Fair Work Act 2009

s.394 - Unfair dismissal

• [1] Mr Kyoung Sub Cha (Applicant) has made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that he had been unfairly dismissed from his employment with The Coffee Traders Group Pty Ltd (in Liquidation) (Respondent) (Application).

• [2] The matter was heard before me as a determinative conference on 18 September 2024.

• [3] The Applicant represented himself, assisted by a Korean interpreter. There was no appearance by, or on behalf of the Respondent. This was not surprising, as the Respondent had failed to provide a Form F3 Employer Response, failed to attend the case management and directions hearing on 24 July 2024, failed to file any materials in response to the directions issued, and failed to attend the determinative conference. When contacted prior to commencement of the determinative conference, Mr James Chen, a director of the Respondent stated that he could not attend as he was not aware of the conference and was working. I did not accept that was a satisfactory explanation for Mr Chen's non-attendance. The Respondent was put on notice that the proceedings were listed and that a failure to attend may result in the matter being determined in their absence.[1] I decided to proceed in the Respondent's absence.

• [4] Shortly prior to the commencement of the hearing, I became aware that an application for the winding up of the Respondent by Court order had been made.

• [5] At the commencement of proceedings, I referred to this application and noted that if a liquidator was subsequently appointed by Court order, s.471B of the Corporations Act 2001 would not prevent the Commission from exercising its functions.

• [6] On 23 September 2023, a liquidator was appointed by order of the Federal Court of Australia.

• [7] Section 471B of the Corporations Act 2001 provides:

Stay of proceedings and suspension of enforcement process

While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

(a) a proceeding in a court against the company or in relation to property of the company; or

(b) enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

• [8] In Smith v Beck Pty Ltd (in liquidation)[2], a Full Bench of the Australian Industrial Relations Commission held that the Commission is not a court and is not prevented from exercising its functions save with the leave of the relevant court.

• [9] Accordingly, I have decided to determine the Application.

• [10] The following materials were admitted into evidence:

• The Applicant's statement/submission (Exhibit 1);

• The Applicant's contract of employment (Exhibit 2);

• A bundle of the Applicant's payslips (Exhibit 3); and

• A copy of text messages dated 15 and 17 March 2024 (Exhibit 4).

When can the Commission order a remedy for unfair dismissal?

• [11] Section 390 of the FW Act provides that the Commission may order a remedy if:

(a) the Commission is satisfied that the Applicant was protected from unfair dismissal at the time of being dismissed; and

• [12] Both limbs must be satisfied. I am therefore required to consider whether the Applicant was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that the Applicant was so protected, whether the Applicant has been unfairly dismissed.

When is a person protected from unfair dismissal?

• [13] Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person's annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

• [14] Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission 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.

• [15] The Respondent operates two cafes located at Castle Hill and Rouse Hill.

• [16] On 4 July 2022, the Applicant commenced employment with the Respondent in the role of Head Chef at the Castle Hill café, although under the Applicant's contract of employment, the Applicant could be directed to work at any of the Respondent's venues.

• [17] The Applicant was paid a salary of $80,000.00 plus superannuation. The Applicant's principal duties were:

• The supervision and training of cooks and kitchen employees; and

• [18] After about six months, the Applicant was working 4 days per week at the Castle Hill café and 1 day per week at the Rouse Hill café.

• [19] In or about June 2023, the Applicant was asked to prepare a kitchen plan and menu for a third café to be located at Macquarie University. It was anticipated that the Macquarie University café would commence trading in late 2023.

• [20] A friend of the Applicant's was employed to be the Head Chef at the Macquarie University café and commenced working with the Applicant at the Castle Hill café to learn the proposed menu and the Respondent's systems and processes. The Applicant stated that the new Head Chef was paid a salary of $75,000.00 plus superannuation per annum.

• [21] The opening of the Macquarie University café was delayed. In January 2024, the Applicant was advised by a co-worker that the Respondent had abandoned its plans to open that venue.

• [22] Despite the Respondent abandoning its plans for the Macquarie University café, the Applicant's friend remained employed working at the Castle Hill café. By this stage, the Applicant was working 3 days per week at the Castle Hill café and 2 days per week at the Rouse Hill café.

• [23] On 15 March 2024, the Applicant received a text message from Mr Chen which stated:

Due to the unexpected financial situation, I had to made this difficult decision to giving you the termination notice and thank you for everything you had down with us.

• [24] Prior to receiving that text message, the Applicant was not aware that the Respondent was experiencing any financial difficulties.

• [25] After receiving that text message, the Applicant and Mr Chen had a brief discussion at the Castle Hill café which was limited to Mr Chen asking the Applicant "how many weeks of notice do you need?". The Applicant stated that there was no discussion about financial difficulties or redeployment to alternative roles.

• [26] On 17 March 2024, the Applicant received a further text message from Mr Chen which stated:

Following up on our conversation on the Friday 15th March 2024 at the shop, you had requested of 2 weeks notice and I had accepted your request.

• [27] In his evidence before the Commission, the Applicant agreed that after the Respondent abandoned its plans to open the Macquarie University café, there were too many chefs employed by the Respondent.

• [28] The Applicant's last day of employment was 29 March 2024. At the time of his dismissal the Applicant stated that the Respondent employed 10 employees at the Castle Hill café and about 7-8 employees at the Rouse Hill café.

• [29] The Application was made on 12 April 2024.

• [30] The Applicant accepted that there was an extra head chef than what was needed but submitted that it was unfair that he was dismissed simply because he was earning a higher salary than his friend.

• [31] The Applicant also submitted that his dismissal was unfair because Mr Chen did not inform him of the Respondent's decision to abandon its plans to open the Macquarie University Café.

• [32] A threshold issue to determine is whether the Applicant has been dismissed from their employment.

• [33] Section 386(1) of the FW Act provides that the Applicant has been dismissed if:

(a) the Applicant's employment with the Respondent has been terminated on the Respondent's initiative; or

(b) the Applicant has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by the Respondent.

• [34] Section 386(2) of the FW Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant.

• [35] Having regard to the evidence before me, I find that the Applicant's employment with the Respondent was terminated at the initiative of the Respondent.

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

• [37] Section 396 of the FW Act requires the Commission to decide four initial matters before considering the merits of the application.

• [38] Having regard to the evidence before me, I am satisfied on the evidence that:

(a) the application was made within the period required in s.394(2);

(b) the Applicant is a person protected from unfair dismissal; and

(c) the Small Business Fair Dismissal Code did not apply to the Applicant's dismissal.

Was the Applicant's dismissal a case of genuine redundancy?

• [39] The meaning of "genuine redundancy" is set out at s.389 of the FW Act as follows:

(1) A person's dismissal was a case of genuine redundancy if:

(a) the person's employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person's dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the enterprise of an associated entity of the employer.

Was the Applicant's job no longer required to be performed by anyone because of changes in the operational requirements of the Respondent's enterprise? (s.389(1)(a))

• [40] Section 389(1)(a) of the FW Act provides that a person's dismissal will be a case of genuine redundancy if his or her job is no longer required to be performed by anyone because of changes in the operational requirements of the employer's enterprise.

• [41] The expression "the person's employer no longer required the person's job to be performed by anyone" has long been used and applied in industrial tribunals and courts as a practical definition of redundancy.[3]

• [42] A job involves "a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees' organisation, to a particular employee".[4]

• [43] The test is whether the job previously performed by the employee still exists, not whether the employee's duties survive,[5] notwithstanding there are aspects of the employee's duties still being performed by other employees.[6]

• [44] In determining whether a dismissal is a case of genuine redundancy, it is not the function of the Commission to form a view about whether the employer's decision to make a position redundant was objectively fair or justifiable. The Commission is only concerned with whether the employer acted because of changes in its operational requirements.[7]

• [45] In this matter, the Applicant candidly stated that there was an excessive number of chefs employed following the Respondent abandoning its plans to open the third café. Furthermore, the Applicant agreed that he was receiving a higher salary than the more recently employed chef. Although the Respondent did not participate in these proceedings, the reason provided to the Applicant for his dismissal was the Respondent's unexpected financial situation. That the Respondent has been placed into Court ordered liquidation is, prima facie, consistent with the Respondent experiencing financial difficulties. Having regard to these matters, I find that s.389(1)(a) of the FW Act is satisfied.

Did the Respondent comply with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy? (s.389(1)(b))

• [46] For there to be a genuine redundancy, the Respondent must have complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy (s.389(1)(b)).

• [47] A modern award applies to particular employment if the modern award covers the employee and the employer, the modern award is in operation, and no other provision has the effect that the modern award does not apply.[8] A modern award covers an employer and employee if the award is expressed to cover the employer and employee.[9]

• [48] A café is within the coverage of the Restaurant Industry Award 2020 (Restaurant Award).[10] In relation to whether the Applicant's employment is covered by the Restaurant Award, clause A.3.8 of the Restaurant Award defines a Cook Grade 5 as follows:

A.3.8 Cook grade 5 (tradesperson) means a chef de partie or equivalent who has completed an apprenticeship or passed the appropriate trade test or who has the appropriate level of training in cooking, butchering or pastry cooking and who performs any of the following:

(a) general and specialised duties, including supervision or training of kitchen employees; or

(c) supervising other cooks and kitchen employees in a single kitchen establishment.

• [49] Notwithstanding the Applicant's position title, the principal duties for which the Applicant was employed[11] fall squarely within the scope of duties for a Cook Grade 5.

• [50] Accordingly, I am satisfied that the Applicant was covered by the Restaurant Award and that it applied to his employment.

• [51] The Restaurant Award contains an obligation that employers consult with employees about redundancy. Clause 32 of the Restaurant Award requires an employer who has made a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees:

• To give notice of the changes to affected employees;

• To discuss the effect of those changes, including measures that might mitigate the adverse effect of the changes; and

• [52] I accept the Respondent gave notice of the change. However, the Respondent did not discuss the effect of the change or any measures that might mitigate the adverse effect of the change, and did not provide relevant information in writing.

• [53] It follows that the Respondent has not complied with its obligation in the Restaurant Award to consult.

Was it reasonable in all the circumstances for the Applicant to have been redeployed within the Respondent's enterprise or the enterprise of an associated entity? (s.389(2))

• [54] A person's dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to have been redeployed within the Respondent's enterprise or that of an associated entity of the Respondent.

• [55] The Applicant did not contend that there was another job, position or other work that he could have been redeployed to, and there is no evidence to support a finding that it would have been reasonable for the Applicant to have been redeployed.

• [56] Accordingly, I find that it was not reasonable in all of the circumstances for the Applicant to have been redeployed in the Respondent's enterprise.

• [57] The Respondent did not comply with its obligation to consult under the Restaurant Award. It follows that I am not satisfied that the Applicant's dismissal was a case of genuine redundancy within the meaning of s.389 of the FW Act.

• [58] I now turn to a consideration as to whether the dismissal was harsh, unjust or unreasonable.

Was the dismissal harsh, unjust or unreasonable?

• [59] Section 387 of the FW Act provides that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.

• [60] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[12]

s.387(a) - Was there a valid reason for the dismissal related to the Applicant's capacity or conduct? s.387(b) - Was the Applicant notified of the valid reason? s.387(c) - Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?

• [61] The Applicant was not dismissed for a reason that related to his capacity or conduct. It follows that s.387(a)-(c) are not relevant to the question of whether the Applicant was unfairly dismissed.[13]

• [62] These factors weigh neutrally in my consideration.

s.387(d) - Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?

• [63] The Respondent did not unreasonably refuse to allow the Applicant a support person. I regard this factor as a neutral consideration.

s.387(e) - Was the Applicant warned about unsatisfactory performance before the dismissal?

• [64] As the dismissal did not relate to unsatisfactory performance, this factor is not relevant to the present circumstances.

s.387(f) - To what degree would the size of the Respondent's enterprise be likely to impact on the procedures followed in effecting the dismissal?

• [65] It is likely that the size of the Respondent's enterprise impacted on the procedures followed in effecting the dismissal. However, I consider this factor weighs neutrally in my consideration.

s.387(g) - To what degree would the absence of dedicated human resource management specialists or expertise in the Respondent's enterprise be likely to impact on the procedures followed in effecting the dismissal?

• [66] I am satisfied that the absence of a dedicated human resource management specialist or expertise impacted upon the procedure by which the Respondent carried out the dismissal.

• [67] However, this does not relieve the Respondent of extending an appropriate degree of courtesy to its employees "even when implementing something as difficult and unpleasant as the termination of a person's employment."[14] This factor weighs in favour of the dismissal being unfair.

• [68] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.

• [69] As set out above, I have found that the Respondent dismissed the Applicant because it no longer required the Applicant's job to be performed by anyone because of changes in the operational requirements of the Respondent's enterprise and it was not reasonable to redeploy the Applicant. This was a valid reason for the Applicant's dismissal. However, the Respondent's failure to consult with the Applicant was unreasonable and weighs in favour of a finding the Applicant's dismissal was unfair.

• [70] The only other matter relevant to my consideration under this factor was the Applicant's submission that he has not received payment for annual leave, redundancy pay and that superannuation contributions have not been made. Beyond the Applicant's submission there is no evidence as to whether those entitlements were or were not paid. If those entitlements remain unpaid, the Applicant will be able to pursue those through a court of competent jurisdiction or may be eligible for assistance under the Fair Entitlements Guarantee Scheme.

Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?

• [71] I have made findings in relation to each matter specified in s.387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[15]

• [72] Having considered each of the matters specified in section 387, I am satisfied that the Applicant was unfairly dismissed within the meaning of s.385 of the FW Act. This is because the Applicant was deprived of the opportunity to consult about measures that might have mitigated the adverse impact of the Respondent's decision to make the Applicant's position redundant.

• [73] Being satisfied that the Applicant was unfairly dismissed within the meaning of s.385 of the FW Act, I may, subject to the FW Act, order the Applicant's reinstatement, or the payment of compensation to the Applicant.

• [74] Under s.390(3) of the FW Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

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

Is reinstatement of the Applicant inappropriate?

• [75] In all the circumstances of this matter, I find it would be inappropriate to reinstate the Applicant.

Is an order for payment of compensation appropriate in all the circumstances of the case?

• [76] Where reinstatement is found to be inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, "[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one..."[16]

• [77] Having regard to all the circumstances of the case, I consider that an order for payment of compensation to the Applicant is appropriate. However, there is insufficient material before me addressing the matters relevant to the calculation of compensation, including the effect of any order on the viability of the Respondent's enterprise.

• [78] Accordingly, the matter will be listed for mention and directions in relation to the issue of compensation. This will provide the Liquidator appointed by the Court with an opportunity to heard in relation to any order for compensation that might be made.

[2] PR940508 [2003] AIRC 1424. See also Jean-Louis, Vallery v Mt Eliza Home Services Pty Ltd T/A My Home Residential Cleaning) [2020] FWC 2554 and Lydon McKay v Blend and Pack Pty Ltd [2023] FWC 2751.

[3] Ulan Coal Mines Limited v Howarth [2010] FWAFB 3488 (Ulan) at at [15].

[4] Ulan at [17] applying Jones v Department of Energy and Minerals [1995] IRCA 292; (1995) 60 IR 304 at 308 (per Ryan J).

[5] Kekeris v A. Hartrodt Australia Pty Ltd [2010] FWA 674 at [27].

[6] Dibb v Commissioner of Taxation [2004] FCAFC 126 (Dibb) at [41].

[7] Low v Menzies Group of Companies [2014] FWC 7829 at [16] cited with approval in Adams v Blamey Community Group [2016] FWCFB 7202 at [14].

[10] See clause 4.2 of the Restaurant Award.

[12] Sayer v Melsteel Pty Ltd [2011] FWAFB 7498 at [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002) at [69].

[13] UES (Int'l) Pty Ltd v Leevan Harvey [2012] FWAFB 5241 at [42]- [43] (per Acton SDP and Bissett C).

[14] Sykes v Heatly Pty Ltd t/a Heatly Sports PR914149 (AIRC, Grainger C, 6 February 2002) at [21].

[15] ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357 at [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002) at [92]; Edwards v Justice Giudice [1999] FCA 1836 at [6]- [7].

[16] Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter [2014] FWCFB 7198 at [9].

Printed by authority of the Commonwealth Government Printer