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[2020] FWC 4560
General information, not legal advice.
Fair Work Commission
2020-09-01
Original judgment source is linked above.
s.394 - Application for unfair dismissal remedy
Application for unfair dismissal remedy - resignation - jurisdictional objection - s. 386 (1) (b) - resignation forced because of conduct of employer - dismissal established - no valid reason for dismissal - significant procedural deficiencies - dismissal harsh, unjust and unreasonable - compensation Ordered.
[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was made by Jenny Yang (the applicant), and the respondent employer has been identified to be FCS Business Service Pty Ltd ABN: 60 161 300 983 (the employer).
[2] The application was lodged at Sydney on 29 December 2019. The application indicated that the date that the applicant's alleged dismissal took effect was 9 December 2019. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.
[3] The matter was not resolved at conciliation, and it has proceeded to arbitration before the Fair Work Commission (the Commission) in a Hearing conducted at Sydney on 1 and 2 July 2020.
[4] During a Pre-Hearing Conference held on 26 February 2020, the Commission granted permission, pursuant to s. 596 of the Act, for the Parties to be represented by lawyers or paid agents. At the Hearing the applicant was represented by Mr N Stevens, solicitor and Director of the firm of Stevens & Associates Lawyers. Mr Stevens called the applicant and two further witnesses who provided evidence in support of the claim for unfair dismissal remedy. The employer was represented by Mr M Wang, special counsel from the firm Juris Cor Legal. Mr Wang adduced evidence from four witnesses called on behalf of the employer.
[5] The applicant had been employed for almost 3 years when, on 9 December 2019, she signed duplicate resignation letters that had been prepared for her by the employer. The applicant was initially employed as an accountant, and in January 2018 she was promoted to a position as a manager accountant, responsible for the employer's taxation team supervising the work of approximately eight accountants.
[6] The employer and CPTB Accountants Pty Ltd (CPTB) are related companies which are wholly-owned subsidiaries of FCS Group Holding Pty Ltd ACN:612 785 056. The applicant, while employed by the employer, performed work for CPTB. CPTB is registered with the Australian Government Tax Practitioners Board as a Company Tax Agent with the registration number of 25453890. The sole Director and secretary of the employer and the person responsible for the control and management of the operations of, inter alia, the employer and CPTB is Mr Yixin Shen (Mr Shen) who is also known as Fernando.
[7] Prior to the events of 9 December 2019, which culminated with the resignation of the applicant, the applicant's employment was not the subject of any recorded complaint or concern. The events of Monday, 9 December 2019, arose from a discussion that occurred on the previous Thursday, 5 December during the Christmas party that had been organised by the employer.
[9] During the Christmas party, Mr Shen held what he described as a review meeting with three employees that comprised an entertainment committee. These three employees were Ms Yu (Penny) Tao, Ms Yuran (Maggie) Yan and Ms Yadi (Lydia) Li. Mr Shen asked these employees if all the employees were enjoying the Christmas party. Ms Tao told Mr Shen that some employees had made criticisms of the Christmas party, and when Mr Shen inquired further Ms Tao said that the applicant had suggested that the party had been organised at a house with a swimming pool to allow Ms Maggie Yan an opportunity to strip for him to make him happy. Further, Ms Tao said that the applicant had said that Ms Maggie Yan was having an affair with Mr Shen, and that the applicant had also said that another employee had been brainwashed by Mr Shen.
[10] In brief, the information provided to Mr Shen by Ms Tao on 5 December 2019 during the Christmas party involved the assertion that the applicant was spreading rumours (the rumours) that Mr Shen was having an affair with one of his employees, Ms Maggie Yan, and that he had brainwashed another employee, referred to as Lan. Mr Shen decided to investigate the issue of the applicant spreading the rumours.
[11] On Monday, 9 December, Mr Shen discussed the rumours with various employees who were in attendance at the employers' office premises. Mr Shen asked inter alia, the employer's Tax Director, and the applicant's supervisor, Ms Leanne Peng whether she had heard the rumours which had purportedly been spread by the applicant. Ms Peng told Mr Shen that she had not heard the rumours, but she did mention that the applicant had expressed some concerns that Ms Maggie Yan appeared to dislike her.
[12] In the early afternoon, Mr Shen called the applicant into a meeting with himself and Ms Peng, and he challenged the applicant about her spreading the rumours. The applicant denied that she had spread the rumours, but Mr Shen responded that he had witnesses that had confirmed that the applicant had spread the rumours. The applicant became agitated and upset and she asked Mr Shen to name the persons who had said that she had spread the rumours. Mr Shen told the applicant that he could not name the individuals who had told him that the applicant had spread the rumours.
[13] The applicant and Ms Peng were both upset, the applicant demanded to know the names of those who had accused her of spreading the rumours. Ms Peng was sufficiently disturbed that she felt it necessary to leave the meeting. The applicant then requested that all of the staff be summonsed into a meeting so that she could confront her accusers and ask them to reveal their identity. Mr Shen acceded to this request, and he summonsed all of the staff, some 15 or more people, into the meeting room.
[14] Once all of the staff had come into the meeting room, Mr Shen then told those assembled that he had heard about the rumours. Mr Shen repeated the rumours and he stated that he had been told that the rumours had been spread by the applicant. Mr Shen then indicated that the applicant had denied spreading the rumours, and he asked for those that had heard the rumours being spread by the applicant (Jenny) to raise their hands. No one raised their hands.
[15] Ms Peng returned to the meeting and as no one had raised their hands, she suggested that a secret vote would be taken, and she distributed pieces of paper to all the staff upon which each would write yes or no to two questions as to whether they had heard the rumours from the applicant. Ms Peng subsequently collected the voting papers and announced the outcome of the secret ballot. The result of the ballot was that two people had written yes to both questions, one person had written yes and no, and all others had written no to both questions.
[16] After Ms Peng had announced the result of the secret ballot, the assembled employees disbursed, and she also left the meeting room and went elsewhere to destroy the ballot papers. The applicant and Mr Shen remained in the meeting room. At this point, there was a considerable divergence in the evidence about what exchanges occurred between Mr Shen and the applicant.
[17] In summary, according to Mr Shen, when he questioned the applicant about why she had fabricated the rumours, the applicant responded by telling him that she wished to resign. Mr Shen said that he tried to dissuade the applicant from resigning but that she was insistent. Mr Shen said that he then asked the applicant if she would like to have Ms Maggie Yan prepare a written resignation letter for her, and the applicant agreed to this suggestion. Mr Shen then instructed Ms Maggie Yan to prepare two copies of the applicant's resignation letter which were subsequently amended in hand by the applicant and then signed by her.
[18] The applicant provided an alternative account of what occurred when Mr Shen and she were together in the meeting room following the secret ballot. In summary, the applicant said that once Ms Peng had left, Mr Shen produced two copies of the typed resignation letter that had earlier been placed under a telephone but had been unnoticed until presented to her by Mr Shen.
[19] According to the applicant, Mr Shen demanded that the applicant sign the resignation letters. The applicant was upset and crying and although she continued to deny that she had spread the rumours, she signed the resignation letters after Mr Shen agreed that the notice period could be amended, in hand, from two weeks to three weeks. After the applicant had signed the resignation letters, she gathered her personal belongings and left the employer's office.
[20] On 29 December 2019, the applicant filed the unfair dismissal claim, and on the following day, 30 December, she sent an email to the employer which raised concern that the employer had not made payment of wages and other entitlements due on termination. The payment of the applicant's entitlements including unpaid superannuation, has been a matter that the applicant's solicitors have been required to pursue and which had not been finalised at the time of the Hearing of the applicant's unfair dismissal claim.
[21] Following the termination of the applicant's employment, she has unsuccessfully sought alternative employment. The employer has contested the unfair dismissal claim on the basis that the applicant was not dismissed from her employment, or in the alternative, any dismissal of the applicant was not unfair.
[22] The solicitors acting for the applicant filed a written outline of submissions document dated 16 March 2020, together with a further outline of submissions in reply document dated 1 May 2020. During the Hearing on 2 July 2020, Mr Stevens referred to the documentary submissions that had been filed by the applicant and he supplemented that material with further oral submissions.
[23] The submissions made by Mr Stevens recounted particular aspects of the events of 9 December 2019 which culminated with the applicant signing the letters of resignation. Mr Stevens stressed that the applicant had been summonsed into a meeting and not afforded any opportunity for a witness or support person to be present, then Mr Shen confronted the applicant with allegations of her involvement in spreading the rumours.
[24] Mr Stevens said that the applicant was then subjected to the embarrassing and unfair secret ballot vote, after which Mr Shen produced the pre-prepared resignation letters and forced the applicant to sign those documents. Mr Stevens said that these circumstances involved conduct on the part of Mr Shen that clearly amounted to a constructive dismissal within the meaning of subsection 386 (1) (b) of the Act.
[25] Mr Stevens made further submissions regarding the conflicting evidence about the exchanges that occurred between the applicant and Mr Shen following the outcome of the secret ballot and immediately prior to the applicant signing the resignation letters. Mr Stevens submitted that the applicant's version of these important events should be preferred, and that the credibility of the applicant should prevail over that of Mr Shen. In this regard, Mr Stevens said that the applicant had provided open and believable evidence involving concessions where necessary whilst Mr Shen's evidence was said to have been inconsistent and unreliable.
[26] Mr Stevens made submissions which challenged the credibility of Mr Shen and in particular he referred to the failure of the employer to provide soft copies of the resignation letter in answer to a Notice to Produce. Mr Stevens submitted that the absence of evidence from the employer in answer to the Notice to Produce and which would have established the time that the letter of resignation was created on 9 December 2019, provided for an inference that this evidence had either been destroyed, or that it was subsequently manipulated in order to avoid any confirmation that the letter of resignation had been prepared earlier in the day and before the applicant was summonsed into the initial meeting with Mr Shen and Ms Peng.
[27] Mr Stevens made further submissions which challenged the credibility of Mr Shen. Mr Stevens said that Mr Shen ruled his accountancy firm in a manner that was quite authoritarian, and that many of his employees were scared of him. Further, Mr Stevens said that Mr Shen had constructed the circumstances of the post-it note vote which amounted to the applicant being put on trial by her peers in a very unfair manner. According to the submissions made by Mr Stevens, these were circumstances which were clearly unfair and amounted to a constructive dismissal within the meaning of subsection 386 (1) (b) of the Act.
[28] The submissions made by Mr Stevens acknowledged that the onus rested with the applicant to prove that her resignation was not voluntary and that it formed a constructive dismissal. Mr Stevens submitted that even if the employer's version of events as deposed by Mr Shen was to be believed, the circumstances still amounted to a constructive dismissal because the applicant was put in a position where she had no other reasonable alternative but to resign. Mr Stevens submitted that the circumstances that had been created for the applicant had been so distressing, humiliating and intimidating that it left her with no other option but to resign.
[29] Mr Stevens further submitted that the employer's alternative attempted reliance upon issues surrounding the applicant allegedly writing off too much of the work that had been charged clients, was a post-ex facto attempt to drum up some basis to establish valid reason for the dismissal of the applicant. In any event, according to the submissions made by Mr Stevens, the applicant's version of relevant events should be preferred wherever it differed from that provided by evidence from the employer witnesses.
[30] Ms Stevens submitted that the resignation of the applicant had been forced by the conduct of the employer and therefore there was a dismissal of the applicant. Mr Stevens then made submissions which referred to the provisions of section 387 of the Act which he said in this instance clearly established that the dismissal of the applicant was harsh, unjust and unreasonable.
[31] Mr Stevens said that there was not a valid reason for the dismissal of the applicant. Mr Stevens submitted that the rumours could not represent a valid reason for dismissal because Mr Shen provided evidence that he was not particularly troubled or bothered by the rumours. Further, the suggestion that the applicant wrote off too much work that had been billed to clients could not represent a valid reason for dismissal because according to the evidence provided by Mr Shen, he had attempted to dissuade the applicant from resigning.
[32] In further submissions, Mr Stevens referred to other factors contained in section 387 of the Act. Mr Stevens said that the resignation letter of the applicant could not represent notification of the dismissal. Further, Mr Stevens submitted that the applicant had little or no opportunity to respond to the allegations about the rumours, and she was never afforded an opportunity for a witness or support person to be present when she was confronted by Mr Shen about the rumours. In addition, Mr Stevens noted that the dismissal was not connected with any unsatisfactory performance, and he also acknowledged that the employer did not have any dedicated human resource expertise.
[33] Mr Stevens further submitted that there was evidence that the applicant's mental health and wellbeing had suffered as a result of the distress and humiliation associated with the events of 9 December 2019. Mr Stevens noted that the applicant's ability to obtain alternative employment and mitigate her loss had been impacted by the consequences that the applicant had suffered, and which were directly associated with the events of 9 December 2019.
[34] The submissions made by Mr Stevens also dealt with the issue of any remedy for the applicant's unfair dismissal. Mr Stevens submitted that reinstatement was not appropriate nor was it sought by the applicant. Mr Stevens submitted that the Commission should provide for remedy of compensation in lieu of reinstatement and that in all the circumstances the maximum amount payable under the Act should be provided as remedy for the applicant's unfair dismissal.
[35] In summary, Mr Stevens submitted that the applicant had been forced to resign because of the conduct of the employer, and such forced resignation represented her constructive dismissal. Mr Stevens submitted that the Commission should find that the applicant had been dismissed and the dismissal was harsh, unjust and unreasonable.
[36] Further, Mr Stevens submitted that the appropriate remedy for the unfair dismissal of the applicant was that she be provided with the maximum amount of compensation plus superannuation.
[37] The employer was represented by Mr Wang from Juris Cor Legal. Mr Wang made oral submissions on behalf of the employer. In addition to the oral submissions made by Mr Wang, the employer had provided an outline of submissions document that was filed and served on 17 April 2020.
[38] The submissions made by Mr Wang raised the jurisdictional objection which asserted that the applicant had not been dismissed. The submissions made by Mr Wang referred to various decided cases which dealt with circumstances of constructive dismissal, and in particular, where findings were made that the resignation of the relevant individual was not forced because of the conduct of an employer. Mr Wang submitted that the applicant had resigned and was not dismissed.
[39] The submissions made by Mr Wang asserted that the applicant had resigned voluntarily. Further, Mr Wang submitted that the applicant had not satisfied the onus to establish that her resignation was forced because of the conduct of the employer. Mr Wang made submissions which stressed that the meeting of all of the staff at which the alleged unfair vote was conducted, was held at the request of the applicant. Mr Wang emphasised that it was the applicant who had asked Mr Shen to hold a meeting of all staff so that the allegations regarding the rumours could be challenged by the applicant.
[40] Further, Mr Wang submitted that the resignation letter of the applicant was not prepared before the meetings commenced on 9 December 2019, and it was only prepared at the request of the applicant. Mr Wang submitted that the meeting held on 9 December 2019, was merely the beginning of an investigation process that the employer was conducting, and it did not involve any intention, let alone conduct, to terminate the applicant's employment. Mr Wang submitted that there was no compulsion on the applicant to resign.
[41] The further submissions made by Mr Wang referred to decided cases where it had been found that the resignation from employment of dissatisfied employees could not be established to represent a constructive dismissal. According to the submissions made by Mr Wang, in this case it was perhaps the frustration of the applicant which caused her to choose to resign and that did not necessarily provide basis to establish that a constructive dismissal took place.
[42] Mr Wang said that from the beginning to the end the employer never had any intention to terminate the applicant's employment. Mr Wang said that Mr Shen attempted to suggest to the applicant that she should reconsider her decision to resign, and that he did not consider the rumours, even if they had been spread by the applicant, to represent conduct that would give rise to the termination of her employment.
[43] The submissions made by Mr Wang also asserted that even if the applicant's evidence was accepted in relation to the preparation of the resignation letter, such circumstances did not provide sufficient basis to establish a constructive dismissal. In any event, according to the submissions made by Mr Wang, the employer's version of the relevant events should be preferred, and this was supported by the evidence of Ms Maggie Yan whereby she confirmed that the resignation letter was prepared following the discussions between Mr Shen and the applicant.
[44] Mr Wang also made alternative submissions which assumed that a finding was made that the applicant had been constructively dismissed. In this regard, Mr Wang submitted that the dismissal of the applicant was reasonable. Mr Wang made submissions which referred to the issue of the write-offs that the applicant was responsible for, and the amount of these write-offs which the employer was not aware of at the time of the termination of the applicant's employment, and which could subsequently be relied upon by the employer to represent valid reason for dismissal.
[45] In addition, Mr Wang submitted that there was also valid reason for the dismissal of the applicant because she had made inappropriate sexual comments regarding her colleagues which might constitute sexual harassment in the workplace. Consequently, according to the submissions made by Mr Wang, there was valid reason for the dismissal of the applicant because of her conduct associated with spreading the rumours and because of the significant write-off authorisations that she had made, some of which were subsequently discovered by the employer.
[46] Mr Wang further submitted that by way of the face-to-face meeting with Mr Shen the applicant was notified of the reasons for the employer's concerns and was provided with an opportunity to provide an explanation. In addition, Mr Wang submitted that the applicant had never requested the involvement of a support person and therefore there was no unreasonable refusal by the employer to allow a support person because one had not been requested by the applicant.
[47] The submissions made by Mr Wang also mentioned that the employer was not a large business and it did not have dedicated human resource management specialists or expertise. Consequently, according to the submissions made by Mr Wang, any deficiencies in respect of procedure, consultation, or notification of dismissal were due to the size of the business and the lack of human resource expertise. It was further submitted by Mr Wang that even assuming that the applicant was forced to resign, which was denied by the employer, the applicant was not dismissed unfairly.
[48] In respect of the question of any remedy, Mr Wang submitted that the employer was struggling financially because of COVID-19 and it had sought and obtained the Job Keeper assistance. Further, Mr Wang submitted that the applicant's actions amounted to serious misconduct and this should preclude any award of compensation. In addition, Mr Wang submitted that the applicant had not properly mitigated her loss because she had sought alternative employment in other than Chinese small tier accounting firms, and this had reduced her ability to obtain other employment.
[49] In summary, the submissions made on behalf of the employer asserted that the Commission should find that there was no basis to establish the constructive dismissal of the applicant. The employer primarily asserted that the applicant provided her resignation voluntarily. However, in the alternative, the employer submitted that any dismissal of the applicant was not unfair. As part of these alternative submissions, the employer further submitted that the misconduct of the applicant and her failure to mitigate any loss, should deprive her of any financial remedy.
[50] Section 385 of the Act stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. Section 385 is in the following terms:
A person has been unfairly dismissed if the FWC is satisfied that:
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy."
[51] In this instance there was no suggestion that the respondent employer was a small business or that the termination of the applicant's employment involved a case of genuine redundancy. However, the employer raised a jurisdictional objection in respect to that element contained in subsection 385 (a) of the Act, specifically whether the applicant was a person who had been dismissed.
[52] The determination of the question of whether or not a person has been dismissed from employment involves mixed findings of fact and law. Further, s. 386 of the Act prescribes a meaning of "dismissed". Relevantly, subsection 386 (1) of the Act is in the following terms:
(a) the person's employment with his or her employer has been terminated on the employer's initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer."
[53] In this case the applicant signed duplicate resignation letters which had been prepared by the employer. There was a factual contest about whether the resignation letters had been prepared by the employer at the request of the applicant, or alternatively, the resignation letters were said to have been constructed prior to the meeting that the employer had called the applicant to attend.
[54] Irrespective of the resolution of the relevant factual contest about when and upon whose initiative the resignation letters were constructed, the circumstances surrounding the meetings that were conducted by the employer led directly to the applicant signing the resignation letters and unquestionably caused the applicant to resign. There was no evidence to substantiate that the applicant was contemplating or disposed to resignation prior to the events that involved the meetings that the employer conducted on 9 December 2019. The resignation of the applicant was clearly a response to the conduct of the employer. These circumstances are contemplated by the provisions of subsection 386 (1) (b) of the Act which establishes that if an employee is forced to resign because of conduct engaged in by the employer then the resignation is held to be a dismissal.
[55] In order to determine whether the resignation of the applicant was forced because of conduct engaged in by the employer, the factual matrix that provides the context in which the resignation was given must be carefully analysed so as to determine whether the applicant had no other realistic option than to resign. The term constructive dismissal is used to describe inter alia, circumstances where an employee resigns but that resignation was the intended, desired or likely result of the conduct of the employer, and the employee had no other realistic option but to provide the resignation.
[56] The most common circumstance of a forced resignation involves an employer presenting the employee with an ultimatum of "resign or you will be dismissed". However, there are many other situations that involve more subtle actions taken by an employer which can provide an employee with no other realistic option but to resign, and such resignation would be comprehended by subsection 386 (1) (b) of the Act, and described as a constructive dismissal.
"However industrial tribunals and courts have long accepted that an employee who resigns from his or her employment can and should be treated as having been dismissed by the employer if the dismissal is one where the employee did not resign willingly and, in effect, was forced to do so by the conduct of the employer."[3]
"Although the term "constructive dismissal" is quite commonly used it can deflect attention from the real inquiry. That inquiry should involve an analysis of what occurred. Did the employer behave in such a way so as to render the employer's conduct the real and effective initiator of the termination of the contract of employment and was this so despite on the face of it the employee appears to have given his or her resignation?"
"In order to undertake the necessary analysis it is necessary to look carefully at all the relevant facts. It is necessary to determine whether the actual determination was effectively initiated by the employer or by the employee particularly where the dynamics within a factual situation may change."
[60] Consequently, the workplace environment that was created and/or facilitated by the employer appeared to provide significant potential for innuendo driven banter and rumour mongering amongst what appeared to be a group that was generally comprised of young, impressionable and predominantly female employees, who would understandably be seeking to impress their male employer, Mr Shen. In these circumstances Mr Shen was informed that the applicant had been spreading the rumours that included that he was having an affair with Ms Maggie Yan.
[61] Having been informed of the rumours, it would be understandable that Mr Shen would take some action in response to quash or minimise any potential for discredit of himself and to avoid potential friction or at least disharmony in the workplace. Regrettably, the approach that Mr Shen adopted in reaction to hearing of the rumours failed to include any contemplation that those who had informed him that the applicant was responsible for creating and spreading the rumours may have falsely implicated the applicant as a means to deflect attention from themselves.
[63] Unfortunately, what next occurred involved the rather bizarre spectacle of Mr Shen calling for a show of hands from the assembled group of all employees to identify those who had heard the rumours, and as a result of no hands being raised, the secret ballot process was then embarked upon. The level of apparent anonymity associated with the paper voting process purportedly produced three affirmative results.
[64] Mr Shen immediately translated the results of the paper voting process as confirmation that the applicant had both created and spread the rumours. It did not occur to him that others who may have been involved in creating and/or spreading the rumours had successfully transferred all culpability to the applicant, who may have been either entirely or in large part innocent of either creating or conveying the rumours. Consequently, even if the applicant had to some extent, been involved in the creation and/or dissemination of the rumours, the process that Mr Shen adopted meant that the applicant had been singled out, and all responsibility for the rumours was foisted upon the applicant.
[66] The position that the applicant found herself in on the afternoon of 9 December 2019, was understandably very upsetting. Mr Shen had determined that the applicant was responsible for the creation of the rumours, and he had reached this conclusion following the humiliating secret vote taken during a meeting of all assembled staff. Further, the process that Mr Shen had adopted resulted in the applicant being singled out as being the creator of the rumours when on any realistic contemplation, it was clear that others must have had some level of responsibility for the creation and/or dissemination of the rumours. In these circumstances it was clearly the conduct of the employer that was the catalyst for the resignation of the applicant.
[67] According to the evidence provided by Mr Shen, he attempted to dissuade the applicant from resigning, and it was because of the applicant's insistence that he then instructed Ms Maggie Yan to prepare the resignation letters. The applicant was adamant that the resignation letters had been prepared before the commencement of the meetings and revealed to the applicant when she and Mr Shen were together after all the other staff had left the meeting.
[68] The resolution of this factual contest is not vital to the determination of the question of whether the applicant was forced to resign. Even on the version of the events as provided by the evidence of Mr Shen, the resignation of the applicant was the understandable and likely result of circumstances where the conduct of the employer had humiliated and singled out the applicant for all blame in respect of the rumours. However, unfortunately for Mr Shen, there was compelling evidence to support the applicant's version of the contested evidence about the preparation of the resignation letters prior to the commencement of the initial meeting with the applicant, Mr Shen and Ms Leanne Peng.
[69] Ms Peng was the applicant's immediate supervisor and she was employed in the position of Tax Director. Somewhat unusually, in this matter Ms Peng made witness statements for both the applicant and the employer. Ms Peng made a witness statement on 10 March 2020, (the first witness statement) which set out her recollection of particular events that occurred on 9 December 2019. The first witness statement was presented as part of the evidentiary case for the applicant. Ms Peng made a further witness statement on 1 April 2020, (the second witness statement) which in part, sought to elaborate and clarify aspects of the first witness statement. The second witness statement was presented as part of the evidentiary case for the employer.
[70] At the commencement of the Hearing on 1 July 2020, the Parties confirmed that Ms Peng would be providing evidence in respect of both the first and second witness statements. The Parties agreed upon certain anticipated arrangements for dealing with Ms Peng as a witness who was providing evidence for both sides. The arrangements would essentially involve Ms Peng providing evidence in chief in respect of the first witness statement, allowing for cross and re-examination of that material, and then the second witness statement would be introduced by the employer as further evidence in chief of Ms Peng upon which cross and re-examination would occur.
[71] On the second day of Hearing, 2 July 2020, the Commission was advised that Ms Peng would not be giving evidence as a witness. The Parties agreed that the first and second witness statements would be admitted as evidence notwithstanding that in the absence of Ms Peng as a witness, that evidentiary material could not be tested. Consequently, the first witness statement became Exhibit 18, and the second witness statement became Exhibit 19.
[72] It is relevant to note that the first witness statement, Exhibit 18, contains 8 numbered paragraphs, and paragraphs 2 through to 8 provide Ms Peng's recollection of the events of 9 December 2019 (notwithstanding that the date is incorrectly stated as 10 December). The recollection of the events as set out in paragraphs 2 to 8, was provided in chronological order.
[73] Paragraph 2 records a discussion that Ms Peng had with Mr Shen at around 1 pm. Paragraph 3 states; "I saw Ms Maggie Yan printed out a resignation letter." Paragraph 4 recollects the first meeting that was held at around 1:40 pm and which involved the applicant, Mr Shen and Ms Peng. Paragraph 5 refers to Mr Shen calling the subsequent meeting of all staff. Paragraphs 6 and 7 deal with Ms Peng's subsequent involvement in conducting the secret paper ballot, and paragraph 8 indicates that Ms Peng was not present when the applicant signed the resignation letters.
[74] All of these events are set out in chronological order. Importantly, paragraph 3 occurs after the discussion that Ms Peng had with Mr Shen, and before the commencement of the first meeting with the applicant circa 1:40 pm. Consequently, the chronology provided by Exhibit 18 establishes that the resignation letter was printed by Ms Maggie Yan before the commencement of the first meeting with the applicant.
[75] The second witness statement, Exhibit 19, endeavours to introduce a level of contradiction to the chronology that is evident from the first witness statement, Exhibit 18. In paragraph 6 of the second witness statement, Ms Peng refers to paragraph 3 of the first witness statement, and she provides the following additional sentence; "At the time, I was returning from the bathroom and Maggie, Fernando and Yuquan Huang ("Annie") were at the front desk and I also saw the applicant sitting in the boardroom by herself."
[76] Unfortunately, in the absence of Ms Peng giving evidence as a witness, there was no opportunity to test whether or not the time at which she said she saw the applicant sitting in the boardroom by herself as referred to in paragraph 6 of Exhibit 19, was before the first meeting with the applicant, or at a time after the meeting at which all staff had been required to vote in the secret paper ballot.
[77] Although the second witness statement did introduce a level of apparent contradiction to the chronology that was provided in the first witness statement, it did not disturb vital evidence regarding the discussion that Ms Peng had with Mr Shen before the first meeting with the applicant on 9 December 2019. In the first witness statement, Ms Peng recounts the following exchange that she had with Mr Shen before the first meeting with the applicant:
"Mr Shen: 'All of these things were told to other staff, and in this situation, as Jenny is our senior/manager in the firm, she is a bad influence on others, and should let her go'.
Me: 'I don't know any of these, I will be sad to see her go, but will be respecting what you are going to do, as the firm is yours'"
[78] This evidence confirms that before the first meeting with the applicant on 9 December 2019, Ms Peng clearly knew what Mr Shen was "going to do". Mr Shen was going to "let the applicant go" as he described it, and although this saddened Ms Peng, she was prepared to assist in whatever process Mr Shen adopted to provide for the termination of the applicant's employment. It was understandable that Ms Peng did not want to give evidence as a witness in these proceedings because her first witness statement accurately recorded the chronology of relevant events which involved Mr Shen instructing Ms Maggie Yan to produce the applicant's resignation letters prior to the commencement of the first meeting.
[79] Unfortunately, after careful consideration, the conduct of the employer which involved Mr Shen unjustly concluding that the applicant was responsible for creating and disseminating the rumours, and then engaging in a process which involved the humiliating vote of all staff, was, on any objective and reasonable assessment, and having regard for the entire factual matrix, conduct that was intended to produce, or was likely to result in, the resignation of the applicant. Mr Shen was confident that his conduct would result in the resignation of the applicant, and he arranged for the preparation of her resignation letters before he confronted the applicant with the allegations of her involvement in the rumours. Faced with this conduct on the part of Mr Shen, the applicant had no realistic, alternative option but to resign.
[80] In this instance, a careful analysis of the factual matrix of the circumstances that gave rise to the resignation of the applicant has established that the conduct of the employer was intended to produce, or likely to result in, the resignation of the applicant. Consequently, the applicant was forced to resign from her employment because of the conduct engaged in by the employer. Therefore, the applicant was dismissed in satisfaction of the terms of subsection 386 (1) (b) of the Act.
[81] As the applicant was a person who had been dismissed, consideration must logically proceed to that element contained in subsection 385 (b) of the Act, specifically whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:
(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.
387 (a) - Valid reason for the dismissal related to capacity or conduct
[82] The dismissal of the applicant was directly connected with the conclusion reached by Mr Shen that the applicant was responsible for the creation and dissemination of the rumours. Mr Shen disingenuously asserted that the rumours were not of such significance as to warrant the resignation of the applicant. However, the approach that he adopted in response to hearing of the rumours at the Christmas party clearly reflected a desire to confirm what he had been told, and to hold someone, the applicant, responsible for the creation and dissemination of the rumours.
[83] Had there been a proper, careful, fair and just investigation into the rumours which ultimately confirmed that the applicant had maliciously and falsely created and disseminated false rumours about Mr Shen, such conduct may have represented a sound, defensible and well-founded reason to dismiss the applicant. Unfortunately, Mr Shen adopted a hasty and ill-considered conclusion which failed to contemplate that others that may have been more actively involved in the creation and dissemination of the rumours had managed to deflect all attention upon the applicant.
[84] The employer also sought to rely upon the applicant allegedly writing-off significantly more client fees than were authorised or disclosed. This alleged conduct of the applicant represented an additional basis that the employer asserted established valid reason for dismissal. In the absence of any clear warning to the applicant about the allegedly excessive level of her write-offs, such conduct on the part of the applicant, if it had been properly established, could not represent a valid reason for dismissal.
[85] Therefore, the dismissal of the applicant was not for valid reason related to the applicant's capacity or conduct. Consideration of the other elements contained in s. 387 of the Act must also be undertaken.
[86] The applicant signed two copies of resignation letters that had been prepared by the employer. The resignation letters were signed in circumstances where the conduct of the employer meant that the applicant had no realistic, alternative option but to resign. In such circumstances the conduct of the employer essentially avoided any notification of the reason for dismissal.
387 (c) - Opportunity to respond to any reason related to capacity or conduct
[87] The applicant was dismissed because she was held to be responsible for the creation and dissemination of the rumours. The applicant was not provided with any proper opportunity to respond to the allegations that were raised against her.
[88] Mr Shen called the applicant into a meeting and bluntly confronted her with the allegations. This approach led to the predictable outcome involving the emotionally charged responses of the applicant. Mr Shen had determined that the applicant was responsible for the creation and the dissemination of the rumours before he bluntly confronted her with those allegations, and by adopting such a confrontational approach, the applicant's emotional reaction would predictably lead to her resignation. Mr Shen was prepared for that outcome and he had the resignation letters ready.
387 (d) - Unreasonable refusal to allow a support person to assist
[89] The employer's approach to the meeting with the applicant on 9 December 2019 was very regrettable. The applicant was not given any opportunity to have a support person present during the meeting at which the applicant was to be confronted with allegations that she had created and disseminated the rumours. The approach adopted by Mr Shen was intended to produce, or likely to result in, the resignation of the applicant, and on any estimation, the applicant was likely to be very upset and emotional, yet in these circumstances, the employer made no arrangements for the applicant to have a support person present.
387 (e) - Warning about unsatisfactory performance
[90] This factor has no relevance to the particular circumstances that led to the dismissal of the applicant.
387 (f) - Size of enterprise likely to impact on procedures
[91] The employer is a medium size business and it should have adopted far more acceptable and compassionate procedures for dealing with its employees.
387 (g) - Absence of management specialists or expertise likely to impact on procedures
[92] The employer did not have any person engaged in a dedicated employee relations role. Notwithstanding the absence of any employee relations expertise, the procedures that were adopted by the employer were highly inappropriate and very regrettable.
[93] The submissions made on behalf of the applicant introduced the impact that the circumstances surrounding the applicant's dismissal had on the mental health and well-being of the applicant, as a relevant factor for consideration. In addition, evidence of other conduct of the employer, including the failure to make payments in respect to superannuation entitlements, are matters that may be considered to have exacerbated any harshness associated with the termination of the applicant's employment.
[94] The failure of the employer to pay all termination entitlements at the time of termination or within a reasonable period following termination, represented an additional factor that rendered the dismissal of the applicant to be unreasonable.
[95] In this instance, the employer has asserted that it did not dismiss the applicant from employment. Consequently, the Commission has been required to firstly determine the jurisdictional objection raised by the employer.
[96] The Commission has undertaken a careful analysis of all of the evidence regarding the circumstances which led to the applicant signing duplicate resignation letters that had been prepared by the employer. This analysis has led to the conclusion that the applicant was forced to resign because of the conduct of the employer, which was intended to produce, or was likely to result in, the resignation of the applicant. The actions of the employer established the constructive dismissal of the applicant.
[97] Upon further analysis, there was no valid reason for the dismissal of the applicant. Consequently, the applicant was dismissed without valid reason related to her capacity or conduct.
[98] The conduct that the employer adopted when it confronted the applicant with allegations that she had created and disseminated the rumours was severely flawed. The confrontational approach adopted by the employer was designed to create an emotionally charged incident and it deprived the applicant of any natural justice.
[99] The dismissal of the applicant was harsh, unjust and unreasonable. Consequently, the application for unfair dismissal remedy has met the relevant legislative requirements and it is granted.
[100] The applicant has not sought reinstatement as remedy for her unfair dismissal. In the circumstances it is understandable that the applicant would not want to return to the employer's workplace.
[101] The question of remedy in respect of an unfair dismissal is the subject of Division 4 of Part 3-2 (ss. 390 - 393) of the Act. Section 390 of the Act is relevant to the consideration in this instance and is in the following terms:
"390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person's reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(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."
[102] In the circumstances, I am satisfied that reinstatement of the applicant would be inappropriate, and that payment of compensation would represent an appropriate remedy for the applicant's unfair dismissal. I now turn to the factors which involve the quantification of any amount of compensation.
[104] Firstly, I confirm that an Order for payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.
[105] Secondly, in determining the amount of compensation that I Order, I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392(2) of the Act.
[106] There was no evidence provided which established that an Order of compensation may impact on the viability of the employer's enterprise.
[107] The applicant had been employed for a period of about two years and eleven months. The applicant would have been likely to have received remuneration of approximately $1,780.00 per week if she had not been dismissed.
[108] There was no evidence to provide any basis to conclude that the employment of the applicant may not have continued for a significant period of time. Theoretically, the applicant would have been likely to have continued in employment for a period roughly equivalent to the length of service that she had achieved at the time of her dismissal, circa three years.
[109] For the purposes of calculation of remuneration that the applicant would have received or would have been likely to receive if she had not been dismissed, I have notionally considered that the employment of the applicant would have continued for at least a further 26 weeks. Therefore, the total remuneration that would have been received in the notional period of 26 weeks following dismissal amounted to a figure of $46,280.00.
[110] The total amount of remuneration received in alternative employment, and that which may be reasonably likely to be earned between dismissal and the making of the Order for compensation, has been calculated to be $0.00. The applicant has provided evidence of her attempts to secure alternative employment and mitigate her loss. I have accepted that any restriction that the applicant placed upon the nature of alternative employment arose from mental health impacts caused by the conduct of the employer in respect to the termination of her employment. Therefore, any restrictions in respect of the pursuit of alternative employment arose from the conduct of the employer, and any potential for lack of mitigation should not adversely impact the quantum of compensation available to the applicant.
[111] Thirdly, in this instance there was no established misconduct of the applicant, and consequently I have decided to make no reduction to the amount of compensation to be provided to the applicant on account of any established misconduct.
[112] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.
[113] Fifthly, the amount Ordered does not exceed the compensation cap as prescribed by s. 392(5) of the Act.
[114] Consequently, for the reasons outlined above, taking into account all of the circumstances of the case, and having cognisance so as not to apply the approach taken in the Decision in Sprigg in a rigid, determinative manner, as was cautioned in the Decision in Pericich, I have decided that the amount of compensation to be provided to the applicant should be calculated by subtracting 3 weeks remuneration in respect of notice paid, from $46,280.00 ($46,280.00 minus $5,340.00); the resultant figure being: $40,940.00 gross.
[115] Accordingly, separate Orders [PR722316] providing for unfair dismissal remedy in these terms will be issued.
Mr N Stevens, Solicitor from Stevens & Associates Lawyers appeared for the applicant.
Mr M Wang, Special Counsel from Juris Cor Legal appeared for the employer.
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Jenny Yang
FCS Business Service Pty Ltd [2020] FWC 4560