s Reply Submissions on Remedy at [4]
25 Ibid at [5]
26 Respondent’s Remedy Submissions at [14]
27 Ibid at [15]
28 Ibid at [16]
29 Ibid at [17]
30 Ibid
31 Respondent’s Remedy Submissions at [20]
32 Ibid at [18] – [19]
33 Applicant’s Outline of Submissions on Remedy at [6] and Applicant’s Reply Submissions on Remedy at [6]
34 Ellawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109
35 Applicant’s Outline of Submissions on Remedy at [6] – [7]
37 Applicant’s Reply Submissions on Remedy at [7]
39 Applicant’s Outline of Submissions on Remedy at [8]
40 Ibid
41 Ibid at [9]
42 Ibid and Applicant’s Reply Submissions on Remedy at [13]
43 Applicant’s Reply Submissions on Remedy at [13]
45 Applicant’s Reply Submissions on Remedy at [10] – [11]
46 Ibid at [12]
47 Respondent’s Remedy Submissions at [21] and [24]
48 Ibid at [22]
49 Ibid at [23]
50 Ibid at [24]
51 Ibid
52 Ibid