DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Raymond Zhai
v
Brett Galloway
(U2020/4410)

Application for unfair dismissal remedy – unfairly dismissed – compensation ordered.

[1] Mr Raymond Zhai made an application under s.394 of the Fair Work Act 2009 for an unfair dismissal remedy. His application named APT Corporation Pty Ltd T/A Brett Galloway Solicitors Barristers & Attorneys (APT) as his employer. However, for reasons set out later in this decision, I am satisfied that Mr Brett Galloway was his employer and have amended the name of the respondent to Brett Galloway (the Respondent).

[2] His application was heard together with an application made by Ms Milena Molina who had been employed by the Respondent as the Office/Practice Manager and was dismissed at the same time (together referred to as the Applicants).

[3] This application has a lengthy history and there are several matters that need to be dealt with including jurisdictional objections and procedural matters.

[4] Having considered all of the matters required under the Act, I have decided that Mr Zhai’s dismissal was unfair and have awarded compensation as a remedy.

The dismissal

[5] Mr Zhai worked for the Respondent as a solicitor until he was summarily dismissed on 18 March 2020. His termination letter reads as follows:

“Ray,

Your employment

At the date and time you receive this letter, which will be between 10.30 am and 11.00 am on Wednesday 18th March, 2020, you are Summarily Dismissed from your employment forthwith for what I consider to be serious misconduct –

1 serious insubordination;

2 attempted intimidation;

3 attempted bullying in your attempt to either or both bully me and or intimidate me;

4 sabotage;

5 any further or other grounds as may be advised.

In the circumstances as I see them, I consider no other course of action would be reasonable nor do I consider it reasonable to continue to work with you at all.

History

The relevant history goes like this ~

1 you were quite rude to me during the Anda trial. This conduct has continued to the present.

2 this conduct took place in circumstances where the judge and I clearly weren't seeing eye to eye and your uncalled for and continuing rudeness caused me unnecessary distress and anxiety.

3 despite the fact that the jury acquitted the client on the two serious counts and the judge discharged the client without conviction on the count where he misdirected the jury, you were aggressive and rude, saying I did not know much or do much anymore. You changed my draft submissions in relation to the aggravating and mitigating factors on the sentence proceedings such that you put in matters I had asked you not to and which were legally unhelpful to the point where I received unnecessary criticism from the judge. It must have been apparent to you that I considered your tone, language and words insubordinate.

4 between then and now little has been said between us due to the fact that you have continued to exhibit an openly hostile attitude toward me in the office except when you got in to difficulty with a client last week and I had to intervene to help you out the day before my wedding when I had other obligations.

5 prior to heading off on two weeks leave in late January this year, I delegated the matter of Travis Johnson to you to ready for his appeals which I considered may bring about a judicial Inquiry because of related events. I explained to you what needed to be done by when it needed to be done in consultation with the client. It was not outside your experience to do the work nor did you say you were too busy to do it. You made poor attempts to justify your failure to undertake the work by text when challenged.

6 you did not do anything requested of you at all nor did you seek any guidance in relation to it nor did you seek to have someone else do the work. The excuses you gave me included that you were busy; something that was not mentioned by you when you were delegated the work.

7 You caused me both personal embarrassment with the client and professional embarrassment with the court and your inaction resulted in the loss of the case from the firm. You only declared your failure the Friday before the Monday that the matter was listed before the court and then only when I asked you about the work i had delegated to you.

8 late last year you and another employee suggested to a client that the lawyer on the other side of a very public case was better than me. It was suggested that he get someone better and sack me. You admitted your conduct at the time. You knew I regarded your actions as an endeavour to sabotage my business as he was well known in Sydney and Melbourne. Had he gone to another law firm and sacked me and said that two of my staff had told him to sack me, it would have caused serious harm to the business.

9 On Tuesday 17th March between 4.00 pm and 4.30 pm, I indicated to Milena, who was at the entrance to the boardroom that I would speak to the staff the following day about our futures, having regard to the closure of many courts and the restricted basis courts would operate for some time, all as a consequence of action being taken around the globe due the spread of a serious virus and it effects on humans to date.

10 as I moved toward you, you said in a threatening tone that I was to return the books of the business to Milena, or else. You both sought to bully and intimidate me.

10 I invited you to come to my office to discuss any work issues you were concerned about but you refused as you had an audience. The entire staff were working within metres of you and were definitely within earshot of your raised voice. You told me I would comply today, being yesterday. I indicated that it wouldn't happen and I left. Before i left, I asked you what difference it made and you said you didn't trust me. I had not taken the opportunity to tell you that you have no say in how I run the business.

You have been well paid, treated with kindness and respect throughout your time with me. I do not have to tolerate your behaviour.

I have given the relevant issues and considerations as much thought as I was able in the time available to me.

In my view, your actions clearly fall in to the categories set forth above and in to other categories which I shall include, if the matter goes in to litigation.

You are to immediately -

1 leave your work phone on the desk with any relevant passcode;

2 leave your work keys and any Carpark entry /exit key on the desk.

3 leave the office

4 you are not permitted to remove any of my intellectual property, any client file, any client list or anything else relevant to the clients and or the business. If you have any of my information at your home, it is to be returned to the office by 4.00pm today.

Yours Faithfully,
Galloways,
Solicitors, Barristers & Attorneys”

Procedural history

[6] Mr Zhai’s application was lodged on 8 April 2020. A conciliation conference that took place on 18 May 2020 was unsuccessful, and application was listed for directions and conference before me on 25 May 2020.

[7] The Employers Response (Form F3) indicated it had two jurisdictional objections, the first being that the Respondent was a small business and it complied with the Small Business Fair Dismissal Code (the Code), and second that there was no applicable award or agreement.

[8] At the directions and conference listed on 25 May 2020, Counsel for the Respondent admitted that the dismissal of Mr Zhai was unfair and the Commission would only need to determine a remedy in relation to his application (the Admission). The Admission was subsequently withdrawn. Mr Zhai seeks to rely on the Admission, and this is dealt with later in this decision.

[9] The Applicants filed their witness statements and submissions in accordance with the Commission’s directions on 17 June 2020.

[10] On 3 July 2020, Counsel for the Respondent sought an extension of time to file the Respondent’s material. The extension was granted and the material was due on 13 July 2020.

[11] On 14 July 2020 the Commission wrote to the Respondent’s Counsel as no material had been filed by the extended due date.

[12] The Respondent’s Counsel wrote to the Commission later on 14 July 2020 attaching some submissions. The email reads:

“Dear Ms Wong,

Thank you for your email re the above matters.

I have today (Tuesday 14 July) ceased to act for APT Corporation in both the Molina and the Zhai matters.

I have impressed upon Mr. Galloway, particularly over the past week that he needs to prepare statements of evidence and file and serve them on Monday 13 July.

On Sunday 12 July, I provided Mr Galloway with 3 written and signed submissions so he could file and serve them the next day in accordance with the Commission’s orders. These submissions were drafted from oral instructions given to me by Mr. Galloway and some draft but statements of evidence. Those 3 submissions were:

1. In ZHAI - Submissions that the FWC lacks jurisdiction to hear the matter;

2. In ZHAI - Submissions on the substantive matter; and

3. In MOLINA - Submissions on the substantive matter

I informed Mr. Galloway that he must file and serve these submissions together with statements of evidence on Monday 13 July as per the Commission’s orders.

On Monday 13 July and on Tuesday I made numerous attempts to contact Mr. Galloway seeking to confirm whether he had filed and served the submissions and statements. Mr Galloway did not answer my phone calls. He did not call me back after I left messages on his phone. He did not respond to my emails nor to my SMS messages.

In addition to my inability to obtain proper instructions there is a further ethical issue that I have raised with Mr. Galloway on numerous occasions and that he has failed to address. Accordingly, I have informed Mr Galloway that I have ceased to act for him and his company.

I have done my best to ensure the Commission’s orders were complied with. However, compliance was out of my hands. I trust my ceasing to act will not seriously inconvenience the Commission. I trust the Commission will understand that I can no longer act in this matter where my ethical obligations are compromised.

Finally, I confirm that I will not be attending the second conciliation conference listed for Friday 17 July. I have informed Mr Galloway that he should attend this conference.

Kind regards,
John Overall B.Agr; Dip.Ed. LLB(Hons)
Barrister”

[13] The Respondent’s submissions and witness statements were subsequently filed on 14 July 2020.

[14] Mr Zhai’s submissions in reply were filed on 22 July 2020.

[15] On 28 July 2020 Mr Paul McGirr, solicitor, filed a notice of commencing to act for the Respondent.

[16] The first hearing day was scheduled for 29 July 2020. At the commencement of the hearing Mr McGirr made an application for an adjournment on the basis that he had not had sufficient time to obtain proper instructions. The application was not granted given the time already provided to the parties to prepare for the hearing, and that it was a choice made by Mr Galloway to change legal representation so close to the commencement of the hearing. The hearing proceeded on 29 July 2020.

[17] The second day of the hearing was scheduled for the following day, 30 July 2020, and Mr Galloway was scheduled to give his evidence. At 8.38am on 30 July 2020 an email was received from Mr McGirr who advised that Mr Galloway had flu symptoms and required a COVID test.

[18] When the hearing commenced on 30 July 2020 Mr McGirr indicated he had issued a notice to produce that morning in relation to both Applicants. I explained to Mr McGirr that he needed to make an application to the Commission for an order for production if he wished to have the Applicant’s produce documents. Mr McGirr was also advised that the adjournment which became necessary because of Mr Galloway’s alleged illness would not be used as an opportunity to ‘improve’ his client’s case – something that Mr McGirr had been complaining about during the first day of hearing when the Applicants’ sought to answer his questions with something other than a yes or no answer.

[19] I indicated at the time that the documents he had identified for production were either of no apparent relevance or were documents that were, or ought to have been, in the possession or control of the Respondent. Further, if this were the case, I would be unlikely to issue an order for production but would make a final decision when such an application was properly made.

[20] Ultimately, no application for an order for production was made in respect of Mr Zhai.

[21] Other than dealing with these procedural matters on 30 July, the proceedings had to be adjourned because Mr Galloway was allegedly unwell.

[22] Also on 30 July 2020, Mr McGirr emailed a document to the Commission headed ‘Respondent’s outline of submissions on jurisdiction’. This document was dated 13 July 2020 but had not previously been filed.

[23] Mr Zhai objected to the new jurisdictional objection raised on 30 July 2020, that objection being his employment was limited to the duration of a training arrangement, and his employment had ceased at the end of that arrangement (the training arrangement)

[24] The hearing date of 31 July 2020 was subsequently vacated due to Mr Galloway’s alleged illness.

[25] The applications were relisted for 17 and 21 August, however due to the unavailability of the parties the hearing dates were pushed back to 15 and 16 October 2020.

[26] In an email from Mr McGirr dated 14 October 2020, Mr McGirr indicated that further ‘preliminary matters’ would be raised at the hearing the following day. These matters included ‘the issue of additional evidence discovered’ by Mr Galloway, and Mr McGirr foreshadowed an application for a further adjournment. Additionally, the jurisdictional objection raised in July and relating to Mr Zhai needed to be dealt with.

[27] During the hearing on 15 October 2020, the Applicants concluded their evidence. The Respondent’s witnesses were not available at the conclusion of the Applicants’ evidence, resulting in a further delay. When the hearing resumed later on 15 October, the evidence of Mr Vu and Mr Silvestre was taken.

[28] Shortly after 1pm on 15 October, Mr McGirr advised the Commission that Mr Galloway had to go home because his wife had fallen over and he had to attend to her. Mr Galloway was then unavailable to give his evidence. The hearing concluded early as no further witnesses of the Respondent were available. It was agreed that the hearing would resume at 9am on 16 October to ensure that all of the witnesses would be finalised that day.

[29] At 9am on 16 October 2020, Mr Galloway was not in attendance, nor were the Respondent’s remaining witnesses. The hearing was stood over until 10am to allow Mr McGirr further time to attempt to contact his client. At 10am, Mr McGirr advised he had had no contact from Mr Galloway since the previous afternoon and had been unable to contact him. The hearing was then concluded and directions were issued regarding the filing of closing submissions.

[30] On 19 October 2020 the Applicants filed their closing submissions in accordance with the Commission’s directions. The closing submissions of the Respondent were due on 21 October 2020.

[31] Instead of receiving closing submissions from the Respondent, Mr McGirr filed a submission seeking the proceedings be reopened to allow the evidence of Mr Galloway and his remaining witnesses. He filed a statutory declaration of Mr Galloway in support of the application to reopen, along with a medical certificate dated 15 October 2020 certifying that Mr Galloway was unable to work from 15 to 16 October 2020 due to a medical condition.

[32] Closing submissions were subsequently filed by the Respondent on 22 October 2020 on the basis that the application to reopen the proceedings may be declined.

[33] On 23 October 2020 the Applicants filed their submissions in reply.

[34] On 26 October 2020 the Commission advised the parties that the application to reopen the case was refused. The reasons for refusing the application are set out later in this decision.

Procedural and jurisdictional matters

[35] As noted earlier, there are several matters that need to be dealt with in this decision. I will deal with them now, before turning to whether Mr Zhai’s dismissal was unfair.

Who is Mr Zhai’s employer?

[36] Mr Zhai was employed by Mr Galloway on 7 July 2017. He gave evidence that he thought Mr Galloway was always his employer. After he was dismissed, he discovered that in around February 2020 his employment had been transferred from Mr Galloway to APT, of which Mr Galloway is the Director and Principal Solicitor.

[37] Mr Zhai gave evidence that he did not provide his consent to transfer his employment to APT in 2020 accordingly his employment was in fact still with Mr Galloway.

[38] In support of his contention that his employment had continued with Mr Galloway until his dismissal, he relied on a decision of the Federal Court in McCluskey v Karagiozis 1, where Merkel J said at [11]:

“The law is clear … As was stated citing Lord Atkin in Noakes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 at [1026] there is no power in an employer “to transfer a man without his knowledge and possibly against his will from the service of one person to the service of another. I had fancied that ingrained in the personal status of a citizen under our laws was the right to choose for himself whom he would serve: and that right of choice constituted the main difference between a servant and a serf.”

[39] Based on the evidence of Mr Zhai, and in the absence of any evidence to the contrary from Mr Galloway, I am satisfied that his employer at the time of his dismissal continued to be Mr Galloway. Accordingly, I correct the application pursuant to s.586 of the Act to reflect the correct name of his employer.

The Admission

[40] As mentioned earlier, during a directions hearing on 28 May 2020, Counsel for Mr Galloway made the Admission, that being the dismissal of Mr Zhai was unfair and accordingly the only matter for the Commission to determine was that of remedy.

[41] The Admission was subsequently withdrawn by the Respondent.

[42] Mr Zhai contends that the Respondent made a deliberated and tactical decision to admit that his dismissal was unfair, and the Respondent was bound by the Admission. He relied on a decision of the High Court of Australia in Smits v Roach 2 in which the Court said:

“46. The adversarial system of litigation operates upon the basis that a party is generally bound by the conduct of counsel, and that counsel has a wide discretion as to the manner in which proceedings are conducted. The width of that discretion is reinforced by the role of the barrister as an officer of the court, by the barrister's paramount duty to the court, and by the public interest in the efficiency and finality of the judicial processes. This was civil litigation. If Mr Lindsay had failed to object to inadmissible evidence in the course of the trial, the appellants would have been bound by the consequences, and there would have been no enquiry by an appellate court as to whether that had occurred for a good reason, or with the approval of the clients. Indeed, such an enquiry would normally be impossible. Similarly, if Mr Lindsay had decided not to pursue a certain line of argument, or press a possible point of law, the appellants could not have complained to an appellate court that he had failed to consult them about the matter. The respondents were not at risk of having a favourable decision set aside on the ground that, in some aspect (perhaps some very important aspect) of the conduct of the case, Mr Lindsay was acting without express instructions from his clients. That was because, in conducting the case on behalf of his clients, Mr Lindsay was exercising wide and independent discretion. If it were otherwise, any judgment in a civil case would be at risk of being set aside on the ground that counsel had acted in excess of authority, and the appellate process would be one of endless re-litigation of contested issues.”

[43] Applying the same reasoning, he argued, the Respondent could not resile from the decision made by Counsel to admit that his dismissal was unfair.

[44] I do not consider it necessary to decide whether the Respondent should be bound by the Admission because for reasons set out below, I found the dismissal to be unfair in any event.

Application to reopen case

[45] On 16 October 2020, when it became obvious that Mr Galloway was not in attendance, I asked Mr McGirr whether there was any reason I should not conclude the proceedings at that time and deal with the application based on the material before me. That material clearly did not include any evidence of Mr Galloway. Mr McGirr’s response was: “I have no information as what’s happened to my client so I have nothing further to put”. I then concluded the proceedings and confirmed the directions for the filing by both parties of their closing submissions.

[46] As outlined in paragraph 31 above, Mr McGirr made an application to reopen the proceedings on 21 October 2020 to allow the evidence of Mr Galloway and the Respondent’s remaining witnesses.

[47] In Mr Galloway’s statutory declaration he explained his non-attendance on 16 October 2020 as follows:

a. When he arrived home at around 1.55pm on 15 October he assisted his wife inside their house.

b. Shortly after this time, their dog Jock was extremely excited and so Mr Galloway bent over to give him a calming pat. Unfortunately, Jock jumped up and hit Mr Galloway’s face which caused him to fall backward and hit his head.

c. Mr Galloway was not sure but thinks he could have lost consciousness.

d. When he regained his senses, he realised he had blood in his mouth and had a loose tooth.

e. He went inside and told his wife.

f. They called a taxi at about 5.30pm and went to a dentist.

g. The dentist advised him to go to a doctor as soon as possible if he had been unconscious.

h. Mr Galloway and his wife went to the medical centre at Darlinghurst as it was outside his regular doctors’ hours.

i. He told the doctor what had happened and the doctor told Mr Galloway to go and have tests done. He was given a referral to St Vincent’s Hospital and was provided with a medical certificate.

j. The referral to St Vincent’s Hospital was in the following terms: “Thank you for seeing Mr Brett Galloway, aged 59 years. Brett is feeling very unwell today, dizzy, nauseous etc. He has prominent nystagmus on examination today. I would appreciate review and perhaps imaging to clarify his diagnosis…”

k. The medical certificate was in the following terms: “This is to certify that Mr Brett Galloway is unable to work from 15/10/2020 to 16/10/2020 inclusive due to a medical condition”.

l. Mr Galloway said he then went to St Vincent’s Hospital and on arrival was told he would need to wait as there was quite a large number of people there.

m. As he was not feeling well, he and his wife decided to go home at around 8.30pm and return to the hospital the following day or sometime later.

n. Mr Galloway said that when he got home he said to his wife that he should check his phone for messages because Mr McGirr needed to know what had happened, but his wife told him to check his phone in the morning because he was always up early, to which Mr Galloway agreed.

o. Mr Galloway then took a dose of Valium to help him sleep. He said he woke up at around 10am the next morning and said to his wife: “goodness look at the time. I’m supposed to be in court, ring Paul McGirr urgently and tell him what has happened”.

p. Mr Galloway said he heard the conversation between Mr McGirr and his wife that took place at around 10.10am, during which his wife told Mr McGirr that Mr Galloway had been unwell and only just woken up, and Mr McGirr replying that the Deputy President had just declared the proceedings concluded around 10 minutes ago and the case was over. Mr McGirr also said he had been phoning and emailing Mr Galloway but had had no reply from him.

q. Mr Galloway said that given how he was feeling that morning, it would have been unwise for him to give evidence as he was not thinking clearly and was still suffering from slight vertigo.

r. Mr Galloway said he had been unwell for some time and in hindsight he realised that the illness from which he was suffering has resulted in him being unable to properly instruct counsel and unable to properly prepare for these proceedings. His illness had also resulted in him taking 10 hours to do something that used to take him one hour to complete, and the simplest of tasks had become very difficult.

s. He apologised for the delay caused by him in this matter, declared that he wished to give evidence on his own behalf, and said that the events on 15 and 16 October were a result of a genuine accident.

[48] Unsurprisingly, the Applicants vigorously opposed the reopening of the proceedings. They described the application to reopen as extraordinary given Mr Galloway had been the cause of numerous delays without proper explanation, and there was no evidence from his wife, the dentist or the hospital. They contended it was an abuse of process to enable further delay. They further contended that the statutory declaration of Mr Galloway was self-serving, and given the prior conduct of the Respondent, should be given little if any weight.

[49] In deciding whether to reopen proceedings, the following considerations are relevant:

a. Is the evidence relevant, in that it engages in one or more of the issues requiring determination?

b. Was the evidence able to be obtained with reasonable diligence for use during the hearing?

c. Are the interests of justice served better by allowing or rejecting the evidence?

d. What is the likely prejudice to the party resisting the application?

e. Will a denial of procedural fairness likely arise if a party does not have an adequate opportunity to argue its case?

f. Was the evidence not led because of inadvertence or mistake?

[50] At the time I made the decision not to reopen the proceedings, I considered the following:

a. The explanation provided by Mr Galloway as to his non-attendance on 15 and 16 October 2020. In this regard I was persuaded by the submissions of the Applicant that Mr Galloway’s statutory declaration was self-serving and not supported by other obtainable evidence, and given his prior conduct in the proceedings, I considered that I should place little weight on it.

b. That the evidence of Mr Galloway is relevant to the proceedings.

c. The evidence of Mr Galloway was available for use during the hearing and there was a reasonable opportunity for him to put his evidence before the Commission.

d. The interests of justice would be better served by not reopening the proceedings in the circumstances described in the procedural history above.

e. The prejudice to the Applicants would have involved further delay and additional legal costs, in circumstances where Mr Galloways conduct had already resulted in both delay and increased costs for the Applicants.

f. There is no denial of procedural fairness as the Respondent has had an adequate opportunity to argue its case.

g. There is no suggestion that evidence was not led because of inadvertence or mistake.

[51] Further, there is a strong public interest in maintaining the finality of litigation.

[52] I also note that Mr Galloway and Mr McGirr were on notice on 15 October 2020 that the proceeding would not be allowed to drag out further than what had already occurred. This is clear from the exchange that took place between Mr McGirr and me at the beginning of the day when Mr McGirr was seeking permission to introduce new evidence:

THE DEPUTY PRESIDENT:  Well, Mr McGirr, I'm sure you're very experienced in litigation and you would know that it's not the normal course that, you know, once you've finished your cross-examination, you don't get another turn, that's it, we've moved on.

MR McGIRR:  That is normally the case.

THE DEPUTY PRESIDENT:  Yes.  And these proceedings have already taken significantly longer, in terms of our normal time frames.  It’s not normal - it may be perfectly acceptable in other courts, but in the Fair Work Commission we have an obligation to deal with matters quickly.  It's a particular requirement of the Act and this is already going for a very long period of time.  So - - -

MR McGIRR:  Well, (indistinct) - - -

THE DEPUTY PRESIDENT: I'm not at liberty to simply keep giving parties the opportunity to provide new evidence and extend these proceedings beyond what has already been a reasonable time frame, to provide evidence and deal with the hearing.

[53] Having considered all of these matters, I was satisfied that on balance, the proceedings should not be reopened.

New evidence

[54] On 15 October 2020 Mr McGirr sought to introduce new evidence. Mr McGirr’s reasons for making the request related to what he referred to as ‘statements and surplusage’ that were said to arise from the answers given by the Applicants in cross examination. He was advised by the Commission on 15 October that further evidence would not be admitted at such a late stage in the proceedings.

[55] I decided not to allow the new evidence because:

a. It was clear from the exchange between Mr McGirr and the Commission on 15 October 2020 and set out earlier that allowing new evidence at such a late stage in the proceedings would result in a further adjournment and add further costs to the Applicants. It would have also involved having to recall one of the Applicants for further cross examination, which would also have again added further cost and delay;

b. the parties had had a reasonable opportunity to put their case; and

c. the ‘surplusages’ that Mr McGirrr complained of were a direct result of his own questions to the Applicants in cross examination.

Was Mr Zhai’s dismissal consistent with the Code?

[56] In its Employer Response to the application, the Respondent contended that Mr Zhai’s dismissal was consistent with the Small Business Fair Dismissal Code.

[57] The Respondent made no further mention of the Code or why it contended the dismissal was consistent with the Code.

[58] In relying on the decision in Pinawin v Domingo³ Mr Zhai contended that for a dismissal to be consistent with the Code, it was necessary to determine:

a. Whether the Respondent genuinely held a belief that the Applicant’s conduct was sufficiently serious to justify immediate dismissal; and

b. whether such a belief was, objectively, based on reasonable grounds.

[59] It is for the Respondent to establish that it had reasonable grounds to hold the belief.

[60] It was argued on behalf of Mr Zhai that the summary dismissal section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in Regulation 1.07 of the Fair Work Regulations (the Regulation).

[61] The Termination Letter provided the following reasons for the dismissal:

a. Serious insubordination;

b. Attempted intimidation;

c. Attempted bullying;

d. Sabotage; and

e. Any further or other grounds as may be advised.

[62] The Respondent’s reasons for dismissing Mr Zhai, it was argued, are not prescribed by the Regulation and accordingly did not justify immediate dismissal. The written submissions filed on behalf of Mr Zhai detailed the reasons why this argument was sound.

[63] Having considered the evidence and submissions, I am satisfied that Mr Zhai’s dismissal was not consistent with the Code. The Respondent in its submissions or any of the material it filed did little more than tick the box on the Employer Response form in this regard. There is no evidence that the dismissal was consistent with the Code. The Code does not rate a mention in the closing submissions filed on behalf of the Respondent. There is nothing to establish that Mr Galloway, at the time of Mr Zhai’s dismissal, held a belief that his conduct was sufficiently serious as to warrant summary dismissal, and that any such belief was based on reasonable grounds.

Not covered by an award etc

[64] The second jurisdictional objection raised by the Respondent in its Employer Response was that Mr Zhai was not covered by an award or enterprise agreement.

[65] This is not a proper jurisdictional objection. The mere fact that an employee is not covered by an award or enterprise agreement does not mean that a person is not protected from unfair dismissal. In this case, it is not disputed that Mr Zhai had completed the minimum employment period and earned less than the high income threshold, as required by s.382 of the Act. I am satisfied that in this regard he is a person protected from unfair dismissal.

Whether Mr Zhai’s employment was limited to a training arrangement

[66] A further jurisdictional objection was raised on 30 July 2020, after the hearing had commenced. This further objection was that Mr Zhai’s employment was limited to the duration of a training arrangement and the employment ceased at the end of that arrangement.

[67] The Respondent argued that the training arrangement included ‘supervised legal practice’, that being the condition on a practicing certificate issued by the NSW Law Society requiring a period of supervised practice of 24 months before an unrestricted practicing certificate could be issued. Mr Galloway contended that he agreed to a two year period of supervision of Mr Zhai and that his employment period coincided with this two year period of supervision. He further contended that Mr Zhai was entitled to apply for the removal of the supervision condition at the time of his dismissal, and because he was entitled to apply for an unsupervised practicing certificate, his employment ended for this reason on the day he was dismissed.

[68] Mr Zhai gave evidence that his employment was not for the term of any training arrangement.

[69] I reject the Respondent’s argument in this regard. It is misplaced and wrong. Whether Mr Zhai held a restricted practicing certificate or not does not in itself determine whether his contract of employment was for the period of supervision only.

[70] There is no evidence that Mr Zhai’s employment was limited to the duration of any training arrangement as contemplated by s386(2) of the Act. It was not disputed that he had never received a written employment contract.

[71] Further, there is no suggestion in the termination letter that this was the reason Mr Zhai’s employment ended. The reasons are specific allegations of misconduct which the Respondent alleges justified summary dismissal.

Was Mr Zhai unfairly dismissed?

[72] Having dealt with the procedural and jurisdictional matters, I now turn to whether Mr Zhai was unfairly dismissed.

The case for Mr Zhai

[73] Mr Zhai commenced employment with Mr Galloway on 7 July 2017 as a Law Clerk. He was admitted to practice on 16 February 2018 and was thereafter employed as a Solicitor.

[74] He was never given a written employment contract and worked full time, earning $75,000 gross per annum, plus superannuation.

[75] His employment as a Solicitor was subject to a two year supervision condition on his practicing certificate, and Mr Galloway was his designated supervisor. He was eligible to make an application to remove this condition on 19 February 2020.

[76] Mr Zhai gave evidence that he was eligible to earn commissions in addition to his salary. His commission rate was 15% from around August 2018, and in early 2019 he asked Ms Molina for an increase in his commission rate to 20%. He understood that Ms Molina took the request to Mr Galloway and the request was approved. He then received 20% commission from February 2019.

[77] He said his commission was paid either in cash or by electronic funds transfer.

[78] Mr Zhai gave evidence that on one occasion in early September 219 he spoke to Mr Galloway about paying him a commission for one of Mr Galloway’s clients, as Mr Zhai was responsible for the client retaining the Respondent’s services. Mr Galloway agreed to pay him a commission in acknowledgement for the work he had done.

[79] His evidence also set out each of the commission payments he received including the quantum of the payment and whether it was paid by cash or EFT.

[80] Mr Zhai explained that on 17 March 2020 Mr Galloway approached him in the office and said words to the effect of “I know there’s an issue with your commissions, I’ll fix you up tomorrow”. Mr Zhai called out to Ms Molina as he was of the view that she should be included in the conversation to the extent it related to the management of Mr Galloway’s financial accounts. In the conversation that followed, Mr Zhai expressed his concern about the future of the firm and Mr Galloway’s ability to continue to pay the staff. Mr Galloway said that he would look over the accounts that evening.

[81] Ms Molina and Mr Galloway then walked away. Ms Molina returned a short time later and said that Mr Galloway had called Mr Zhai “greedy” and said that he wouldn’t be blackmailed. Ms Molina told Mr Zhai that she had explained to Mr Galloway he wasn’t being blackmailed. She also told him that Mr Galloway would hold a staff meeting the following day.

[82] The next morning when he attended work he was confronted by a security guard who would not allow him to enter the premises and handed him the Termination Letter.

[83] Mr Zhai said that none of the matters in the Termination Letter had previously been raised with him and he denied engaging in any form of misconduct.

[84] In response to the first 3 paragraphs of the Termination Letter, Mr Zhai denied the allegations and said that at no point was he rude to Mr Galloway. He provided his view about the conduct of the trial referred to, including that Mr Galloway was repeatedly criticized by the judge for the way he asked questions in cross examination, Mr Galloway did not object to improper questioning during the Crown’s cross examination of their client, and Mr Galloway repeatedly fell asleep during the trial, requiring Mr Zhai to have to wake him up by nudging him under the bar table.

[85] In response to the fourth paragraph of the Termination Letter, Mr Zhai denied being hostile towards Mr Galloway.

[86] In response to paragraphs 5 to 7 of the Termination Letter, Mr Zhai denied the allegations therein and set out in detail his version of events relating to the trial in question.

[87] In response to paragraph 8 of the Termination Letter, Mr Zhai denied the allegation and again explained in detail his version of events relating to the interactions with the client in question.

[88] In response to paragraphs 9 to 10 of the Termination Letter, Mr Zhai denied the words attributed to him.

[89] Mr Zhai also gave evidence of the personal and financial hardship that had resulted from his dismissal, including damage to his professional reputation.

[90] In relation to the evidence given by Mr Vu for the Respondent, Mr Zhai did not deny performing work for him after his employment ended with Mr Galloway He set out in his evidence his account of his interactions with Mr Vu and Mr Silvestre, including his call logs and text messages about what had been said about Mr Galloway.

[91] In his closing submissions in reply, Mr Zhai said the following in respect of whether he had declared his commissions payments in his tax return:

“13. In response to paragraphs 9-18 of the Respondent’s outline of submissions dated 22 October 2020, Mr McGirr will recall he asked two questions in relation the Applicant’s tax returns summarised as ‘what was in your tax return’ and ‘did you declare commissions’. The Applicant was confused by the vagueness of the first question, which is confirmed by the Deputy President intervention at the time and answered the second question. With no prior evidence being led by the Respondent in respect of tax returns, the question naturally took the Applicant by surprise. The Applicant confirmed that no commissions payments have been declared in the tax return for the 2018-2019 financial year. On 15 October 2020, the Applicant’s legal representative clarified further that the Applicant sought financial advice and declared to the commission that his 2019-2020 tax return had not yet been filed and so would be able to report the commission payments as income in this year’s tax return. There has been no act of fraud on the Respondent or the ATO because nothing has ever been declared incorrectly to the tax office. It is only the Respondent who has created incorrect pay records, where the Applicant’s PAYG summary does not disclose commission payments as income. The Applicant notes that the Respondent has failed to address the EFT payments made to himself and Jessica Tohi in September/October 2019 which is a breach of his employer reporting obligations.

14. In response to paragraph 19 of the Respondent’s outline of submissions dated 22 October 2020, the Applicant has not been dishonest because he has not declared or completed the tax return for the period that relates to the payment of commissions. The Applicant may be late in lodging each tax return but will make the correct declarations for each financial year.”

[92] Mr Zhai gave evidence that he had commenced his own business and had started paying himself a wage in the week commencing 13 July 2020. He paid himself the same wage he received with Mr Galloway, being $1442.31 per week gross. His period of economic loss is 16.7 weeks. He seeks the maximum compensation available to him.

The case for Mr Galloway

[93] The effect of having refused the Respondent’s application to reopen the case means there is no evidence before the Commission from Mr Galloway.

[94] Even if I did have before me the evidence of Mr Galloway in the form of the witness statement filed prior to the commencement of the hearing, I note that nothing in his witness statement suggests that the dismissal of Mr Zhai was undertaken in a manner required by the Code.

[95] The two witnesses who did give evidence were Mr Vu and Mr Silvestro. To the extent they dealt with the matters raised in the Termination Letter, I consider their evidence to be unconvincing. Their answers to questions in cross examination suggested they were unsure about key aspects of their testimony and was often inconsistent with their evidence in chief. Accordingly, to the extent there is any inconsistency between their evidence and that of Mr Zhai, I prefer the evidence of Mr Zhai.

[96] The Respondents submissions of 13 July 2020 relied in part on submissions made in the case of Ms Molina. In those submissions it was highlighted that Mr Galloway has been the subject of professional disciplinary proceedings on two occasions.

[97] On the first occasion in November 2009, he was reprimanded with a finding that there was ‘a reasonable likelihood of a finding of unsatisfactory professional conduct’ because he had mixed trust money with other money, caused a deficiency in his trust account, and failed to keep this trust records so as they disclosed a true position in relation to trust money.

[98] In July 2012, Mr Galloway was reprimanded with a finding of ‘professional misconduct’. The substance of the matter was:

“1. Breaches of section 262 of the Legal profession Act 2004 – deficiency in trust account

2. Failure to report Trust irregularities to the Society contrary to section 263(i) of the Legal Profession Act 2004

3. Causing unidentified transactions to be posted to a miscellaneous Trust ledger

4. Unauthorised payment from the Trust account to the office account

5. Failure to implement a compliant trust account record

6. Failure to deposit transit money received in cash into its trust account

7. Failure to lodge an External Examiners Report within the required period

8. Failure to report Austrac significant cash transactions

9. Failure to supervise staff

10. Failure to pay superannuation entitlements and annual leave entitlements and provide a Group Certificate to an employee.”

[99] It was revealed in these submissions that Mr Galloway also had a debt to the ATO in excess of $500,000, although Mr McGirr denied this during the proceedings.

[100] The Respondent contended that in early 2018 Mr Galloway was asked by Ms Molina to pay a commission to Mr Zhai, and Mr Galloway refused this request. After his dismissal, Mr Galloway became aware that Mr Zhai had been receiving unauthorised cash payments as a commission. Mr Galloway submitted he was deceived by both Ms Molina and Mr Zhai and these payments had never been disclosed to him.

[101] The Respondent also submitted that Mr Zhai received cash payments from his clients and had gone to Mr Vu’s home to collect cash rather than bring the client to the office. This was contended to be gross misconduct.

[102] Finally, the Respondent submitted that there was evidence of gross disloyalty by Mr Zhai, based on the evidence of Mr Silvestre, which it says revealed that after his dismissal Mr Zhai lied to Mr Silvestre about the ability of Mr Galloway to represent him and arranged to represent Mr Silvestre himself without seeking to the transfer of the client file. This, it was alleged, also constituted gross misconduct.

[103] The Respondent’s closing submissions dated 22 October 2020 are set out in full as follows:

“1. The Respondent maintains his objection to jurisdiction filed herein and dated 13 July 2020.

2. Evidence that Mr Zhai was still under the supervision of Mr Galloway contained in Mr Zhai’s first statement dated 16 June at Paragraph 96 is an admission that he was still under supervision restriction on his practising certificate at the time of dismissal.

3. It is noted that in the F53 Employer Response that the jurisdictional objection was made under clause 2.1 and clause 2.2. and the grounds under “other” were that “there is no applicable award or enterprise agreement.”

4. The document headed submissions dated 13 July 2020 filed herein, submit that Mr Zhai’s employment was subject to a training arrangement as defined in Section 6 – Definition Fair Work Act.and accordingly

a. the contract of employment was for a period of supervision only.

b. pursuant to section 386(2) of the Fair Work Act, the Commission lacks jurisdiction to hear Mr Zhai’s case for unfair dismissal.

5. In relation to termination, the Respondent submits that the dismissal of Mr Zhai was not unfair in the circumstances of conduct during employment and continued conduct in further behaviour to undermine the Respondent’s business which later conduct was consistent with earlier serious misconduct by the Applicant

6. Mr Vu’s evidence in his Statement of Evidence to the effect that Mr Zhai attended Mr Vu’s home to collect cash rather than bringing the cash to the office not denied and represents gross misconduct.

7. Evidence of Mr Silvestre further evidences gross disloyalty to the employer which evidences a mode of conduct both before and after dismissal of gross disloyalty described in the Respondent’s statement as sabotage. The respondent submits that Mr Silvestre’s evidence should be referred to that of Mr Zhai. Mr Silvestre has no interest in the outcome of these proceedings and has no reason to be dishonest. The commission should find Mr Zhai was not honest in his evidence in this regard

8. Furthermore in relation to evidence of Mr Silvestre the Commission can be confident Mr Silvestre was an open, frank and honest whereas on the other hand Mr Zhai was a very unsatisfactory witness who sought to give self-serving evidence, answering questions which he was not asked and generally improving his case without cause to do so by being unresponsive. More will be said hereafter in relation to Mr Zhai’s honesty in relation to taxation matters and his mode of and motive in giving evidence before this commission.

9. The commission will recall by reference to the transcripts the great difficulty the respondent had in obtaining any admission in relation to taxation returns from the Applicant. The Applicant Repeatedly denied recalling that he had not declared in his Income Tax Return the receipt of commissions as income.

10. The respondent submits that a witness that admits such fraudulent conduct should not be treated as a credible witness.

11. In particular the respondent refers to the oral evidence of Mr Zhai at paragraphs PN915. The witness swore that he did not recall whether his PAYG certificates from his employer included his commissions. Such obviously false swearing in the light of later evidence means that the commission in our submission should not believe anything Mr Zhai says. If the Applicant has lied to the taxation office and to the commission then the Applicant’s case must fail.

12. The fact that the Applicant is a qualified solicitor at the relevant period further belies the lack of honesty in giving evidence to the effect he did not recall what was in his tax return

13. the respondent submits the comment by the Deputy President at PN 936 – 938 that she does not remember what is in her tax return from 12 months ago and later that tax returns are irrelevant in respect of wrongful dismissal are potentially evidence of bias or misdirection. Clearly dishonesty in evidence before the commission must be of great relevance. Similarly dishonesty in business affairs including filing false taxation returns and incredibly a solicitor pleading ignorance of the law is something of great importance in respect of a witness’s credibility

14. From PN 915 to 935 of the transcript were assertions from the Applicant that he could not recall what was in his Tax Return and a refusal to produce his Tax Return. This shows a lack of frankness and openness with the Commission and a lack of honesty. This lack of honesty is exacerbated by the subsequent evidence at PN945 which shows the attempt by the Applicant in his evidence to avoid the issue of the false declaration by feigning ignorance of the necessity for disclosure and of the legal requirements to show all income in an Income Tax Return. Even a layman of very low intelligence knows that you have to declare all income in your taxation returns

15. The lack of recollection again continued from paragraph 950 to 955. At Paragraph 956 the Applicant finally admitted he did not think he included income from commissions in his Tax Return. This was finally an admission followed up at paragraph PN 957 where he gives an excuse that he wasn’t aware “Yes, I wasn’t aware of my obligations”.

16. The Commission is entitled to regard his answer at PN959, “Yes, now that I look back on it, it something I should have declared as an embarrassment to the Applicant” as a recent concoction to try and minimise the impact of displayed dishonesty in taxation matters. The respondent submits that the lengthy denials by the Applicant in his evidence shows a lack of candour before the commission

17. For the Commission to find Mr Zhai a credible witness on the issue of an allegation that there was an agreement to pay him commission in light of his unsatisfactory evidence would be a miscarriage. If Mr Zhai is not a credible witness then his evidence in relation to an agreement in respect of commission should not be believed.

18. If there is not agreement as to commission then the receipt by Mr Zhai of that commission is a serious fraud compounded by the fraud on the Commonwealth. He is an admitted tax avoider in these proceedings. Taking commission unauthorised without an agreement constitutes a gross breach of his obligations as an employee entitling the employer to terminate his employment.

19. The respondent submits that the dishonesty also comes within any “further or other grounds as may be advised” as stated in the Notice of Termination.

20. The unsatisfactory conduct of the Applicant was set out in the Notice of Termination and is referred to albeit obliquely in the second last page of the Notice of Termination. In the respondent’s submissions the Applicant’s “actions clearly falls in the category set forth above and into other categories which I shall include if the matter goes into litigation” as stated in the notice of termination.

21. The respondent submits that the deception in relation to unauthorised cash payments as a commission to Mr Zhai was a joint enterprise which could have lead to the destruction i.e. “sabotage” of the Respondent’s business.

22. Evidence of Mr Vu in paragraph 4 of his statement, concerning the attendance of the house of Mr Vu and accepting a cash payment and accepting a further cash payment at Court is a gross breach of proper procedure. This is evidence of gross misconduct in the respondent submission.

23. In the first instance it would be unheard of for a solicitor to attend at a client’s house to collect cash. The only reason this would occur is that so it would not be noticed by his employer. The respondent asks the commission to say make such inference.

24. The Commission can take note that payments outside of the office would not normally come to the attention of the employer unless it was disclosed by the employee whereas if payments were made in the office they would be much harder to conceal.

25. Similarly, the evidence of Mr Vu at paragraph 5, Ray did not offer me a receipt for the money went uncontradicted in evidence by the Applicant.

26. No where in Mr Zhai’s statement in reply does he say that the monies received by him were paid to the firm.

27. It is Mr Vu’s recollection in relation to the business card and other matters were inconsistent with his sworn statement. However taking money and not issuing a receipt is another breach of taxation laws and a breach of the Law Society’s Rules. Again, evidence of dishonesty on the part of Mr Zhai, the Applicant and consistent with his dishonesty in relation to commissions and other taxation matters.

28. Accepting money on account of costs would require a Costs Disclosure Agreement, the money to be paid into a Trust Account and a Trust Account Receipt to be issued and a Trust Account Ledger to be opened under the Law Society Regulations. There is no evidence this occurred.

29. The respondent submits that the Applicant’s conduct would justify summary dismissal and the Applicant’s untruthfulness and continued dishonesty in giving evidence before the commission entitles him to no relief.”

Conduct of the Respondent during the proceedings

[104] Before considering whether Mr Zhai’s dismissal was unfair, it is necessary to make some comment about the conduct of the Respondent throughout the proceedings, including its closing submissions set out above.

[105] The manner in which the Respondent, including through his legal representative, engaged with the Commission throughout the proceedings fell well short of the standard expected of a ‘highly experienced and well regarded lawyer’.

[106] As already outlined, there were numerous adjournment requests, many of which had to be granted, which delayed the proceedings and increased the legal costs for the Applicants.

[107] Mr Galloway’s witness statement was poorly laid out, difficult to follow and many of the annexures were never filed with the Commission.

[108] It is difficult to know where to start with the Respondent’s closing submissions. With some measure of restraint, I will limit my comments to saying that the submissions are highly misleading and inaccurate in that they bear almost no resemblance to the evidence or what actually happened during the hearing. I do not consider it an effective use of time to correct all of the inaccuracies in this decision.

[109] Finally, it is astounding that the Respondent would complain of procedural unfairness and a denial of natural justice in terms of the conduct of the proceedings in the circumstances that have already been described.

Protection from Unfair Dismissal

[110] I am satisfied that Mr Zhai is a person protected from unfair dismissal by virtue of s.382 of the Act. I will now consider if his was unfair within the meaning of the Act.

Was the dismissal unfair?

[111] A dismissal is unfair if the Commission is satisfied on the evidence before it that the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

[112] There is no dispute that Mr Zhai was dismissed, and that subsection (d) does not apply. I have already found that the dismissal was not consistent with the Code.

Was the dismissal harsh, unjust or unreasonable?

[113] The criteria the Commission must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

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.

[114] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd⁴ as follows:

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

[115] I am required to consider each of these criteria in reaching my conclusion⁵, which I now do.

Valid reason - s.387(a)

[116] The Respondent must have a valid reason for the dismissal of Mr Zhai, although it need not be the reason given to him at the time of the dismissal.⁶ The reason(s) should be ‘sound, defensible and well founded’⁷ or justifiable on an objective analysis of the relevant facts, and should not be ‘capricious, fanciful, spiteful or prejudiced’.⁸

[117] The question I must address here is whether there was a valid reason for the dismissal related to his conduct (including its effect on the safety and welfare of other employees).

[118] In cases concerning conduct, the Commission must determine whether, on the balance of probabilities, the conduct allegedly engaged in by the employee actually occurred⁹. The test is not whether the employer believed on reasonable grounds, after sufficient inquiry, that the employee was guilty of the conduct and therefore acted in the belief that the termination was for a valid reason. The Commission must make a finding as to whether the conduct occurred based on the evidence before it¹⁰.

[119] Further, the Commission does not ‘stand in the shoes’ of the employer but will need to be satisfied that the termination of the employee was for a valid reason¹¹.

[120] There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision-making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.

[121] In this case, the Respondent dismissed Mr Zhai for the reasons set out in the Termination Letter.

[122] For a number of reasons, including those already traversed earlier in this decision, I accept the evidence of Mr Zhai, particularly given there is no evidence of Mr Galloway to contradict his evidence.

[123] The Respondent’s submissions in reply were concentrated on what it said was Mr Zhai’s ‘displayed dishonesty in taxation matters’.

[124] In this regard I note the following:

a. Mr Zhai subsequently confirmed that he had not lodged his tax return for either of the financial years in which he was paid commission. As a result, I accept that in the context of the issued before me, he has not been dishonest in this regard.

b. The cross examination of Mr Zhai by Mr McGirr was often confusing and the questions were on occasions difficult to answer because they contained multiple propositions in the one question. Mr Zhai’s submissions described the cross examination by Mr McGirr as ‘combative, overly repetitive and intentionally designed to confuse the Applicant’. I agree with this description. Some of the questions were so vague and broad as to be unable to be easily understood or answered. For example, a question was put as to what was in Mr Zhai’s last tax return. It would be difficult for most people to remember the dollars and cents of what was in their last tax return.

[125] I do not accept the contention that Mr Zhai engaged in gross misconduct because he attended the house of Mr Vu to accept a cash payment, nor do I accept that the evidence of Mr Silvestre is evidence of gross disloyalty by Mr Zhai toward Mr Galloway, or an act of sabotage by Mr Zhai. There was no evidence brought by Mr Galloway that would suggest he had any procedures as to the method or location at which cash could be paid. Nor was there any reason why Mr Zhai could not perform work for Mr Galloway’s clients after his employment had ended in circumstances where there is no evidence of any restraint provision applying to him.

[126] I am not satisfied that the Respondent established that Mr Zhai’s summary dismissal was consistent with the Code for reasons already explained, including that there was no evidence by Mr Galloway that would establish that Mr Galloway held a belief that his conduct was serious enough to warrant immediate dismissal, and that such a belief was reasonably held by Mr Galloway. In any event I do not consider that the reasons set out in the Termination Letter are reasons that warrant summary dismissal.

[127] Many of the reasons for dismissal are either denied by Mr Zhai or to the extent that he agreed with some of the circumstances referred to the Termination Letter, occurred many months beforehand, and without any discussion with him at the relevant time.

[128] I accept Mr Zhai’s response and explanation to each of the matters raised in the Termination Letter, particularly because there is no evidence of Mr Galloway to contradict it.

[129] In terms of commission payments to Mr Zhai, I am satisfied that there was an agreement between Mr Galloway and Mr Zhai that commission payments would be made and were made in accordance with that agreement.

[130] In terms of the commission payments, I accept that Ms Molina kept a record of these payments that Mr Galloway had access to. Further, the commission payments paid via an EFT bank transfer were clearly labelled ‘commission’. There is no doubt Mr Galloway had access to his own bank accounts. There is also no doubt that Mr Galloway’s accountant had information as to EFT payments for taxation purposes. There is no evidence to suggest that questions were raised by Mr Galloway’s accountant about the commission payments. I do not accept that Mr Galloway did not know of or had not agreed to the payment of commission to Mr Zhai.

[131] In short, there is no evidence to support a finding that Mr Zhai engaged in any form of misconduct warranting his dismissal.

[132] For these reasons, I am satisfied and find that on the balance of probabilities, the conduct allegedly engaged in by Mr Zhai did not occur and accordingly there was no valid reason for his dismissal.

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

[133] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,¹² in explicit terms¹³ and in plain and clear terms.¹⁴ In Crozier v Palazzo Corporation Pty Ltd¹⁵ a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[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 170(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. Much like shutting the stable door after the horse has bolted.”16

[134] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied 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.¹⁷ This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.¹⁸

[135] The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to Mr Zhai before his dismissal was effected.

[136] On the evidence before me, I am satisfied that Mr Zhai was not notified of the reason for his dismissal and was given an opportunity to respond to the reason. Mr Zhai was never warned or otherwise notified of the reasons for his dismissal before the decision to dismiss him was made. Because he was summarily dismissed, he did not have an opportunity to respond to the matters set out in the Termination Letter.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[137] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[138] Mr Zhai was not provided with the opportunity to have a support person, having been unaware prior to his dismissal that he was to be dismissed. However he was not refused a support person being present.

Warnings regarding unsatisfactory performance - s.387(e)

[139] Mr Zhai was not dismissed for unsatisfactory performance and this factor is therefore not relevant in my consideration.

Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))

[140] While the Respondent is a small employer and did not have dedicated human resource expertise, Mr Galloway is a lawyer with extensive legal experience who ought to have been able to ascertain the basics in how to fairly effect a dismissal.

Other relevant matters - s.387(h)

[141] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.

[142] Mr Zhai submitted the following matters were relevant:

a. He had been employed for almost 4 years with Mr Galloway and had an impeccable record of service;

b. He had brought considerable business to the firm and had a large caseload;

c. Mr Galloway had intentionally disparaged him to former clients; and

d. Mr Galloway had summarily dismissed him during a global pandemic.

[143] While I have taken this submission into account, I do not consider it appropriate to place significant weight on the matters raised.

Conclusion

[144] Having considered each of the matters specified in s.387 of the Act and for the reasons set out above, I am satisfied that the dismissal of Mr Zhai was harsh, unjust and unreasonable, and accordingly unfair.

[145] I now turn to the appropriate remedy.

Remedy

[146]  Having found that Mr Zhai was protected from unfair dismissal, and that his dismissal was unfair, it is necessary to consider what, if any, remedy should be granted to him. Mr Zhai seeks the remedy of compensation.

[147] Under section 390(3) of the Act, I must not order the payment of compensation to Mr Zhai unless:

a. I am satisfied that reinstatement is inappropriate; and

b. I consider an order for payment of compensation is appropriate in all the circumstances of the case.

[148] I am satisfied that reinstatement is inappropriate and Mr Zhai does not seek reinstatement.

[149] I am also satisfied that an order for the payment of compensation is appropriate, for the reasons I have found Mr Zhai’s dismissal was unfair.

[150] Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation including:

(a) the effect of the order on the viability of the Respondent;

(b) the length of Mr Zhai service;

(c) the remuneration that Mr Zhai would have received, or would have been likely to receive, if he had not been dismissed;

(d) the efforts of Mr Zhai (if any) to mitigate the loss suffered by him because of the dismissal;

(e) the amount of any remuneration earned by Mr Zhai from employment or other work during the period between the dismissal and the making of the order for compensation;

(f) the amount of any income reasonably likely to be so earned by Mr Zhai during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the Commission considers relevant.

[151] In determining an amount to be paid as compensation, and as was noted by a Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).¹⁹ This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages²⁰.”

Step 1: Estimate the remuneration the Applicant would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

Remuneration received, or likely to be received (s392(2)(c))

[152] While the evidence in this regard is limited, and while there is clearly an element of speculation in determining specifically how long Mr Zhai would have remained employed, I consider that it is likely that his employment would have continued for 6 months. I consider the effects of COVID-19 on business may have impacted on whether his employment would have continued beyond this time.

[153] His earnings over that period would be $37,500 gross.

Remuneration earned and income likely to be earned (s392(2)(e) and (f))

[154] Mr Zhai commenced new employment on 13 July 2020, being 16.7 weeks after his dismissal, on an annual salary of $75,000 plus superannuation. I consider it is likely he would continue to earn this income for the remainder of the 6 month period.

Length of service (s392(2)(b))

[155] Mr Zhai had been employed for just under 4 years. While this is not a lengthy period of employment, I consider it does not support reducing or increasing the amount of compensation ordered.

Viability (s392(2)(a))

[156] There is no direct evidence before me as to the effect of an order for compensation might have on the viability of the Respondent.

Mitigation efforts (s392(2)(d))

[157] Mr Zhai commenced alternative employment after 16.7 weeks. This was a reasonable effort to mitigate his loss. I do not consider it appropriate to reduce the amount of compensation otherwise calculated for this factor.

Other relevant matters (s392(2)(g))

[158] There are no other matters relevant to this consideration. Specifically, I do not consider it necessary to discount or increase the amount for ‘contingencies’. This step is a means of taking into account the possibility that the occurrence of contingencies to which Mr Zhai was subject might have brought about some change in earning capacity or earnings.

Misconduct (s392(3))

[159] Misconduct is not a relevant factor in this matter.

Shock, distress etc (s392(4))

[160] The amount of compensation does not include a component for shock, humiliation or distress.

Compensation cap (s392(5) and (6)

[161] Mr Zhai’s estimated remuneration for 26 weeks is $37,500. He had been unemployed for 16.7 weeks until he secured other employment on $75.000 per annum, and so had lost $24,086.41 gross (being 16.7 x $1442.30). He seeks the maximum compensation available to him, being $24,086.41 gross.

[162] I do not consider that a discount should be applied for contingencies.

[163] This amount is less than the amount of remuneration Mr Zhai was entitled in his employment with the Respondent during the 26 weeks immediately before the dismissal.

Conclusion

[164] In my view, the application of the Sprigg formula does not yield an amount that is clearly excessive or inadequate.

[165] For the reasons outlined above, I am satisfied that a remedy of compensation in the amount of $24,086.41 less appropriate taxation in favour of Mr Zhai is appropriate in the circumstances of this case. An order to that effect will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

G Barry of Resolution123 Pty Ltd for M Molina.
P McGirr of McGirr Lawyers for APT Corporation Pty Ltd.

Hearing details:

2020.
Sydney (By video):
July 29, 30;
October 15,16.

Final written submissions:

23 October 2020.

Printed by authority of the Commonwealth Government Printer

<PR728296>

 1   [2002] FCA 1137.

 2   [2006] HCA 36.

3 [2012] FWAFB 1359.

4 (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.

5 Sayer v Melsteel [2011] FWAFB 7498.

6 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378.

7 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371, 373.

8 Ibid.

9 Edwards v Giudice (1999) 94 FCR 561.

10 King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24].

11 Miller v University of New South Wales (2003) 132 FCR 147

12 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

13 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

14 Previsic v Australian Quarantine Inspection Services Print Q3730.

15 (2000) 98 IR 137.

16 Ibid at 151.

17 Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.

18 RMIT v Asher (2010) 194 IR 1, 14-15.

19 (1998) 88 IR 21.

20 [2013] FWCFB 431.