[2] The applicant was summarily dismissed for alleged misconduct on 16 October 2009. Her application for an unfair dismissal remedy was filed on 30 October 2009, and remained unresolved following a telephone conference before a Fair Work Conciliator on 19 November 2009. There was no dispute that the applicant was a person protected from unfair dismissal (s 382 of the Act); was employed by the respondent for more than six months (s 383 of the Act) and was not otherwise barred by the Act or Regulations from bringing this application. I shall proceed to determine the matter on this basis.

[3] The arbitration of the matter occurred on 15 April 2009, after I was satisfied that it was the fairest and most efficient means of determining the matter, and after considering the views of both parties (s 399 of the Act). While both parties were unrepresented, the proceedings were relatively free of any factual contest (save for the applicant's assertion that she may have been dismissed because she was five months pregnant and had attended too many medical appointments) and the issues to be determined can also be readily identified and resolved, as will be evident from my later findings in the matter.

[4] At the outset, I would observe that there is no doubt that the respondent considered the applicant's alleged poor and unprofessional handling of a phone inquiry from a major client on 16 October 2009, constituted misconduct; although, for reasons which I will later develop, this incident could not, on any sound, rational or objective basis, be so characterised. The dismissal document, curiously titled 'Written Warning Form', describes the misconduct as 'Short, unhelpful and rude to the concierge of Four Seasons Hotel in Sydney' and records at the Manager's Comments 'Termination due to Misconduct'. Inexplicably, the applicant has, at no point, received a letter confirming her dismissal or the reasons for it (although there was no misapprehension that she was summarily dismissed on the same day as the incident). These, together with a number of other of the respondent's bizarre and unacceptable employment and industrial relations practices, will be referred to later in this decision. What makes the respondent's conduct even more incomprehensible, is that it employs some 150 employees at three well known premium restaurants in Sydney and Melbourne. I turn now to the evidence.

[5] The applicant was employed on 14 April 2009 (although her letter of offer is dated 7 February 2009), as a full time Reservations and Administration Assistant for Spice Temple and Rockpool Bar and Grill Restaurant ('Rockpool') in Sydney. Her remuneration was $40,000 per year with a probationary period of three months, which she passed on 1 September 2009, after being rated as good/satisfactory. The applicant received a warning in September 2009 about an error over a cake order.

[6] On 16 October 2009, around 4:30pm, without any warning or notice, the applicant was called to a meeting with the General Manager, Mr Jeremy Courmadias and Administration Manager, Ms Lauren Treweek. There she was advised of a complaint from the Concierge of the Four Seasons Hotel, Mr James Nobleza. Mr Nobleza's complaint was made in a phone call to Ms Penny Watson-Green, the General Manager of Rockpool. This complaint arose following a phone call from him to inquire about who had designed the Rockpool Bar and Grill Restaurant. As the applicant did not know the answer and no one was available to answer the question, she offered to call Mr Nobleza back or he could call back later. Mr Nobleza was asked to provide details of the call for the purposes of these proceedings some five months later. These details were contained in an email which was tendered in the proceedings; however, Mr Nobleza was not called to give evidence, nor was the recipient of the complaint, Ms Penny Watson-Green. I reproduce Mr Nobleza's email below:

Several Months ago - My Director of Food and Beverage had requested information regarding Rockpool Bar and Grill's interior design. I quickly called the reservation line. Michelle from Rockpool Bar and Grill promptly answered the phone.

I introduced myself and asked for the Interior design brief on the restaurant. My first impression during the phone call was she seemed disinterested and pre-occupied.

Michelle said "I don't know the information - let me see if I can get a manager to answer your question."

After a 2-3 minute hold she returned saying "we are currently in the middle of service, I can't seem to get a manager, can you all back".

Her phone manner was abrupt and quite unprofessional.

I then asked, if it was possible she return my call with the accurate information.

I needed to convince her that calling me back was good practice.

Because of these unfortunate customer service issues I voiced my complaint to Penny (Rockpool Restaurant Manager) - Penny apologised for the inconvenience with the promise that the issues would be handled internally.

Jeremy - hope that the above report is okay - if you require additional info please do not hesitate to contact me either by email or phone.

[7] The applicant said that at the disciplinary meeting, the General Manager did all the talking and the meeting lasted less than ten minutes. She had felt intimidated, confused and distressed. She said she was too confused to provide an immediate response and had not been asked if she would like a support person with her. The applicant said she had not been provided with a dismissal letter to explain the reasons for her dismissal. She had also not been provided with any copies of the Company policies. The applicant said that in August 2009, she had notified her employer that she was pregnant. She believed her dismissal may have been because she had too many doctor's appointments. However, she said she had had only two appointments which were in work hours and she had made up the time later.

[8] In her oral evidence, the applicant confirmed that she had given Mr Nobleza two options - to call back or she would call him back when she had an answer to his query. At the time, she was under pressure as the only one answering phone calls, because the other two receptionists were not there. He had called at a busy time. She said she may have sounded hurried, but she was not rude. The applicant agreed that relationships in the restaurant industry were very important to maintain and could be jeopardised by rude or unhelpful behaviour. She believed that as Mr Nobleza worked in the same industry, he would have understood how pressured it could be. In further oral evidence, the applicant agreed that during the meeting on 16 October 2009, she was asked for her version of what had happened, but said she was too confused and upset to respond.

[9] Given that the respondent's witness statement was prepared and signed by both Mr Courmadias and Ms Treweek, there must be a real doubt as to whether the Tribunal should have accepted it as a properly prepared and executed witness statement. Nevertheless, I admitted the document, despite these reservations. Both Mr Courmadias' and Ms Treweek's oral evidence was more helpful and enlightening.

[10] The statement described how information about the business could be accessed from the computer's common drive. The statement said that it was not correct to say, (as the applicant did), that she had not personally met the General Manager before the 16 October meeting. It was said that the applicant was asked to speak her mind at the disciplinary meeting, but she refused to do so. It was further said that the applicant was escorted back to her office to ensure that she was okay and to arrange for her to get home safely.

[11] The statement claimed that the phone call incident was unacceptable. The respondent had invested a lot of time and effort in securing a close relationship with the Four Seasons Hotel and the applicant's conduct jeopardised that relationship and its financial rewards.

[12] The statement stated that the applicant could have always accessed documents on her personal file and she had been provided with the Company's Code of Conduct when she had commenced employment. The statement denied that the performance issues discussed with the applicant were not followed up after her review and an improvement plan had been in place. The respondent said the applicant received a written warning on 22 September and had been given numerous verbal warnings. In any event, the respondent maintained that the applicant was not terminated for her performance, but for misconduct.

[13] The statement denied that the applicant was dismissed because of her pregnancy and medical appointments. The other staff had been excited about her pregnancy and time off (for medical appointments) was willingly granted. The Company does not engage in pregnancy discrimination as evidenced by the fact that five employees in the Melbourne restaurant have had babies in the last couple of months and had not been terminated.

[14] In oral evidence, Mr Courmadias said the Company has no Human Resources Manager and local managers rely on advice on such matters from the respondent's Directors and through self-education.

[15] Mr Courmadias described the steps he took to investigate the allegation against the applicant. He had conversations with Ms Watson-Green and Mr Nobleza and then spoke to the restaurant owner, Mr Neil Perry. Mr Perry had felt that the applicant was guilty of misconduct and should be immediately dismissed. Mr Courmadias agreed that the decision to dismiss the applicant was made before the meeting with her later that day and that he had not considered any other option, other than dismissal.

[16] Mr Courmadias agreed that the respondent did not lose any business from the Four Seasons Hotel as a consequence of the phone call. However, he believed that misconduct included putting the business at risk. Mr Courmadias did not believe the call was made during the busiest time of the day, which is not between 12:00pm and 3:00pm.

[17] In answer to questions from the Tribunal, Mr Courmadias confirmed that he had acted on Mr Perry's direction to dismiss the applicant; had not offered the applicant a support person and had not told the applicant what the meeting was about beforehand.

[18] Ms Treweek said in oral evidence that she attended the disciplinary meeting as a neutral third party. The applicant had been offered numerous occasions to say whatever she wanted, but had declined. Ms Treweek said the Company has a flat management structure and staff are welcome to discuss any matter at any time. Copies of warnings and performance reviews are available on request. She said that there was follow-up training and performance management plans in place for the applicant. Part of the Company's training was that staff are asked to attend unpaid meetings with Mr Perry on a Saturday, although it is not compulsory. Ms Treweek said that the Company was trying to help the applicant improve, but the incident was misconduct for failing to provide customer service.

[19] In answer to my questioning, Ms Treweek said that the applicant was not the only person in the office at the time. One receptionist, Ms Ming Chan, was also in the office that day. Ms Treweek agreed that the applicant was not offered a support person; not told of the purpose of the meeting and had not received a termination letter. Ms Treweek also knew what the outcome of the meeting was to be before it occurred.

[20] Ms Samantha Poerschke is the respondent's Reservations Team Leader and worked closely with the applicant. Ms Poerschke said she had to frequently remind the applicant about accuracy and that on a few occasions she had heard her expressing frustration in her voice when speaking to customers. Ms Poerschke said she had numerous discussions with the applicant about various issues.

[21] In oral evidence, Ms Poerschke said the busiest time on the receptionist phones is around 10:00am to 11:30am when people are thinking about booking for lunch. Ms Poerschke said she believed the applicant was dismissed for rudeness to a customer.

[22] Ms M Sahagun, the applicant's mother, submitted that the applicant was not guilty of misconduct. She had denied being rude and had been denied procedural fairness. The applicant had been stressed and negatively affected by her dismissal. Ms Sahagun said the applicant had an impression that she had been dismissed because of her pregnancy. The applicant was seeking compensation from the time she was dismissed to when she would have proceeded on maternity leave (about 14 to 17 weeks).

[23] In its written submissions, the respondent put that the applicant was dismissed for being rude, disinterested, preoccupied, abrupt and unprofessional. She had been offered numerous opportunities to explain herself during the meeting. No letter of termination was sent to her, but the documentation was available if requested. The applicant had been spoken to on numerous previous occasions and was aware of the responsibilities of working in a customer service industry. Support is offered to all employees to improve performance.

[24] The respondent relied on the misconduct clause in the Restaurant Employees' State Award. The applicant had jeopardised a very important customer relationship ($86,000 in revenue brought in at the Rockpool Restaurant in nine months). The losses could have been unimaginable.

[25] The respondent also relied on its Code of Conduct and, in particular, the following:

Serious breaches of Rockpool Restaurant Group's policies, procedures and misconduct including physical or verbal abuse or assault, dishonesty, theft, working under the influence of drugs or alcohol, wilful damage to Rickpool property, neglect of duty and failure to obey a reasonable instruction will result in instant dismissal.

[26] The respondent also claimed that it was still discovering mistakes by the applicant after she had been terminated, although no evidence was brought to that effect.

[27] There was no cogent evidence before the Tribunal which would ground a finding that the real reason for the applicant's dismissal was because she was pregnant and/or that she had an unacceptable number of medical appointments. Indeed, the applicant herself merely speculated that this may have been the reason, but could not identify any sound basis for her impressions. Nevertheless, that said, the circumstances surrounding the applicant's dismissal were, in my opinion, nothing short of appalling and manifestly unfair. These circumstances include the following:

a) Mr Nobleza's complaint did not describe the applicant's conversation in a single phone call as rude; rather, that she seem 'disinterested and pre-occupied'. He described her phone manner as 'abrupt and quite unprofessional' and that this was an 'unfortunate customer service issue'. Nevertheless, the respondent concluded, without any foundation, that her conduct was rude. I note that the respondent did not call the Concierge to give evidence in the proceedings. It relied on Mr Nobleza's email prepared almost five months after the incident for the purposes of these proceedings. Nor did the respondent call the recipient of the phone complaint, Ms Penny Watson-Green to corroborate what Mr Nobleza had said to her.

b) In an extraordinary and candid admission, Mr Courmadias gave evidence that he had consulted the restaurant owner, Mr Neil Perry, about the matter some hours before the dismissal meeting with the applicant. Mr Perry had directed him to dismiss her. Apart from the fact that Mr Perry had made the dismissal decision, and not Mr Courmadias, and had never even spoken to the applicant, the consequential meeting with the applicant was nothing more than a complete sham. On the respondent's own evidence, the decision had already been made. Ms Treweek said she knew the outcome of the meeting before it occurred. The unfairness of the process was further exacerbated by the fact that the applicant was:

• not told the reason for the meeting with Mr Courmadias and Ms Treweek and was effectively 'ambushed' by the allegation;

• given no reasonable opportunity to respond to the allegation of misconduct;

• given no opportunity to have a support person present. Although the respondent suggested that Ms Treweek fulfilled this role, such a suggestion was nonsense. Ms Treweek was the applicant's direct supervisor. Moreover, the applicant had never asked her to be her support person; and

• understandably shocked and distressed that she was to be dismissed. Yet, the respondent gave her no chance to compose herself and respond appropriately, or at all, to the allegation.

c) Seemingly, the respondent's policy is not to provide an employee with copies of written warnings or dismissal letters, unless requested. This is totally unacceptable and a denial or procedural fairness. It is no defence and is disingenuous to claim - as the respondent did - that employees could ask for such documentation and it would be provided.

[28] In my view, the most appalling aspect of this case is that there was no valid reason for the applicant's dismissal for misconduct. At best, the applicant's demeanour during the phone conversation may have deserved a verbal counselling - nothing more. To think that a young pregnant woman, under pressure in a busy workplace, would be dismissed for a single instance of unacceptable phone manner, which had no adverse ramifications, is incomprehensible. Moreover, that the respondent claims its actions were perfectly justified, and its disciplinary processes were appropriate, simply beggars belief. If ever the protections from unfair dismissal, under the Fair Work Act, were so obviously necessary, this case provides a classic example. I strongly recommend that the respondent's personnel, who are in any way responsible for employee or industrial relations, undertake relevant training as to what are acceptable industrial relations practices. The respondent would also be well advised that, in future, it seek appropriate professional advice on how to deal with similar situations. Plainly, it got it hopelessly wrong on this occasion and deserves strong condemnation. I now intend to point out to the respondent what type of employee conduct might constitute misconduct such as to justify summary dismissal.

[29] The respondent placed great emphasis on its submission that the applicant had breached the Company's Code of Conduct as referred to in the earlier reference at par 25 as to the definition of serious breaches of Rockpool's policies and procedures and misconduct.

[30] Under the Act, the Small Business Fair Dismissal Code, serious misconduct is described as including 'theft, fraud, violence and serious breaches of occupational health and safety procedures'. There are obviously numerous other examples, including fighting in the workplace, being under the influence of alcohol or drugs at work, gross insubordination or a wilful refusal to comply with an employer's reasonable direction. However, the guiding principles as to what constitutes misconduct can be distilled from O'Connor v Palmer and Others (No I) (1959) 1 FLR 397, where the Commonwealth Industrial Court held at page 401:

Without attempting to define exhaustively the word "misconduct" it involves something more than mere negligence, error of judgment or innocent mistake.

[31] A more expansive definition can be found in Pillai v Messiter (No 2) (1989) 16 NSWLR 197, where the New South Wales Court of Appeal, under the heading '"Misconduct" means more than mere negligence', said:

The words used in the statutory test ("misconduct in a professional respect") plainly go beyond that negligence which would found a claim against a medial practitioner for damages: Re Anderson, (at 575). On the other hand gross negligence might amount to relevant misconduct, particularly if accompanied by indifference to, or lack of concern for, the welfare of the patient: cf Re Anderson (at 575). Departures from elementary and generally accepted standards, of which a medial practitioner could scarcely be heard to say that he or she was ignorant could amount to such professional misconduct: ibid. But the statutory test is not met by mere professional incompetence or by deficiencies in the practice of the profession. Something more is required. It includes a deliberate departure from accepted standards or such serious negligence as, although not deliberate, to portray indifference and an abuse of the privileges which accompany registration as a medical practitioner: cf Allison (at 760 - 761). These are the approaches which have been taken in our courts. They have been taken in the courts of England where such misconduct is alleged. And they have similarly been taken in the courts of the United states. The entry in Corpus Juris Secundum, vol 58, (1948) at 818, reads:

"Both in law and in ordinary speech the term 'misconduct' usually implies an act done wilfully with a wrong intention, and conveys the idea of intentional wrongdoing. The term implies fault beyond the error of judgment; a wrongful intention, and not a mere error of judgment; but it does not necessarily imply corruption or criminal intention, and, in the legal idea of misconduct, an evil intention is not a necessary ingredient. The word is sufficiently comprehensive to include misfeasance as well as malfeasance, and as applied to professional people it includes unprofessional acts even though such acts are not inherently wrongful. Whether a particular course of conduct will be regarded as misconduct is to be determined from the nature of the conduct and not from its consequences."

Reference to much United States authority is provided to support this passage. In the 1988 supplement to the Corpus, reference is made to Beaunit Mills Inc v Board of Review, Division of Employment security, Department of Labor and Industry 128 A 2d 20 (1956). In that case, the New Jersey Superior Court held that "misconduct" does not mean mere mistakes, errors in judgment or in the exercise of discretion or minor but casual or intentional, carelessness or negligence. It did not mean mere inefficiency, unsatisfactory conduct, failure of performance as a result of inability or incapacity inadvertent in isolated instances or errors of judgment which were not made in bad faith or some other ingredient. Numerous other recent cases are cited to support the proposition that, in the United States, "misconduct" generally means wrongful, improper or unlawful conduct, motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one's acts. Similar approaches to the meaning of the word "misconduct" have been taken in Australia, outside the context of professional discipline: see, eg, O'Connor v Palmer (No 1) (1959) 1 FLR 397. The primary dictionary meanings confirm that this is also the way "misconduct" is used in everyday speech.

[32] In Police Association of New South Wales (on behalf of Kim Gilmour) and Commissioner of Police [2009] NSWIRComm 51, I made some obiter observations based on the above principles when I said at par [300]:

300 Mr Howell submitted that the definition of misconduct, in the disciplinary context, cannot mean mere mistakes, errors in judgement, errors in discretion, carelessness, negligence, inefficiency or poor performance. He put that misconduct means 'wrongful, improper or unlawful conduct motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one's acts'. He submitted that none of the allegations against SC Gilmour fell into the definition of misconduct. Strictly speaking, it is unnecessary for the Commission to make findings on these submissions, as I have found that the evidence advanced in these proceedings, on the balance of probabilities, does not permit a finding that any of the allegations have been proven to the requisite standard. The question of whether the conduct was misconduct does not, therefore arise. That said, I consider Mr Howell's submissions are thoughtfully made and soundly based.

[33] In my opinion, the applicant's conduct during the 16 October phone call, does not come 'within a bull's roar' of the commonly accepted definition of misconduct referred to above. Moreover, it does not even fit the test of what the respondent itself said was a breach of the Company's Code of Conduct. It was no more than an error of judgment which was neither deliberate, nor wilful.

[34] Section 387 of the Act mandates Fair Work Australia (FWA) to consider a number of matters, including procedural fairness issues, when determining whether a particular dismissal is 'harsh, unreasonable or unjust'. The section is expressed as follows:

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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

[35] It will be readily seen from my earlier comments, that the Tribunal is comfortably able to find that s 387(a), (b) and (c) must be answered in the negative. I have referred to subclause (d) at par 27 earlier. Subclause (e) does not apply, given the reason advanced by the respondent for the applicant's dismissal was misconduct. As to subclauses (f) and (g), I have earlier expressed my serious reservations as the respondent's disciplinary processes and, in particular, how they were applied in this instance. Given that the respondent employs around 150 staff, it could hardly be described as a small business which might be inexperienced in the proper handling of employee relations or disciplinary issues. It seems that the respondent has its own somewhat peculiar understanding of what constitutes fairness in these situations. To that extent, its conduct on this occasion, as revealed unashamedly by its own evidence, left a lot to be desired.

[36] In addition, it seems to me that the following well known passage from Byrne v Australian Airlines Limited [1995] HCA 24; (1995) 185 CLR 410, is particularly apposite to the present case:

"--- It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted."

In my view, and I find accordingly, the applicant's dismissal was:

a) unjust, because she was not guilty of the misconduct on which the employer acted;

b) unreasonable, because she was terminated based upon inferences which could not reasonably have been drawn from the material before the employer;

c) harsh, because of its adverse personal and economic consequences for the applicant; and

d) also harsh, because it was grossly disproportionate to the gravity of her conduct.

[37] Section 390(3) of the Act deals with the remedies which may be ordered by FWA consequent upon a finding of unfairness. The section is as follows, and it seems pellucidly clear that reinstatement is the primary remedy for an unfairly dismissed employee:

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

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

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

[38] In this case, I am satisfied that reinstatement of the applicant would be inappropriate and an order for payment of compensation is appropriate in all the circumstances of the case. I make these findings for the following reasons:

a) the applicant does not seek reinstatement, given she is currently caring for her newborn child;

b) the applicant believes she was so poorly treated that she could not return to work for the respondent; and

c) the respondent (although quite wrongly) still considers the applicant was guilty of misconduct.

[39] Section 392(2) identifies the mandatory criteria for determining the amount of compensation the applicant may receive by way of order of FWA. The section is expressed as follows:

(2) In determining an amount for the purposes of an order under subsection (1), FWA 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

[40] The applicant seeks full compensation for the period from dismissal to when she would have otherwise proceeded on maternity leave. I have taken all the above matters in s 392(2) of the Act into account and note particularly that:

a) there would be no adverse impact on the viability of the employer by the order I intend to make;

c) the obvious difficulties she would have experienced in obtaining alternative employment while pregnant; and

d) the unfairness of the applicant's dismissal, by any measure, was severe and manifest. If there was a scale of unfairness, this dismissal would be in the top quartile.

[41] Accordingly, I would determine an appropriate amount of compensation, pursuant to s 392(2) and (3) of the Act, is 12 weeks pay at the agreed sum of $769.23 per week.

Ms M Sahagun, mother/representative of the applicant

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