s.394 - Unfair dismissal

Application for an unfair dismissal remedy - resignation - employee not paid and therefore dismissed - objection dismissed - dismissal unfair - remedy.

• [1] Corey Carnegie has made an application to the Commission for an unfair dismissal remedy under s 394(1) of the Fair Work Act 2009 (Cth) (Act). Mr Carnegie alleges that he was unfairly dismissed from his employment as a Building Designer with the respondent, M.J. Harris Group Pty Ltd.

• [2] The respondent relied upon the Small Business Fair Dismissal Code in which it stated that it has under 15 employees; that Mr Carnegie had been employed in the business of the respondent for 12 months or more; and that it did not dismiss Mr Carnegie, but rather he resigned from his employment.

• [3] The hearing of this application was delayed, with the parties' agreement, to facilitate attempts by the parties to settle the application, which were ultimately unsuccessful.

(a) file a Form F3 employer response to the application; or

(b) file submissions or witness statements or other material in accordance with the Commission's directions.

• [5] On 10 June 2025, the respondent advised of its unavailability to attend the 12 June 2025 hearing. The matter was ultimately re-listed to proceed to hearing on 18 June 2025. The respondent acknowledged receipt of the revised listing details by way of an email to Chambers. Despite this, the respondent did not attend the video hearing on 18 June 2025 and did not respond to multiple attempts by Chambers to contact it by email and multiple telephone calls.

• [6] I am satisfied that the respondent was on notice of the hearing and that the Commission's correspondence was received by its Director, Mike Harris, on its behalf. Consistent with s 600 of the Act, which allows the Commission to determine an application in the absence of a party that has been required to attend before it, the hearing proceeded as listed. Upon the conclusion of the hearing, correspondence was sent to the parties which confirmed that the decision was reserved and would be issued to the parties as soon as possible. The respondent did not provide a response to this correspondence.

• [7] This decision determines Mr Carnegie's application for an unfair dismissal remedy based on the information before the Commission, which comprises the written material filed by Mr Carnegie, his oral evidence, and the Small Business Fair Dismissal Code completed by the respondent.

• [8] Dealing first with the initial matters for the purposes of s 396 of the Act, I am satisfied that the application was made within 21 days of the dismissal taking effect; Mr Carnegie was protected from unfair dismissal within the meaning of s 382 of the Act; and there is no contention that the dismissal arose by way of redundancy and so it was not a case of genuine redundancy.

• [9] As to the Small Business Fair Dismissal Code, the only available information provided by the respondent was, "I didn't dismiss the employee, he resigned" and "yes, the employee resigned." The respondent has written "N/A" in response to the balance of the questions enquiring about the circumstances of the dismissal.

• [10] Mr Carnegie accepts that he resigned from his employment and says that he was forced to do so because of the respondent's persistent failure to pay his weekly wages on time for the 16 consecutive weeks from July 2024. Mr Carnegie also relies upon the respondent's failure to pay his superannuation entitlements consistently in the period prior to 25 July 2024, and says that after this date, he received no superannuation entitlements at all from the respondent. Mr Carnegie submits that at the time of his resignation, he had not received any income for three weeks.

• [11] Mr Carnegie submits that the respondent's failure to pay his wages on time, or at all, caused him considerable financial strain and breached his contract of employment. Mr Carnegie gave evidence[1] that the respondent informed its employees on occasions in March, April and August 2024 that cash flow had been an issue, but by September 2024 Mr Carnegie felt "seriously concerned" and sought advice from the Fair Work Ombudsman. On 29 September 2024, Mr Carnegie received a text message from the respondent assuring him that his pay would be up to date by the end of the week and the respondent would then focus on outstanding superannuation. Despite this, Mr Carnegie's evidence was that he did not receive his outstanding pay entitlements.

• [12] On 9 October 2024, Mr Carnegie sent an email to the respondent asking for an update as to the payment of his wages, which were 13 days late. Mr Carnegie says that he subsequently received "one payment" but two weeks of salary were still outstanding.

• [13] On 13 October 2024, Mr Carnegie sent what he described as a letter of demand to the respondent, requesting payment of his outstanding wages within 7 days. Mr Carnegie received an email from the respondent that day, which apologised for the "continued delay in payments." Mr Carnegie says that he received payments for the outstanding two weeks pay, but not until 21 October and 22 October 2024.

• [14] On 23 October 2024, Mr Carnegie said that he asked the respondent about his wages which were due that day and had not been paid. Mr Carnegie said these wages were not received by him until 13 November 2024.

• [15] On 7 November 2024, Mr Carnegie said he had not received wages for "the last week and two weeks prior" and it was causing him "unnecessary stress and difficulty" in managing his expenses. Accordingly, Mr Carnegie resigned on 7 November 2024 with notice to 22 November 2024, and "stated the reason I resigned is because 'I cannot work if I am not getting paid.'" Mr Carnegie said that Mr Harris did not respond and Mr Carnegie said, "It is what it is."

• [16] On 9 November 2024, Mr Carnegie emailed the respondent to demand payment of the three weeks of wages he says remained owing to him. Mr Carnegie explained that it was causing him stress, and it was difficult to manage his personal expenses. Mr Carnegie requested that his outstanding wages be paid in the next pay cycle on 13 November 2024. Although the respondent indicated that it would do its "absolute best" to have the pays sorted by this date, Mr Carnegie said he did not receive his outstanding payments. Mr Carnegie sent a text message to the respondent on 13 November 2024 asking if he would be paid that day, as his wages were, by tat time, four weeks behind. Mr Carnegie again explained that it was "extremely tough financially" for him. Mr Carnegie said that Mr Harris advised him that he had made one payment that day and would do more as funds became available.

• [17] On 21 November 2024, Mr Carnegie says that he still had not received the outstanding wages owing to him and informed the respondent that it was "extremely stressful" not knowing if he would be paid or not, but he did not receive a reply.

• [18] On 28 November 2024, following the cessation of employment, a pay slip for Mr Carnegie's final pay was made available to him but Mr Carnegie said that the sum specified in his termination pay, including accrued leave entitlements, was not paid to him.

• [19] I accept Mr Carnegie's evidence, which I found to be detailed, credible and convincing. It is also supported by the documentary material he relies upon and which is in evidence before the Commission.[2] This material demonstrates that from 25 July 2024, each of Mr Carnegie's weekly pays were paid to him between 7 to 20 days after they fell due for payment. Further, Mr Carnegie has not been paid for the pay periods 21 October to 27 October 2024; 28 October to 3 November 2024; 4 November to 10 November 2024; 11 November to 17 November 2024; and 18 November to 22 November 2024.

• [20] I am satisfied and I find that the respondent terminated Mr Carnegie's employment by failing to pay his wages. The failure to pay wages was action taken by the employer that was the principal contributing factor which resulted in the termination of the employment (see the Full Bench decision in Khayam v Navitas English Pty Ltd.[3]) In these circumstances, Mr Carnegie's employment was terminated on the employer's initiative within the meaning of s 386(1)(a) of the Act. This means that despite the respondent's contention that Mr Carnegie was not dismissed, Mr Carnegie's resignation was a dismissal within the meaning of the Act. The respondent's jurisdictional objection is therefore dismissed.

• [21] I have considered whether the dismissal was consistent with the Small Business Fair Dismissal Code, within the meaning of s 388 of the Act. A small business is one that, at the time of the relevant employee's dismissal, employed fewer than 15 employees, inclusive of the applicant, "regular casuals," and employees of any associated entities (see s 23). The respondent has ticked the box indicating that it employed less than 15 employees, but Mr Carnegie rejects this contention. Mr Carnegie submits that the respondent had more than 15 employees at the relevant time, taking into account his colleagues in the office and other tradespersons such as carpenters, painters and cabinetry makers in the workshop. There is no evidence before me to allow me to conclude that the respondent was a small business employer at the relevant time. But even if it were, I do not consider that the respondent complied with either of the two limbs of the Small Business Fair Dismissal Code.

• [22] The first limb concerns summary dismissal. It provides that it is fair for an employer to dismiss an employee without notice or warning when the employer "believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal." This limb is not applicable because the respondent did not in fact dismiss Mr Carnegie summarily, nor is there any evidence of conduct engaged in by Mr Carnegie that the respondent believed was sufficiently serious to justify immediate dismissal.

• [23] The second limb of the Small Business Fair Dismissal Code states that in cases not involving summary dismissal, the employer must, among other things, give the employee a reason why he or she is at risk of being dismissed, and the reason must be a valid one based on the employee's conduct or capacity to do the job. There is no evidence that a warning of this type was provided to Mr Carnegie. I therefore conclude that the dismissal was not consistent with the Small Business Fair Dismissal Code.

• [24] The Commission must now proceed by considering the merits of Mr Carnegie's unfair dismissal application and decide whether that dismissal was harsh, unjust or unreasonable, taking account of the matters in s 387 of the Act. I find that there was no valid reason for the dismissal (s 387(a)).[4] Mr Carnegie was not notified of a valid reason for his dismissal (s 387(b)).[5] He was not given an opportunity to respond to the reasons for dismissal (s 387(c)).[6] There was no unreasonable refusal of a support person (s 387(d)). I find that Mr Carnegie was not warned about poor performance (s 387(e)). As to ss 387(f) and (g), I consider that the relatively small size of the respondent's enterprise and the apparent absence of human resources advisers had a negative impact on the process followed in effecting the dismissal. There are no relevant factors (s 387(h)), however I record the parties' genuine efforts to resolve this application. Nevertheless, taking into account all of the circumstances, I consider that the dismissal was harsh due to the economic and personal consequences to Mr Carnegie.[7] The dismissal was therefore unfair.

• [25] As to remedy, I find that reinstatement is inappropriate. It is not sought by Mr Carnegie as he considers the working relationship with the respondent be irretrievably broken, and I accept his evidence. I consider that compensation is appropriate (s 390(3)).

• [26] In assessing compensation, the Commission is required by s 392(2) of the Act, to take into account all of the circumstances of the case. I consider these circumstances below and in undertaking this task apply the long-established methodology for assessing compensation in unfair dismissal cases as outlined by the Full Bench in Sprigg v Paul's Licensed Festival Supermarket (Sprigg).[8] The approach in Sprigg is as follows:

Step 1: Estimate the remuneration the applicant would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

• [27] The consideration commences with an assessment of the remuneration that Mr Carnegie would have received, or would have been likely to receive, had he not been dismissed (s 392(2)(c)). This requires an estimation of Mr Carnegie's anticipated period of employment;[9] that is, how long he would have remained in employment but for the dismissal, and the remuneration he would have received, or been likely to receive, during that period.[10] There is an element of speculation in this counterfactual task as it involves an assessment of what would have been likely to happen in the future had Mr Carnegie not been dismissed.

• [28] Mr Carnegie's evidence was that he did not have any desire to resign and might otherwise have still been in employment to this day. However, Mr Carnegie acknowledged that he could not continue to work without getting paid and in those circumstances, said that his employment would not have continued for "very long." As noted by the Full Court of the Federal Court in He v Lewin, in determining the remuneration the employee would have, or would have been likely to receive, the Commission is required to give its attention to an actual state of facts:[11]

In determining the remuneration that the employee would have received, or would have been likely to receive, the Commission is required to give its attention to an actual state of facts... In each case, it is necessary for the Commission to address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.

• [29] In this case, there is no evidence that the cash flow concerns that appear to have given rise to the pay-related issues have been remedied. Mr Carnegie contends that he is still owed money by the respondent. Taking this into account, I accept Mr Carnegie's evidence that he would not have remained in employment with the respondent for "very long" had the employment not ended when it did. Mr Carnegie's position was that the "whole reason" he resigned was because he was not being paid. In the absence of evidence demonstrating that this would likely have resolved in the short term, I do not consider Mr Carnegie's employment would have continued for longer than two weeks from the effective date of his dismissal.

• [30] Mr Carnegie was remunerated a gross annual salary of $80,000 which he contends amounted to $38.46 per hour or $1,538.46 per week (gross).[12] For the purposes of step 1 in Sprigg, in the two weeks following the dismissal, Mr Carnegie would have received remuneration of $3,076.92 gross, plus superannuation.

• [31] The Commission is required by s 392(2)(e) and (f) to take into account any amounts earned by Mr Carnegie from employment or other work since the dismissal. Monies earned from employment or other work after the end of the two-week anticipated period of employment are not deducted. This is because the calculation is intended to put Mr Carnegie in the financial position that he would have been in but for the unfair dismissal.[13] Mr Carnegie's evidence is that he did not earn any remuneration in the two-week period following the dismissal. I accept this evidence. While Mr Carnegie now receives job seeker payments, these payments did not commence until March 2025. In any event, social security payments are not included in the amount of remuneration earned.[14] Accordingly, for the purposes of step 2 in Sprigg, I make no deductions to the provisional compensation sum above.

• [32] I have considered, for the purposes of s 392(2)(g) of the Act, whether any discount should be made for contingencies, consistent with step 3 in Sprigg.[15] A discount for contingencies is a means of taking into account the various probabilities that might otherwise affect earning capacity.[16] However, in circumstances where the two-week anticipated period of employment has entirely passed, I do not consider that in the circumstances of this case,[17] a deduction should be made for contingencies. This is because there is no relevant uncertainty that needs to be accounted for in that two-week period.

• [33] Further, with respect to step four in Sprigg, I have considered the impact of taxation. Compensation will be determined as a gross amount, and it will be left to the respondent to deduct any amount of taxation required by law. There are no other matters that are relevant in determining an amount of compensation apart from those to which I now turn.

• [34] There was no evidence or submissions made by the respondent that would warrant an adjustment to the provisional compensation sum, having regard to the viability of the respondent's business (s 392(2)(a)). The length of Mr Carnegie's employment with the respondent was just short of three years. I do not consider this period to justify any increase or reduction to the amount of compensation ordered (s 392(2)(b)).

• [35] I am satisfied that Mr Carnegie made reasonable efforts to mitigate his loss by looking for alternative employment opportunities following his dismissal although he has not secured new employment (s 392(2)(d)). I am satisfied that no discount to the provisional compensation sum ought to be applied. There being no findings of misconduct by Mr Carnegie, I am not required by s 392(3) of the Act to reduce the amount of compensation I would otherwise order by an appropriate amount. Accordingly, I make no reduction of this kind. There was no submission that any amount of compensation should be subject to payment by instalments (s 393). No order will be made to that effect.

• [36] The provisional compensation sum appropriately does not include a component for shock, humiliation or distress (s 392(4)). The amount of compensation which is derived from the above considerations is $3,076.92 gross, plus superannuation, which is less than the compensation cap in s 392(5) of the Act in relation to Mr Carnegie.

• [37] Having applied the formula in Sprigg, I am nevertheless required to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.[18] I am satisfied that the above analysis takes into account the matters set out in s 392(2) of the Act, and the compensation that I have determined is, appropriately, neither excessive nor inadequate having regard to all the circumstances of the application.

• [38] I consider it appropriate to make an order that the respondent pay Mr Carnegie the sum of $3,076.92 gross, less taxation as required by law, plus 11.5% superannuation[19] which is $353.85. I will order these amounts to be paid within 28 days of this decision.

• [39] It should be noted that this decision only provides a remedy for Mr Carnegie's unfair dismissal application. It does not address any outstanding wages, termination pay, accrued leave entitlements, and superannuation entitlements that Mr Carnegie contends remain owing to him by the respondent. To the extent that there are entitlements that have not been paid to Mr Carnegie upon the termination of employment, this is a serious matter and although not in the Commission's jurisdiction, any such outstanding amounts should be rectified by the respondent without delay.

• [40] An order is issued separately in PR790852.

[3] [2027] FWCFB 5162 at [75]

[4] Selvachandran v Peteron Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371; Walton v Mermaid Dry Cleaners Pty Ltd [1996] IRCA 267; (1996) 142 ALR 681

[5] Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429 at [19]; Reseigh v Stegbar Pty Ltd [2020] FWCFB 533 at [55]

[6] Gibson v Bosmac Pty Ltd [1995] IRCA 222; (1995) 60 IR 1 at 7; Central Queensland Services Pty Ltd v Tara Odgers [2020] FWCFB 304 at [42]; Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41]; Bartlett v Ingleburn Bus Services Pty Ltd t/as Interline Bus Services [2020] FWCFB 6429 at [19] and [21]; Crozier v Palazzo Corporation Pty Ltd (t/as Noble Park Storage and Transport) (2000) 98 IR 137 at [75]

[7] Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at [128]

[8] Print R0235; [1998] AIRC 989; (1998) 88 IR 21. This approach was articulated in the context of the Fair Work Act 2009 (Cth) in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge [2013] FWCFB 431; 229 IR 6 and Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206 at [16] (Double N Equipment Hire)

[9] See Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) (Ellawala) at [34]

[10] He v Lewin [2004] FCAFC 161; 137 FCR 266 at [58]

[12] Applicant's outline of arguments: merits at [2]

[14] Shorten v Australian Meat Holdings Pty Ltd [1996] AIRC 2023; (1996) 70 IR 360, citing _Mullany v Active Concrete (_1995) 64 IR 237

[15] Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001) at [39]

[16] Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53, 184 CLR 485; Ellawalla at [43]

[17] Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge [2013] FWCFB 431, 229 IR 6 at [53]

[18] Double N Equipment Hire at [17]; Smith v Moore Paragon Australia Ltd PR942856, [2004] AIRC 57, (2004) 130 IR 446 at [32]

[19] The superannuation guarantee percentage at the time of the dismissal

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