Lockwood v Menai Variety Discounts Pty Ltd [2016] FWC 940 (12 February 2016) [2016] FWC 940 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.394 - Application for unfair dismissal remedy Ms Maria Lockwood v Menai Variety Discounts Pty Ltd T/A The Base Warehouse (U2015/13663) COMMISSIONER SAUNDERS NEWCASTLE, 12 FEBRUARY 2016 Application for relief from unfair dismissal. [1] Ms Maria Lockwood was employed by Menai Variety Discounts Pty Ltd trading as The Base Warehouse (the Respondent) from June 2014 until her dismissal on 29 September 2015. Ms Lockwood claims that her dismissal was harsh, unjust and unreasonable. [2] Ms Lockwood was represented by the Shop, Distributive and Allied Employees’ Association (SDA), Newcastle and Northern Branch, throughout these proceedings. Procedural matters [3] The Respondent did not, at any time, file a Form F3 - Employer’s Response to Application for Unfair Dismissal Remedy, or any other form of response to Ms Lockwood’s Form F2 – Unfair Dismissal Application. The Respondent also refused to participate in conciliation. [4] On 20 November 2015, the parties were sent a Notice of Listing by the Fair Work Commission (Commission) in which they were informed that the matter had been listed for arbitration conference/hearing in the arbitration roster at Newcastle on 9, 10 and 11 February 2016, subject to the possibility that the number of hearing days could be reduced depending on the number of witnesses to be called by each party. The following directions were also communicated to the parties in the Notice of Listing: (a) The Applicant is directed to lodge with the Commission and serve on the Respondent an outline of submissions, any witness statements and other documentary material the Applicant intends to rely on in support of the application by no later than noon on Monday, 14 December 2015; and (b) the Respondent is directed to lodge with the Commission and serve on the Applicant an outline of submissions, and any witness statements and other documentary material the Respondent intends to rely on in opposition to the application in this matter by no later than noon on Monday, 11 January 2016. [5] Ms Lockwood complied with the directions by filing and serving an outline of submissions, statement of Ms Lockwood, and statement of Ms Nina Hutchinson, on 14 December 2015. [6] The Respondent did not comply with the directions made on 20 November 2015, nor did it, at any time, file or serve any outline of submissions, witness statements or other documentary material. [7] By email dated 18 January 2016, Mr Peter Zafiropoulos, Managing Director of the Respondent, was sent a copy of correspondence received by the Commission from the SDA in relation to the Respondent’s failure to file or serve any materials in accordance with the directions made on 20 November 2015. [8] On 27 January 2016, an amended Notice of Listing was sent to the parties to inform them that the matter was “now listed for arbitration conference/hearing in the arbitration roster for one day only at 10am on Thursday, 11 February 2016” at Newcastle. [9] Later on 27 January 2016, Mr Zafiropoulos sent an email to the Commission in the following terms: “I’m based in Sydney impossible to go to Newcastle please arrange hearing in Sydney please Peter Zafiropoulos Managing Director” [10] In light of the procedural history in this matter, the fact that Ms Lockwood had worked for the Respondent at its store in The Entrance (which is much closer in location to the Commission’s offices in Newcastle than it is to the Commission’s offices in Sydney), Ms Lockwood lives in a part of the Central Coast which is much closer in location to the Commission’s offices in Newcastle than it is to the Commission’s office in Sydney, and the information provided in the email from Mr Zafiropoulos to the Commission on 27 January 2016 including the absence of any explanation as to why Mr Zafiropoulos could not travel from Sydney to Newcastle for a one day conference/hearing, Mr Zafiropoulos was informed in writing on 28 January 2016 that the matter would remain listed for “arbitration conference/hearing in Newcastle at 10am on Thursday, 11 February 2016”. No appeal or other challenge was made to that decision. [11] The email from the Commission to Mr Zafiropoulos on 28 January 2016 also included the following statement: “We note that we have not received any material from the Respondent in accordance with the Directions in this matter. Can you please confirm whether you intend to file any evidence or other material in response to this application?” [12] By email dated 29 January 2016, Mr Zafiropoulos responded to the email sent to him the previous day in the following terms: “Ok but I will not be able to attend! Will ask for a lawyer to attend on my behalf of me [sic] Thanks Peter Zafiropoulos” [13] On 1 February 2016, my Associate sent an email to Mr Zafiropoulos in the following terms: “If the respondent wishes to rely on evidence from any witness at the hearing/conference on 11 February 2016, an application will need to be made for an extension of time to file and serve witness statements. Any such application must be supported by reasons as to why the respondent says such an extension of time should be granted. The Commissioner has a discretion to grant permission for a party to be represented at a hearing/conference by a lawyer or paid agent. Such permission will not automatically be granted. In the event that you would like to apply for the respondent to be given permission to be represented at the hearing/conference on 11 February 2016 by a lawyer or paid agent, please let me know the basis for the application by 4pm on 5 February 2016.” [14] Mr Zafiropoulos did not respond in any way to the 1 February 2016 email. [15] At the commencement of the hearing/conference at 10am on 11 February 2016, Mr Bliss of the SDA appeared on behalf of Ms Lockwood, who was also present, together with the applicant’s other witness, Ms Nina Hutchinson, an organiser for the SDA Newcastle & Northern Branch. There was no appearance for the Respondent. [16] My Associate spoke to Mr Zafiropoulos by telephone at 10am on 11 February 2016. During that discussion: my Associate informed Mr Zafiropoulos that there had been no appearance by or on behalf of the Respondent at the Commission. Mr Zafiropoulos was asked whether he was on his way to the Commission or whether anyone would be appearing on the Respondent’s behalf; Mr Zafiropoulos informed my Associate that he would not be attending, he is based in Sydney, and it is impossible for him to get to Newcastle; my Associate informed Mr Zafiropoulos that we had received his request to move the location of the hearing to Sydney and the Commissioner had not granted his request, and he had been informed by email that the hearing would be proceeding at 10am on 11 February 2016 in Newcastle; Mr Zafiropoulos then informed my Associate that: he had received the email correspondence from the Commission informing him of the fact that the matter would be proceeding at 10am on 11 February 2016 in Newcastle; he had forgotten about the hearing; he was planning on having a meeting with his lawyer last Friday, 5 February 2016, however the meeting did not go ahead; he has been overworked and has four children, therefore he did not have time to deal with this matter and because he had been trying to run a busy business he had forgotten about the hearing; my Associate then informed Mr Zafiropoulos that the Commissioner may determine the matter in his absence, to which he replied ‘that’s okay, there’s nothing I can do about it’.” [17] The Commission may make decisions as to how, when and where a matter is to be dealt with (s.589(1) of the Fair Work Act 2009 (Cth) (the Act)). However, the Commission must, at all times, afford natural justice to parties to proceedings before it. Sections 577 and 578 of the Act are also important in relation to the way in which the Commission must perform its functions and exercise its powers: “ 577 Performance of functions etc by the FWC The FWC must perform its functions an exercise its powers in a manner that: (a) is fair and just; and (b) is quick, informal and avoids unnecessary technicalities; and (c) is open and transparent; and (d) promotes harmonious and cooperative workplace relations. 578 Matters the FWC must take into account in performing functions etc In performing functions or exercising powers, in relation to a matter, under a part of this Act (including this Part), the FWC must take into account: (a) the objects of this Act, and any objects of the part of this Act; and (b) equity, good conscience and the merits of the matter; and (c) the need to respect and value the diversity of the workforce by helping to prevent and eliminate discrimination on the basis of race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, natural extraction or social origin.” [18] The objects of Part 3 - 2 (Unfair dismissal) of the Act are as follows (s.381 of the Act): “(1) The object of this Part is: (a) to establish a framework for dealing with unfair dismissal that balances: (i) the needs of business (including small business); and (ii) the needs of employees; and (b) to establish procedures for dealing with unfair dismissal that: (i) are quick, flexible and informal; and (ii) address the needs of employers and employees; and (c) to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement. (2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a ‘fair go all round’ is accorded to both the employer and employee concerned.” [19] I decided to proceed with the hearing of this matter in the absence of the Respondent on 11 February 2016. In making that decision, I had regard to the procedural history of the matter set out above, the communications between the Commission and Mr Zafiropoulos summarised above, the principles referred to in paragraphs [17] and [18] above, including the objects of the Act and Part 3 - 2 of the Act, and the fact that Mr Zafiropoulos had been aware since 20 November 2015 that the matter would be heard in Newcastle on 9, 10 and/or 11 February 2016. I do not accept Mr Zafiropoulos’ explanation that he forgot about the hearing, in light of his recent communications with the Commission and the fact that he had planned to have a meeting with his lawyer about the matter on Friday, 5 February 2016. Evidence [20] Ms Lockwood was called to give evidence in support of her case. She gave evidence that the content of her witness statement was true and correct. [21] Ms Lockwood’s witness statement provides as follows: “1. My name is Maria Lockwood of Unit 3/15-17 Nirvana Street Long Jetty. 2. My date of birth is 3 July 1969. 3. I commenced employment in June 2014 with The Base Warehouse (Menai Services Pty Ltd) as the full time employee. 4. My role was that of ‘Second in Charge’ of The Entrance store. 5. My duties included opening up and closing the store, cash handling, banking, register operator, unpacking stock, merchandising, managing change for registers, checking deliveries and managing paperwork. 6. I was a full time employee working 38 hours a week and my payslips reflect that I was a “full time” employee. However from July 2015 there were weeks I was rostered less than 38 hours, this occurred every second week. I was too scared to address this with my new manager. I was getting warning letters for things I had not done and I was in fear of losing my job. I also know that there were hours available as Lauren McKenzie, my manager, would ask Tamara Scott or Blake Laws to stay back after their shifts had ended for extra hours. 7. I was dismissed on 29 September 2015. Attached hereto and marked “A” is the termination letter issued by my former employer. Warning letter dated 18 th June 2015 8. Attached hereto and marked “B” is the “Letter of Warning” issued by my former employer on 18 June 2015. 9. On 18 June 2015 I had finished work and locked up. Lauren McKenzie handed me a letter. I asked what it was and she said “Just read it.” I read the letter which was a warning letter for not locking the back door on 16 June 2015. I told Lauren "It was locked. Jackie checked it." And Lauren replied "Well it wasn't when I opened up in the morning." 10. On the morning of 19 June 2015, I showed Jackie my warning letter and she said "I checked that door, I pulled on the handle it was locked." She also said "Lauren just wants to get rid of you." 11. I was too scared and didn’t know what to do as I felt targeted. I suffer from anxiety and depression and don't handle conflict well. She didn’t even check with Jackie to see if it was locked. 12. I know that I did lock the door on 18 June. I always asked a fellow staff member when locking up the store to check that the door is locked. The procedure was that I would lock the door and my co-worker would pull the door bar to check that it was indeed locked. On this particular day Jackie Tinker had pulled on the handle to check this and confirmed it was locked. Her conversation the day after I received the warning confirms this. 13. The letter also stated that I encouraged another staff member on 23 April to write down a finishing time of 5:30pm when they left at 5pm. I did not do this. 14. On 23 April I was working at the store with Katie (Katie usually works at Erina store). Her father had phoned in and said that he was concerned about Katie driving home as trees and power lines had come down and there was flooding on the path to her home in Erina. 15. On 23 April I phoned Peter and I told him that I was sending her home early as her father was concerned about the flooding, downed trees and powerlines and that there were concerns for her safety. He told me that “No one is to go home early, not even if the Police come. Stay inside the store and do cleaning and recovery.” We had even heard recommendations on the radio to leave work early to ensure people are safe with the risk of further storms and damage. I made the decision to send her home as per her wishes as I felt there was a risk to her safety. I didn’t discuss anything with her about her finishing time. Other stores closed early. We remained open. 16. I told Renee Simmons the following day that I had allowed Katie to leave earlier due to the danger and safety concerns. 17. The Shire of Wyong was declared a Natural Disaster Zone due to these storms. Warning letter dated 30 th July 2015 18. Attached hereto and marked “C” is the “Second Warning Letter” issued by my former employer on 30 July 2015. 19. On 30 July 2015 I was standing at the counter when Lauren threw a letter across the counter. I asked what it was. She said “It’s from Peter and I”, she then continued on her way across the road to the other store. 20. Upon her return to the store I asked Lauren “Why couldn’t you talk to me about this?” I said “The door was locked, Tamara was there!” She replied “It is what it is” and walked away from me. 21. I then approached Tamara about the door. I said “You checked the door! It was locked!” She replied “Yeah but when Lauren opened up in the morning if someone was really strong they could have pulled and opened it.” I couldn’t believe this was happening. I was shocked and felt powerless. 22. On 27 July I followed the usual process of locking the door and asking another staff member to check it. On this occasion the other staff member was Tamara Scott. She checked the door on this day and was satisfied it was locked. Termination letter dated 29 th September 2015 23. I was asked to come in “for a few hours” on 29 September by Lauren McKenzie. This was my rostered day off. Because I needed the extra money I agreed to work. 24. I started work at 9am. Tim the Area Manager called me in to the office 10:30am. Tim and I were the only people in the room. He was standing up and so I was standing too. He said “I don't like doing this.” He handed me a letter. He said “Peter would have done it but he had something else on and no one else wanted to do it". I read it. I said "This is untrue I haven't done any of these things." We were still standing I said "I've been set up by Lauren and Tamara." He said "Sorry, I don't know what to say." I was in shock. 25. I went back on the shop floor and Tim followed me. I said to Lauren "Lauren this is all untrue, I did not do any of these things that I have been accused of and I am going to the union." She said nothing. I walked out of the shop and showed Tina and Jackie across the road at the gift shop. Tina said "I have never come across anything like this" they were very shocked. I was shaken up and could not drive home so Tina helped me calm down as I was crying, she kept saying "She didn't know what to say". 26. After that I left and went home and phoned the SDA and spoke to the Organiser Nina Hutchinson. 27. The letter states that I have bullied another staff member on a continual basis from 27 July 2015. This is untrue. 28. It alleges I told another staff member that they will have no hours next week or an opportunity for a full time position within this company. It further states that I encouraged them to look for a job elsewhere and introduced them to “businesses” near our store. This is untrue as it has been taken completely out of context. 29. Regarding the alleged “no hours next week” comment. I do recall a conversation with fellow staff member Tamara Scott. Tamara had recently moved to the area and was always saying that she needed more hours and needed a full time job. She had complained to me on several occasions that she wasn't getting enough hours. Knowing that there weren’t any full time positions at our store being advertised I told her that “It’s a quiet time of year and it probably won’t get busy till Christmas time." I didn't say this with malice I was just stating a fact as it was a quiet time of year and lots of casuals weren’t getting many hours. 30. In relation to the allegation that I introduced her to businesses in the area and encouraged her to seek employment elsewhere. I recall one instance of Tamara Scott introducing her to a lady who owned a Bakery. The lady was looking for a full time staff member. As Tamara had previously complained to me about needing full time work I was only trying to help. I felt sorry for her because she had just moved to The Entrance, had no friends, needed more work and wasn't getting enough to pay her rent. I thought this would help her as she had been complaining to me about her problems for some time. 31. Since April 2015 I have been treated differently to other staff. Lauren McKenzie socialises with other staff outside of work and doesn’t invite me. She would talk about this in front of me at work. I had my hours cut when I was full time and hours were given to other staff who she was friendlier with. 32. Lauren McKenzie would also take me away from tasks which were part of my role. I would appear on the roster as “floor staff” with tasks such as merchandising. Instead Lauren would give those tasks to Tamara and I was told to stay on the register. 33. Lauren was also supposed to give me training on certain managerial tasks, instead she would train Tamara. 34. I have never been counselled on anything to do with my work performance so there is no reason to suggest I was incapable of learning the tasks. 35. I believe Lauren was looking for ways to get rid of me and put Tamara Scott in my role. 36. I was the most experienced person in the store as a 2IC but when Lauren McKenzie went on annual leave in August 2015 she had Tamara Scott, a casual team member relieve her as Manager. 37. During Tamara’s time as relief manager she did various things wrong which I complained about to Lauren McKenzie upon her return. I will outline the issues below: 38. On 22 August Fellow staff member Danika Imran came to me and told me that Tamara was telling people that I was to blame for the store being messy. I approached Tamara about this as I was upset and she denied it. I do not understand why Danika would have made it up. 39. Tamara came into work on her weekend off (I was in charge) to cash up the gift shop and confronted Danika. I was upset about this as I was in charge I was responsible for the cash and if she had made an error it would fall on me as manager that day. We were not short staffed so there was no need for her to be there. I found it strange and it was like she was checking up on me. 40. On 28 August Tamara texted everyone to say that she had called a staff meeting and all staff must attend on Saturday, 29 August at 6pm. I did not think this was an appropriate time or normal practice. 41. On Monday 31st August I needed the bathroom. I was in the gift shop alone I rang Tamara for relief but there was no answer. I then rang the main phone and was told she was having lunch out the back with Jess. She had a new guy (who was employed that day) on the register and he was using her ID number to operate the register. This was a breach of policy. We are not to have lunch with fellow staff and a rule and she had left a completely inexperienced person in the store on their own and permitted him to use her login (another breach). I felt this was irresponsible. 42. On 4 September Tamara Scott and Jess stayed back until 10:30pm to do a Halloween display. I asked if they had authorisation from Peter to do this as it was highly unusual. She said “No” she hadn’t. I said to her that she might want to check with him first. 43. When I was on the phone to Peter on 5 September I asked if he had spoken to Tamara about the window display and whether he authorised it. He said no and asked me details. I told him what that they stayed back and had opened stock that could not be resold and burned candles. He asked if it looked good. In my opinion a lot of stock was wasted which is not normally done when doing displays and I personally thought the candles they had burned created an unnecessary fire hazard. 44. Upon Lauren’s return from annual leave on 7 September I complained about Tamara’s conduct and breaches of policy while she was away. I gave her a list of things that I have mentioned in this statement. Lauren told me that she would talk to Peter about the issues. I never had any feedback from Lauren about this and what the outcome was. 45. On 10 September I was having day off and was travelling down to Westmead as my daughter was in labour. Tamara kept ringing my phone constantly. I finally picked up. She asked me “What is going on at work?” I said to her “I can’t talk right now” as I was going to see my daughter and I told her that she needed to speak to Lauren about it. 46. I was terminated because I made a complaint about my co-worker breaching policy. I am obliged as an employee to report breaches. 47. I did not bully any of my co-workers and I was not given any opportunity to put my case forward which is unfair. 48. During my employment I was aware, to the best of my belief, that my former employer owned / operated two stores, at Erina and The Entrance, in addition to a head office / warehouse at Alexandria. Attached hereto and marked “D” is website information on the business derived from www.thebasewarehouse.com.au/our_locations. 49. The termination has put me under financial hardship. I am currently unable to work due to the depression which has been diagnosed by my treating medical practitioner. Attached hereto and marked “E” is a letter from Dr John Harris. I did suffer from manageable depression before I was dismissed but my dismissal has exacerbated this and I now have feeling of worthlessness. 50. My dismissal has led me to financial hardship I have gone from being employed full time to relying on Centrelink payments to pay my rent but these are not enough to survive. 51. Attached hereto and marked “F” is a copy of two of my payslips. 52. I could not go back to working for The Base Warehouse as I do not trust Peter Zafiropoulos. He has treated me unfairly and he hasn’t even bothered to talk to me about any of the allegations he makes. The allegations simply weren’t true and the entire dismissal process was humiliating.” [22] Ms Lockwood gave oral evidence to the effect that she remains unable to work due to her anxiety and depression. As a result, she has not earned any remuneration since the termination of her employment with the Respondent and she is not sure when she will be able to re-enter the work force in the future. [23] Ms Hutchinson also gave evidence on behalf of Ms Lockwood. Ms Hutchinson confirmed that the content of her witness statement dated 14 December 2015 was true and correct. Annexed to that statement was a chain of email correspondence between Ms Hutchinson and Mr Zafiropoulos, including the following relevant parts: (a) Email from Ms Hutchinson to Mr Zafiropoulos dated 14 October 2015: “Dear Peter, I was unable to contact you yesterday afternoon at the prearranged time of 4pm, October 13th, 2015. I would have appreciated the opportunity to have heard your version of events with regards to the recent termination of employment of our member Maria Lockwood, and had a view [sic] to resolving the situation, if possible…” (b) Email from Mr Zafiropoulos to Ms Hutchinson dated 14 October 2015, replying to Ms Hutchinson’s email sent earlier that day: “Hi Nina Regards to Maree [sic] Lockwood There will be no negotiations! Her tactics in my work place not tolerated! Her third warning was regards to bullying of a staff member. And she has made not nice messages to a ex-staff member [sic] which shows her character. So please don’t waste my time and yours. Thank you Peter Zafiropoulos Managing Director” [24] I accept the unchallenged evidence given by Ms Lockwood and Ms Hutchinson. Initial matters to be considered before merits [25] Section 396 of the Act requires me to decide four matters before I consider the merits of Ms Lockwood’s application. I am satisfied on the evidence that: (a) Ms Lockwood’s application was made within the period required by section 394(2) of the Act; (b) Ms Lockwood was a person protected from unfair dismissal; (c) the Respondent was not a “small business employer” as defined in section 23 of the Act 1 , so that the Small Business Fair Dismissal Code was inapplicable; and (d) Ms Lockwood’s dismissal was not a case of genuine redundancy. [26] I am also satisfied on the evidence that Ms Lockwood was dismissed by the Respondent. Was the dismissal harsh, unjust or unreasonable? [27] The ambit of the conduct which may fall within the phrase “harsh, unjust or unreasonable” was explained in Byrne v Australian Airlines Ltd 2 by McHugh and Gummow JJ 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 misconduct which the employee 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.” [28] The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out in section 387 of the Act. I will deal with each of these matters in turn below. Valid reason (s.387(a)) [29] The employer must have a valid reason for the dismissal of the employee, although it need not be the reason given to the employee at the time of the dismissal. 3 The reason for the dismissal should be “sound, defensible and well founded” 4 and should not be “capricious, fanciful, spiteful or prejudiced.” 5 [30] The Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer. 6 The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees). 7 [31] In cases relating to alleged conduct, the Commission must make a finding, on the evidence provided, whether, on the balance of probabilities, the conduct occurred. 8 It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason. 9 [32] The letter of termination provided to Ms Lockwood on 29 September 2015 states as follows: “It has been recorded and reported to your Manager and the Owner of this store that you have bullied a staff member on a continual basis from Monday the 27th July 2015. We are terminating your employment with The Base Warehouse because it was not your place to: tell a staff member they will have no hours “next week” or an opportunity for a full–time position within this company. Encouraging them to look elsewhere for a job within the local area, introducing them to other businesses near our store. Your employment with The Base Warehouse will end: 29 September 2015.” [33] On the basis of the evidence given by Ms Lockwood, I find, on the balance of probabilities, that she did not bully a staff member on a continual basis, or at all, from Monday, 27 July 2015 to 29 September 2015, nor did Ms Lockwood tell a staff member they would have no hours “next week” or an opportunity for a full–time position with the Respondent. As to the allegation that Ms Lockwood encouraged another staff member to look elsewhere for a job in the local area and introduced the staff member to other businesses, I am satisfied on the evidence before the Commission that Ms Lockwood acted in a genuine, caring and reasonable way in an attempt to assist a casual employee who was new to the local area, was not getting many hours of work from the Respondent, and who needed additional hours of work to obtain such additional work. [34] I also find, on the balance of probabilities, and based on the evidence given by Ms Lockwood, that she did not engage in the conduct alleged against her in the first or second warning letters dated 18 June and 30 July 2015 respectively. [35] In light of my findings, on the evidence provided, that the conduct alleged against Ms Lockwood did not occur, there was not, in my view, a valid reason for Ms Lockwood’s dismissal related to her conduct or capacity. Notification of the valid reason and opportunity to respond (s.387(b)&(c)) [36] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made 10 , and in explicit 11 and plain and clear terms. 12 In Crozier v Palazzo Corporation Pty Ltd a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following (at [73]): “As a matter of logic procedural fairness would require that an employee be notified of a valid reason for the 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.” [37] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. 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. 13 [38] Ms Lockwood was informed of the reasons for her dismissal in the letter of termination. However, the first time that Ms Lockwood was notified of those reasons was when she was provided with the letter of termination dated 29 September 2015. It is plain from the terms of that letter that the decision to dismiss Ms Lockwood was made before the letter was provided to her. It follows that Ms Lockwood was not notified of the reasons for the termination of her employment before the decision was made to dismiss her, nor was she provided with an opportunity to respond to the Respondent’s reasons for her dismissal. Unreasonable refusal by the employer to allow a support person (s.387(d)) [39] 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. [40] There is no positive obligation on an employer to offer an employee the opportunity to have a support person: “This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.” 14 [41] Ms Lockwood did not request that a support person be present during her discussion with Tim, the Area Manager, on 29 September 2015. However, she had no notice that she would be called into such a meeting or that there would be any discussion about her dismissal or potential dismissal on 29 September 2015. Further, the Area Manager simply handed the termination letter to Ms Lockwood on 29 September 2015, and gave her no opportunity to request a support person be present. In those circumstances, I am satisfied that the Respondent’s conduct constituted an unreasonable refusal to allow Ms Lockwood to have a support person present to assist at any discussions relating to her dismissal. Warnings regarding unsatisfactory performance (s.387(e)) [42] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal. [43] In this case, the reasons for dismissal related to Ms Lockwood’s conduct, rather than her performance, so this consideration is not relevant. Impact of the size of the employer’s enterprise on procedures followed (s.387(f)) [44] The evidence establishes that The Base Warehouse has two stores on the Central Coast and a head office in Alexandria. Management involved in The Entrance store during the time that Ms Lockwood was employed there include the Store Manager, an Area Manager, and the Managing Director. Further, the evidence shows that numerous employees were engaged to work at The Entrance store during the time that Ms Lockwood worked there. [45] I do not consider that the size of the employer’s enterprise would be likely to have a significant impact on the procedures followed in effecting the dismissal of Ms Lockwood. Absence of dedicated human resources management specialist/expertise on procedures followed (s.387(f)) [46] There is no evidence as to whether the Respondent had, at the date of Ms Lockwood’s dismissal, any dedicated human resource management specialists or expertise. Accordingly, I consider this to be neutral fact. Other relevant matters (s.387(h)) [47] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant. [48] I have had regard to the following other matters in considering whether Ms Lockwood’s dismissal was harsh, unjust or unreasonable: (a) In addition to the fact that there was no valid reason for Ms Lockwood’s dismissal based on her capacity or conduct, there was no other identifiable legitimate reason for her dismissal; (b) Ms Lockwood’s age 15 and the harshness of the personal and economic consequences of the dismissal for Ms Lockwood, particularly in circumstances where Ms Lockwood requires the income from her work to meet her living expenses and she has not been able to obtain alternative work since her dismissal. Prior to her dismissal, Ms Lockwood suffered from manageable depression, but following the termination of her employment her level of depression has been such that she has been unfit for work; (c) Ms Lockwood was employed by the Respondent as the second in charge of its store at The Entrance for about 15 months before her dismissal. This is a relatively short period of time; and (d) Prior to her dismissal, Ms Lockwood had received two written warnings, but I am satisfied on the evidence that Ms Lockwood did not engage in the conduct alleged against her in those warnings. Conclusion as to whether the dismissal was unfair [49] Having considered each of the matters specified in section 387 of the Act, I am satisfied the dismissal of Ms Lockwood by the Respondent was harsh, unjust and unreasonable. Remedy [50] In light of my findings that Ms Lockwood was protected from unfair dismissal, and that her dismissal was harsh, unjust and unreasonable, it is necessary to consider what, if any, remedy should be granted to her. [51] Ms Lockwood seeks the remedy of compensation. She contends that reinstatement would be inappropriate because she does not have any trust or confidence in Mr Zafiropoulos. In particular, Ms Lockwood says that the Respondent has treated her unfairly, Mr Zafiropoulos did not even talk to her about any of the allegations he made against her, the allegations are untrue, and the entire dismissal process was humiliating. I agree. I do not have any level of confidence that conduct of the type that took place on the part of the Respondent towards Ms Lockwood in the period from the first warning letter on 18 June 2015 to the dismissal on 29 September 2015 will not recur if she is reinstated. For those reasons, I am satisfied that reinstatement is inappropriate in this case. [52] A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied. 16 [53] Having regard to the fact that Ms Lockwood has suffered financial loss and unemployment as a result of her unfair dismissal, I consider that an order for payment of compensation to her is appropriate in all the circumstances of this case. [54] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms Lockwood. In assessing compensation, I am required by section 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection. In undertaking this task, I shall use the established methodology for assessing compensation in unfair dismissal cases which was reasonably recently elaborated upon in the context of the current Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc ( Bowden ). 17 Remuneration Ms Lockwood would have received, or would have been likely to receive, if she had not been dismissed (s.392(2)(c)) [55] The SDA submitted on behalf of Ms Lockwood that she would have been employed for at least 15 years by the Respondent if she had not been dismissed on 29 September 2015. [56] Ms Lockwood obviously needed, and continues to need, the income she earned from her position as the second in charge at The Entrance store. For example, notwithstanding the fact that Ms Lockwood was employed by the Respondent as a full-time employee to work 38 hours a week, she was rostered to work fewer than 38 hours a week in a number of weeks in about July 2015, but she was too scared to address this issue with her manager because she was in fear of losing her job. I do not consider it likely that Ms Lockwood would have voluntarily resigned anytime soon from her employment with the Respondent, being a position she had worked in for about 15 months. However, it is clear from Ms Lockwood’s evidence that there was tension in the workplace as a result of disagreements or disputes between Ms Lockwood and at least two other employees in The Entrance store. Those matters may have resulted in Ms Lockwood’s employment with the Respondent coming to an end (one way or another) at some point in the future. [57] It is also relevant to note that the evidence does not disclose any issue in relation to Ms Lockwood’s performance in the role of second in charge at The Entrance store. The matters raised in the warning letters and the letter of termination provided to Ms Lockwood can be more appropriately characterised as issues of alleged conduct, as opposed to issues related to performance. I have already found that Ms Lockwood did not, on the evidence before the Commission, engage in the conduct the subject of the earlier written warnings or the termination letter. [58] In all the circumstances, I estimate that Ms Lockwood would have remained in employment with the Respondent for at least a period of 12 months but for the termination of her employment on 29 September 2015. [59] In calculating the remuneration Ms Lockwood would have earned had she not been dismissed, it is necessary to identify what her rate of payment would have been. The evidence establishes that Ms Lockwood’s average gross weekly earnings as a full-time employee with the Respondent were $848.82 per week. [60] Ms Lockwood would therefore have received $44,138.64 in gross remuneration had she not been dismissed (52 x $848.82 = $44,138.64). Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f)) [61] The only remuneration Ms Lockwood has received in respect of the period since her dismissal with the Respondent is the one week’s payment of wages in lieu of notice she received from the Respondent on the termination of her employment. Otherwise Ms Lockwood has been in receipt of social security payments, which are not deducted for the purpose of calculating compensation under the Act. 18 [62] Given that Ms Lockwood has not worked in the period of almost four and a half months since the termination of her employment with the Respondent, and having regard to her ongoing medical condition, I am of the view that it is likely she will not earn any income and will remain on social security during the period between the making of the order for compensation and the 12 month period referred to in paragraph [58] above. [63] Once the payment of one week’s wages in lieu of notice ($848.82) is deducted from the figure of $44,138.64, this leaves $43,289.82. This calculation is intended to put Ms Lockwood in the position she would have been in but for the termination of her employment. 19 Other matters (s.392(2)(g)) [64] It is possible that Ms Lockwood’s ongoing medical condition 20 might have brought about some change in her earning capacity or earnings after 29 September 2015, even if she had not been dismissed at that time. The evidence demonstrates that Ms Lockwood’s ongoing medical condition has been “manageable for most of the time until she recently lost her job. The condition has deteriorated since then”. 21 For those reasons, I am of the view that it is appropriate to apply a 20% deduction for contingencies to the amount of compensation that would otherwise be ordered. I do not consider that there should be any other deductions for “contingencies” in the circumstances of this case. [65] Once a 20% deduction rate is applied, the figure becomes $34,631.86 ($43,289.82 x 0.8 = $34,631.86). [66] I have considered the impact of taxation, but I prefer to determine compensation as a gross amount and leave taxation for determination. Viability (s.392(2)(a)) [67] There was no evidence that any particular amount of compensation would affect the viability of the Respondent’s business. No adjustment will be made on this account. Length of service (s.392(2)(b) [68] I consider that Ms Lockwood’s relatively short period of service with the Respondent (about 15 months) does not in all the circumstances justify any increase or reduction to the amount of compensation otherwise payable. Mitigation efforts (s.392(2)(d)) [69] Ms Lockwood has not been able to obtain other employment to mitigate her loss because of her ongoing medical condition. I will make no adjustment on this score. Misconduct (s.392(3)) [70] Based on the findings I have made in this matter, Ms Lockwood did not commit any misconduct, so this has no relevance of the assessment of compensation. Shock, Distress (s.392(4)) [71] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress. Compensation cap (s.392(5) &(6)) [72] The amount of $34,631.86 is greater than the compensation cap (26 x $848.82 = $22,069.32), with the result that the amount to be ordered must be reduced to the compensation cap of $22,069.32. Instalments (s.393) [73] There was no submission that any compensation amount should be payable by instalments, and I do not consider that payment by instalments is warranted. Conclusion on remedy [74] In my view, the application of the Sprigg formula does not, in this case, yield an amount which appears either clearly excessive or clearly inadequate. Accordingly, there is no basis for me to reassess the assumptions made in reaching the amount of $22,069.32. 22 [75] For the reasons set out above, I am satisfied that a remedy of compensation in the sum of $22,069.32 in favour of Ms Lockwood is appropriate in the circumstances of this case. [76] An order [ PR577061 ] will be issued with this decision. COMMISSIONER Appearances : Mr D Bliss , from the SDA, on behalf of the applicant; No appearance by or on behalf of the respondent. Hearing details: 2016. Newcastle: February, 11. 1 Based on the facts referred to in paragraph [44] below, I am satisfied, on the balance of probabilities, that the Respondent was not a “small business employer” at the time of Ms Lockwood’s dismissal. 2 (1995) 185 CLR 410 at 465 3 Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21 ; (1931) 45 CLR 359 at 373, 377-8. 4 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373 5 Ibid 6 Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at 685 7 Ibid . 8 King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24]. 9 Ibid 10 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] 11 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 12 Previsic v Australian Quarantine Inspection Services Print Q3730 13 RMIT v Asher (2010) 194 IR 1 at 14-15 14 Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1542]. 15 46 16 Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17] 17 [2013] FWCFB 431 18 Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21 at 29 19 Bowden at [24], citing Ellawala v Australian Postal Corporation Print S5109 at [35] 20 Depression, from which she has suffered for at least five years (Witness Statement of Ms Lockwood at annexure E) 21 Witness Statement of Ms Lockwood at annexure E 22 Smith v Moore Paragon Australia Ltd [2004] AIRC 57 ; (2004) 130 IR 446 at [32] . 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