4. Despite the protestations of the respondent's witnesses (including Dr Zhang), I prefer the applicant's evidence on this point. This is primarily because of written documentation included in both Dr Zhang's and Mr Guan's evidence. In particular, both those witnesses attached to their statements company records, including monthly cash balance reports and tax invoices, clearly indicating the payment to the applicant of the performance bonus, together with the revenue figures on which it was based.[9] It beggars belief that these records were never seen by Dr Zhang and Mr Guan, which means the respondent must have known about and accepted them - at least, at the time they were made.

[28] In June 2017, the applicant informed the respondent she was pregnant. There were complications with the pregnancy; consequently, the applicant took quite a lot of time off work between 17 June and 16 August 2017. The applicant kept Dr Zhang informed via WeChat. There is no evidence that Dr Zhang objected to the applicant taking this time off.

[29] In around November 2017, the applicant indicated to Dr Zhang that she would be going on maternity leave in February 2018, and asked what would happen to her commission. Dr Zhang told her she would continue to receive her commission while she was on leave.

1. During December 2017, the applicant had further time off from work due to complications with her pregnancy. She continued to keep Dr Zhang informed.[10] Again, there is no evidence that Dr Zhang took any objection to this, or asked for any medical certificates.

2. On 11 January 2018, Dr Zhang confirmed in writing that the applicant would continue to receive her commission while she was on parental leave, but that it would be reduced by 1.5%. She indicated that she would pay the applicant all the commission from her time on parental leave 'at one time after you finished your PPL'.[11]

[32] On 5 February 2018, the applicant commenced her maternity leave. On 12 February 2018, she gave birth to her child. The applicant was not paid anything at all while she was on maternity leave.

[33] In April 2018, the applicant returned to work part-time. On 12 May 2018, the applicant sent a text message to Mr Lawrence Guan telling him she would be ready to resume full-time work on 1 June 2018.

1. On 11 June 2018, the applicant completed a Cash Balance Report and left it at reception. This report covered the period from 6 January 2018 to 31 May 2018. It clearly identified the amounts of performance bonus and commission the applicant said she was owed by the respondent (and which had not been paid by her while she was on maternity leave). It included a handwritten note for Mr Qi (Kelvin) Guan asking him to 'fix' these payments and to 'pls pay after 17'.[12]

[35] The respondent claimed that the 11 June 2018 Cash Balance Report was in effect a forgery, prepared after the applicant's dismissal. I do not accept this. The only way it could have been compiled by the applicant was if she had access to the respondent's cash books. She ceased to have access to these books after 11 June 2018.

[36] On 13 June 2018, Mr Lawrence Guan met the applicant at the respondent's premises. He handed her the clinic's cash record book from September 2017 to January 2018 and asked her to account for a $24,000 difference their accountant had allegedly found. She appears to have been stood down without pay from this time onwards.

[37] On 14 June 2018, the applicant attended a meeting with Mr Lawrence Guan and Mr Chang to discuss the alleged discrepancy. It appears that at least part of the discrepancy was due to a disagreement about the quantum of the applicant's commission - Mr Guan said it should only be 5.5% - and the performance bonus, to which Mr Guan denied she was entitled.

[38] On 14 July 2018, the applicant received a letter from the respondent described as a 'Warning Letter of Employment'.

[39] This letter included the following:

'On 13th June, you met with Lawrence Guan. At this meeting you were advised that your conduct in managing the cash accounts had been unsatisfactory. In particular, there were large amount of cash missing in the surgery cash account record. You were advised that the company requested an explanation for this matter.

In the meeting on the 14th June with Mr Lawrence Guan and Mr Shi Chang you explained that Dr Jun Zhang verbally agreed to give you this bonus. However, Dr Jun Zhang denied this agreement. In addition Mr Lawrence Guan point out that your personal withdrawal of money under incorrect labelling such as 'expense' was unsatisfactory.

This is your first warning letter. Your employment may be terminated in July 2018. We seek to resolve this breach in employment conditions further by discussion.

[40] The applicant replied in a detailed letter on 21 July 2018.

[41] The applicant said she had never been given any guidance on how to prepare the cash reports. She had developed her own method and format, which she had been following for more than four years without any question or comment from management. She emphasised that she had printed out these cash accounts and handed them to Mr Guan or Dr Zhang every month. She also asked for details of the allegedly missing amounts.

1. The applicant then explained how the cash reports were compiled, including that all cash withdrawals are described as 'expenses', including customer cash refunds, daily operating expenses, one of the dentists' cash commission, staff bonuses, cash withdrawals taken by Dr Zhang or Mr Guan, and her own commission and bonus. The applicant further explained the agreements she had with the respondent in relation to her performance bonus and commission.[14]

[43] On 10 August 2018, Mr Guan wrote an 'Employee Warning Letter' to the applicant rejecting her explanations. This included the statement:

'One of the key requirements for your position in our practice is to have sufficient account management skill. However, you did state in your letter that "there were no guidelines or trainings to instruct me how to work with cash accounts and prepare so-called satisfactory report in this company." If you do not have the relevant knowledge, you do not meet the job requirements. As such you are not suitable for this position.'[15]

[44] I find this statement somewhat bizarre, given that it was Mr Guan who had appointed the applicant to the position of Practice Manager, despite her apparent lack of bookkeeping qualifications, and that he had, to that point, accepted her (undoubtedly primitive) accounting methods for four years.

[45] Mr Guan went on to say that Dr Zhang had denied ever agreeing to the performance bonus. He asked for evidence of this agreement. The letter concluded:

'This is the second letter of warning with regards to your continued employment at Mastery Dental Clinic. Please provide the evidence required as above within 7 days.'

1. On 13 August 2018, the applicant sent a message asking if she could return to work yet. Mr Guan said the investigation was continuing. On 3 September 2018, the applicant sent an email to Mr Guan asking whether she was still an employee of the respondent, and if so, when she could return to work.[16]

[47] On 13 September 2018, the applicant met with Mr Lawrence Guan and Mr Chang at Hurstville RSL. Mr Guan asked if the applicant wanted to add anything. She essentially reiterated what she had put in her email responses.

[48] On 18 September 2018, the applicant received the letter of termination extracted at [6] above.

[49] In considering whether I am satisfied that a dismissal is harsh unjust or unreasonable I must take into account the criteria set out in s.387 of the FW Act. These are:

(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.

[50] I will consider each of these criteria in turn.

[51] I first turn to whether the respondent had a valid reason for the applicant's dismissal based on her capacity or conduct (FW Act s.387(a)).

[52] The evidence in this case is far from clear. This was compounded by the primitive accounting practices used by the respondent. However, I generally accept the applicant's version of events, especially as it was generally consistent with the written records, such as they are. In particular, I accept that the applicant had an understanding with the respondent that she would receive both commission and a performance bonus, and that these would continue to be paid while she was on maternity leave. The applicant's practice, accepted and condoned by the respondent over a long period of time, was that she would take this money herself from the respondent's cash receipts. There was nothing hidden about this. Both the commission and the bonus were included in the monthly cash reports that the applicant gave to the Dr Zhang and Mr Guan. They were also included in the report that the applicant prepared on 11 June 2018.

[53] I do not consider there is sufficient evidence to sustain any of the allegations the respondent made against the applicant. In particular, I am not persuaded that there are any significant, unexplained discrepancies in the cash accounts the applicant had prepared.

[54] Moreover, I accept on the balance of probabilities that Dr Zhang had verbally agreed to pay the applicant a $200 performance bonus for every $12,000 of revenue received per week.

[55] There is no basis for accepting the respondent's contention that the applicant took unauthorised leave during the period from May 2017 to February 2018. She appears to have kept Dr Zhang informed when she needed to have time off because of complications with her pregnancy. There is no evidence that she failed to meet any requirements for 'prior written approval' of that leave.

[56] Finally, I am satisfied that any money the applicant took from the respondent's cash receipts was money that she was authorised to receive.

[57] Given these findings, I am satisfied that there was no valid reason for the applicant's dismissal.

[58] I am satisfied that the applicant was broadly notified of the allegations made against her, and that she was given an opportunity to respond. There is no evidence that the applicant was prevented from having a support person present at any relevant meetings.

[59] The process taken by the respondent in effecting the dismissal was broadly consistent with its relatively small size and lack of access to dedicated human resource management specialists or expertise.

[60] I do not consider there are any other matters I should take into account.

[61] Having regard to all these factors, I am satisfied that the dismissal was unjust and unreasonable.

[62] The applicant does not wish to be reinstated. The applicant does not appear to have attempted to obtain alternative employment, but I note she has a very young child. I am satisfied that an order for the payment of compensation to the applicant in lieu of reinstatement is appropriate in all the circumstances.

[63] Section 392 of the FW Act provides as follows:

(1) An order for the payment of compensation to a person must be an order that the person's employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

• (a) the effect of the order on the viability of the employer's enterprise; and

• (b) the length of the person's service with the employer; and

• (c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

• (d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

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

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

• (g) any other matter that the FWC considers relevant.

(3) If the FWC is satisfied that misconduct of a person contributed to the employer's decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person's dismissal.

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

• (a) the amount worked out under subsection (6); and

• (b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

• (a) the total amount of remuneration:

  • (i) received by the person; or

  • (ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period - the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

1. The approach to be adopted to assessing compensation was set out by a Full Bench in Humphries:[17]

'[16] The well-established approach to the assessment of compensation under s.392 of the FW Act, taking into account the matters specified in s.392(2), is to apply the "Sprigg formula" derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages. Under that approach, the first step to be taken in assessing compensation is to consider s.392(2)(c) - that is, to determine what the applicant would have received, or would have been likely to receive, if the person had not been dismissed. In Bowden this was described in the following way:

"[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:

'... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.'

[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the 'anticipated period of employment'..."

[17] The identification of this starting point amount "necessarily involves assessments as to future events that will often be problematic". Once this first step has been undertaken, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee's misconduct and the application of the cap of six months' pay. This approach is however subject to the overarching requirement to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case.' [references omitted]

[65] In this case, the applicant had around five years' service with the respondent at the time of her dismissal. She had never received any warnings in relation to her performance or conduct. I am satisfied that if she had not been unfairly dismissed, she would have worked for the respondent (her 'anticipated period of employment') for at least a further year.

[66] The applicant earned $80,000 per annum plus superannuation. The starting point is therefore $80,000 (plus superannuation).

[67] Remuneration earned from the date of dismissal to the date of any compensation order is required to be taken into account under s.392(2)(e) of the FW Act. Remuneration reasonably likely to be earned from the date of any compensation order to the date the compensation is paid is to be taken into account under s.392(2)(f). Any remuneration likely to be earned after that date to the end of the period of anticipated employment determined for the purpose of s.392(2)(c) is a relevant amount to be taken into account under s.392(2)(g) in accordance with the Sprigg formula.

[68] The applicant has received no earnings since her dismissal. However, while I appreciate she has a young child, I consider that she should be able to earn some money prior to the end of the period of anticipated period of employment. I would deduct $20,000 from $80,000. I also consider that the figure of $60,000 should be discounted by 20% for contingencies, making it $48,000.

[69] The applicant's length of service is a neutral consideration.

[70] There is no evidence that an order for compensation would affect the viability of the respondent's enterprise.

[71] I do not propose to make any adjustment because of the applicant's failure to mitigate her loss.

[72] The applicant did not receive any payment in lieu of notice.

[73] The compensation cap is $40,000 (the applicant's annual remuneration divided by two).

[74] I do not consider that I should make any discount to the amount of compensation payable because of any misconduct on the part of the applicant. I do not consider there are any other circumstances to which I should have regard. I have not included any amount for shock, distress etc.

[75] I conclude that the respondent should pay the amount of $40,000 plus superannuation as compensation to the applicant. I do not see any reason for this amount to be paid in instalments. An order to this effect will issue separately.

L Saunders, counsel, with V Maroulis, solicitor, for Mei Kuen Chan.

G W McGrath SC with W Shen, solicitor, for Advanced Health Invest Pty Ltd T/A Mastery Dental Clinic.

1. [1] Exhibit 5 [5].
2. [2] Exhibit 2 [61].
3. [3] Exhibit 6 [16]-[21].
4. [4] Exhibit 8 [3].
5. [5] Fair Work Act 2009 (Cth) s.388(2)(a).
6. [6] Exhibit 5 [17].
7. [7] Exhibit 5 [18].
8. [8] Exhibit 2 [19]-[20].
9. [9] Exhibit 5, appendix 12; exhibit 8, appendix 8.
10. [10] Exhibit 2, appendix D.
11. [11] Exhibit 2, appendix E.
12. [12] Exhibit 2, appendix J.
13. [13] Exhibit 5, appendix 15.
14. [14] Exhibit 5, appendix 16.
15. [15] Exhibit 5, appendix 17.
16. [16] Exhibit 2, appendices O and P.
17. [17] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206.

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