DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Michelle Sposito
v
Maori Chief Hotel
(U2020/14422)

Application for an unfair dismissal remedy – whether genuine redundancy – whether dismissal complied with the Code – dismissal unfair

[1] This decision concerns an application by Mrs Michelle Lee Sposito (Applicant) for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth) (Act). The Applicant was employed as a chef with Maori Chef Hotel (Respondent), commencing in or around March 2010, until her employment was terminated for reason of redundancy, effective 16 August 2020. The Applicant contends that her termination was unfair because her position was not redundant. In support of this, she claims that she was misled into believing that the Respondent was permanently ceasing its operations and that the Respondent has since hired two casual staff members to perform duties that used to be the responsibility of the Applicant. She seeks compensation. The Respondent objects to the application on the jurisdictional grounds that it complied with the Small Business Fair Dismissal Code (Code) and that the dismissal was a case of ‘genuine redundancy’ for the purpose of s 389.

[2] The matter was heard before on me 10 February 2021. Both parties attended and were self-represented. As I explain below, I have concluded that the dismissal did not comply with the Code because the Code is not concerned with dismissal for reason of redundancy, and that the dismissal was not a case of ‘genuine redundancy’ because the Respondent did not comply with its consultation obligations under the Hospitality Industry (General) Award 2020 (Award). I have determined that the measure of compensation should reflect the period it would have taken the Respondent to comply with these obligations, which I consider to be two weeks.

[3] There are two other matters that s 396 of the Act requires the Commission to decide before considering the merits of an unfair dismissal application, which I will briefly address.

[4] First, the Applicant was a person protected from unfair dismissal, as she earned less than the high-income threshold and had undertaken the minimum period of employment (s 382).

[5] Second, the Applicant’s application was not made within the 21-day period contemplated by s 394(2) of the Act. This issue was dealt with following a hearing on 4 December 2020, at which both parties attended and were self-represented, and I delivered an ex tempore judgment granting the Applicant an extension of time under section 394(3) of the Act. 1

Factual background

[6] The Respondent operates a restaurant and bar in South Melbourne. At the time of the Applicant’s dismissal, the business employed two people, being the Applicant and Mr Craig Baldwin, Manager. It is uncontested that the Respondent has no associated entities. Mr William Clements, an owner and director of the Respondent, gave evidence that as a result of the COVID-19 pandemic, the Respondent experienced a significant decline in turnover in 2020. According to Mr Clements, this was attributable to periods of time where the Respondent was forced to cease operations as part of the Victorian “lockdown”, its inability to implement a financially viable take-away service as an alternative to its dine-in business, and the fact that office workers, which accounted for much of the Respondent’s pre-COVID patronage, continue to work from home. Uncontested evidence adduced by Mr Clements demonstrates that the Respondent made total gross income of $55,005.65 between April and November 2020, compared to $409,366.69 over the same period in 2019. 2

[7] On 9 July 2020, the Respondent was required to close as a result of the Victorian lockdown. On 11 July 2020, Mr John Kent, the other owner and director of the Respondent, sent the Applicant an email attaching a letter addressed from him and Mr Clements. The email read as follows:

Hi Michelle

Sadly, neither this email nor the attachment are good news.

The Corvid-19 pandemic is having a disastrous effect on both the Maori Chief and the owner’s other business interests. From the beginning of the virus and the initial closure of the Maori Chief we set a target of surviving to the end of June. Along with the rest of the population we all hoped that the Maori Chief would reopen sometime in July and that business as usual would follow progressively in the months that followed. Despite various levels of government assistance and further financing by the owners the hotel has lost a considerable amount of money every month since March. This latest virus outbreak in Melbourne coupled with the ongoing shut down and financial costs has left us with no choice but to close.

It is quite apparent that any pubs, bars, restaurant of cafes will not see a return to business as we knew it until a vaccine is found and available to everyone in Australia. This is not likely to happen for many months, if not years, and with zero revenue for the foreseeable future we are left with no choice but to close down all hotel operations. We have delayed our decision for as long as possible but, so that we have some certainty, we will cease all hospitality activities on COB Sunday August 16^th, 2020.

We apologise for not speaking to you in person but this is not possible in the current environment. Please read the attached letter very carefully. If you have any questions please contact either Bill or myself and we will do our best to answer them.

We wish you and your family all the best for the future

John & Bill

[8] The letter attached to the email, erroneously dated 10 July 2020, further provided as follows:

Dear Michelle

Termination of your employment by reason of redundancy

The purpose of this letter is to confirm the outcome of a recent review by Manchild Pty Ltd (trading as the Maori Chief Hotel) of its operational requirements, and what this means for you.

As a result of the Corvid-19 pandemic and the ongoing economic downturn your position is no longer needed. Regrettably, given that there are no options for redeployment in an alternative position, this means your employment at the Maori Chief will terminate. This decision is not a reflection on your performance.

Based on your length of service, your notice period is 5 weeks which is made up of 4 weeks and an additional 1 week - as employees over 45 years old who have completed at least two years of service are given an additional week. Therefore, your employment will end on Sunday August 16^th, 2020.

You will continue to be paid throughout the notice period. On termination you will also be paid in full for your accrued entitlements for both Annual Leave and Long Service Leave.

You may seek information about the terms and conditions of employment from the Fair Work Ombudsman. If you wish to contact them you can call 13 13 94 or visit their website at www.fairwork.gov.au.

We thank you for your valuable contribution during your employment with us. Please contact me if you wish to obtain a reference in the future.

Yours sincerely,

Bill Clements & John Kent
Directors

…

[9] A copy of the letter was also sent to the Applicant via registered post. 3

[10] There is no contest that the Applicant received the Respondent’s letter and that she did not instigate any contact with representatives of the Respondent following receipt of that correspondence. She states that she believed that there was no reason to respond as the correspondence “made it abundantly clear that I was being made redundant as they were closing down the business suggesting permanent closure”. 4

[11] The Applicant’s employment terminated on 16 August 2020. It is not in dispute that she was paid out her accrued annual leave and long service leave entitlements.

[12] On 28 October 2020, the Applicant became aware that the Respondent’s business was re-opening via a Facebook post published the same day. 5 On 10 November 2020, the Respondent posted a job on its Facebook page. This post stated the Respondent was “looking for chefs” and that the job was for “35-40hr p/w nights & weekends included contracted award wage”.6

[13] The Respondent states that the Applicant’s position “no longer exists” and has “not been refilled with a new employee”. 7 In relation to the Facebook post advertising for new chef(s), the Respondent claims that this was an “overly ambitious advert placed by the Venue Manager” and that whilst the Respondent has since re-engaged two former casual bar staff, these employees have no kitchen duties.8

Compliance with the Code

[14] I will deal first with the Respondent’s contention that the dismissal was consistent with the Code. I adopt the observations of Deputy President Colman in Solway v Vision Blonde 9concerning the relevance of the Code to dismissals for reason of redundancy, and in particular the Deputy President’s analysis of the interaction between the Code and the dismissal of an employee for reason of redundancy. In essence, the Deputy President concludes that in its application to dismissals that are not summary dismissals, the Code requires that there be a valid reason for dismissal based on an employee’s ‘conduct or capacity’. As the dismissal of an employee for reason of redundancy is not one that is based on conduct or capacity, but rather on the employer’s business or operational needs, the dismissal in those circumstances is not consistent with the Code. In the present case, as there was no reason for the Applicant’s dismissal related to her capacity or conduct, the dismissal was not consistent with the Code.

Genuine Redundancy

[15] The Respondent’s second jurisdictional objection is that the Applicant’s dismissal was a case of genuine redundancy, and that the Commission has no jurisdiction to hear the merits of the application. Under s 385 of the Act, a dismissal cannot be unfair if it was a case of ‘genuine redundancy’, which is defined as follows by the Act at s 389:

“(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[16] I consider that the Respondent no longer required the Applicant’s job to be performed by anyone because of changes in the operational requirements of its enterprise. I accept the evidence of Mr Clements that the company had experienced a significant downturn, including a substantial decrease in gross income during 2020 compared to the previous year, and was required to cease operations over an extended period of time due to the Victorian “lockdown” mandated by the state government. The Applicant was one of only two employees at the time of the dismissal, and in the circumstances, her kitchen duties could and were re-allocated to Mr Baldwin, the Manager. I note in this respect that it is well established that a person may still be genuinely redundant where there are aspects of the employee’s duties still being performed by other employees. 10 Whilst I accept that the Applicant was disappointed that the Respondent chose to re-allocate her duties to Mr Baldwin and make her redundant, rather than retain both of them under the JobKeeper scheme, this of itself does not mean that her dismissal was not a case of genuine redundancy for the purposes of s 389(1).

[17] Despite the Respondent’s Facebook post on 10 November advertising for a chef position with its business, I am satisfied on the balance of probabilities that the Applicant’s position has not been filled. It was abolished when she was dismissed and has not been reinstated. Whilst two former casual employees have since been re-engaged by the Respondent, I am satisfied that these employees perform bar duties only and do not discharge the responsibilities of Chef.

[18] The Applicant indicated that the Respondent had ulterior motives for ending her employment. She says that:

(a) She had been harassed and intimidated by Mr Baldwin in relation to requests she had made to change shifts so she could support her daughter, who was attending The Melbourne Clinic in relation to mental health issues;

(b) Mr Baldwin “micro-managed” her position, altered her timesheets and tried to cut her rostered hours;

(c) She has been underpaid through her employment; and

(d) Mr Baldwin, without consultation, increased her number of shifts from five to six so that she was working 20 hours, and that when she stated she could not handle another shift due to her commitments to her ill mother and daughter, she was required to take annual leave to “make up the difference”. 11

[19] These submissions are not fully developed, and I am unable to make any findings in relation to them. Both the Applicant and Mr Clements gave evidence at the hearing and I found both to be honest and forthright witnesses. Whilst I accept that the Applicant believes that the Respondent had ulterior motives for wanting to end her employment, I do not accept that the Respondent did in fact have any such motives, or that it dismissed the Applicant wholly or partly for such reasons. I accept Mr Clement’s evidence about the reasons for ending the Applicant’s employment. These are sensible and credible reasons.

[20] Next, it is necessary to consider whether the Respondent complied with its Award obligation to consult the Applicant about her redundancy. The Respondent acknowledged that the Applicant’s employment was covered by the Award. Clause 38 of the Award requires an employer to consult with employees about major workplace change. Clause 38.1 states that where an employer has made a ‘definite decision’ to make major changes in organisation, structure, or various other matters, that are likely to have significant effects on employees (which includes termination), the employer must give notice of the changes to all employees who may be affected by them, and discuss the changes, their likely effect on employees, and measures to avoid or reduce the adverse effects of changes on employees. Clause 38.2 provides:

For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

[21] Clause 38.4 provides:

The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).

[22] Consultation for the purpose of clause 38 of the Award required the Respondent to advise the Applicant that her position was to be made redundant and discuss any ‘measures to avoid or reduce the adverse effects of changes’ on her. The Respondent admits that it did not engage in any such discussions. It simply sent her the letter advising her of her redundancy, effective on the expiry of five weeks’ notice. At the hearing, during an interchange with the Commission, Mr Clements cited a “stressful period”, “unusual circumstances” and his belief that any conversation with the Applicant regarding her termination would be “emotionally charged” due to the pandemic and her personal circumstances, as reasons for not making contact with the Applicant. He also stated that because any conversations would not be “face to face” due to restrictions associated with the lockdown, he was reluctant to contact the Applicant and instead left it to her to initiate discussions, as referenced in the email of 11 July 2020 attaching the termination letter. I am not persuaded by these submissions. In my view, there was nothing preventing the Respondent from calling the Applicant on the telephone or arranging to speak to her via other means. I note in this regard, Mr Clements’ concession during the hearing that “in hindsight, I would have made the call”.

[23] As the Respondent cannot be said to have engaged in discussions with the Applicant as required under the Award, it has failed to satisfy the requirement of s 389(1)(b) of the Act. I must therefore conclude that the dismissal was not a case of ‘genuine redundancy’.

[24] In light of my conclusion above in relation to the Respondent’s failure to discharge its consultation obligations under the Award in line with s 389(1)(b) of the Act, it is not strictly necessary for me to turn my attention to s 389(2). However, for the sake of completeness, I note that, having considered the evidence of the Respondent’s financial position and operational needs at the relevant time, I am not satisfied that it would have been reasonable for the Applicant to be redeployed within the Respondent’s enterprise. At the relevant time, the Respondent had reduced its workforce to just one employee – Mr Baldwin – who was responsible for managerial and kitchen duties. Whilst the Applicant points to, and the Respondent concedes, that it re-hired two former casual employees in November to attend to bar duties when the business resumed operations, the Respondent could not have been expected to consider these positions as redeployment opportunities for the Applicant at the time it made her redundant. On the material before me, I find that the directors of the Respondent reasonably believed at the time of the Applicant’s dismissal that the business would be closed for the foreseeable future. Whilst they hoped that there would be an opportunity to resume operations, the evidence before me does not support the proposition that they anticipated, much less knew, that they would require staff in November.

Was the dismissal unfair?

[25] A finding that a dismissal was not a case of genuine redundancy does not necessarily lead to a conclusion that the dismissal was unfair. Rather, the Commission proceeds to consider the unfair dismissal application on its merits. Section 387 states that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the matters in subsections 387(a) to (h).

[26] In circumstances of dismissal for reason of redundancy, no relevant finding can be made in relation to the consideration in s 387(a), namely whether there was a ‘valid reason for the dismissal related to the person’s capacity or conduct’. The Respondent does not contend that there was any valid reason for dismissal related to the Applicant’s capacity or conduct. Rather, its reliance on redundancy as the reason for dismissal is to be considered in connection with s 387(h), ‘any other matters the Commission considers relevant’, to which I shall return.

[27] Similarly, the considerations in ss 387(b) and (c) are not relevant. They concern whether the employee was ‘notified of that reason’ (i.e. the valid reason) and whether the person was given an opportunity to respond to any reason related to capacity or conduct. The consideration in s 387(d) is whether there was ‘any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.’ There was no such refusal in this case. If a dismissal relates to unsatisfactory performance, s 387(e) requires the Commission to consider whether the person has been warned about that performance prior to the dismissal however the present matter does not concern performance.

[28] The Commission is required to consider the degree to which the size of the employer’s enterprise, and the absence of dedicated human resources expertise, would be likely to impact on the procedures followed in effecting the dismissal (ss 387(f) and (g)). I have considered that the Respondent is a small business employer with no internal human resources expertise, and this likely affected its approach to the dismissal of the Applicant.

[29] This brings me then to s 387(h). My conclusions in relation to the ‘genuine redundancy’ jurisdictional objection are relevant to the question of whether the dismissal was unfair. The Respondent did not need the Applicant’s role to be undertaken by anyone. Its decision to make the Applicant’s position redundant was a legitimate reason to end her employment in the circumstances. Even though the dismissal was not a ‘genuine redundancy’ for the purposes of the jurisdictional objection, this does not mean that the dismissal was not a real and bona fide redundancy. Although it could not be a valid reason related to capacity or conduct for the purposes of s 387(a), the Applicant’s dismissal occurred for a good reason. This tells against a finding that the dismissal was unfair.

[30] It is also relevant to take into account the manner in which the Applicant’s employment was terminated. In particular, she was entitled under the Award to be consulted in a particular way, as I have explained above. This did not occur. The process leading to the Applicant’s dismissal was deficient because the Respondent did not comply with the requirements of clause 38 of the Award. The Applicant’s employment was ended during the COVID-19 lockdown, when finding alternative employment would prove a challenging prospect. If the Respondent had complied with the Award consultation provisions, and engaged in discussions with the Applicant about its decision and potential measures to reduce its impact on her, the Applicant could have had further notice of the impending termination of her employment. In my view, the Applicant’s dismissal was not unreasonable or unjust. However, I consider that, in the circumstances, the company’s failure to comply with the consultation provision in the Award rendered the Applicant’s dismissal unfair.

Remedy

[31] Reinstatement is not sought and would not be appropriate. I consider that an award of compensation is appropriate. Section 392(2) provides that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(a) to (g).

[32] There is no evidence to suggest that an award of compensation would affect the viability of the Respondent’s enterprise (s 392(2)(a)). As to the Applicant’s length of service (s 392(2)(b)), I note that she had worked for the company for approximately 15 years, in two stints, the most recent of which lasting approximately 10 years.

[33] Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. This requires the Commission to consider how long the person would have remained employed, but for the dismissal. Given the company’s financial situation and the fact that it had decided the Applicant’s role was not required, I consider it likely that, had she not been dismissed with effect from 16 August 2020, she would have been dismissed a very short time later. I assess this hypothetical situation from the standpoint that any subsequent dismissal of the Applicant would have occurred according to law. If the company had made her position redundant in full compliance with the consultation provision in the Award and engaged in discussions with her as required by clause 38, I consider that this would have taken not more than two weeks.

[34] The Applicant has provided limited evidence regarding the remuneration she would have received, or would have been likely to receive, if not for the dismissal. Given my finding that I consider her employment would not have continued for more than two weeks beyond 16 August 2020, it is appropriate that the parties confer as to the remuneration she would have been entitled to in respect of this period. Should the parties require the assistance of the Commission to facilitate these discussions, the parties are directed to contact my chambers to request a Member Assisted Conciliation.

[35] In the event that the parties are unable to agree on the appropriate sum to be paid to the Applicant, I will issue directions for the filing of further materials.

COMMISSIONER

Appearances:

Ms Michelle Lee Sposito, Applicant

Mr William Clements for the Respondent

Hearing details:

10 February 2021 (via Microsoft Teams)

Printed by authority of the Commonwealth Government Printer

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 1   Michelle Sposito v Maori Chief Hotel [2020] FWC 6555 (EoT Decision).

 2   Maori Chief Hotel – Takings Comparison 2019 and 2020.

 3   Applicant’s extension of time application materials filed 23 November 2020 (EoT Materials), page 4.

 4   Applicant’s Outline of arguments: merits filed 8 January 2021, page 12.

 5   EoT Decision, [16].

 6   EoT Materials, pg 18.

 7   Respondent’s response to applicant’s outline of arguments: objections (Respondent’s Objection Material), page 2.

 8   Respondent’s Objection Materials, page 2.

 9   [2020] FWC 4233

 10   Dibb v Commissioner of Taxation [2004] FCAFC 126, [43]-[44].

 11   EoT Materials, page 5-8.