K Arachchillage Priyanka Sudarshani Perera v Rupesh Kumar Pabbathi (Mark); The Trustee for RK Saloon Family Trust [2022] FWC 3365 (22 December 2022)

Fair Work Act 2009

s.394 - Unfair dismissal

Rupesh Kumar Pabbathi (Mark); The Trustee for RK Saloon Family Trust

Application for an unfair dismissal remedy - whether dismissed or resignation - failure to pay wages and other entitlements over two years - out of time - extension of time denied.

• [1] This decision concerns an application by Mrs K Arachchillage Priyanka Sudarshani Perera (the Applicant) for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (Act) against Rupesh Kumar Pabbathi and The Trustee for RK Saloon Family Trust and RK Saloon Pty Ltd (the Respondents).

• [2] This application was filed on 25 November 2022, outside of the 21-day statutory timeframe. Mrs Perera submits that she resigned on 27 August 2022 in a face-to-face meeting as she had no other option as her employer was not paying her wages and other entitlements. Mrs Perera commenced employment with the Respondents, the trading name being Sapphire Essence Hair Salon, located in Bourke Street Docklands on 27 July 2018.

• [3] On 21 December 2022 a jurisdiction (no dismissal and extension of time hearing) was held before me (Hearing).

• [4] The Trustee for RK Saloon Family Trust and/or RK Saloon Pty Ltd T/A Sapphire Essence Hair Salon and Mr Rupesh Kumar Pabbathi, are collectively the Respondents. Google searches do not find an active business nor do ASIC searches reveal registered company details. However, an ABN search of 24 355 167 755 shows the entity, The Trustee for RK Saloon Family Trust, is active and has been so since 23 May 2012; it is identified as a discretionary Trust. The business name Sapphire Essence was registered to The Trustee RK Saloon Family Trust from 28 April 2014 to 7 September 2017. Mrs Perera provided the notice of termination of lease dated 31 August 2022 (Notice) in evidence, because Mr Pabbathi failed to remedy a breach of the lease. I note, the letter is addressed to Rupesh (Mark) Pabbathi T/A Sapphire Essence Hair Salon (ABN 24 355 167 755). Mrs Perera gave evidence that the landlord served the Notice after a VCAT hearing and gave evidence of outstanding rental payments of some $25,000. Mrs Perera also provided copies of her income statements in evidence that identify her employer as The Trustee for RK Saloon Family Trust.

• [5] The following variation in the names were used by the Respondents at various times:

• Mark Pabatti
• Mark Pabbathi
• Rupesh Kumar Pabatti
• Rupesh Kumar Pabbathi
• The Trustee for RK Saloon Family Trust
• RK Saloon Pty Ltd
• Sapphire Essence
• Sapphire Essence Hair Salon

• [6] Mrs Perera appeared for herself and the Respondents failed to appear at either the mentions hearing on 2 December 2022 or the Hearing. I am satisfied that the Respondents received communications about the matter, the listing and the directions. The Hearing notification was sent to an active email address. I am further satisfied that the Respondents were aware of the proceedings because an attempt to contact Mr Pabbathi on his mobile phone was successful, but he indicated his refusal to engage with the Commission.

• [7] This decision is made in the absence of any submissions of the Respondents. Mrs Perera gave witness evidence. Mrs Perera appeared truthful and freely responded to the Commission's questions.

• [8] Mrs Perera gave evidence regarding the background to the matter. She commenced as a senior hairdresser at the salon, and at the time there were six hairdressers. Mr Pabbathi attended the salon answering calls and performing duties other than hairdressing. In 2018 Mr Pabbathi went to India for six months because of the loss of his parents. As the Senior Hairdresser, Mrs Perera was left in charge to manage the salon. Mrs Perera states that at any time she was left to manage the salon she was not paid for the extra duties or for the additional hours worked. In 2019 there were three hairdressers which included herself and an apprentice. Mrs Perera submits that the apprentice left because they were not being paid their wages.

• [9] In August 2020 Mr Pabbathi left for India and did not return until 22 August 2022. It is submitted that Mr Pabbathi has restaurants in India. In the time of Mr Pabbathi's absence, Mrs Perera was expected to manage the salon. She was given a work phone to take customer related calls and she attended the salon each Monday, even though it was closed to the public, for the purpose of managing the appointments for the week. Mrs Perera gave evidence that the salon was very busy and generated strong income. Mrs Perera further gave evidence that she understood from her discussions with Mr Pabbathi that the earnings were sent to India to fund his other business interests instead of meeting his financial obligations in Australia.

• [10] During the Hearing, Mrs Perera advised that while her application exceeds the 21-day statutory limit, she is seeking formal recognition of the entitlements owed to her. She understands that the salon no longer trades, but she states that Mr Pabbathi continues to sell hair products and the salon equipment through social media. She further submits that a public decision that identifies Mr Pabbathi and his failure to pay employee entitlements may be helpful in her pursuit of her entitlements, but she also fears that he will leave the country for India imminently (as she is informed) and he will not bear any consequences for the debts owed to the following:

• More than $40,000 in wages owed to Mrs Perera;
• More than $25,000 in wages owed to her work colleague;
• More than $25,000 in rent owed to the recent landlord;
• More than $65,000 in rent owed to the earlier landlord; and
• More than $100,000 owed to the ATO.

• [11] Mrs Perera is not seeking reinstatement, only her legal entitlements.

• [12] There are two jurisdictional questions in this matter - was Mrs Perera dismissed and whether her application for unfair dismissal remedy ought to be granted an extension of time.

• [13] Section 394(1) of the Act deals with unfair dismissal applications where a person has been dismissed. Section 394(2) of the Act states that an application for an unfair dismissal remedy must be made 'within 21 days after the dismissal took effect', or within such further period as the Commission allows pursuant to s.394(3) if it is satisfied that there are exceptional circumstances.

• [14] The meaning of dismissal includes a termination at the employer's initiative and a resignation forced because of the employer's conduct.

• [15] The term "dismissed" in s.394(1) of the Act is defined in s.386 of the Act.[1] A dismissal is to be at the initiative of the employer, or where a person was forced to resign. However, a dismissal does not include a range of situations such as employment for a specified period of time or for a specified reason.

• [16] The relevant extract from s.386 provides:

(a) the person's employment with his or her employer has been terminated on the employer's initiative; or

the person has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer."

• [17] To make an unfair dismissal application the person must have been dismissed as defined by the Act. Should I find that Mrs Perera was dismissed as defined by the Act, it is then that I am required to consider the extension of time application.

• [18] The Act allows the Commission to extend the period within which an unfair dismissal application must be made, but only if it is satisfied that there are 'exceptional circumstances'. Briefly, exceptional circumstances are circumstances that are out of the ordinary course, unusual, special or uncommon but the circumstances themselves do not need to be unique nor unprecedented, nor even very rare.[2] Exceptional circumstances may include a single exceptional matter, a combination of exceptional factors, or a combination of ordinary factors which, although individually of no particular significance, when taken together can be considered exceptional.[3]

• [19] The requirement that there be exceptional circumstances before time can be extended under s.394(3) contrasts with the broad discretion conferred on the Commission under s.185(3) to extend the 14-day period within which an enterprise agreement must be lodged, which is exercisable simply if in all the circumstances the Commission considers that it is 'fair' to do so.

• [20] Section 394(3) requires that, in considering whether to grant an extension of time, the Commission must take into account the following:

(a) The reason for the delay;

(b) Whether the person first became aware of the dismissal after it had taken effect;

(c) Any action taken by the person to dispute the dismissal;

(d) Prejudice to the employer (including prejudice caused by the delay);

(e) Th merits of the application; and

(f) Fairness as between the person and other persons in a similar position.

• [21] The requirement that these matters be taken into account means that each matter must be considered and given appropriate weight in assessing whether there are exceptional circumstances.

• [22] I now consider both the question whether Mrs Perera was dismissed and the extension of time application.

• [23] Mrs Perera submits that she had no option but to resign because the Respondents did not pay her wages. She raised her wages with Mr Pabbathi directly many times over her period of employment and was promised that her wages would be paid. She states that while she was informed by Mr Pabbathi that he did not have any money, she believed him that he would make good her wages.

• [24] When Mrs Perera became aware that the ATO took control of her superannuation savings because her employer failed to make contributions for more than 22 months, together with the realisation that her PAYG tax had not been paid since March 2022 (even though it was deducted from her wages that she did receive), she resolved it was time to end the employment relationship and advised him of her decision that she would not be returning. Mrs Perera gave evidence that on 27 August 2022 she approached Mr Pabbathi to hand in the salon key and inform him that she would not be returning. She stated that the discussion was unpleasant and she feared his reaction.

• [25] On 30 August 2022, she approached Mr Pabbathi again, this time with her accountant in an effort to extract the payment of her wage entitlements. She gave evidence that Mr Pabbathi did not accept her resignation on 27 August and insisted on a letter of resignation. To receive her entitlements, Mrs Perera agreed to provide a letter of resignation. The letter was not tendered in evidence, but she recalls that she included her itemised entitlements that were owing to her.

• [26] In addition to her outstanding entitlements, she was informed by the landlord, that it obtained a VCAT decision to direct the business to vacate the premises because of unpaid rent since September 2021. She states that the landlord gave notice by way of letter to her to pass on which required the premises to be vacated by 5 September 2022. Mrs Perera states the business closed on 5 September 2022.

• [27] Mrs Perera described her outstanding entitlement sums being:

• Three years value of her annual leave accrual covering the period 2020-2022 - $10,591.92;
• Overtime worked over two years as she worked 6 days per week and on Mondays, plus payment of commissions for on selling salon products - $12,800;
• Two weeks wages for work still outstanding- $2,110; and
• Superannuation contributions owing since 2018 - $16,351.08.

• [28] During the hearing Mrs Perera described her hours of work based on trading hours which were between 8 - 10 hours with no lunch breaks including an eight-hour day each Saturday. Consequently, I believe that Mrs Perera has underestimated her outstanding entitlements because her weekly pay rate did not include overtime penalties, nor cover her actual hours worked at ordinary rate.

• [29] In this matter the Respondents repudiated the contract of employment by failure to pay wages. However, the test in an unfair dismissal is not whether the contract of employment came to an end, but rather had the employment relationship come to an end, due to the conduct of the employer either directly or consequentially, at the employer's initiative.[4] I am satisfied that had the employer not repudiated the contract of employment, the employment relationship would have remained.[5] I am further satisfied that Mrs Perera resigned because she had no other choice. Mrs Perera, similarly, to Mr Hobbs in the matter of Hobbs v Achilleus Taxation Pty Limited,[6] "could not be expected to continue to provide services" to her employer "in a situation where the employer did not pay" her wages. The conduct of the Respondents based on the evidence forced Mrs Perera's resignation.

• [30] It is uncontroversial to highlight the importance of considering all of the circumstances, including the conduct of both the employer and the employee in determining whether a person's employment has been "terminated on the employer's initiative".[7]

• [31] I am therefore satisfied that the Applicant has been dismissed within the meaning of s.385 of the Act.

• [32] Having determined that Mrs Perera was dismissed, I now consider her extension of time application.

• [33] Mrs Perera submits her delay in lodging her application is due to Mr Pabbathi texting her regularly promising that he would make good her outstanding payments which she believed until 11 November 2022. On 11 November 2022, Mr Pabbathi blocked her calls. Her reason for delay from 11 November 2022 consisted of her researching what options she had to progress her claim for payment of wages. Mrs Perera admitted to not having awareness of her legal rights, and she was afraid of Mr Pabbathi because he avoided paying employee entitlements to past employees.

• [34] The Act does not specify what reason for delay might tell in favour of granting an extension however decisions of the Commission have referred to an acceptable or reasonable explanation. The absence of any explanation for any part of the delay will usually weigh against an applicant in the assessment of whether there are exceptional circumstances, and a credible explanation for the entirety of the delay will usually weigh in the applicant's favour, however all of the circumstances must be considered. [8]

• [35] While I observe that Mrs Perera appeared to honestly describe her fears and the deplorable behaviour by Mr Pabbathi towards her, I am concerned that the delay of 69 days following her termination of employment does not objectively meet the requirements of exceptional circumstances. The significant delay of 69 days together with the reliance on the reason of ignorance and the absence of explanation for periods of the delay is not a credible explanation. Mrs Perera was free from her daily intolerable interactions while she was employed, and the prolonged hope attached to the promises of payment, particularly in the context of awareness of Mr Pabbathi's failure to pay other employees, rent to landlords, superannuation contributions and tax obligations is not on balance acceptable or exceptional to warrant an extension of time. I observe that Mrs Perera gave evidence that on 31 August 2022, four days after her resignation she and her accountant were yelled at by Mr Pabbathi, yet no application was made until 25 November 2022.

• [36] While I do not consider the reasons for delay exceptional, I certainly do not condone the behaviour of the Respondents. Mr Pabbathi's total disregard of his legal obligations and to his employees including the distasteful manner in which he abused his employees trust and loyalty is nothing short of repugnant. Due to the considerable breach of employee entitlements over a long period of time, the prospect of claiming payment is hindered. However, Mrs Perera should not be deterred from pursuing her underpayment with the assistance of the Fair Work Ombudsman and/or Wage Inspectorate.

• [37] In respect to this application, in addition to the reason for delay I am required to consider the balance of provisions in s.394(3)(b)-(f) of the Act which follows.

Whether the person first became aware of the dismissal after it had taken effect

• [38] Mrs Perera was aware of the date of her termination of employment as she personally advised her employer and was abused for doing so.

• [39] Where an applicant takes action to contest a termination, it will put the employer on notice that its decision to terminate the applicant's employment is actively contested and may, depending on all the circumstances, favour the granting of an extension of time.[9]

• [40] Mrs Perera submits she took no action to challenge her termination of employment, withdraw her resignation nor suggest to the Respondents that she resigned against her will. While this would normally not be in her favour, I do observe that she regularly communicated with Mr Pabbathi concerning her outstanding wage entitlements until he blocked her phone number. In the context of seeking a resolution to the failure to pay wages, I am satisfied that Mr Pabbathi was on notice that Mrs Perera would continue to pursue her claim. However, he was not on notice that she would be seeking an unfair dismissal remedy. For this reason, I find this consideration neutral.

• [41] Mrs Perera states the application does not prejudice the employer. However, I note the business is no longer trading, but Mrs Perera's outstanding entitlements have not been paid.

• [42] Mrs Perera is seeking payment of her entitlements and not an unfair dismissal remedy. This application in the context of the remedy sought is not prejudicial to the employer. Nevertheless, despite the matter not of prejudice to the employer it does not follow that an extension is favoured. For this reason, I consider prejudice a neutral consideration.

• [43] Mrs Perera makes no direct submissions concerning merit as she is not seeking a remedy for unfair dismissal. However, as I have found that Mrs Perera was dismissed and I considered her evidence concerning the serious allegations of underpayment of wages, her unfair dismissal application, had she pursued an unfair dismissal remedy and had the business remained trading may be arguable. For this reason, on balance and in the absence of testing the evidence I consider her application in consideration of merit neutral.

Fairness as between the person and other persons in a similar position

• [44] No submissions were made in this regard; therefore, this consideration is neutral.

• [45] The jurisdiction considerations of whether the termination of employment was a dismissal, I found in Mrs Perera's favour. Having determined that Mrs Perera was dismissed I then took into account the matters under s.394(3)(a) to (f) of the Act. While I consider the alleged underpayment to be serious and shocking the reason for delay of 69 days together with the other required considerations did not fall in favour of granting an extension of time. Nevertheless, as Mrs Perera is seeking her entitlements, I strongly suggest she contact the FWO and Victorian Wage Inspectorate for immediate assistance in action against Mr Pabbathi and the Respondents wherever possible.

• [46] While this application cannot, in practicality, bring a suitable remedy to Mrs Perera's predicament, perhaps by identifying the various Respondents' identities and by outlining the relevant background, this decision may assist Mrs Perera on focussing on an alternative avenue for remedy. However, in terms of the extension of time application, I do not consider that she has met the requirements to find exceptional reasons to grant an extension, and accordingly, the application for an unfair dismissal remedy is dismissed.

[1] See Part 1-2 - Definitions in s.12 of the Fair Work Act 2009, which refers to s.386.

[2] Nulty v Blue Star Group Pty Ltd [2011] FWAFB 975 at [13].

[4] Searle v Moly Mines Limited (2008) 174 IR 21 at [22] and Hill v Pathways Australia Pty Ltd T/A Pathways Australia - (U2017/4909) - [2017] FWC 5901.

[5] Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) IRCA 645 29 November 1995.

[6] Thomas Hobbs v Achilleus Taxation Pty Limited ATF The Achilleus Taxation Trust; Achilleus Accounting Pty Limited AF The Achilleus Accounting Trust [2012] FWA 2907 at [12].

[7] Hill v Pathways Australia Pty Ltd T/A Pathways Australia [2017] FWC 5901

[8] Stogiannidis v Victorian Frozen Foods Distributors Pty Ltd [2018] FWCFB 901 at [39]

[9] Brodie-Hanns v MTV Publishing Ltd (1995) 67 IR 298.

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