Fair Work Act 2009

s.604 - Appeal of decisions

Appeal against decision [ [2018] FWC 2080] of Commissioner Cambridge at Sydney on 1 May 2018 matter number U2017/13095.

[1] Chesson Pty Ltd t/a Pay Per Click (Chesson) has lodged an appeal, for which permission to appeal is required, under s 604 of the Fair Work Act 2009 (FW Act) against a decision of Commissioner Cambridge issued on 1 May 2018 (Decision).[1] The Decision concerned an unfair dismissal application by Nichole Knutson. In the Decision the Commissioner found that Ms Knutson had been dismissed by Chesson, that the dismissal was unfair, and that Chesson should pay Ms Knutson the amount of $22,882.00 in compensation. The Decision was accompanied by an order[2] (Order) requiring that the compensation amount be paid to Ms Knutson within 21 days (that is, by 22 May 2018). Chesson's notice of appeal, which was lodged on 21 May 2018 (the day before the compensation amount was required to be paid) seeks a stay of the Decision pending the hearing and determination of the appeal. This decision is concerned with that stay application.

[2] Chesson's grounds of appeal, as stated in its notice of appeal, are as follows:

1. The Commissioner erred in finding that the Appellant dismissed the Respondent, in circumstances where:

   1. The purported notice of termination provided by the Appellant did not specify a date that the employment would terminate;

   2. The period of notice and date of termination was not ascertainable from the notice;

   3. Through her solicitor, the Respondent asserted that the notice was ineffective and not served in accordance with section 117 of the FW Act;

   4. The Respondent accepted that effective notice had not been provided and that no termination of employment had taken place;

   5. The Respondent continued to treat her employment as being on foot by claiming paid personal leave;

   6. The Respondent then resigned from her employment.

2. The Commissioner erred in finding that notification of dismissal should not be made by email communication and that the message of dismissal should be conveyed face to face unless there is some genuine apprehension of physical violence or geographical impediment.

3. The Commissioner erred in finding that, because all communications between the Appellant and the Respondent took place by email, the Appellant unreasonably refused to allow the Respondent to have a support person present to assist at any discussions related to the purported dismissal.

4. The Commissioner erred in finding that the Respondent had an entitlement to be paid personal leave without considering whether the Respondent had met the requirements of section 110(3) of the Act, in circumstances where the Appellant had required the Respondent to provide evidence of her entitlement.

5. The Commissioner erred in finding that the Appellant summarily dismissed the Respondent solely on the basis that the Appellant determined that she had not met the requirements of section 110(3) of the Act and therefore was not entitled to paid personal leave.

6. The Commissioner erred in finding that the summary termination took place on 6 November 2017, when the decision not to pay personal leave was not communicated by the Appellant to the Respondent until 17 November 2018.

7. The Commissioner erred in finding that the Respondent's claim for an unfair dismissal remedy was established based on the matters set out above.

8. The Commissioner erred in awarding compensation to the Respondent equating 17 weeks remuneration ($22,882.00) by reason of the following:

   1. During the 17 weeks between the date when the Respondent stopped working (7 November 2017) and the date that she commenced alternative employment (5 March 2018), the Respondent went on a three-week trip to the USA. The Respondent had received approval from the Appellant to take this time as annual leave, which she would have done if her employment had continued. Had the Respondent remained employed during this time, she would have used her accrued annual leave. Instead, the Respondent's annual leave accrual of 90.74 hours ($3,257.57) was paid to her following the termination of her employment. Therefore, the Respondent was awarded compensation of $3,257.57 for time that she would have taken as annual leave in circumstances where that amount was paid to her on termination.

   2. The Commissioner included compensation for the period from 7 November 2017 to 20 November 2017 (2 weeks), which is a period that the Respondent took as personal leave. The Commissioner awarded compensation for this period as a result of finding that the Appellant's decision not to pay the Respondent personal leave during this time amounted to a summary dismissal, effective 6 November 2017. The Appellant contends that this finding was made in error and the Respondent remained employed until she resigned on 20 November 2017. Therefore, the Appellant contends that the Respondent should not be awarded compensation for this period.

[3] The notice of appeal contends that permission to appeal should be granted in the public interest because the appeal raises issues of importance and general application concerning, among other things, whether a notice of termination is ineffective to terminate the employment where it does not specify the period of notice or where the employer and employee agree that the notice was not a proper notice; because the Decision would result in an injustice if it was not reviewed; and because the legal principles applied to find that the notice of termination effected a dismissal were disharmonious with other decisions concerning the requirements for a valid notice of termination, in particular Metropolitan Fire and Emergency Services Board v Garth Duggan[3] (at paragraphs [40] to [41]).

[4] In support of its stay application, Chesson contended that its appeal and its application for permission to appeal were reasonably arguable. Its submissions in this respect focused on its first appeal ground. The Commissioner found in the Decision that Chesson had dismissed Ms Knutson on 6 November 2017 when it advised her by email that her employment was terminated on notice because she refused to sign a new employment contract with different terms, that Chesson could not unilaterally withdraw that notice, and that the evidence undeniably established that Ms Knutson's employment was terminated at the initiative of the employer.[4] Chesson submitted that it had a meritorious case that the Commissioner erred in concluding that Ms Knutson had been dismissed, on the basis that:

• the notice of termination issued on 6 November 2017 was not effective to terminate Ms Knutson's employment because it did not specify a period of notice or the termination date as required by s 117 of the FW Act, in accordance with the position stated in the Full Bench decision in Duggan;

• this had been asserted by Ms Knutson's lawyers at the time, and it had been accepted by Chesson that this proposition was correct and that Ms Knutson's employment would not terminate pursuant to this notice;

• Ms Knutson had then, through her lawyers, resigned from her employment on 20 November 2017, and it was this resignation that had effected the termination of her employment.

[5] Chesson contended that the balance of convenience favoured the grant of a stay because it was a small business, the compensation amount was large, the appeal hearing was only three weeks away, and if a stay was not granted and the appeal was successful it would then face the difficulty of recovering the money from Ms Knutson.

[6] Ms Knutson submitted that the Commissioner was correct in concluding that the notice of termination issued by Chesson on 6 November 2017 effected her dismissal, and that the balance of convenience did not favour the grant of a stay because her dismissal was six months ago and she still had not received any compensation in circumstances where she had a mortgage to pay.

[7] The principles applying to the determination of stay applications which are usually applied by the Commission are as stated in the decision of the Australian Industrial Relations Commission in Edghill v Kellow-Falkiner Motors Pty Ltd.[5] Paragraph [5] of that decision states:

"[5] In determining whether to grant a stay application the Commission must be satisfied that there is an arguable case with some reasonable prospects of success, in respect of both the question of leave to appeal and the substantive merits of the appeal. In addition, the balance of convenience must weigh in favour of the order subject to appeal being stayed. Each of the two elements referred to must be established before a stay order will be granted."

[8] In assessing for the purpose of a stay application whether an appeal has the requisite prospects of success, the Commission necessarily engages in an assessment of the merits that is preliminary in nature, since the Commission will not have had the benefit of hearing the appellant's full argument and usually will not have had the opportunity to properly peruse the case materials.[6]

[9] As earlier stated, Chesson's submissions in support of its application for a stay focused on the merits of its first appeal ground, which contended that Ms Knutson had not been dismissed but had resigned. In advancing those submissions, Chesson did not take me to any of the relevant documents in evidence, but merely made a series of assertions about what those documents demonstrated. That has required me to review the file in order to understand the nature of the case that might be capable of being advanced on behalf of Chesson at the hearing of the appeal. On a review of the chronology and the documents relating to the period from 6 November 2017 (when Chesson sent a notice of termination to Ms Knutson) to 30 November 2017 (when Chesson paid Ms Knutson her accrued leave entitlements), my preliminary assessment is that this appeal ground is not reasonably arguable, for the following reasons:

(1) The premise of Chesson's argument is that because the notice of termination it sent to Ms Knutson on 6 November 2017 did not specify the period of the notice or the termination date, it was self-evidently not effective to terminate the employment. However, the position is far less clear than that. The email which communicated the termination of email stated not only that "...you are now on notice and will work out your notice period. Post which, you will no longer be employed..." but also "Jenny from accounts will notify and confirm with you your notice period, as per your previous employment contract" (underlining added). The natural reading of that is that the notice period being given was that specified in Ms Knutson's employment contract, with the precise date of termination to be confirmed by "Jenny". It is not clear whether Ms Knutson's operative employment contract was in evidence, but certainly the proposed replacement contract, the dispute about which led to the termination of employment, clearly specified the notice period (by way of a scale of notice depending on service reflective of s 117(3) of the FW Act).

(2) Even if it is accepted that the notice of termination did not comply with the requirements of s 117 of the FW Act, which requires the employer to give written notice of the day of termination, it does not follow that it was not effective to terminate Ms Knutson's employment. Chesson cites the Full Bench decision in Metropolitan Fire and Emergency Services Board v Garth Duggan[7] in support of its case that the 6 November 2017 notice was ineffective to terminate the employment, and contends that the Commissioner decided the matter before him inconsistently with that decision, but in fact Duggan stands for the opposite proposition:

"[32] In summary, it is clear in our view that if an employer terminates the employment of an employee without giving notice, or payment in lieu thereof, in accordance with an obligation owed by the employer under a contract, award, enterprise agreement or s.117 of the Act, the result is that the employer has acted unlawfully and/or wrongfully and the employee will have one or more causes of action available to him or her under the contract, award, enterprise agreement and/or the Act to remedy the deficiency in notice. However, an unlawful or wrongful dismissal does not invalidate or render void the termination of the employment relationship. Whether the employment relationship has been terminated is a question of fact.

[33] Accordingly, a notice of termination which does not comply with s.117 of the Act may be effective to bring about the termination of the employment relationship and may constitute "notice of the dismissal" within the meaning of s.383(a)(i) of the Act. Construing the Act in this way is consistent with the purpose of the relevant provisions, as set out above."

(3) Chesson's purported withdrawal of the notice of termination on 17 November 2017 was based on the proposition that the notice was defective and therefore no termination of employment had taken place. However, as earlier stated, Duggan makes it clear that the fact that the notice was defective in respect of s 117(1) did not mean that it was ineffective to terminate the employment. Chesson could not unilaterally withdraw the notice of termination of employment: Birrell v Australian National Airlines Commission.[8]

(4) Any reliance upon the "resignation" letter from Ms Knutson's lawyers appears to be entirely misplaced. Firstly the resignation was conditional upon the proposition that "...your purported withdrawal of termination is accepted...", which appears to mean that the condition was that the withdrawal was valid, not that it was accepted by Ms Knutson. Secondly, the resignation was proffered expressly on the basis that it was "forced". Section 386(1)(b) provides that a forced resignation constitutes a dismissal for the purposes of the unfair dismissal regime in Pt 3-2 of the FW Act. It is difficult to see how Chesson could act on the basis that the resignation was effective to terminate the employment but simultaneously deny that there had been a forced resignation.

[10] However I consider that ground 8 of the appeal concerning the quantification of compensation, earlier set out, is arguable with reasonable prospects of success. Although the reasons for the award of compensation in the Decision do not actually explain how the amount of $22,882.00 (representing 17 weeks' pay) was calculated in accordance with the principles stated in Balaclava Pastoral Co Pty Ltd v Nurcombe[9], I infer that it represents compensation calculated at Ms Knutson's weekly rate of pay for the period from 6 November 2017 (the date upon which the Commissioner found Ms Knutson was summarily dismissed) to 5 March 2018 (when Ms Knutson commenced new employment). If so, firstly it is arguable that the Commissioner erred by taking into account the period from 6 November 2017 until 27 November 2017, the date on which Ms Knutson contended in her application her dismissal took effect and shortly prior to when she was paid her leave entitlements upon termination of employment. The Commissioner found that Ms Knutson had been summarily dismissed on 6 November 2017[10] (a position which does not appear to have been advanced by either party, and which would render Ms Knutson's application as having been lodged out of time) on the basis that she had not been paid during the notice period. If the actual position was that the termination did take effect on 27 November 2017, as Ms Knutson contended, the period from 6 November 2017 to that date could not have been taken into account in assessing compensation for losses arising from her dismissal. The failure to pay Ms Knutson during that period, on this view, arose from a separate dispute concerning her entitlement to personal leave during this period. Secondly, during her period of unemployment after the dismissal, Ms Knutson took a three-week overseas holiday that appears to have been booked prior to the dismissal. If she had not been dismissed, Ms Knutson would presumably have used her annual leave entitlement to take this holiday. Since she was paid out her annual leave entitlement on termination, she arguably should not have been compensated for lost pay during the period of the holiday since there was no actual financial loss over this period. I consider that it is arguable that permission to appeal would be granted with respect to these alleged errors on the basis that they potentially visited an injustice upon Chesson.

[11] I consider that the balance of convenience very slightly favours the grant of a stay. The amount of compensation is reasonably large, and Chesson is only a small business. Although Ms Knutson would undoubtedly prefer to receive the compensation amount now, she is currently in employment and does not appear to have any immediately pressing financial need. The appeal hearing has been listed for 13 June 2018, only a few weeks away, so the wait will not be excessive for Ms Knutson if the appeal is unsuccessful.

[12] I will therefore grant a stay. However, I do consider that Ms Knutson should be denied payment of the whole of the compensation amount of 17 weeks' pay, since I have been only able to identify an arguable case of appealable error with respect to the award of 6 weeks of that 17 week's pay and since the appeal grounds do not challenge the finding that her dismissal was unfair. Accordingly the appropriate course is to grant the stay on the condition that Chesson pays Ms Knutson the amount of $14,806 (11 weeks' pay) within seven days of this decision. A stay order [PR607446] will separately be issued consistent with this conclusion.

S. Melbourne, solicitor, for Chesson Pty Ltd t/a Pay Per Click

[1] [2018] FWC 2080

[3] [2017] FWCFB 4878

[5] [2000] AIRC 785, Print S2639

[6] Supreme Caravans Pty Ltd v Hung Pham [2013] FWC 4766 at [9]

[7] [2017] FWCFB 4878

[8] [1984] FCA 419, 5 FCR 447, 9 IR 101

[9] [2017] FWCFB 429 at [42]- [46]; see also Jimenez v Platypus Pty Limited [2016] FWCFB 7201 at [20]

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