Fair Work Act 2009

s.394 - Unfair dismissal

Fearon Howard Real Estate Pty Ltd T/A Ray White Balmain

Application for an unfair dismissal remedy - applicant unfairly dismissed - compensation ordered

[1] Ms Smith was employment by Fearon Howard Real Estate Pty Ltd T/A Ray White Balmain (Ray White Balmain) and its predecessor from 10 October 2017.

[2] Ms Smith says that she was dismissed on 26 May 2020 because of her requests to receive the Jobkeeper payment. She subsequently made an application pursuant to s.394 of the Fair Work Act 2009 seeking relief for her alleged unfair dismissal by Ray White Balmain.

[3] Ray White Balmain contends that Ms Smith's dismissal was not unfair and she was dismissed for performance and attitude issues.

[4] The application was heard by video on 27 October 2020. At the hearing Ms Smith appeared with a support person, Mr Julian Luton. Ray White Balmain was represented by Ms M O'Neill of Real Estate Employers' Federation.

[5] For the reasons set out below, I find that the dismissal of Ms Smith was unfair and have ordered compensation as a remedy.

[6] Ms Smith was employed on a full time basis as a salesperson. Her duties were to prospect, list and sell property. She gave evidence that in March 2019 she made the highest recorded sale on the Balmain Peninsula. In March 2020, she received an award from Ray White head office for becoming a "Premier Agent". This award was in recognition for having made over $330,000 in settled commission for the 2019/2020 financial year. She was dismissed around two months later.

[7] Ms Smith said that she sought advice from "Fair Work" about her entitlement to the JobKeeper payment, and had a number of conversations and email correspondence about the payment from early April 2020 until the day of her dismissal with representatives of Ray White head office and with Ms Rebecca Fearon and Mr Karl Howard, the co-owners of Ray White Balmain.

[8] Ms Smith gave evidence that on 26 May 2020 she was called to a meeting with Ms Fearon. Ms Fearon accused Ms Smith of 'stirring the pot' with her colleagues about JobKeeper, and said she was 'sick of it" and told Ms Smith to pack her bag and leave. Ms Smith said she unsuccessfully tried to talk to Ms Fearon, and then returned to her desk to collect her personal belongings. A colleague approached her to ask what was happening, and when she started to explain, Ms Smith said Ms Fearon started yelling at her and said words to the effect of "no matter what we did for you, you were never grateful. We went above and beyond to help you".

[9] Ms Smith contended that her dismissal was unfair because there was no valid reason for her dismissal, she was not given the opportunity to respond or given the opportunity to have a support person with her, and she was never warned about either her behaviour or her performance prior to her dismissal.

[10] In cross examination, Ms Smith maintained that she was competent in the performance of her role, and that she was not warned or counselled about her performance or behaviour.

[11] The submissions made on behalf of Ms Smith highlighted that Ms Smith's performance over the past year had been excellent, and in the six months prior to her dismissal she had been performing on par with her sales colleagues. Ms Smith had been the longest standing employee and had had an excellent relationship with the co-owners until a few months before her dismissal. This was evidenced in part, she submitted, because of Mr Howard's many requests for Ms Smith to return to work after her dismissal. It was submitted that Mr Howard would not have asked Ms Smith to return if she was not a valued employee.

[12] Ms Fearon and Mr Howard gave evidence on behalf of Ray White Balmain.

[13] Ms Fearon explained that Ms Smith was employed on a wage with a debit credit commission structure, which meant that she was paid a wage which would then be debited from her future commission payments.

[14] She said she noticed performance issues with Ms Smith in February 2020. She and Mr Howard then started to have regular face to face meetings and phone conversations with Ms Smith as she was 'missing out' on many listings. Ms Fearon said she recommended to Ms Smith that she attend a Toastmasters course to improve her sales skills.

[15] Ms Fearon said that because Ms Smith had missed out on many listings, she engaged a consultant, Ms Bolderston, to provide coaching to upskill her and the other staff members in order to improve their sales results.

[16] Ms Fearon gave evidence that she and Mr Howard regularly provided assistance to Ms Smith by going to property appraisals with her and assisting her with negotiating and closing deals. Ms Fearon also said that Ms Smith had a poor attitude and did not accept help from anyone.

[17] In early April 2020 when JobKeeper was announced, Ms Fearon said Ms Smith approached her and asked whether the business had qualified for the JobKeeper payments. Ms Fearon told her she was unsure at that time whether they had qualified for JobKeeper. She said Ms Smith asked on numerous occasions about JobKeeper as she was struggling to get her own listings.

[18] Ms Fearon gave evidence that the business received its first Jobkeeper payment on 15 May 2020, at which time a webinar was held with Ray White head office to explain how the payment would work for commission-based employees such as Ms Smith.

[19] Ms Fearon said Ms Smith was then advised she would receive a proportion of the JobKeeper payment based on her debit credit arrangement, which meant she was paid 60% of the JobKeeper payment. The effect of this arrangement, Ms Fearon contended, was that Ms Smith would continue to be paid her full wage and would be debited from her commissions only 60% as her wage, meaning she was debited less than normal.

[20] Ms Fearon said she received an email from Ms Smith on 20 May 2020 asking to be stood down as she had received advice that she would be better off financially in doing so. Ms Fearon responded on 21 May 2020 seeking to meet with her to discuss her request but Ms Smith was unavailable that day to meet.

[21] Ms Fearon said that Ms Smith was the only employee who remained disgruntled that she was not receiving the full JobKeeper payment, and during that time period had not listed any properties on her own. She said Ms Smith was obviously unhappy and was causing distress and disharmony in the office because of her regular discussions about Jobkeeper with other staff.

[22] Ms Fearon gave evidence that on 26 May she asked Ms Smith to meet with her as she was frustrated at her lack of focus on her work and that she was focussed on the JobKeeper payment. During the meeting, Ms Fearon told Ms Smith that it was obvious she was unhappy and that she had continued to discuss JobKeeper with other staff behind Ms Fearon's back. Ms Fearon said Ms Smith became hysterical and stormed out of the room. She then followed Ms Smith and asked her to pack her bags and leave as it was clear she had no respect for her and was being divisive in the office.

[23] On the same day, Ms Fearon sent Ms Smith an email confirming her dismissal effective immediately due to irreconcilable differences.

[24] In cross examination, Ms Fearon acknowledged that Ms Smith had sold a similar number of properties to other sales staff during the time period in which Ms Fearon had contended she was underperforming. She was also asked whether she had at any stage informed Ms Smith that her employment was at risk, and answered that she had provided training for Ms Smith and had provided her with support to achieve her sales goals. She did not, however, say that Ms Smith had been informed her employment was at risk.

[25] Mr Howard gave evidence that Ms Smith's performance was discussed with her formally but these discussions were not documented. He said he had raised a number of issues with her, and that Ms Smith appeared to be disgruntled with her lack of listings.

[26] In terms of JobKeeper, Mr Howard said he was upset that Ms Smith had spoken with Ray White head office staff before talking to him about it.

[27] Mr Howard said that after Ms Fearon dismissed Ms Smith, he discussed with Ms Fearon the possibility of salvaging the employment relationship with Ms Smith and as a result, he offered Ms Smith her job back. A number of text messages between Ms Smith and Mr Howard followed, including Mr Howard arranging for a conflict resolution specialist to come in to assist in repairing the relationship between Ms Smith and Ms Fearon. Mr Howard also said in a text message that he did not think Ms Smith should leave and instead they should try to "work through everything". He also advised Ms Smith that Ms Fearon would not be managing employees moving forward.

[28] On 7 June 2020, Mr Howard sent a text message to Ms Smith in the following terms:

I spoke to Rebecca and we both want you to stay working at Ray White. Please talk to me before you make any decisions. I don't think there's another agency where you will be able to succeed as you'll be competing against the established agents that are already there. We are working on changing our business structure and want you to be part of it into the future ..."

[29] No agreement was reached with respect to Ms Smith's return to Ray White Balmain.

[30] Mr Howard said that Ms Smith had created serious division within the workplace over JobKeeper, and the situation had escalated to the point where there was no other option but to dismiss Ms Smith because of her unsatisfactory performance and her attempts to "try to get staff to turn against management in relation to JobKeeper".

[31] It was submitted on behalf of Ray White Balmain that Ms Smith's poor performance and attitude, which had been discussed with her, warranted her dismissal. It was submitted that the debiting of 60% of her wage rather than 100% in accordance with her employment contract was fair and reasonable, but Ms Smith continually argued about this with her employer. The evidence showed that Ms Smith obtained employment as a commission only salesperson within four weeks of her dismissal.

[32] There is no dispute and I am satisfied that Ms Smith is a person protected from unfair dismissal by virtue of s.382 of the Act. I now turn to consider if her dismissal was unfair within the meaning of the Act.

[33] A dismissal is unfair if the Commission is satisfied on the evidence before it that the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

A person has been unfairly dismissed if the FWC 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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

[34] There is no dispute that Ms Smith was dismissed and that subsections (c) and (d) do not apply.

Was the dismissal harsh, unjust or unreasonable?

[35] Section 387 of the 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.

[36] The ambit of the conduct which may fall within the phrase 'harsh, unjust or unreasonable' was explained in Byrne v Australian Airlines Ltd[1] as follows:

"... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted."

[37] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[2]

[38] In order to be a valid reason, the reason for the dismissal should be "sound, defensible or well founded"[3] and should not be "capricious, fanciful, spiteful or prejudiced."[4] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[5]

[39] There is no mandate for giving the 'valid reason' criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to 'have regard to' or 'take into account' requires the Commission to give the matter(s) weight as a fundamental element in the decision making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.

[40] I find that the evidence does not support a finding that there was a valid reason for Ms Smith's dismissal.

[41] There is no evidence to support the contention that Ms Smith was underperforming. On the contrary, in March 2020 she received an award from Ray White head office for becoming a 'Premier Agent', in recognition for having made over $330,000 in settled commission for the 2019/2020 financial year. The evidence also shows that Ms Smith's sales in the six months before her dismissal were comparable to the other sales staff.

[42] The fact that Mr Howard made multiple offers to Ms Smith to have her return to her employment with Ray White Balmain is also suggestive that her performance was not unsatisfactory.

[43] In terms of Ms Smith's requests to receive the JobKeeper payment, I do not accept that Ms Smith's queries in this regard could provide a valid reason for her dismissal. In circumstances where Ms Smith had received conflicting advice (ie. that she was entitled to receive the full benefit of the JobKeeper payment), it was not unreasonable for her to seek clarification from her employer in this regard. It may well have been that she was disgruntled with the response she was provided with from her employer. However this is also an insufficient basis for her dismissal.

[44] In summary, there is no evidence to support a finding that there was a valid reason for Ms Smith's dismissal.

Notification of the valid reason and opportunity to respond - s.387(b) and (c)

[45] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,[6] in explicit terms[7] and in plain and clear terms.[8] In Crozier v Palazzo Corporation Pty Ltd[9] a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

"[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted."[10]

[46] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern.[11] This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.[12]

[47] The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to Ms Smith before her dismissal was effected.

[48] Ms Smith was not notified of a valid reason and was not given the opportunity to respond. So much is clear from the evidence, and in particular that Ms Smith was not informed that the meeting with Ms Fearon on 26 May 2020 was a disciplinary meeting or that it might result in her dismissal.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[49] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[50] Ms Smith was not refused a support person, however she was not aware that she may have required one, in that she was not aware that the meeting she had with Ms Fearon on 26 May 2020 might result in her dismissal.

Warnings regarding unsatisfactory performance - s.387(e)

[51] A warning for the purposes of s.387(e) must clearly identify:

• (a) the areas of deficiency in the employee's performance;

• (b) the assistance or training that might be provided;

• (c) the standards required; and

(d) a reasonable timeframe within which the employee is required to meet such standards.[13]

[52] The warning must also "make it clear that the employee's employment is at risk unless the performance issue identified is addressed."[14]

[53] I am not satisfied on the evidence that Ms Smith was appropriately warned regarding the alleged unsatisfactory performance. In particular, while there may have been some discussions about how to improve her sales, it was clear from the cross examination of Ms Fearon that Ms Smith was not advised that her employment was at risk.

Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))

[54] I am satisfied that the size of Ray White Balmain and the absence of dedicated human resource management expertise did not impact on the procedures followed by it in effecting the dismissal. Ray White Balmain is a member of the Real Estate Employers Federation (REEF) and had access to Ray White head office staff for advice and support.

Other relevant matters - s.387(h)

[55] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.

[56] In this matter there are no other relevant matters to be considered.

[57] Having considered each of the matters specified in s.387 of the Act and for the reasons set out above, I am satisfied that there was no valid reason for the dismissal of Ms Smith, and the dismissal was harsh, unjust and unreasonable.

[58] I now turn to the appropriate remedy.

[59] Having found that Ms Smith was protected from unfair dismissal, and that her dismissal was harsh, it is necessary to consider what, if any, remedy should be granted to her. Ms Smith seeks remedy in the form of compensation.

[60] Under section 390(3) of the Act, I must not order the payment of compensation to Ms Smith unless:

1. I am satisfied that reinstatement is inappropriate; and

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

[61] In this case, I am satisfied that reinstatement is inappropriate. Ms Smith does not seek reinstatement and has obtained alternative employment. I am also satisfied that an order for the payment of compensation is appropriate, given my finding that her dismissal was unfair.

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

• (a) the effect of the order on the viability of Ray White Balmain;

• (b) the length of Ms Smith's service;

• (c) the remuneration that Ms Smith would have received, or would have been likely to receive, if she had not been dismissed;

• (d) the efforts of Ms Smith (if any) to mitigate the loss suffered by her because of the dismissal;

• (e) the amount of any remuneration earned by Ms Smith from employment or other work during the period between the dismissal and the making of the order for compensation;

• (f) the amount of any income reasonably likely to be so earned by Ms Smith 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.

[63] In determining an amount to be paid as compensation, and as was noted by a Full Bench, "[t]he well-established approach to the assessment of compensation under s.392 of the FW Act ... is to apply the "Sprigg formula" derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket (Sprigg).[15]

Remuneration received, or likely to be received (s392(2)(c))

[64] While the evidence in this regard is limited, I consider that it is likely that Ms Smith's employment would not have continued for a lengthy period if the friction that had developed between Ms Smith and Ms Fearon was not resolved. While there is clearly an element of speculation in determining specifically how long Ms Smith would have remained employed, I consider it would not have been longer than six months.

Remuneration earned and income likely to be earned (s392(2)(e) and (f))

[65] Ms Smith gave evidence that she commenced alternative employment on 22 June 2020, approximately four weeks' after her dismissal. She received the JobSeeker payment between 26 June 2020 and 21 August 2020 for which she received a total amount of $6,320.50.

[66] Ms Smith's employment with Ray White Balmain from 11 October 2017 to 26 May 2020 is a relatively short period and I consider it does not support reducing or increasing the amount of compensation ordered.

[67] There is no evidence before me as to the effect of an order for compensation might have on the viability of Ray White Balmain.

[68] Ms Smith was successful in obtaining alternative employment after her dismissal. This was a reasonable effort to mitigate her loss. I do not consider it appropriate to reduce the amount of compensation otherwise calculated for this factor.

[69] There are no other matters relevant to this consideration. Specifically, I do not consider it necessary to discount or increase the amount for 'contingencies'. This step is a means of taking into account the possibility that the occurrence of contingencies to which Ms Smith was subject might have brought about some change in earning capacity or earnings.

[70] The amount of compensation does not include a component for shock, humiliation or distress.

[71] In Hanson Construction Materials Pty Ltd v Pericich[16], the Full Bench said that:

"Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission 'must take into account all of the circumstances of the case' including the particular matters set out at s.392(2)(a) to (g)."

[72] Ms Smith's base wage was $916.95 per week. She seeks 22 weeks' pay which she says equates to $65,736, and which is inclusive of commission.

[73] Having considered all of the matters necessary in determining an appropriate quantum of compensation, I find that $10,000 is appropriate in all of the circumstances.

[74] This amount is approximately equivalent to four weeks' remuneration, and is less than the amount of remuneration Ms Smith would have been entitled in her employment with Ray White Balmain during the 26 weeks immediately before the dismissal. I am satisfied there is no basis to reduce the amount by reason of s 392(5) of the Act.

[75] An order to this effect will be separately issued.

M O'Neill for Fearon Howard Real Estate Pty Ltd T/A Ray White Balmain.

[1] (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.

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

[3] Selvachandran v Peteron Plastics Pty Ltd [1995] IRCA 333; (1995) 62 IR 371, 373.

[5] Walton v Mermaid Dry Cleaners Pty Ltd [1996] IRCA 267; (1996) 142 ALR 681, 685.

[6] Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

[7] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

[8] Previsic v Australian Quarantine Inspection Services Print Q3730.

[9] (2000) 98 IR 137.

[11] Gibson v Bosmac Pty Ltd [1995] IRCA 222; (1995) 60 IR 1, 7.

[12] RMIT v Asher [2010] FWAFB 1200; (2010) 194 IR 1, 14-15.

[13] McCarron v Commercial Facilities Management Pty Ltd t/a CFM Air Conditioning Pty Ltd [2013] FWC 3034, [32].

[14] Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].

[15] (1998) 88 IR 21.

[16] [2018] FWCFB 5960 at [39].

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