Fair Work Commission|2025-10-31

John Cincotta v Pepperleaf.Com.Au Pty Ltd [2025] FWC 3272 (31 October 2025)

s.394 - Unfair dismissal

Application for relief from unfair dismissal - whether dismissal was harsh, unjust or unreasonable - dismissal was harsh, unjust or unreasonable - compensation ordered

[1] On 24 January 2025, Mr John Cincotta (First Applicant) and Mr Simon Kahil (Second Applicant) (collectively the Applicants) each made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (Act) for a remedy alleging they had each been unfairly dismissed from their employment with Pepperleaf.Com.Au Pty Ltd (Pepper Leaf or Respondent).

[2] These applications were first subject to a jurisdictional hearing on 28 March 2025 as the Respondent through Ruwan Weerasooriya objected to the applications on the basis they were lodged prematurely and should therefore be dismissed. This required determining the date of dismissal and a decision[1] was issued on transcript on 28 March 2025 whereby I found the applications were lodged prematurely.[2] However, I was satisfied the premature filing constituted an irregularity and pursuant to s.586(b) I exercised my discretion to waive the irregularity in the form or manner in which the applications were made. The Applicants did not press that their dismissal took effect on 6 January but on 30 January as argued by Pepper Leaf. The effect of my decision was to take the effect of dismissal on 30 January and the date of the application being the day of dismissal. I note the Respondent subsequently sought permission to appeal my decision and on 9 May 2025 a decision which refused the appeal was made by the Full Bench[3].

[3] This decision deals with the substantive matters (merits) of Mr Cincotta's (the Chief Operating Officer) and Mr Kahil's (Chief Executive Officer) applications.

[4] Pepper Leaf is a subscription-based meal kit delivery service in Melbourne. Messrs John Cincotta and Simon Kahil founded the business in December 2014. In 2019 they engaged Rewardle Ltd to provide operational services on a fee for service basis.

[5] In October 2023 Rewardle Holdings Ltd (Rewardle) acquired a 54% shareholding in Pepper Leaf with the Rewardle Directors, Messrs Ruwan Weerasooriya and David Niall (Rewardle Directors) being appointed Directors to the Pepper Leaf board alongside the Applicants (founding Directors), but with Mr Weerasooriya appointed Chair with a casting vote. It is noted that Mr Weerasooriya was Board minute taker. Rewardle announced this acquisition to the ASX on 8 November 2023[4]. The announced terms of the acquisition were that Rewardle invests $1.5m into what it describes as a profitable Australian owned business for controlling interest, Pepper Leaf loan to Rewardle $1.5m (the RHX Loan Agreement) and Rewardle loan $110,000 to each of the Pepper Leaf founders. Both sets of loans had the same commercial terms and were to be repayable no later than 30 October 2024. Both Applicants were close to the end of their working careers and an in-principle arrangement was agreed that the founding Directors would earn out their shareholding over a period of 12 months to coincide with the due date of the loans.

[6] In addition to being directors, the Applicants were also employed by Pepper Leaf from 2016. Following the majority shareholding by Rewardle, the two Applicants entered into new employment contracts.[5] Both Applicants were contracted to receive $168,00 per annum, reduced from the earlier contracted salary of $200,000. Despite these new contracts of employment, both Applicants did not receive their full wage entitlements as the business began to experience cash flow difficulties. The Applicant's gave evidence that they received the following wages: $89,450 for 1 July 2024 to 30 June 2024 and $18,900 for 1 July 2024 to 31 December 2024.[6] The Applicants missed out on their wages when business cash flow was insufficient. There is no evidence nor was it contested that no other employee missed out on their wages, the cashflow affected the wages for the working directors. The Applicants submit that at no time did they agree to waive their rights to their wages and other entitlements as asserted by Mr Weerasooriya.

[7] In the period November to December 2024 Directors Ruwan Weerasooriya and David Niall began directing changes in the business without support from the founding Directors. These changes included replacing the company accountant (which had been the accountant since 2014) with Rewardle's accountant,[7] and Rewardle's solicitors sent a letter of demand to each Applicant seeking repayment of their respective loans with interest.[8] On 4 December 2024 Mr Ruwan Weerasooriya sent to the Applicants a Board circulatory resolution varying the RHX Loan Agreement varying the repayment due date for the $1.5m loan from 30 October 2024 to 30 October 2030.[9]

[8] Despite the objections from the Applicants, the two Rewardle Directors approved the resolution to extend the repayment loan of $1.5m due date on the basis that Mr Ruwan Weerasooriya had the casting vote. Further Mr Weerasooriya directed Mr Kahil to relinquish top level administrative access to the Google and Xero accounts. As Mr Weerasooriya had the casting vote among the four directors, neither Mr Kahil or Mr Cincotta could avert or influence any Board decisions that effectively removed any level of their control over Pepper Leaf and into the control of the Rewardle Directors. [10]

[9] As no capital investment was made by Rewardle and the loan repayment was not paid by the due date of 30 October 2024 (noting that the RHX Loan Agreement term was changed on 18 December 2024 to be payable in October 2030), Mr Cincotta, who was drawing from his own personal savings to cover business expenses to keep the business solvent, raised concerns about wages owed to him and its effect on his morale and commitment to the business. Board minutes show that Mr Niall expressed concern over the cash flow and level of reduction on Mr Cincotta's salary, that some level of salary ought to be established, but further discussion is required.[11] No further action was taken by the Directors to address the failure to pay either Mr Cincotta or Mr Kahil their wage entitlements.

[10] In early December 2024 Mr Kahil was hospitalised for serious medical condition. Materials submitted show that Mr Weerasooriya denied payment of sick leave or any other paid entitlements to Mr Kahil during his absence from work.[12]

[11] In December, the Rewardle Directors also demanded repayment of the Pepper Leaf director loans that were in place prior to Rewardle's acquisition of shares.[13]

[12] Pepper Leaf submit that the Applicants were dismissed for failure to comply with the direction to hand over top level admin rights to Xero and Google, for alleged unauthorised director loans, unauthorised expenses for personal benefit and destruction of company records.

[13] The Applicants submit their dismissal was unfair because they were summarily dismissed for invalid reasons and the procedure was unfair. The Applicants submit that the reason given for the summary dismissal was contrived.

[14] At the hearing on 22 May 2025, both parties were self-represented. Mr Cincotta and Mr Kahil gave sworn evidence as the Applicants, and Mr Weerasooriya gave sworn evidence as the Respondent. The Respondent also called Mr David Niall, Co-Director, as a witness.

[15] The Applicants submit that they were working directors (employees) entitled to a salary since 2016 and subject to revised employment contracts following Rewardle's acquisition of shares in September 2023. Both Applicants submit that they did not receive wages when Pepper Leaf's cashflow was deficient and also assert that they did not waiver their rights to their wages, despite the Respondent's submissions. There was no evidence before the Commission of agreement to amend or waiver their salary.

[16] Following the failure of Rewardle to repay its loan in October 2024, Rewardle Directors placed a number of demands with financial consequences on the founding Directors and issued these demands as Board decisions because Mr Weerasooriya had the casting vote, the founding Directors had no capacity to influence decisions made by the two Rewardle Directors at Board level.

[17] At the 4 December 2024 Board meeting, all four directors were present. Mr Kahil reported that performance was below expectations due to low capital to support growth, the Respondent tabled the extension to the RXH loan and despite objections from Mr Kahil that the Rewardle Directors were conflicted, the resolution was held by the Rewardle Directors and with casting vote of Mr Weerasooriya. Mr Weerasooriya advised that the business lacked formal board oversight and directed Mr Kahil to provide top level admin authority to Google and Xero accounts. In relations to unpaid salary, Mr Cincotta raised his struggles to remain motivated due to unpaid salary and continued drawings from his savings to invest in the business. Mr Weerasooriya advised that there was agreement that salaries would not accrue. All four directors passed a resolution that no change would be made to accounts without board approval.[14]

[18] On 6 December 2024 Mr Kahil was admitted to hospital for a serious medical condition.

[19] By 18 December 2024, the Applicants described the situation as follows:

Rewardle's loan was extended to 30 October 2030. None of the $1.5m promised investment was made to Pepper Leaf.
Rewardle commenced proceedings for the Applicant's to repay their $110,000 loans with interest to Rewardle.
The Applicants were not paid wages, and Mr Kahill was denied payment of sick leave during his absence due to illness.
The Applicants were still investing their own private funds into Pepper Leaf to keep it financially viable.
The practice of Director loans against the business which were records of payment in lieu of wages were demanded to be paid by the Rewardle Directors. The Applicants contend that the "loan" repayment demanded by Rewardle was not a loan but a legitimate accounting record in draft form to track tax obligations until accounts were finalised.
The practice of distributing Board minutes by Mr Weerasooriya was late and often recorded discussions out of context.

[20] On 19 December 2025, the Applicants submit they each received an email from Ruwan Weerasooriya at 12.21 pm which stated the following (without providing particulars):

"As passed by board resolution with shareholder majority approval yesterday, please consider this email formal notice of your suspension as COO[15] of Pepper Leaf due to potentially serious misconduct."[16]

[21] On 20 December 2025 Mr Kahil replied as did Mr Cincotta both advising that they did not accept the "formal notice of suspension" as the notice of suspension provided no explanation or particulars of the alleged "potentially serious misconduct," and they denied any wrongdoing or misconduct.[17]

[22] Mr Kahil submits that he was advised at the Board meeting of 6 January 2025 that his and the employment of Mr John Cincotta was terminated. Mr Cincotta advises that he was informed by Mr Kahil of the decision as he was absent at the meeting. However, formal correspondence terminating employment was dated and received by email on 30 January 2025 together with a circulatory Board resolution confirming their dismissal. In addition, both Directors were notified of their immediate removal as Directors of Pepper Leaf by way of a circulatory resolution by Mr Niall and Mr Weerasooriya (as Board Member with casting vote).

[23] Both applicants submit that the 30 January 2025 correspondence was the first occasion in which reasons for dismissal became known. They submit that the allegations and evidence was not at any time put to them to respond to, nor was there any advance notice of the misconduct that both Applicants allegedly conducted.

[24] In Mr Kahil's letter of 11 February 2025, he also refers to harassment from Mr Ruwan Weerasooriya to respond to tasks while he was in hospital in end stage liver failure. Mr Kahil describes the work he had to do, even though both Rewardle Directors were well aware of his state of health and hospitalisation during 2024.

[25] In Mr Cinciotta's letter of 11 February 2025, he states that the conduct of both Rewardle Directors at the December Board meeting placed him in a serious state of mental health breakdown which was evident to them.

[26] In response to the allegation that the Applicants were party to a number of "unauthorized Director loan transactions" since Rewardle became shareholder, Mr Kahil explains that the accountant used the director loan accounts as a temporary measure while accounts were in draft form as a book entry (to assist with tax planning) and did not constitute a loan to the Director. On finalising the accounts from draft form, the amounts were properly adjusted to the correct accounting classification e.g. wages or director fees. Mr Kahil submits that the allegation that these draft accounts referencing director loans is baseless and deliberately misconstrues any allegation that the practice was not known until the Rewardle accountants took over the accounts because all financials were previously fully disclosed to Mr Niall and Mr Weerasooriya. Further the Applicants provided the Respondent with the explanation from the Accountant.[18]

[27] In response to the allegation that Mr Kahil used company resources for personal purposes, he denies the allegation and says his uber account was offered for inspection to show that the use of uber was used to deliver customer goods and not for personal purposes. He further submits that the Respondent did not particularise any of the allegations to properly respond to them.[19]

[28] Mr Cincotta also responds to the allegations that he made grocery purchases and used uber and petrol for personal benefit. Mr Cincotta denies the allegations and says the expenses were in the course of business. He described his purchases to meet customer changes to orders or because of food intolerances or where an item was cheaper from the supermarket than the supplier. Mr Cincotta also used uber to deliver products and petrol was used for delivery purposes or for refuelling the business van. [20] Mr Cincotta responds in broad terms as does Mr Kahil due the lack of specificity in the allegations against them.

[29] In response to the allegation that he deleted company records, Mr Kahil denies this and says private emails and files were deleted unrelated to the company affairs, including correspondence between the Applicant and his legal adviser concerning the unfair dismissal application.[21]

[30] The Applicants further contend that even though no procedural fairness was afforded by the Respondent and even if there were legitimate concerns, the dismissal was disproportionate, and a warning or performance improvement plan was more appropriate.[22]

[31] Separate proceedings are on foot in the County Court concerning the dispute between the majority shareholders and founding Directors. However, the allegations that the founding Directors engaged in unlawful business expenditure for their own benefit is strongly contested by the Applicants lawyers in correspondence dated 14 May 2025.[23] The correspondence identifies that an analysis of the transactions alleged to be personal expenditure contains transactions more than 6 years old and predates the shareholding by Rewardle, further there are over 400 duplicate transactions, the transactions are not personal expenses but legitimate expenses for staff amenities and business related operational expenditure.

[32] The Respondent submits that on 18 December 2024 the Applicants were immediately suspended from employment by Board resolution.[24]. On 18 December 2024, of the remaining two Board members (and founding members) only Mr Cincotta attended the Board meeting, and the Respondent takes issue that Mr Cincotta advised Mr Kahil of the suspension. The Respondent objects that Mr Cincotta relayed the suspension as it is submitted that it was not his role to inform Mr Kahil. In any event, Mr Weerasooriya sent correspondence to each Applicant on 19 December 2024 informing them of their suspension.[25]

[33] At the Board meeting of 6 January 2025, Mr Kahil attended but Mr Cincotta did not. The Respondent submits that neither Director's employment or Directorship was terminated at the meeting, but the threat of dismissal and termination as Directors was probable given the notice that the Rewardle Directors were investigating the conduct of the Applicants. The Respondent asserts that the Board discussed director loan transactions and "unauthorised expenses/ personal benefits" as alleged in the letter of dismissal.[26] The Respondent submits that the alleged transactions which it says amounted to serious misconduct could not be established until Mr Weerasooriya had access to the bank accounts. In addition, evidence of an email where the Quality Assurance Manager responds to Mr Weerasooriya and says that he observed the Applicants go to Jorge's Café across the road regularly but did not see them go to the café with customers is presented as evidence of serious misconduct.[27]

[34] The Respondent submits that the reasons for summary dismissal were justified in addition to the above for the following reasons:

An investigation revealed Mr Kahil deleted company records.
Mr Kahil refused a Board direction to provide full admin rights of the Google account to Mr Weerasoooriya- this is characterised as "intentional disobedience". However, it is acknowledged that full access was granted on 8 January 2025.

• The shareholders' Deed contains provisions[28] requiring executives (the Applicants) to obtain shareholder majority written approval of stock to be used for personal purposes, including payment or reimbursement of purchases for company or personal use. It is submitted that the Applicants used stock for personal use or used company funds for personal purposes without authority which is serious misconduct.

[35] The Respondent submits that after Rewardle's shareholding into the business, Rewardle provided support services and kept track of their value because not all services were paid by the Respondent.[29] It is submitted that an earn out period of 12 months, consistent with the loan periods was agreed to allow the Applicants the maximum opportunity to maximise the value of their shares before the parties agreed to the terms of sale of the Applicants' shares.[30] It also submits that from May 2024 while monitoring business performance it noted a decline and therefore Rewardle advised it ought not be held to the original decision to allow the founding Directors to "earn out" their shareholding.[31]

[36] The Respondent tendered into evidence an email exchange of 31 May 2024 that proposes the Applicants and the Rewardle Directors develop a plan to formalise salary reductions to avoid continued debt.[32] The minutes of the 4 December 2024 Board meeting were also tendered into evidence which show that all four Directors were present and a discussion took place about unpaid salary but it states that the accounts show salary not accruing and that was the understanding of Mr Kahil and Mr Weerasooriya in May 2024. It is also noted that Mr Niall expressed concern that the cash flow reduced salaries to an unsustainable level and a minimum level should be established. There is no evidence that this "concern" was actioned.

[37] The Respondent submits that the 18 December 2024 email[33] makes clear to the Applicants its concerns over:

issues of lack conduct without alleged of authority,
breach of shareholders Deed,
exposing the company to risk and serious misconduct considerations.

The email, however, seeks to follow-up on Director Loan Confirmation letters prepared by Rewardle's auditors and points out that the loans have increased and have identified concerns with a range of transactions which took place without Board approval. Thereby exposing the Companies[34] to risk and is considered serious misconduct. The email suggests that the matters be discussed at the Board meeting that day.

[38] The Respondent contends that with the Applicants' dismissal, it was also logical to terminate their Directorships of the company, so both employment and directorships were terminated on 30 January 2025.

[39] The Respondent relies on the email of 18 December 2024 and discussion at the Board meeting on the same day that the reason for dismissal was valid and that the Applicants were notified of the reason. In addition, the Respondent relies on the suspension email of 19 December 2024 that notifies them that they are subject to summary dismissal. Both Applicants were given until 20 December 2024 to provide a response. An extension was granted to Mr Cincotta to respond. In respect to a support person, the Respondent submits that neither Applicant sought a support person. The Respondent submits that the size of the Respondent and Rewardle meant that it did not have a dedicated HR resource.

[40] The Respondent contends that the evidence against the Applicants is serious warranting summary dismissal for serious misconduct.

Consideration - Was the dismissal harsh, unjust or unreasonable?

[41] Section 387 of the Act provides that, in considering whether I am satisfied that a dismissal was harsh, unjust or unreasonable, I must take into account:

"(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant."

I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[35]

In order to be a valid reason, the reason for the dismissal should be "sound, defensible or well-founded."[36] Further, it is the role of the Commission to consider the employer's reasoning to determine whether that reasoning is valid.[37] In a summary dismissal for serious misconduct the Respondent bears the onus to establish the reasons are sound, defensible, well founded and proportionate.

[44] The Respondent's evidence presented includes screen shots embedded into the submissions which even when the electronic copy is enlarged is unreadable. The Parties were advised at the Directions hearing that copies of original communications should be tendered instead of embedding them in submissions. Despite this, the presentation of materials is unable to be effectively evaluated and verified. Some emails were tendered; however, a number were evidently in isolation of context with earlier or related email threads.

[45] The reasons for the dismissal identified in the letter of termination[38] cites breach of duties as provided in the Shareholder's Deed, as well as levels of professionalism and diligence as an executive with reference to:

Unauthorised and undocumented director loan transactions since Rewardle became shareholder,
Unauthorised expenses/ personal benefits,
Deletion of company records, and
For Mr Kahil the additional allegation of intentional disobedience which relates to a failure to provide access and administration rights to the Respondent's key accounts for approximately two months.

[46] The Respondent failed to present evidence to demonstrate that the decision is sound, defensible or well-founded in respect to each of the reasons. The Applicants gave evidence that they were informed to keep running the business as they always had, prior to the majority shareholding by Rewardle. The Applicants contend that this instruction was given, even though both Applicants executed the Deed variation. The Respondent did not dispute this evidence. Further the contested evidence over the financial records was explained by the former accountant that the accounts were in draft form and the practice in draft form was for the purpose of tax planning.[39] The Respondent evidently rejects this evidence but fails to present evidence that the records show unauthorised loan transactions that presented any risk to either the Respondent or the majority shareholder. I observe that the Respondent makes serious allegations of breaches of Corporations law and tax avoidance which requires more than mere allegations. Reliable evidence supporting the decision to summarily dismiss the Applicants ought to have been presented to them and the Commission to better understand the scope and detail of the allegation. The detail of the allegation was imprecise and remained disputable between the parties. I observe that as the detail of the allegations were never presented to the Applicants, I suspect the detail of the allegations were therefore most likely to be equally unclear to them.

[47] In respect to the alleged unauthorised expenses for personal benefit, this evidence was contested and supported by correspondence from Macpherson Kelley (acting on behalf of the Applicants) to Strongman & Crouch (acting on behalf of the Respondent) dated 14 May 2025. A document containing numerous one-line transactions was presented to the Applicants I suspect in April 2024.[40] The Applicants' response to the allegation and accompanying document containing the transactions of 14 May 2025 appears not to have been responded to by the Respondent. Therefore, the transactions relied upon by the Respondent to assert the unauthorised expenses and/or use of business resources for personal benefit are unknown. Further, the Respondent did not respond to witness evidence and the letter from Macpherson Kelley which identifies more than 400 duplicate transactions presented to the Applicants for their response. No discernible evidence was presented to the Commission that the alleged transactions were either unauthorised or for the personal benefit of the Applicants, nor the value of the alleged transgressions. The Respondent's reliance on email correspondence from the Quality Manager does not corroborate that the Applicants misused company resources, all it established was that the Applicants were seen by the employee to "frequent" the café. The Quality Manager did not present evidence in support of the email relied upon by the Respondent. In the absence of evidence establishing that the expenses were unauthorised or for personal benefit as opposed to legitimate business expenses, this allegation that the pattern of expenses is either fraud, theft, an oversight or a mistake is not substantiated by the Respondent.

[48] While the Respondent asserts that deletion of company records had occurred with deliberate knowledge of both Applicants, this and what company records are alleged to have been deleted was neither revealed or substantiated with evidence. The Respondent relies on an unreadable "sample" of extracts or screen grabs, the purpose which was not established. Further the Respondent asserts that it concludes that the deletion of company records is a deliberate effort to conceal information. What information is concealed is uncertain, the Applicants admit to deleting personal correspondence with their legal representative in respect to their unfair dismissal application considered legal privilege. In regard to this allegation, the reason is not sound, defensible or well-founded.

[49] The final allegation relates only to Mr Kahil, and it is alleged that his conduct amounted to intentional disobedience when he did not immediately abide by a request to hand over high level administrator rights until two days after a Board direction to do so. The Respondent asserts this is serious to justify summary termination. Mr Kahil had reason to be concerned as both Applicants had no capacity to influence Board decisions and their investment as founding Directors of Pepper Leaf was slipping out of their control into the control of the Rewardle Directors. The Applicants in their view had reasonable concern that the conduct of the Rewardle Directors was to take control of the business without the promised financial investment of $1.5m. Mr Kahil held the view that the Google and Xero accounts were the last level of control before the founding Directors would be pushed out of the business. The Respondent acknowledges that Mr Kahil handed over the rights two days after the Board decision and well before the dismissal but does not justify why this alleged disobedience justifies summary dismissal.

[50] On review of the evidence before me I cannot be satisfied that the alleged conduct occurred. The Respondent failed to demonstrate credible, sound, defensible or well-founded reasons for a summary dismissal.

[51] The Applicants were given a letter of dismissal on 30 January 2025 but were suspended on 18 December 2024. The Respondent submits that the Applicants were given the notice that the Rewardle Directors were investigating the conduct of the Applicants in relation to director loan transactions and unauthorised expenses/ personal benefits at the 6 January 2025 Board meeting. This absence of detail in respect to either allegation is bereft of notification of reason. The Applicants were entitled to the detail concerning each serious allegation and this was not done.

Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[52] At no point were the Applicants given an opportunity to respond to the allegations or any evidence against them. No evidence was presented to them for response or in support of the decision to dismiss them. The only detail provided was the numerous one-line transactions, which the Applicants contested and further advised that the document contained more than 400 duplicate transactions. The Respondent did not respond and communicate any reasonable evidence to support the reason that led to the dismissal.

Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[53] While the Respondent did not refuse the Applicants to have a support person, in reality there was no pre-arranged meeting to address the allegations and the evidence to allow the Applicants the opportunity to even consider how they might support themselves in such a meeting if it was called. For this reason, this is a neutral consideration.

If the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal

[54] The Respondent submits the dismissal was not related to performance. It is reasonable to conclude the Respondent did not forewarn the Applicants it was not satisfied with any of the alleged conduct it says amounted to serious misconduct, except for the Boad Meeting of 18 December when they were suspended. At the meeting of 18 December 2024, the allegations to that point were also broadly expressed and no detailed evidence or detailed allegations appear to have been presented.

The degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal

[55] The Respondent contends the size of the business does not have the benefit of human resources. While Pepper Leaf is a small business, Mr Weerasooriya's related corporations under the Rewardle group employ more than 15 employees. Due to the size of the related entities, some basic human resources would have benefitted and not unreasonably expected. However, the Rewardle Directors' decisions were made without regard for the personal, financial, professional or wellbeing interests of either founding Director therefore an absence of human resources would likely have had no effect.

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

[56] The Rewardle Directors, particularly Mr Weerasooriya presented a total disregard for procedural fairness, and a human resources management specialist is likely to have had minimal effect, if any. The Respondent throughout the proceedings took no accountability for its obligation to procedural fairness. The Respondent disregarded its deficiencies in the process and further had shown no concern towards the Applicants in terms of their unpaid entitlements (unpaid wages and annual leave or sick leave while Mr Kahil was absent due to a serious medical condition) nor the mental health consequences of their conduct at Board meetings or in correspondence. One reasonably expects that reliance on a human resources specialist ought to assist the process, but the Rewardle Directors had not obtained advice nor applied a procedurally fair process at a most rudimentary level. This lack of consideration of procedural fairness weighs in favour of the Applicants.

Any other matters that the FWC considers relevant

[57] Taking into consideration the evidence, the circumstances leading to the dismissals occurred after the $1.5m investment in the form of a loan was not paid by Rewardle but extended in December 2024 (unilaterally by the Rewardle Directors) after the Applicants sent a demand letter for its payment. Until such time, there is no evidence of concerns about the Applicants performance or conduct. The extension to the RXH loan resulted in demands that the Applicants repay their loans (no doubt while being aware that the Applicants were not able to do so)[41] and other decisions were made where the Rewardle Directors seized control such as change to the accountant and top level access to Google and Xero accounts. Allegations of wrongdoing followed albeit without any evidence, together with decisions to deny payment of wages or entitlements. Consequently, the Applicants were dismissed and their Directorships removed instead of the planned settlement of loans, payment of entitlements and an exit from a viable business heavily invested in by the Applicants. The Respondent asserts that the Applicants engaged in serious misconduct, their conduct suggests otherwise. They worked in and on the business despite their ill health or financial difficulty, they continued to invest in the business from personal savings and all the while not receiving a salary. This conduct challenges any suggestion of misconduct, let alone the reason for dismissal being serious misconduct.

[58] Not only is the dismissal lacking in valid reasons, but the process is devoid of any procedural fairness. In addition, decisions at the Board level appear to have been unilateral by the Rewardle Directors, somewhat dictatorial and without regard for the effect of the decisions on the Applicants. Most concerning was the decision to not repay the $1.5m loan by the due date and without any penalty or consideration for the Applicants' loans, noting that the Rewardle Directors amended the due date more than a month after it was due. The effect of this was to place the founding Directors in serious debt with unpaid wages and their loans together with accumulated interest, all while Mr Kahil was seriously ill and Mr Cincotta distressed and pressured to reach into his personal savings to keep the business solvent. The Applicants were under enormous pressure. The Applicants were according to the Deed equal Directors, (but not in practice) and wholly financially vested unlike the Rewardle Directors. It is harsh that neither Applicant was given notice, nor paid their accrued entitlements (nor personal leave for Mr Kahil while on sick leave) and denied their wages on the unfounded allegation they waived their rights. The emails relied on by the Respondent to submit that the Applicants waived their rights is not supported on any reasonable and objective assessment. Finally, the Respondent had without any supporting evidence, raised serious allegations against the Applicants and threatened legal action to recover alleged loans and unauthorised transactions which were not established in these proceedings.

[59] Based on my reasons above, I do find that the dismissal of the Applicants is harsh, unjust and unreasonable. Serious misconduct takes its meaning from Regulation 1.07[42], which includes wilful or deliberate behaviour that is inconsistent with the continuation of the employment contract. A number of decisions have considered the notion that serious misconduct strikes at the heart of the employment relationship.[43] I am not satisfied that the Applicants engaged in any conduct that was serious or wilful. Rather, both Applicants under enormous pressure did what they could to keep the business afloat, despite being seriously ill, not drawing wages while working in the business and investing their own personal funds. None of this conduct can be said to be serious and wilful striking at the heart of the employment relationship.

[60] The Commission cannot be satisfied that the reasons for summary dismissal have been substantiated by the Respondent, and the process was devoid of any procedural fairness.

[61] I have considered each matter specified in s.387 of the Act and the evidence in relation to each matter. In reaching my determination I have considered whether the dismissal was harsh, unjust or unreasonable. I have weighed up all the circumstances of the case and I am satisfied that all of the circumstances weigh in favour of finding that the dismissal was harsh, unjust and unreasonable.

[62] I am therefore satisfied that the Applicants were unfairly dismissed within the meaning of s.385 of the Act. The Applicants:

Made an application for an order granting a remedy under s.394;
Were a person protected from unfair dismissal; and
Were unfairly dismissed within the meaning of s.385 of the Act.

[63] I may, subject to the Act, order the Applicants' reinstatement, or the payment of compensation to the Applicants. Under s.390(3) of the Act, I must not order the payment of compensation to the Applicants unless:

I am satisfied that reinstatement of the Applicants is inappropriate; and
I consider an order for payment of compensation is appropriate in all the circumstances of the case.

Is reinstatement of the Applicants inappropriate?

[64] The Applicants ought not to be reinstated and compensation is appropriate in the circumstances because reinstatement without the reinstatement as a Director is unhelpful to the Applicants and cannot restore a practical employment relationship. The Commission cannot restore the Directorship therefore compensation is appropriate as a remedy.

[65] Based on the evidence before me that led to the finding that the dismissal was unfair, an order for compensation is justified.

Compensation - what must be taken into account in determining an amount?

[66] Section 392(2) of the Act requires all the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement, including:

(a) the effect of the order on the viability of the employer's enterprise; and

(b) the length of the Applicants' service with the employer; and

(c) the remuneration that the Applicants would have received, or would have been likely to receive, if the Applicants had not been dismissed; and

(d) the efforts of the Applicants (if any) to mitigate the loss suffered by the Applicants because of the dismissal; and

(e) the amount of any remuneration earned by the Applicants 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 Applicants during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the Commission considers relevant.

[67] I consider all the circumstances of the case below.

Effect of the order on the viability of the Respondent's enterprise

[68] There is no evidence regarding the viability of the Respondent's business. Therefore, I am not satisfied that an order for compensation would have an effect on the viability of the employer's enterprise.

[69] The Applicants length of service was 8 years and a further two years as founding Directors investing in a start-up business. This is not an insignificant period. Both Applicants were close to the end of their working careers and planned to see the new majority shareholders buy them out after 12 months. It is reasonable to conclude on the evidence that the Applicants would have exited their careers with Pepper Leaf after 12 months with their entitlements paid out. These factors are relevant considerations in terms of expected duration of employment and length of employment in the business.

[70] For the reason of length of employment and expectations of a mutually agreed exit from the business compensation at the highest level is appropriate. The maximum compensation under the Act is 26 weeks,[44] and I consider the maximum is appropriate in the circumstances of this matter.

Remuneration that the Applicants would have received, or would have been likely to receive, if the Applicants had not been dismissed

[71] As stated by a majority of the Full Court of the Federal Court,

"[i]n determining the remuneration that the Applicant would have received, or would have been likely to receive... the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination."[45]

[72] There is no credible evidence that termination of employment was likely, rather the earn out after a minimum of a year would have been the reasonable expectation of earnings. There is no evidence that the Applicants intended to leave the business without a proper earn out as agreed in principle. The Applicants were on a salary of $168,000 per year, therefore 26 weeks would amount to $84,000 for each of the Applicants.

Efforts of the Applicants to mitigate the loss suffered because of the dismissal and amount of remuneration earned by the Applicants from employment or other work during the period between the dismissal and the making of the order for compensation

The Applicants must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[46] What is reasonable depends on the circumstances of the case.[47]

[74] Mr Kahil is still ill after the liver transplant and is in no state to find work outside of the business he founded. His circumstances ought not to weigh against him in these circumstances. Mr Cincotta similarly was looking at finishing his career with Pepper Leaf. The level of personal investment and the effect of the conduct of the Rewardle Directors at Board level and with the dismissal has left him with little to no prospects for employment outside the business he founded. These circumstances also should not weigh against Mr Cincotta.

Amount of income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation

[75] The Applicants provided no evidence of likely income from the date of the dismissal until the order for payment of compensation. I treat this as a neutral consideration.

[76] There are no other relevant factors.

[77] An order of 26 weeks' pay is awarded and this figure is $84,000 gross to be taxed according to law. The Respondent is ordered to make the payment of compensation to the Applicants within 14 days of the order. The applicable tax is to be forwarded to the ATO.

[78] I am satisfied that the amount of compensation is appropriate to the circumstances of this case and the criteria for deciding compensation under s.392(2). Misconduct is irrelevant,[48] the figure does not include an amount for shock, distress etc,[49] and the compensation does not exceed the cap.[50]

[79] An order will be issued for the payment of the net sum ($84,000 less tax) within 14 days of this decision into the Applicants' bank account. Superannuation on this compensation is also payable directly into the Applicants nominated superannuation fund in accordance with the Superannuation Guarantee requirements.

[1] Transcript of Proceedings dated 28 March 2025.

[2] Noting the Applicants conceded the effective date of dismissal to be 30 January 2025 instead of 6 January 2025 as they allege.

[3] Pepperleaf.com.au Pty Ltd v Simon Kahil & John Cincotta [2025] FWCFB 92.

[4] ASX Announcement 8 November 2023, Second Digital Hearing Book ('2nd DHB') pp. 142-145.

[5] Updated Employment Contracts, First Digital Hearing Book ('1st DHB') pp. 101-107, 127-133.

[6] Applicants' reply submissions of 20 May 2025, 2nd DHB pp. 27-28.

[7] On 4 December 2024 the Rewardle Directors determined at the Board meeting to engage Affinity the Accountants for Rewardle to manage the Pepper Leaf accounts. See Director Meeting Minutes dated 4 December 2024, 2nd DHB pp. 209-211.

[8] Letter of demand dated 13 November 2024 directing full payment by 20 November 2024. Annexure C to the Applicants' outline of submissions, 1st DHB pp. 59-63.

[9] Annexure D to the Applicants' outline of submissions dated 18 March 2025, 1st DHB pp. 64-86.

[10] See ibid and Director Meeting Minutes dated 4 December 2024, 2nd DHB pp. 209-211.

[11] Director Meeting Minutes dated 4 December 2024, 2nd DHB p. 210.

[12] Director Meeting Minutes dated 6 January 2025, 2nd DHB pp. 233-237.

[13] Annexure C2 1 and Annexure C2 2 to the Applicants' outline of submissions dated 18 March 2025, 1st DHB pp. 57-63; and Director Meeting Minutes dated 18 December 2024, 2nd DHB pp. 226-229.

[14] Minutes of 4 December 2024, 2nd DHB p. 209.

[16] Email 19 December 2024 - Notice of Suspension from Pepper Leaf, 2nd DHB p. 230 as referred to in Letter of 11 February 2025 from Mr Simon Kahil to the Boad of Directors, 2nd DHB pp. 16-20 and Letter of 11 February 2025 from Mr John Cincotta to the Board of Directors, 2nd DHB pp. 21-25.

[17] Ibid 2nd DHB p. 17 at [19] and p. 23 at [19].

[18] See email from Adrian Rogers dated 19 December 2025, 2nd DHB pp. 231-232.

[21] Ibid 2nd DHB p. 19 and Applicants reply submissions dated 20 May 2025, 2nd DHB p. 30 at [5].

[22] Applicants reply submissions dated 20 May 2025, 2nd DHB p. 30 at [4].

[23] Correspondence from Macpherson Kelley to Strongman & Crouch dated 14 May 2025 - Appendix E to the Applicants reply submissions, 2nd DHB pp. 96-99.

[24] Respondent's submissions dated 13 May 2025, 2nd DHB pp. 124-125.

[25] Ibid and Respondent's submissions dated 28 March 2025, 2nd DHB p. 101-102.

[26] Respondent's submissions dated 28 March 2025, 2nd DHB p. 102 at [3].

[27] Ibid 2nd DHB pp. 102-103; Respondent's submissions dated 13 May 2025, 2nd DHB pp. 128; Email 16 January 2025 - Re_ Jorge's Café, 2nd DHB pp. 305.

[28] Deed variation execution dated 24 October 2023, 2nd DHB pp. 147 - 204.

[29] Respondent's outline of submissions dated 13 May 2025, 2nd DHB p. 114 at [1.10].

[30] Respondent's outline of submissions dated 13 May 2025, 2nd DHB pp. 112-114 at [1.4.2] and [1.8].

[32] 2nd DHB p. 208. The proposal is to offset salary obligations against loans owing by the Applicants, but also includes a proposal to extend the due date of the Applicants' loans, neither proposals were executed. This correspondence is in dispute, Mr Weerasooriya argues this was an agreement to forgo salary, while the Applicants argue the proposal which did not eventuate included offsetting salary entitlements against the loan owed by them to Rewardle.

[33] Respondents' submissions dated 13 May 2025, 2nd DHB p. 124 at [1.26.1] and email of 18 December 2024, 2nd DHB p.224.

[34] It is alleged by the Respondent that both Pepper Leaf and Rewardle are exposed to risk.

[35] Sayer v Melsteel Pty Ltd (2011) FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd [2002] AIRC 317, [69].
[36] Selvachandran v Peteron Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371, 373.
[37] Walton v Mermaid Dry Cleaners Pty Ltd [1996] IRCA 267; (1996) 142 ALR 681, 685.

[38] Letter of termination of Mr Cincotta dated 30 January 2025, 2nd DHB pp. 238-241; Letter of termination of Mr Kahil dated 30 January 2025, 2nd DHB pp. 242-245.

[39] Attachment 2 to Mr Cincotta's Form F2, 1st DHB pp. 14-15; Attachment 3 to Mr Kahil's Form F2, 1st DHB pp. 29-30.

[40] The actual date of presentation of the document to the Applicants was unclear.

[41] The Rewardle Directors were aware of cash flow difficulties and that the founding directors continued to invest and worked without receipt of wages.

[43] See Emma Horan v Tren Trading Pty Ltd t/a Dubbo Early Learning Centre [2019] FWC 3249; Sharp v BCS Infrastructure Support Pty Limited [2015] FWCFB 1033.

[45] He v Lewin [2004] FCAFC 161, [58].
[46] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34] ('Biviano') citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].

[47] Biviano, [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.

Printed by authority of the Commonwealth Government Printer

Work Regulations 2009

John Cincotta v Pepperleaf.Com.Au Pty Ltd [2025] FWC 3272

At a glance

Court

Decision date

Source

Judgment (163 paragraphs)

John Cincotta v Pepperleaf.Com.Au Pty Ltd [2025] FWC 3272 (31 October 2025)

Parties

Legislation Cited (2)

Cases Cited (2)