Fair Work Act 2009

s.604 - Appeal of decisions

ppeal against decision [2019] FWC 8283 of Commissioner Yilmaz at Melbourne on 6 December 2019 in matter number U2019/3398.

[1] Ms Lucinda Vennix has lodged an appeal, for which permission to appeal is required, against a decision issued by Commissioner Yilmaz on 6 December 2019[1] (decision) concerning Ms Vennix's application for an unfair dismissal remedy against her former employer, Mayfield Childcare Limited (Mayfield). In the decision, the Commissioner found that there was no valid reason for Ms Vennix's dismissal and that the dismissal was unfair, but determined that it was not appropriate to make any award of compensation in Ms Vennix's favour. Ms Vennix contends in her appeal that the Commissioner erred in declining to grant her any remedy in respect of her unfair dismissal.

[2] The statutory framework in which the impugned aspect of the decision was made may be set out briefly. Part 3-2 of the Fair Work Act 2009 (FW Act) contains the scheme of provisions concerning unfair dismissal. Once a dismissal the subject of an application under s 394 has been found to be unfair pursuant to s 385, having regard to the matters specified in s 387, the Commission must then give consideration as to whether a remedy should be awarded pursuant to the provisions of Div 4 of Pt 3-2. In that respect, s 390(1) empowers the Commission to order the remedies of reinstatement or compensation where a person protected from unfair dismissal has been unfairly dismissed. In respect of the latter remedy, s 390(3) provides:

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

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

[3] If the preconditions for the award of compensation in s 390(3) are satisfied, the Commission must then quantify the amount of compensation in accordance with s 392. Section 392(2) sets out a number of mandatory considerations in the assessment of compensation as follows:

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

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

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

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

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

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

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

[4] Section 392(3) provides that if the Commission is satisfied that the applicant's misconduct contributed to the employer's decision to dismiss the applicant, the Commission must reduce the compensation amount it would otherwise order by an appropriate amount on that account. Section 392(4) provides that a compensation amount must not include any component for shock, distress, humiliation or the like caused by the manner of the dismissal. Section 392(5) and (6) relevantly provide that an award of compensation must not exceed the remuneration entitlement of the employee for the 26 weeks immediately before the dismissal.

[5] The background facts relevant to the issue raised by the appeal may be summarised as follows. Ms Vennix has been employed in the early childhood sector for almost 20 years. In 2016, Mayfield purchased the Grand Oaks Early Learning Centre (centre) at which Ms Vennix was employed as Assistant to the Manager. In November 2016 Mayfield appointed Ms Vennix to the position of Manager of the centre. In this capacity she was the "responsible person" in respect of various regulatory requirements.

[6] On 25 March 2018, Mayfield issued Ms Vennix with a formal warning arising from an incident which occurred on 22 March 2018 when a child was fed something to which the child was allergic and was hospitalised as a result. Ms Vennix was not responsible for the incident itself; the warning related to an alleged failure by Ms Vennix to comply with a number of regulatory and policy requirements in the aftermath, including notifying the Area Manager within the required timeframe and properly reporting in writing and documenting the incident.

[7] On 12 February 2019, Mayfield informed Ms Vennix that it had decided to introduce a performance improvement plan for the centre, and that she would no longer receive three days' per week office support from her assistant manager due to a reduction in occupancy at the centre. This caused Ms Vennix some distress as she considered that the centre had been operating satisfactorily and that she was already overworked and the removal of her office support would exacerbate this. After a break, she proceeded to inform employees individually of what had occurred, and in the course of doing so one of the educators employed at the centre advised (at about 2.45pm) that a parent had made a complaint that another educator had grabbed a child by the arm the previous day. Ms Vennix informed the educator the subject of the allegation about the complaint, and then she left the centre at about 3.30pm (her normal finishing time) to pick up her granddaughter. Ms Vennix is the primary carer for her granddaughter during the week. Mayfield had a policy requirement that such a complaint be reported to the Area Manager within 24 hours in writing, but Ms Vennix did not do so. She did however verbally mention the complaint to her Area Manager the following morning.

[8] On 18 February 2019 Ms Vennix was required to attend a meeting the following day to discuss the incident. Because Ms Vennix was absent for some days because of illness, the meeting ultimately did not occur until 4 March 2019. Ms Vennix was informed the following day (5 March 2019) that her employment was terminated, effective from that day, on the basis that she was in breach of various regulatory and policy requirements in respect of the complaint she had been informed of on 12 February 2019. Her failures in this respect included that she had not informed her Area Manager in accordance with Mayfield's policies and procedures within the prescribed timeframe. She was paid four weeks' pay in lieu of notice. Her annual salary at the time of her dismissal was $68,725.28 (or approximately $1,318.00 per week).

[9] Ms Vennix did not obtain alternative employment until 29 April 2019, when she secured casual employment which lasted until 17 July 2019 and from which she earned a total of $12,108.95 (about $931.50 per week). She obtained permanent employment with remuneration comparable to her former position in September 2019.

[10] The Commissioner, in considering whether Ms Vennix's dismissal was unfair, considered each of the matters required to be considered under s 387. In relation to s 387(a), the Commissioner's findings of fact included the following:

• The Applicant in her oral evidence admitted that much responsibility rests in her role, even though she did not take steps to inform herself of her obligations before taking on the role. The Applicant acted in the role for almost three years and had ample time to appraise herself of her obligations, particularly as she signed documentation attesting that she would comply with the relevant laws, regulations, codes, and policies.

• While it was not evident if the Applicant received materials concerning her obligations to comply with legislation, regulations, codes and policies, having been in the role for almost three years, it is reasonable to expect she would have familiarized herself given the level of responsibility that comes with the role.

• The Applicant while not directly responsible for the first incident where a child reacted to food that he should not have consumed, the outcome of her warning on that occasion should have been enough to alert her to the importance of promptly reporting the second incident in writing, even though she may have verbally informed her Area Manager.

• The Applicant was more consumed by management decisions affecting her position (performance improvement plan and removal of office support), rather than the potential seriousness of the second incident. The Applicant failed to promptly investigate the allegation to inform herself fully and she did not take the allegation that a child may have been mishandled seriously.

• The Respondent is not without responsibility and was quick to attribute full blame on the Applicant. I am satisfied that the Respondent knew of the Applicant's limitations in her competency as the Centre Manager, and I am not satisfied that the Respondent provided the necessary information prior to and on commencement of employment of what the role entailed.

• I am satisfied that a verbal report of some sort was made to the Area Manager, and therefore action by the Respondent could have been more immediate to ascertain the relevant detail and assess its seriousness. After all, the responsibility for reporting of incidents to the relevant government department rests with the Respondent and not the Applicant.

• While the evidence of the child being moved by the arm, does not suggest it was as serious an incident to warrant a reason for immediate dismissal, the behaviour of the Applicant as the person in charge was poor.

• In evidence the Applicant stated that following the cous-cous/food incident, she talked to her staff, but no policy or direction was given in writing to the staff. This is of concern as a child was hospitalized and the Centre employs casual staff. I find that the Applicant failed to take appropriate action to ensure that such an incident should not occur again. At the same time, knowing the seriousness of the incident, the Respondent took no action either.

• The Applicant acknowledged that the care of the children is paramount to the centre and I find, that as the centre's main representative this was lost on her, as she did not prioritise an allegation concerning the safety of a child ahead of how she was feeling."[2]

[11] On the basis of these findings, the Commissioner found that there was not a valid reason for the dismissal:

"[49] Having regard to the matters I have referred to above, I find that there was a valid reason for the Respondent to take disciplinary action related to the Applicant's conduct. However, the reason given by the Respondent falls short of a valid reason for immediate termination for negligence. Under the circumstances I have given weight to evidence that the Respondent was aware of the Applicant's shortcomings in the position, the role of the Area Manager to support centre managers, the expectation that centre managers are responsible and the lack of risk to the child's safety and wellbeing involved in the incident. I am not of the opinion that the Respondent justified summary termination for misconduct."

[12] Of the remaining matters in s 387, it is only necessary to refer to the Commissioner's findings in two instances. First, in relation to s 387(c), the Commissioner found:

"[64] Having regard to the matters referred to above, I find that the Applicant was given an opportunity to respond to an incident at the Centre and her reactions to it, although she was not informed that her behaviour may constitute negligence because she failed to provide a written report within required the 24 hour period. I find that it is reasonable that the Applicant formed the view that the Respondent determined to terminate her employment prior to the meeting."

[13] In relation to s 387(h), the matters which the Commissioner treated as relevant and took into account included the following:

"• The Applicant by her own admission was overwhelmed by the position as it was a step up in her career to manage a large centre and it was the first time, she was to be a Nominated Supervisor.

• Despite not having the competency when she assumed the role, it appears that the Applicant did not ultimately meet the required competency for the role.

• Access to limited training was encouraged, which included the government provided online training relating to child protection. There was no evidence presented that the online training addressed relevant elements to ensure the Applicant understood her role and obligations.

• There is no contention that the Applicant was not provided with support to build her capacity and competence, nor was she provided with specific support or training to conduct employment related management tasks.

• The Area Manager approved all rosters and while the Applicant admitted she had the authority to terminate the employment of the carer involved in the incident, it appears she lacked any skill to perform the task.

• The Applicant assumed a role that required the safety and care of children as a priority, however, she placed her own feelings concerning how she was managed ahead of the responsibility towards the children in her Centre.

• While the Applicant had the care of her grandchild which was why she had to leave the Centre at a specified time, she had ample opportunity to prioritise her tasks to prepare a report and investigate the incident further. On this occasion she did not. Should she have been pressed for time before leaving the Centre, it was unclear why she would check emails during in her private time, yet when an incident is reported to her that may have serious consequences she did not make a report to her Area Manager."[3]

"[97] I find that should the Applicant not gain the satisfactory competency in the role, her employment would have been terminated. However, the Respondent knew of the Applicant's shortcomings and despite the resources on hand it did not take steps to support her development or consider an alternative role given her experience in the industry."

[15] Having found that Ms Vennix had been unfairly dismissed by Mayfield, the Commissioner turned to the issue of remedy. The Commissioner found that reinstatement was not appropriate and then, pursuant to the requirement in s 390(3)(b), considered whether an order for compensation was appropriate in all the circumstances of the case. After summarising the parties' respective submissions as to this question, the Commissioner concluded:

"[110] I find that in all the circumstances, I do not consider that payment of compensation is appropriate because the Applicant was out of her depth in the role of Centre Manager. While her experience in the sector is substantial, her experience in managing a centre, its liabilities, and responsibilities was not at a standard required by the Respondent. It is evident the Applicant did not have the required competency to perform the role dependably without support by the Respondent.

[111] Given its size and resources, I find the Respondent managed the appointment and employment of the Applicant inadequately. Given the level of experience in the childcare sector and the Applicant's admission that her priority is her private care obligations, I am of the opinion that there is limited scope that the Applicant would have maintained enduring employment in the role as Centre Manager.

[112] I therefore decline to order any remedy, notwithstanding that I found the Applicant was a person protected from unfair dismissal and had been unfairly dismissed."

[16] Ms Vennix submitted that permission to appeal should be granted in the public interest because the decision manifested an injustice, was counter-intuitive, the legal principles applied appeared disharmonious when compared with other recent decisions, and there was a need for appellate guidance regarding how the Commission could determine the appropriateness of compensation. Ms Vennix submitted that the decision was attended by appealable error in the following respects:

(1) The Commissioner had failed to take into account a number of material considerations, namely: whether Ms Vennix had suffered any financial loss as a result of her dismissal; her length of service; the effect of any order of compensation on the viability of Mayfield's enterprise; and the amount of remuneration earned by Ms Vennix following her dismissal.

(2) The Commissioner took into account an irrelevant consideration, namely Ms Vennix's "private care obligations". At its highest, this related only to the incident on 12 March 2019, and had no application generally to Ms Vennix's work performance.

(3) Ms Vennix was denied procedural fairness, in that the Commissioner did not place her (or Mayfield) on notice that the issue of Ms Vennix's "private care obligations" would be taken into account in determining the appropriateness of compensation.

(4) The decision was unreasonable or plainly unjust, in circumstances where the dismissal was found to be unfair for reasons which included that there was no valid reason for the dismissal.

(5) The Commissioner's determination of how long Ms Vennix would have remained in her employment with Mayfield was a significant error of fact.

(6) The conclusion that the Commissioner prioritised her "private care obligations" over her work commitments was also a significant error of fact,

[17] Mayfield submitted that permission to appeal should be refused because the appeal did not raise any issue which attracted the public interest, the decision was wholly discretionary in nature and did not manifest any injustice, and there was no diversity of decisions at first instance requiring appellate guidance. As to the merits of the appeal, Mayfield submitted:

• a finding that a dismissal was unfair does not automatically lead to an award of monetary compensation;

• it was necessary for the Commissioner to determine the appropriateness of compensation as a remedy at the outset, and in doing so the Commissioner considered all of the circumstances of the case;

• the relevant circumstances did not necessarily include the matters specified in s 392(2), the consideration of which only arose if compensation was considered appropriate;

• the Commissioner correctly concluded that the payment of compensation was inappropriate because Ms Vennix was out of her depth in the role of centre manager;

• the proposition that the Commissioner did not consider whether Ms Vennix had suffered any financial loss as a result of her unfair dismissal cannot be maintained since the decision identified it as one of the points of submission advanced by Ms Vennix;

• the issues of the length of service, the effect of compensation on the viability of Mayfield's enterprise and the efforts of Ms Vennix to mitigate her loss were raised in the evidence and submissions and therefore considered by the Commissioner;

• the "private care obligations" of Ms Vennix were properly considered in the context of her unsuitability for her role, in that her inability to balance her own personal commitments with her work commitments limited her longevity in the role; and

• there was no significant error of fact in the decision.

[18] We have earlier set out the terms of s 390(3). That provision, in plain terms, requires that the Commission must not make an order for the payment of compensation in respect of an unfair dismissal unless and until it is satisfied as to two matters: first, that the reinstatement of the person who has been dismissed is inappropriate and, second, that an order for the payment of compensation is appropriate in all the circumstances of the case. This appeal concerns the Commissioner's conclusion with regard to the second of those two matters as specified in s 390(3)(b).

[19] We accept Mayfield's submission that the consideration required by s 390(3)(b) involves the making of a discretionary intermediate decision. The discretion to be exercised is a broad one, since it is not guided by the provision beyond the requirement to take into account all the circumstances of the case.[4] For an appeal against such a decision to succeed, it is necessary to demonstrate error of the type identified in House v The King.[5]

[20] We are satisfied that the Commissioner's decision in relation to the s 390(3)(b) requirement was attended by appealable error of the requisite type in at least two respects. First, we consider that the Commissioner failed to take into account a material consideration, namely whether Ms Vennix had suffered monetary loss as a result of her unfair dismissal. Given the statutory purpose of the compensation power, that was necessarily a centrally relevant matter in circumstances where Ms Vennix's case was that the dismissal had caused her to be unemployed in the first instance and later employed at a lower rate of income.[6] It is apparent on the face of the Commissioner's reasons and conclusions in relation to s 390(3)(b) that this matter was not mentioned let alone addressed.

[21] Second, we consider that the Commissioner erred in taking into account in her assessment of the appropriateness of compensation "...the Applicant's admission that her priority is her private care obligations...". We have closely examined the evidentiary material that was before the Commissioner, particularly the transcript of Ms Vennix's oral evidence. No such admission was ever made by her. Mayfield was unable at the appeal hearing to point to anything constituting such an admission. This was in a direct sense an error of fact of a significant nature, and involved the Commissioner taking into account an irrelevant consideration.

[22] It was also erroneous in a broader sense. In relation to the incident which occurred on 12 February 2019, the evidence is contrary to the proposition that Ms Vennix "prioritised" her family obligation to pick up her granddaughter and that it was this which caused her not to report the complaint that had been made to her Area Manager. The evidence demonstrated that Ms Vennix left work at her normal finishing time to pick up her granddaughter, and notwithstanding her carer's obligations she could have reported the matter to the Area Manager by way of an email on her laptop. The following cross-examination of Ms Vennix explains why she did not do this (underlining added):

Did you take your laptop home the day of the incident?---Yes, I did.

You didn't put it in an email?---No, I didn't want to work out of hours that night.

So you chose this time not to work out of hours?---Yes, I did. After the day I had, yes, I did.

Even though a serious incident had occurred with a child, with a person that you had on your radar, you chose this time not to contact your supervisor in writing?---Yes.[7]

[23] We infer that Ms Vennix's answer concerning the day she had had was a reference to the fact that she had found the day's events, involving as they did the performance improvement plan and the loss of her office support, to be distressing. She identified this as the reason why she did not submit a written report about the complaint that evening. There is no suggestion that her obligation to pick up and care for her grandchild had anything to do with her failure to report the complaint in writing. Nor was there any evidence that, beyond the incident on 12 February 2019, Ms Vennix's carer's responsibilities had been responsible for whatever deficiencies were apparent in her work performance. Accordingly, this could not constitute a proper basis to conclude that the award of compensation was not appropriate.

[24] The outcome determined by the Commissioner was counter-intuitive and manifested an injustice in that Ms Vennix was denied a remedy notwithstanding findings that there was no valid reason for her dismissal, that it was reasonable to conclude that Mayfield had determined to dismiss her before giving her an opportunity to respond to the allegations against her, and that her dismissal was consequently unfair, and further notwithstanding that the evidence plainly demonstrated that Mayfield's conduct had caused Ms Vennix financial loss. For these reasons, we consider that the grant of permission to appeal would be in the public interest, and accordingly permission to appeal must be granted as required by s 604(2) of the FW Act. We uphold the appeal on the basis of the two instances of appealable error we have identified and quash the decision.

[25] We consider that the most procedurally convenient course is to re-determine the issue of remedy ourselves pursuant to s 607(3)(b) of the FW Act on the basis of the material that was before the Commissioner. We note in that connection that the parties made comprehensive submissions before the Commissioner addressing the relevant requirements of ss 390 and 392.

[26] In relation to s 390(3)(a), there was no challenge in the appeal to the Commissioner's finding that the reinstatement of Ms Vennix is inappropriate, and we confirm that finding. In relation to s 390(3)(b), we consider that an order for the payment of compensation is appropriate in all the circumstances of the case. Mayfield's unfair dismissal of Ms Vennix caused her financial loss, in that she was unemployed until 29 April 2019, and thereafter only enjoyed a limited period of casual employment on a lower rate of remuneration before finally obtaining permanent employment in September 2019. We do not consider that Ms Vennix has engaged in any conduct before or after her dismissal of a nature which would entirely disqualify her from receiving compensation for her financial loss.

[27] It is therefore necessary for an assessment to be made as to the amount of compensation which should be ordered. In assessing compensation, it is necessary under s 392(2) of the FW Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a)-(g) of the subsection, and it is also necessary to consider the other relevant requirements of s 392. Our assessment as to the quantum of compensation will be based on the methodology articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc.[8]

Section 392(2)(c) - Remuneration that would have been received if the dismissal had not occurred

[28] In assessing the remuneration Ms Vennix would have received if the dismissal had not occurred, it is necessary to take into account the findings made by the Commissioner concerning Ms Vennix's suitability to continue to hold the position in which Mayfield employed her. We have earlier set out the relevant passages in the decision; in summary, the Commissioner found that while Mayfield was not without fault concerning Ms Vennix's work difficulties, she nonetheless:

• was not competent to hold the role to which she was appointed at the outset, and never achieved such competency;

  • did not during her employment in the role familiarise herself with the role's responsibilities, particularly in relation to the relevant regulatory requirements;

  • did not after the 22 March 2018 incident take steps to ensure that it would not be repeated, or comprehend the importance of reporting incidents in writing;

  • behaved poorly in response to the information about the complaint she received on 12 February 2019, prioritised her feelings over her responsibilities to the care of the children, and did not take the matter sufficiently seriously; and

  • felt overwhelmed by her promotion to the position of centre manager and was "out of her depth".

[29] These findings, which were not the subject of any serious challenge by Ms Vennix in the appeal, militate against a conclusion that Ms Vennix would have remained in employment with Mayfield for a significant period of time had she not been dismissed. However, Ms Vennix's failings in the position were not so frequently demonstrated as to permit the conclusion that she would have been dismissed for other reasons virtually immediately, as Mayfield submitted. The logic of the Commissioner's conclusion that Ms Vennix's conduct on 12 February 2019 justified disciplinary action short of dismissal suggests that she might properly have been given a final warning and a reasonable opportunity to improve her performance. On that basis, our assessment is that if not dismissed, Ms Vennix would have remained in employment for a further ten weeks. That additional employment would have entitled her to remuneration of $13,180.00 (10 x $1,318.00 per week).

Section 392(2)(e) and (f) - Remuneration earned and income reasonably likely to be earned

[30] Ms Vennix did not earn any remuneration from alternative employment in the first eight weeks following her dismissal. In the two weeks which followed, she commenced casual employment, for which her average weekly earnings were, as earlier stated, $931.50. Once this is deducted, it reduces the compensation amount to $11,317.00 ($13,180.00 - 2 x $931.50).

[31] We consider that account needs to be taken of the four week's pay in lieu of notice which Ms Vennix was paid upon her dismissal, since this constituted earnings available to her during her period of unemployment. This will be deducted from the compensation amount, leaving a total of $6,045.00 ($11,317.00 - 4 x $1,318)

[32] We do not consider that there is a basis for any deduction for contingencies, since we are dealing with past and therefore known circumstances. In relation to taxation, compensation should be determined as a gross amount and it should be left to Ms Vennix to pay any amount of taxation required by law.

[33] There is no evidence that any particular amount of compensation that might be ordered would have an adverse impact on the viability of the Mayfield's business.

[34] We do not consider that Ms Vennix's length of service justifies any adjustment to the amount of compensation that might otherwise be ordered.

[35] We are satisfied that Ms Vennix attempted to mitigate her loss by seeking alternative employment.

[36] Ms Vennix's difficulties in her role were performance related, and could not be said to constitute misconduct. Accordingly, no deduction is required under s 392(3).

Section 392(4) - No component for shock, distress, humiliation or other analogous hurt

[37] We confirm that the compensation amount we have assessed contains no component for any shock, distress, humiliation or other analogous hurt suffered by Ms Vennix as a result of the manner of his dismissal.

[38] The amount of compensation we propose to order is below the compensation cap.

[39] The amount of compensation is not sufficiently large to justify the compensation amount being paid in instalments.

[40] We consider that a compensation amount of $6,045.00 would be appropriate in all the circumstances. The amount shall be payable in 14 days.

(3) The decision ( [2019] FWC 8283) is quashed.

(4) Mayfield Childcare Limited shall pay Ms Lucinda Vennix the amount of $6,045.00 within 14 days of the date of this decision.

[1] [2019] FWC 8283

[4] See Coal and Allied Operations Pty Ltd v AIRC [2000] HCA 47, 203 CLR 194, 99 IR 309 at [21] per Gleeson CJ, Gaudron and Hayne JJ

[5] [1936] HCA 40, 55 CLR 499 at 505 per Dixon, Evatt and McTiernan JJ

[6] See Kylie Jeffrey v IBM Australia Limited [2015] FWCFB 397 at [12] and [2015] FWCFB 4171 at [5]- [7]

[7] Transcript 17 July 2019, PNs 490-493

[8] [2013] FWCFB 431, 229 IR 6

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