s.394 - Application for unfair dismissal remedy

• [1] Ms. Chloe McAuley has applied under s.394 of the Fair Work Act 2009 (Cth) (Act) for an unfair dismissal remedy arising from her dismissal by Ozi4x4 Pty Ltd (OZI4x4).

• [2] A conference was conducted on 26 March 2025 to allow the parties to provided information about the application. Prior to the conference I directed the parties to file and serve any written material they wished to rely upon at the conference. Ms McAuley provided a written statement and copies of communications she had with OZI4x4 leading up to her dismissal. OZI4x4 did not file any written material. At the conference Ms McAuley represented herself. OZI4x4 was represented by Mr Safi who is a Director of OZI4x4.

• [3] Ms McAuley commenced work for OZI4x4 on 11 July 2023 as a sales representative. She was employed on a casual basis. On 12 October 2023 she was offered, and accepted, a full-time role as a sales representative. On 26 August 2024 her role changed, and she began working full-time as a dispatch officer in the company's warehouse. Her salary was $70,000 per annum. On 11 November 2024 Ms McAuley left work sick. She notified Mr Safi that evening that she was sick, would not be at work the following day, and that she would visit her doctor the following day. Mr Safi replied on the following morning with a text message that read:

Good morning, that's fine your days off work has accrued more then the business can handle. I will send you your termination letter today. Thank you

• [4] On 16 November 2024 Mr Safi sent Ms McAuley a letter of termination. It read:

It is with deep regret that I write to inform you of the decision to end your employment with OZI4X4 PTY LTD, effective 12/11/2024. ​

Your role as Warehouse Dispatch / Customer Service Operator has been crucial to the success of our business. ​ Your dedication and contributions have made a significant impact, and this decision was not made lightly. ​ However, after careful consideration, it has become evident that the scheduling constraints of your current working hours have created challenges in meeting the operational demands of our business.

Please be assured that you will receive your full entitlements, including payment for all accrued but unused leave. ​ Additionally, we will provide you with two weeks' pay in recognition of your service and to support you during this transition. ​ Your final payments, including these entitlements, will be processed and issued by 25/11/2024. ​

We kindly ask that all company property, such as [specific items, e.g., equipment, keys, uniforms], be returned by 22/11/2024. ​ Should you have any questions regarding your final pay or the return of company property, please contact (email address).

This decision is in no way a reflection of your performance or dedication. ​ It is a necessary step to align operational requirements with the business's long-term goals. ​ We sincerely thank you for your invaluable service and wish you every success in your future endeavours.

If you would like to discuss this further, please do not hesitate to reach out. ​

• [5] Ms McAuley was not paid the two weeks' pay referred to in the letter. She was paid her outstanding leave entitlements.

• [6] During the conference Mr Safi explained that the reason for dismissal was the amount of leave Ms McAuley had taken in the twelve months leading up to the dismissal. He did not provide any records of the leave but estimated it was 4 weeks. Ms McAuley said that she took around 2 to 3 weeks leave. Ms McAuley said that she notified of sick leave by text message. She had access to her phone at the conference, searched it, and found text messages which confirm that she had taken 11 days sick leave during 2024. The time off comprised 4 days in June 2024, 5 days in August 2024 and 2 days in November 2024. In the absence of business records from OZI4x4, the best evidence I have is the account of the text messages on Ms McAuley's phone. I accept that she took 11 days' sick leave in the second half of 2024. Ms McAuley also accepted that she had exhausted her sick leave entitlements by November 2024.

• [7] OZI4x4 is a small business and Mr Safi stated that the business suffered when Ms McAuley had time off. He emphasised the importance of Ms McAuleys's dispatch role and that having Ms McAuley away during this time affected the capacity of the business to move stock. Mr Safi said that he spoke to Ms McAuley about the impact that her time off was having on the business. He said that he spoke to her at least three times. Ms McAuley said that she was only spoken to once about the issue of taking time off. Mr Safi accepted that at no stage did he issue Ms McAuley with a warning that if she continued to take time off, he would dismiss her. I prefer Ms McAuley's account that she was only spoken to once about her absence and the impact it had on the business. I find that was after the August absences. I note that she did not move to the important role in the warehouse until October 2024 and so her earlier absences would not have had as adverse an impact on the business and would not have warranted Mr Safi raising the issue with her.

• [8] Section 390 of the Act provides that the Commission may order a person's reinstatement, or the payment of compensation to a person if satisfied that the person was protected from unfair dismissal at the time of being dismissed and the person has been unfairly dismissed.

• [9] Section 382 provides that a person is protected from unfair dismissal if the person is an employee who has completed a period of employment of at least the minimum employment period and the person is covered by a modern award, an enterprise agreement applies to the person, or the person earns less than the high-income threshold. It was not contested, and I am satisfied, that the Ms McAuley is protected from unfair dismissal for the purposes of s.382.

• [10] Section 385 relevantly provides that a person has been unfairly dismissed if the Commission is satisfied of four matters; the person has been dismissed, the dismissal was harsh, unjust or unreasonable, the dismissal was not consistent with the Small Business Fair Dismissal Code, and the dismissal was not a case of genuine redundancy. There is no question that Ms McAuley was dismissed. OZI4X4 is a small business but did not submit that it had complied with the Small Business Fair Dismissal Code. Nor was it suggested that the dismissal was a case of genuine redundancy.

• [11] The issue for determination is whether the dismissal was harsh, unjust or unreasonable. Ms McAuley contends that the dismissal was harsh, unjust or unreasonable because she was dismissed for being sick, she was dismissed by text message, and there was no warning or discussion with her before the dismissal.

• [12] OZI4X4 contends that the dismissal was not harsh, unjust or unreasonable because it was based on a business decision that it could no longer accommodate Ms McAuley's absences when sick. Mr Safi was adamant that he did everything he could to assist Ms McAuley by being flexible about working times and allowing her to take time off as required but that the business could no longer support her if she was going to be absent.

• [13] Section 387 of the Act sets out the matters that are to be considered in determining whether the Commission is satisfied that the dismissal was harsh, unjust or unreasonable.

• [14] Section 387(a) requires a consideration of whether there was a valid reason for dismissal relating to capacity or conduct. The letter of termination states the reason in a cryptic way as "scheduling constraints of your current working hours have created challenges in meeting the operational demands of our business". The text message sent on 12 November 2024 states the reason more clearly. It said, "your days off work has accrued more then the business can handle". The reason for dismissal was Ms McAuley taking too much time off due to illness.

• [15] Absenteeism may constitute a valid reason for dismissal. There are cases in the Commission where unauthorised absences, persistent and unexplained absences, or absences where no medical certificate or other explanation was provided have all been found to be valid reasons for dismissal[1]. There are also cases where absenteeism has been found not to be a valid reason[2]. In the various decisions the Commission has considered matters such as the extent of the absences, the assistance provided by the employer in addressing absenteeism by way of performance management plans or other measures, the reasons for the absences, and whether and the manner in which the absences were notified to the employer, as factors relevant in assessing whether an employee's ongoing absenteeism constitutes a valid reason for dismissal. Each case is to be determined on its facts.

• [16] I do not consider that Ms McAuley's absence due to illness was a valid reason to dismiss her. One factor relevant to my consideration is the extent of Ms McAuley's absenteeism. She was absent on 11 days over a six month period. I do not consider that as excessive. I appreciate that this caused inconvenience to the business, but I do not consider the extent of the absences, nor the inconvenience caused, to amount to a valid reason for dismissal. Another factor is that Ms McAuley notified Mr Safi of her absences. Also, they were authorised, and they were explained. Personal leave is an entitlement of employment and employees are authorised to take leave.

• [17] Mr Safi stated that due to the inconvenience caused he believed that the period of notice he was given was not adequate. I disagree. Ms McAuley was able to locate the messages she sent, and the notices were given at the time she was sick. They gave Mr Safi prior warning that she was unavailable to work. Further, Ms McAuley informed me that she provided medical evidence to support her absences. Mr Safi took no issue with the fact that medical evidence was provided. In the message exchange on 11 November 2024, that led to the dismissal, Ms McAuley indicated that she had an appointment with her doctor the next day. Mr Safi said that he had spoken to Ms McAuley about her absences on at least three occasions. Ms McAuley said that she had been spoken to once. I prefer her account. Regardless, Mr Safi stated that at no point did he tell Ms Safi that she would be dismissed if the absences continued. In all these circumstances, I find that Ms McAuley's absenteeism was not a sound reason for dismissal.

• [18] Section 387(b) and (c) deal with whether the employee was notified of the valid reason and given an opportunity to respond to the reason. As I have concluded that there was no valid reason, I also conclude that the Ms McAuley was neither notified nor given an opportunity to respond to a valid reason. I note, in any event, that the way Ms McAuley was notified of the dismissal in the text message of 12 November 2024 gave her no opportunity to respond at all. An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee's employment.

• [19] Section 387(d) is directed to whether the employer unreasonably refused to allow the employee to have a support person present to assist at discussions relating to the dismissal. In this case, there were no discussions at all about the dismissal before it occurred.

• [20] Section 387(e) requires consideration of whether the employee was warned about unsatisfactory performance before the dismissal. Ms McAuley was dismissed for reasons relating to conduct rather than performance, so this is not a relevant factor.

• [21] Section 387(f) and (g) are about what degree the size of the employer's enterprise was likely to impact on the procedures followed in effecting the dismissal and to what degree would the absence of dedicated human resource management specialists or expertise was likely to impact on the procedures followed in effecting the dismissal. OZI4x4 is a small business and there was no evidence of any specialist resources or expertise in dealing with these matters. The process that was adopted was inadequate. As an employer, Mr Safi should have been aware that an employee should not be dismissed without discussion or warning, by text, for taking sick leave. I do not consider that the lack of dedicated support explains or mitigates what was a flawed decision implemented by an unacceptable procedure that resulted in Ms McAuley losing her job.

• [22] The Commission may also take into account other relevant factors under s. 387(h). There are no additional factors that need to be taken into account.

• [23] Having regard to matters referred to above, I am of the view that the Applicant's dismissal was harsh, unjust and unreasonable and that the dismissal was unfair.

• [24] Ms McAuley sought compensation rather than reinstatement. The Commission can only order the payment of compensation where it is satisfied that reinstatement is inappropriate, and it considers that an order for compensation in lieu of reinstatement is appropriate in all the circumstances.

• [25] I am satisfied that it is appropriate in the circumstances to make an order for compensation in lieu of reinstatement. In doing so, I am required by s.392 to take account of all the circumstances of the case, including the matters listed in subsections (2)(a) to (g) of that section. I have taken those matters into account. I note, Mr Safi said that the business could not afford anything but moderate compensation. He said that he was in the process of putting the business into liquidation or administration. When asked to provide details he was unable to do so. Ms McCauley has not worked since she was dismissed and has only received social security payments. She has been applying for work and said she has applied for 2 jobs per week since the dismissal. She is also studying 2 days per week. Ms McAuley was earning $1,346.15 per week at the time she was dismissed.

• [26] The well-established approach to the assessment of the quantum of compensation under s.392 of the Act is to apply the "Sprigg formula". That formula is derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket Print [1998] AIRC 989; (1998) 88 IR 21. The application of that formula in the context of the current legislation was explained by the Full Bench of this Commission in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206. The first step is to consider s. 392(2)(c) and determine what Ms McAuley would have received, or would have been likely to receive, if she had not been dismissed. This requires some speculation about how long she would have remained at OZI4x4. The next step is to make the various adjustments in accordance with s.392 for matters that include the impact on the business, monies earned since dismissal, any reduction on account of the employee's misconduct and the application of the cap of six months' pay. A reduction for contingencies has also been commonly applied to take into account likely changes in circumstances that may impact ongoing employment. This approach is subject to the overarching requirement to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.

• [27] In this case I consider that Ms McAuley would have remained in employment for another 2 months. Mr Safi was frustrated with the time off that Ms McAuley took in the latter part of 2024 and had formed the opinion that she was unreliable. That opinion was not well based, but it is evident that it was his view, nonetheless. As the business involves a small team, the employment relationship between Ms McAuley and Mr Safi would inevitably become strained. In those circumstances I consider that Ms McAuley would have left the employment by mid-January 2025. I will discount that amount by 25% to take into account the financial situation described by Mr Safi. Mr Safi's comments that the business was not going well such that he was considering liquidating or putting it into administration. No time frame for Mr Safi taking these steps was given but it appears the business may not continue in the long term. As no detail was given some speculation is required.

• [28] Another factor in the assessment of compensation is the fact that Ms McAuley was not paid the 2 weeks' pay referred to in the termination letter. I have taken that into account in assessing the appropriateness of the compensation order. I make no deduction for misconduct because there was none. I will also include the ability for compensation to be paid in four fortnightly instalments to reduce the burden on the business.

• [29] The calculation of the total is 8 weeks' pay at 1,346.15 x 8 = 10,769.20 less 25 % ($2,692.30) giving a total of $8,076.90. The instalments will be $2,019.22 per fortnight over an 8 week period. Those amounts will be subject to tax in accordance with law.

• [30] An order reflecting this decision will be published separately.

[1] See eg Ahern v BM Alliance Coal Operations Pty Ltd T/A BMA [2013] FWC 659; Atlagic v Charlie and Son Electrical Pty Ltd [2016] FWC 3826; Lennen v Hallmark Editions Pty Ltd T/A Hallmark Editions [2012] FWA 6691; Portelli v Polar Fresh Cold Chain Services Pty Ltd [2016] FWC 3519; and Reseigh v Stegbar Pty Ltd T/A Jeld-wen Glass Australia [2019] FWC 7170.

[2] See eg: Ni v T&E Tools T/A T&E Tools - [2010] FWA 7512; Tamehana v Contraflow Pty Ltd [2015] FWC 3151; Thurston, Alison v Bunbury Medical Imaging [2020] FWC 3962; Kahrilas, Michael v Check Point Software (Australia) Pty Limited [2020] FWC 6275, and ,Tung, Andrew v Mos Burger Australia Pty Ltd T/A Mos Burger [2015] FWC 2678

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