s.394 - Unfair dismissal

Application for relief from unfair dismissal - small business employer - compliance with Small Business Fair Dismissal Code - application dismissed

• [1] Ms Thong was employed as a barista by Ran Aromas Pty Ltd until her dismissal on 2 December 2024. Ms Thong alleges that her dismissal was harsh, unjust and unreasonable. Ran Aromas denies those allegations and raised jurisdictional objections that Ms Thong did not meet the minimum employment period and Ran Aromas is a small business employer and it complied with the Small Business Fair Dismissal Code.

• [2] I heard this matter on 8 April 2025. Ms Thong gave evidence in support of her case. Ran Aromas adduced evidence from Mr Alan Redford, director of Ran Aromas, Ms Elgem Rose Redford, co-owner of Ran Aromas and wife of Mr Redford, and Mr Oliver William Jones, employee of Ran Aromas.

• [3] I am required by s 396 of the Fair Work Act 2009 (Cth) to decide four matters before I consider the merits of Ms Thong's application. I am satisfied on the evidence that:

(a) Ms Thong's application was made within the period required by s 394(2) of the Act;

(b) Ms Thong was a person protected from unfair dismissal. The only issue in contest in relation to Ms Thong's status as a person protected from unfair dismissal was whether she had satisfied the minimum employment period at the time she was dismissed on 2 December 2024. Although Ms Thong did not commence employment with Ran Aromas until 2 October 2024, she was employed for about 12 years in the business before it was bought by Ran Aromas. Ms Thong continued working in the business after the change in ownership in early October 2024. I am satisfied that Ms Thong was a transferring employee, within the meaning of the Act, in relation to a transfer of the café business from her old employer to Ran Aromas. The old owner and Ran Aromas were not associated entities at the time of the transfer. Further, I am satisfied on the evidence that Ran Aromas did not inform Ms Thong in writing before her new employment started that her period of service with the old employer would not be recognised by Ran Aromas. The notes made by Mr Redford on the back of the 'Payrite' form completed by Ms Thong at the commencement of her employment with Ran Aromas do not state that Ms Thong's period of service with the previous owner of the café would not be recognised by Ran Aromas. It follows that the exception in s 384(2)(b) of the Act has not been made out, with the result that Ms Thong's service with the previous owner of the café counts as service with Ran Aromas. Accordingly, Ms Thong was employed for longer than the minimum employment period at the time she was dismissed;

(c) Ran Aromas was a "small business employer" as defined in s 23 of the Act at the relevant time. Mr Redford gave uncontested evidence, which I accept, that Ran Aromas had 12 employees, with only about six employees working at any one time. I will consider below whether Ms Thong's dismissal was consistent with the Code; and

(d) Ms Thong's dismissal was not a case of genuine redundancy.

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person's dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person's employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal."

• [5] The Code declared by the Minister pursuant to section 388(1) of the Act is in the following terms:

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. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements."

• [6] In Pinawin v Domingo[1], the Full Bench considered whether, in the context of a summary dismissal under the Code, the Commission had to be satisfied that the serious misconduct which was the basis for the dismissal actually occurred:

"[29] ... There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee's conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. The circumstances include the experience and resources of the small business employer concerned.

[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo's conduct for his future employment. However this is a very unusual case..."

• [7] Another Full Bench of the Commission examined the summary dismissal part of the Code in detail in Ryman v Thrash Pty Ltd[2] and concluded as follows:

"[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the "Summary dismissal" section of the Code operates the following way:

(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the "Summary dismissal" section of the Code. All other types of dismissals by small business employers are to be considered under the "Other dismissal" section of the Code.

(2) In assessing whether the "Summary dismissal" section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee's conduct was sufficiently serious to justify immediate dismissal, and second whether the employer's belief was, objectivity speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element."

• [8] I am satisfied that Ran Aromas complied with the relevant parts of the Code in relation to Ms Thong's dismissal for the following reasons:

(a) On 2 December 2024, Ran Aromas dismissed Ms Thong without notice - that is, with immediate effect - on the ground that Ms Thong had committed serious misconduct.

• (b) Mr Redford genuinely believed that Ms Thong had engaged in conduct sufficiently serious to justify immediate dismissal. In this regard, I accept Mr Redford's evidence that he believed that Ms Thong engaged in serious misconduct because, shortly before she gave two weeks' notice of her resignation on 1 December 2024, (i) she was telling customers of Ran Aromas, "Do not to buy coffee from Aromas; in future, come and see me",[3] (ii) Ms Thong was obtaining phone numbers from customers of Ran Aromas, which Mr Redford believed she would use to try to persuade those customers to follow Ms Thong to the new café in which she was going to work after and resignation from Ran Aromas, and (iii) Ms Thong was bullying other staff of Ran Aromas.

• (c) The conduct in which Mr Redford believed Ms Thong had engaged and on which he acted to dismiss Ms Thong meets the definition of "serious misconduct" within the meaning of reg 1.07. In particular, it is alleged that Ms Thong was obtaining the personal contact details of customers of Ran Aromas and telling customers not to buy coffee from Ran Aromas, and instead to see Ms Thong in the future when she moved to her new employer. This alleged conduct comfortably satisfies the description of wilful or deliberate behaviour that is inconsistent with the continuation of the contract of employment.[4]

(d) Mr Redford's belief that Ms Thong's conduct was sufficiently serious to justify immediate dismissal was, objectivity speaking, based on reasonable grounds. The relevant context includes the fact that Mr Redford met with Ms Thong on 21 November 2024 to discuss a number of areas of concern held by Mr Redford in relation to Ms Thong's attitude, performance at work, and interactions with other employees of the business. Later on 21 November 2024, after her meeting with Mr Redford, Ms Thong applied for a job as a barista in a new Coffee Club café which was opening in the same centre as the location of Ran Aromas' café. Ms Thong attended an interview for the job at the Coffee Club on 24 November 2024. She was offered a job by the Coffee Club on 27 or 28 November 2024 and formally accepted that offer on 2 December 2024. On 1 December 2024, Ms Thong gave Ran Aromas two weeks' notice of her resignation. Mr Redford made the following relevant contemporaneous notes in his notebook in the period from 21 November 2024 to 2 December 2024:

"21 Nov I had meeting with Joy to ask her about what customers were telling me and why she was not happy. At meeting Joy informed me she was not getting enough money, even though I had given her a pay rise after purchase of business. Several subjects were discussed such as her telling customers bad things about the business and its staff, bully fellow employees, not doing rostered hours, such as that day leaving work station without permission, taking customers' phone numbers. I was disturbed by her replies to all things discussed, especially about - pay (extortion), approaching customers and giving damaging information, fellow employees, theft.

Nov 22 the very next day Joy comes in 2 hrs earlier than her roster and says reason because she has a second job to go to in afternoon. During day I observed Joy talking to customers and getting their phone numbers.

Nov 28 I noticed some 3 people, 2 men and a woman, standing for approx. 20 mins looking inside the café observing operation and in particular Joy, and Joy appeared to be attracting their attention. After 20 min one of them, a male, came around to the side entrance door and Joy started to approach the person but when she noticed me sitting near entrance stopped and went back to work station. I then got up and went over to the person but as I got there the male walked away and joined the other 2 out front. The 3 then went away. After they had gone I asked Joy did she know them, to which she nervously replied, no.

Nov 29 Joy canvassing customers phone number and I heard her say that don't get buy coffee from Aromas, in future come and see me?

Dec 1 Joy gave 2 weeks' notice. I informed her 2 weeks is not required. 1 week is sufficient and she can finish in 1 week.

Mon Dec 2 Joy continued to get customers phone numbers and doing more bolder. I spoke to her about it but she did not care so I terminated from the week's notice due to serious misconduct on the basis I was told she was starting employment with a new café called Coffee Club just 40 metres away from Aromas in Erina Fair and canvassing customers for that business."

• (e) Although Mr Redford did not put allegations to Ms Thong before making his decision to terminate her employment, I am satisfied that Mr Redford carried out a reasonable investigation in all the circumstances prior to dismissing Ms Thong. The reasonableness of the investigation is informed, in part, by reason of the small nature of Ran Aromas' business, the fact that Mr Redford and his wife had only acquired the business two months earlier, the fact that Ms Thong was leaving Ran Aromas to work in a competing business in very close proximity to the Ran Aromas café, the fact that Mr Redford relied on his own observations of Ms Thong's conduct and hearing her speak to customers in a damaging way about Ran Aromas' business before deciding to terminate her employment, and the fact that Mr Redford spoke to customers, Ms Redford and other employees of Ran Aromas before concluding that there were sufficient grounds to terminate Ms Thong's employment on the grounds of serious misconduct.[5]

• [9] Having regard to all the circumstances, I am satisfied that Ran Aromas complied with the Code in relation to Ms Thong's dismissal. It follows that Ms Thong's unfair dismissal application cannot succeed and must be dismissed.[6]

• [10] I note that I have not made any factual findings about whether Ms Thong was obtaining the telephone numbers and contact details of customers of Ran Aromas (which she admits) for the purpose of soliciting business for the Coffee Club, as contended by Mr Redford, or for the purpose of maintaining contact with long term customers who had become part of Ms Thong's friend network, as contended by Ms Thong. Nor have I made any factual finding about whether Ms Thong said to customers of Ran Aromas, "Do not to buy coffee from Aromas; in future, come and see me". I have not been required to make factual findings about these contested matters because the Code only requires proof, in the case of a summary dismissal, about whether the employer genuinely held a belief that the employee's conduct was sufficiently serious to justify immediate dismissal, and whether the employer's belief was based on reasonable grounds.

• [11] For the reasons given, Ms Thong's unfair dismissal application is dismissed.

Mr Redford, director, appeared for the respondent.

[1] [2012] FWAFB 1359

[2] [2015] FWCFB 5264

[3] Exhibit F to Mr Redford's witness statement

[5] Witness statement by Mr Redford (Ex R1) at [23]

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