Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - reinstatement and lost remuneration.

[1] This decision relates to an application for unfair dismissal remedy made pursuant to s.394 of the Fair Work Act 2009 (the Act) by Mr Chris Papaioannou in relation to the termination of his employment by CSL Limited. The following decision was issued in transcript on 26 October 2017 following the conclusion of proceedings.

[2] The Commission is satisfied that the application in this matter was filed within the period required in subsection 394(2).

[3] The Applicant is below the high income threshold and has served the minimum period of employment.

[4] I find that the applicant was a person protected from unfair dismissal.

[5] I find that the Small Business Fair Dismissal Code is not a relevant matter as the employer is not a small business.

[6] I find that the dismissal was not a case of genuine redundancy as the issue was not agitated at all by either party.

[7] That deals with the matters under section 396 of the Act.

[8] Having dealt with the issues under section 396, I now turn to the issues raised by section 387 of the Act.

[9] Section 387 reads as follows:

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(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."

[10] The authorities make clear that the Commission is obliged to take into account each of the relevant criteria but not to take into account any irrelevant matters.

[11] I can say at the outset that the criteria related to or referred to in paragraph 387(e) is not a relevant criteria for the purposes of the present matter. I can also say that in relation to paragraphs (f) and (g), there is no degree to which the size of the employer's enterprise impacts upon the procedures followed in effecting the dismissal and there is no degree to which there would be an absence of dedicated human resource management impacting on the procedures and that is because the employer is a large employer. It has got a robust and comprehensive industrial relations/HR management system in place and this is not a question or a case there any of the procedures followed by the employer would have any impact on a finding of fairness or unfairness.

[12] The employer can't be criticised whatsoever for its procedures in this matter and they could have no weight in any finding or have no weight against the employer's interest. They also have no weight in advancing the applicant's case.

[13] I turn now to paragraph 387(a) and this is valid reasons for the dismissal relating to the person's capacity or conduct. It is common ground that this is a capacity issue, not a conduct issue and at no stage has the conduct of the applicant been put in question.

[14] The reasons for the dismissal in this matter is identified in the letter of termination dated 6 July 2017 and the decision in that letter reads:

"On the basis of the medical evidence available to it, CSL has now formed the viewed that you do not have the capacity to perform your pre-illness duties now or in the foreseeable future. CSL has not received any information which would enable us to form a different view. Accordingly, CSL regrets to advise you that your employment with CSL will be terminated effective today, 6 July 2017."

[15] That is a very precise reason for termination.

[16] In the present matter the applicant challenges the validity of that reason. A valid reason as identified in the decision in Selvachandran v Peteron Plastics has to be "sound, defensible or well-founded" and a decision which is "capricious, spiteful or prejudiced could not be a valid reason".[1]

[17] Having regard to the evidence before the Commission, there is no way in which it could ever be considered that the decision of the employer was spiteful, prejudiced or capricious. It is very clear that to the extent that the employer has relied upon a medical report prepared by a professional, Dr Bloom, that that constitutes a clearly defensible position adopted by the employer.

[18] Much of the case has been as to whether or not the employer should have preferred the medical evidence of the applicant's treating psychiatrist over the evidence of an occupational physician. It is entirely defensible for an employer to rely upon the report of Dr Bloom in this matter. I am more than satisfied that the employer had a valid reason for the dismissal, based upon the report of Dr Bloom.

[19] There is an issue which I do not need to decide. I will leave it for decisions in other matters. The question of capacity has been discussed in the case law and it goes to the capacity of a person to actually perform the duties which constitute the job. What those authorities do not discuss is whether the capacity includes the non-performance of the work, where the circumstances of the contract, the enterprise agreement, the award or the legislative regime or whatever other mechanism may be in place provides the capacity for a person not to perform the work whilst still performing their part of the employment relationship.

[20] The issues discussed in Balfours Bakery v Cooper[2] do not go to the extent of a clear discussion on that inter-relationship and this is a case where I wouldn't go down that path either but it will be, I suspect, something for future hearings to deal with.

[21] In the present matter, I don't need to go down that path, having regard to the language used by Dr Bloom in his report and because the issue wasn't agitated effectively in the written submissions of the parties, I am certainly not going to touch the issue as to the intersection between valid reason and the existence of the salary continuation issue in this matter. I do that because in asking questions of Mr Grealy he conceded certain points in terms of the proper interpretation of the Full Bench authority in the Balfours Bakery matter.

[22] Having determined that there is a valid reason for the dismissal, I can turn to paragraph (b), (c) and (d). It is very clear that the process adopted by the employer in this matter put the applicant on notice at all times as to the proposed course of conduct at each and every step along the way. The applicant was always given an opportunity of responding before decisions were made. The applicant was given property opportunity to respond to any of the issues raised by the employer.

[23] There was, at no point, any unreasonable refusal by the employer to allow the applicant to have a support person represent in or to assist at any discussions relating to the dismissal. Nothing in paragraphs (b), (c) or (d) would weigh in favour of a finding that the dismissal was unfair. They would in many respects support an outcome that the dismissal was fair.

[24] I've already dealt with paragraph (e), (f) and (g).

[25] The last matter I need to consider is paragraph (h). I do consider that it is specifically relevant to determination of this matter to have regard to the presence of Part IX of the enterprise agreement, which is the part dealing with salary continuance.

[26] The issue of salary continuance has been canvassed throughout the evidentiary material of the parties, simply because the applicant has been in receipt of salary continuance for a period of time.

[27] I note that salary continuance commenced in April 2013 and I take that date from paragraph 10 exhibit R1. It then ended on 30 September 2013. I take that from paragraph 15 of exhibit R1. Then it separately commenced on 17 November 2014 and that is from paragraph 21 of exhibit R1. It then concluded on 12 January 2015 and that is at paragraph 27 of exhibit R1.

[28] It recommenced again on 8 August 2015. That is at paragraph 31 of exhibit R1. It then concluded on 5 October 2015. That is at paragraph 37 of exhibit R1. It recommenced again on 8 August 2015 and that is at paragraph 31 of exhibit R1. It then concluded on 5 October 2015 and that is at paragraph 37 of exhibit R1. It then started again on 10 October 2016. That is at paragraph 45 of exhibit R1. It stopped on 6 July 2017. That is at paragraph 74 of exhibit R1 and that also happens to be the date of termination of the applicant.

[29] On my calculation the applicant has already received some 39 weeks of salary continuance on those calculations. That is just taking it from the material that is in exhibit R1.

[30] Salary continuance has a specific relevance in this matter because it is a term of the enterprise agreement which covers the employee and the employer. It has relevance because the salary continuance does not have a total cap of 104 weeks but it has a cap of 104 weeks for a specific incidence of salary continuance, in which case all of the earlier salary continuance periods prior to 10 October 2016 do not count for the purpose of calculating a period of 104 weeks from 10 October 2016.

[31] The salary continuance provisions of the enterprise agreement are incredibly generous. It reflects extremely well on the employer that it has agreed to a provision of salary continuance of such generosity and the processes for accessing salary continuance appear to be highly beneficial for employees. The process seems to be relatively simple and the entitlements seem to be relatively easy to access.

[32] In the circumstances of this matter, it becomes directly relevant as to whether or not the dismissal is fair or unfair on the basis that if the applicant had remained in employment, the applicant would certainly have had an opportunity of continuing salary continuance and that is a term and condition of employment that is available to all employees.

[33] In the circumstances of this present matter, the inability of the applicant to attend work is matched by the ability of the applicant not to attend work and receive pay by virtue of the salary continuance provisions. It is a direct factor which goes to whether or not the dismissal, even if for a valid reasons, is harsh, unjust or unreasonable.

[34] I also take into account as a relevant factor the difference in opinion between the treating psychiatrist, Dr Congiu, and the opinion of the occupational physician Dr Bloom. The employer, as I have identified, had a valid reason for the dismissal based upon the opinion expressed by Dr Bloom, however, in the circumstances where the treating psychiatrist had set the return date at a much earlier date, it becomes a relevant factor. It is any other relevant matter which impacts upon fairness.

[35] I am not, as a Commissioner, going to decide who is right or who is wrong. I don't need to. It is the mere presence of that opinion and because it is the opinion of the psychiatrist, it, in some respects, should trump the decision of a non-psychiatrist in relation to a psychiatric assessment of the applicant. It is not a matter that weighs heavily but it is a matter which is relevant and I take it into account.

[36] If I weigh up all of the relevant matters as required under section 387, I come to the conclusion that the dismissal was harsh. It's harsh because in circumstances where the employment could not be carried out by the applicant because of the current incapacity of the applicant, whilst that might give rise to a valid reason for the dismissal, the dismissal itself denied the applicant the benefit of the terms of an enterprise agreement which were intentionally designed to be generous and intentionally designed to specifically cover long periods of absence by the employee.

[37] The Applicant simply didn't have to have the capacity to work in order to get the benefits of the enterprise agreement. The enterprise agreement was predicated upon the Applicant not having the capacity to work in order to get the benefit of the agreement. In all the circumstances of this matter, the dismissal was harsh on the employee.

[38] Having made a finding that the dismissal is harsh, I turn to the issue of remedy.

[39] Remedy is discretionary. I do not have to give a remedy. If I do give a remedy, I am required to consider whether or not reinstatement is inappropriate. The prime remedy is reinstatement. If I decide the remedy that reinstatement is appropriate, then I must order reinstatement. If I decide that reinstatement is inappropriate, then I must consider whether or not compensation is appropriate. If I decide that compensation is inappropriate, then no remedy at all is given. If I decide that compensation is appropriate, then I'm required to calculate an amount of compensation, having regard to s 392.

[40] In this matter, having regard to all of the circumstances of the case, I am of the strong view that a remedy should be granted to the Applicant in this matter. The prime remedy provided for in the Act is reinstatement. The Applicant can only receive a remedy if they've asked for one and they can only receive it if there's been a finding that the applicant has been unfairly dismissed. They are the provisions of section 390(1) and (2).

[41] Section 390(3) says:

"390 When the FWC may order remedy for unfair dismissal

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case."

[42] In the present matter, I consider that an order for reinstatement is appropriate. It is appropriate in the circumstances where there is no issue of conduct. This is not a conduct issue, which raises questions as to trust and confidence in the employee. It is appropriate because reinstating the employee puts the employee and the employer in exactly the same position they were as at the date of dismissal. The employee is not performing work but the employee is accessing and has the ability to access the salary continuation provisions of the agreement.

[43] It remedies the particular unfairness which I have found exists in this matter, which is the denial of the applicant to the salary continuation scheme. I am in agreement with the submissions made by the respondent that salary continuation is not a right and that the respondent has the ability to terminate a person. In other words, a person being on salary continuance is not immune from dismissal. However, they can be dismissed as has been shown by the present circumstances. It is not that they are not immune from dismissal, it is whether or not dismissal in the circumstances of the person on salary continuance would be either for a valid reason or would be a fair dismissal.

[44] In the circumstances of this matter, reinstatement is the most appropriate remedy. Having said that, it is very clear that at some point of time, if it's going to be within six months as identified by Dr Congiu or whether it's going to be within 12 months as identified by Dr Bloom, if the applicant does not make the requisite recovery from his psychological or psychiatric illnesses, there will come a time when the employer can revisit the issue of dismissal. The circumstances of that will be dealt with by the parties at that time.

[45] A decision of the Commission in relation to a dismissal which took effect on 6 July 2017 has no bearing - and the parties need to understand this - has no bearing on any future conduct that the employer may take to dismiss the employee at any future date after the employee has been reinstated. That reflects absolutely the correct position of the employer that salary continuance does not make an employee immune from dismissal.

[46] I intend to make an order for the restoration of lost pay. In the circumstances, I do so on the basis that the lost pay is whatever is provided for by the salary continuation clause, rather than having regard to what might be the salary of a person in paid employment fulfilling the normal functions. I leave it up to the parties to work out whether or not they can come to an agreement on that. If there is no agreement, I'll relist the matter to make a subsequent order to determine the amount of lost pay but I am of the view that, given that the parties understand the mechanics of the salary continuation provisions better than the Commission, that the parties will come to an appropriate figure.

[47] I also make an order for continuation of service, as is appropriate in these matters.

N. Grealy of the "Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union" known as the Australian Manufacturing Workers' Union (AMWU) on behalf of the Applicant.

[1] Selvachandran v Peteron Plastics Pty Ltd,(1995) 62 IR 371, 373.

[2] [2011] FWAB 8032.

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