The Respondent is a solicitor of good standing in the Supreme Court of NSW. The Applicant's claim that such a person would be party to defrauding the Australian Taxation Office lacks credibility.

The Applicant referred to advice from tax offices and accountants but has produced not one scintilla of evidence from any such advisors supporting her claim that she received advice that what was occurring was legitimate. Indeed her attempt to hide her taxation returns from the Respondent In these proceedings and to hide the receipt of commissions and cash payments from the Australian taxation office reflect adversely on her as to honesty and credibility.

The Applicant produced no evidence showing complicity in any way by the Respondent in such illegal activities.

The Applicant's Evidence to the effect that she was an experienced office manager of many years standing and that that she did not know she had to declare commissions or a regular payment of $650.00 as income tax is not credible

The evidence from the Respondent is that he trusted her implicitly but certain documents he found in relation to commission consequent to termination and prior to termination caused him to terminate employment of the Applicant.

The Respondent submits that there was no evidence of agreement to pay commission between him and Ms Molina or between him and Mr Zhai and that the grounds for termination 2 are validly made out. If there had been an agreement there would on the balance of probabilities been some document evidencing agreement on the part of the Respondent

The Respondent submits that the evidence of the Applicant in relation to the alleged theft $25,000.00 and the theft by use of credit card including cab charge lacks credibility and when taken with the other matters referred to above in which the Respondent lack credibility or has admitted to filing false tax returns and preparing false PAYG statements which did not include the cash payments or the commissions leads the conclusion that the Applicant is not a credible witness.

Respondent submits that the payment of petty cash at the rate of $650.00 per week is clearly fraud conducted solely by the Applicant who was office manager. No evidence incriminating the Respondent or even ascribing to him knowledge thereof has been produced by the Applicant either as to payment of commission or payment of cash at the rate of $650 per week.

The evidence shows that a round-robin of cheques was conducted by the Applicant whereby the Applicant paid herself and/or her company a total sum of $25,000 in respect of cheques written between 12 February and 26 February 2018. The commission should find that this round-robin was not authorised by the Respondent and was conducted in a way as to hide the real recipients of these transactions. The Applicant submits that the money was paid to a company belonging to her but admitted there was no agreement specifically with the Respondent in this regard between the Applicant's company and the Respondent and the Respondent submits that the Applicant's evidence in this regard is not credible particularly taking into account the above-mentioned issue of credibility raised against the Applicant in paragraphs above.

The Respondent submits that the evidence concerning the use of bankcards for the benefit of the Applicant does not show such payments were authorised by the Respondent and the Applicant's evidence in this regard should not be regarded as credible.

Respondent submits that the statement by the Deputy President in this matter to the effect that the commission has no interest in whether parties were defrauding the taxation office or filing false returns as that had no relevance to wrongful dismissal is wrong in law and is particularly relevant as to credibility and honesty and as to placing the employer in jeopardy for wrongful information being prepared for the purpose of defrauding the taxation office.

The Respondent submits that the failure to grant leave for a notice to produce to be issued in this matter is an error in law and resulted in a denial of natural justice.

The Respondent submits that the ruling by the Deputy President in refusing to allow new evidence to be introduced in this matter including materials and evidence required to be adduced by the Respondent (including evidence discovered subsequent to the filing of statements) in response to new evidence by the applicant wrongfully allowed in the 3 Respondent's opinion by the Deputy Pres to be admitted, notwithstanding a lengthy adjournment is a denial of natural justice to the Respondent.

The Respondent submits that the ruling by the Deputy President to the effect that there was an Order prohibiting the issue a Notice to Produce during the proceedings is wrong in fact and law and the refusal of leave due issue such a notice to produce is a denial of natural justice to the Respondent".

[122] Before considering whether Ms Molina's dismissal was unfair, it is necessary to make some comment about the conduct of the Respondent throughout the proceedings, including its closing submissions set out above.

[123] The manner in which the Respondent, including through his legal representative, engaged with the Commission throughout the proceedings fell well short of the standard expected of a 'highly experienced and well regarded lawyer'.

[124] As already outlined, there were numerous adjournment requests, many of which had to be granted, which delayed the proceedings and increased the legal costs for the Applicants.

[125] Mr Galloway's witness statement was poorly laid out, difficult to follow and many of the annexures were never filed with the Commission.

[126] The submissions filed by Mr Galloway did not deal with the matters I needed to decide. Additionally, a number of highly misleading and inaccurate submissions were made by the Respondent. For example, in relation to paragraph 16 of the Respondent's closing submissions which is set out above, it was never the case that I said there was an order prohibiting the issuing of an order for production of documents. This matter was the subject of an exchange between Mr McGirr and me and is captured in the transcript of the proceedings on 15 October 2020[5] in which I clarified that directions, and not an order, had been issued to ensure the orderly conduct of the proceedings. To make such a submission, particularly when the parties had access to the transcript, leaves a lot to be desired and is unfortunately but one example of the Respondent's unsatisfactory conduct during the proceedings.

[127] Comments made by me during the proceedings in an effort to keep Mr McGirr focussed on the matters I needed to decide have been taken out of context and twisted. For example, it was submitted that I said the Commission has no interest in whether parties were defrauding the Australian Taxation Office (ATO) or filing false returns. In this case, Ms Molina admitted that certain cash payments made to her by the Respondent had not been declared by them as income to the ATO. In circumstances where such an admission had been made, there was nothing further to be gained by me reviewing her taxation records as the Respondent wanted to me to do. In this context, it was then a matter for the ATO and not the Commission to deal with any tax issues that might arise, and the tax records were not going to assist me in deciding whether Ms Molina had been unfairly dismissed.

[128] Finally, it is astonishing that the Respondent would complain of procedural unfairness and a denial of natural justice in terms of the conduct of the proceedings in the circumstances that have already been described.

[129] I am satisfied that Ms Molina is a person protected from unfair dismissal by virtue of s.382 of the Act. I will now consider if her was unfair within the meaning of the Act.

[130] 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.

[131] There is no dispute that Ms Molina was dismissed, and that subsection (d) does not apply. I have already found that the dismissal was not consistent with the Code.

Was the dismissal harsh, unjust or unreasonable?

[132] The criteria the Commission must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

1. Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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.

[133] The ambit of the conduct which may fall within the phrase 'harsh, unjust or unreasonable' was explained in Byrne v Australian Airlines Ltd[6] 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.'

[134] I am required to consider each of these criteria in reaching my conclusion[7], which I now do.

[135] The Respondent must have a valid reason for the dismissal of Ms Molina, although it need not be the reason given to her at the time of the dismissal.[8] The reason(s) should be 'sound, defensible and well founded'[9] or justifiable on an objective analysis of the relevant facts, and should not be 'capricious, fanciful, spiteful or prejudiced'.[10]

[136] The question I must address here is whether there was a valid reason for the dismissal related to her conduct (including its effect on the safety and welfare of other employees).

[137] In cases concerning conduct, the Commission must determine whether, on the balance of probabilities, the conduct allegedly engaged in by the employee actually occurred[11]. The test is not whether the employer believed on reasonable grounds, after sufficient inquiry, that the employee was guilty of the conduct and therefore acted in the belief that the termination was for a valid reason. The Commission must make a finding as to whether the conduct occurred based on the evidence before it[12].

[138] Further, the Commission does not 'stand in the shoes' of the employer but will need to be satisfied that the termination of the employee was for a valid reason[13].

[139] 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.

[140] In this case, the Respondent dismissed Ms Molina for the reasons set out in the Termination Letter.

[141] For a number of reasons, including those already traversed earlier in this decision, I accept the evidence of Ms Molina. She was subjected to extensive cross examination and she did not resile from the key parts of her evidence that relate to the reasons for her dismissal.

[142] I am not satisfied that the Respondent established that Ms Molina's summary dismissal was consistent with the Code for reasons already explained, including that there was no evidence by Mr Galloway that would establish that Mr Galloway held a belief that her conduct was serious enough to warrant immediate dismissal, and that such a belief was reasonably held by Mr Galloway.

[143] I do not consider that the reasons set out in the Termination Letter are reasons that warrant summary dismissal. Many of the reasons are either denied by Ms Molina or to the extent that she broadly agreed with some of the circumstances referred to the Termination Letter, occurred many months beforehand, and without any discussion with her at the relevant time.

[144] I accept her responses to each of the matters raised in the Termination Letter, particularly because there is no evidence of Mr Galloway to contradict it. Additionally, some of the matters raised in the Termination Letter are simply not credible, for example, that Mr Galloway was fearful of Ms Molina.

[145] In terms of cash payments to Ms Molina, I am satisfied that there was an agreement between Mr Galloway and Ms Molina that she would be paid partially in cash each week. It is unsurprising that an arrangement to make cash payments was not recorded in writing.

[146] Ms Molina kept a record of the cash payments which I accept Mr Galloway had full knowledge of and had endorsed. These records include the commission spreadsheet and the Transaction Record. She provided the records to Mr Galloway whenever he requested her to do so. I accept the submissions by Ms Molina that it makes no sense she would make such an extensive record of her own fraud. Further, many of the commission payments paid via an EFT bank transfer were clearly labelled 'commission'. There is no doubt Mr Galloway had access to his own bank accounts. There is also no doubt that Mr Galloway's accountant had information as to EFT payments for taxation purposes. There is no evidence to suggest that questions were raised by Mr Galloway's accountant about the commission payments.

[147] Whether or not the agreement to pay part of Ms Molina's salary as cash was for the purpose of avoiding tax and superannuation obligations is not a matter I need to decide.

[148] Ms Molina conceded she did not declare this income on her tax returns and confirmed she had taken steps to remedy this through her accountant.

[149] I am also satisfied that Mr Galloway agreed to pay Ms Molina a commission payment of $25,000.

[150] In short, there is no evidence to support a finding that Ms Molina engaged in theft or fraud.

[151] For these reasons, I am satisfied and find that on the balance of probabilities, the conduct allegedly engaged in by Ms Molina did not occur and accordingly there was no valid reason for her dismissal.

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

[152] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,[14] in explicit terms[15] and in plain and clear terms.[16] In Crozier v Palazzo Corporation Pty Ltd[17] 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."[18]

[153] 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.[19] 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.[20]

[154] 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 Molina before her dismissal was effected.

[155] On the evidence before me, I am satisfied that Ms Molina was not notified of the reason for her dismissal and was not given an opportunity to respond to the reason. Ms Molina was never warned or otherwise notified of the reasons for her dismissal before the decision to dismiss her was made. Because she was summarily dismissed, she did not have an opportunity to respond to the matters set out in the Termination Letter, and they had not previously been raised with her.

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

[156] 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.

[157] Ms Molina was not provided with the opportunity to have a support person, having been unaware prior to her dismissal that she was to be dismissed. However she was not refused a support person being present.

Warnings regarding unsatisfactory performance - s.387(e)

[158] Ms Molina was not dismissed for unsatisfactory performance and this factor is therefore not relevant in my consideration.

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))

[159] While the Respondent is a small employer and did not have dedicated human resource expertise, Mr Galloway is a lawyer with extensive legal experience who ought to have been able to ascertain the basics in how to fairly effect a dismissal.

Other relevant matters - s.387(h)

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

[161] Ms Molina submitted the following matters were relevant:

1. She had been employed for almost 10 years with Mr Galloway and had an impeccable record of service;

2. She had been systematically exploited by Mr Galloway during the course of her employment;

3. Mr Galloway had intentionally disparaged her to former clients; and

4. Mr Galloway had summarily dismissed her during a global pandemic.

[162] While I have taken this submission into account, I do not consider it appropriate to place significant weight on the matters raised.

[163] Having considered each of the matters specified in s.387 of the Act and for the reasons set out above, I am satisfied that the dismissal of Ms Molina was harsh, unjust and unreasonable, and accordingly unfair.

[164] I now turn to the appropriate remedy.

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

[166] Under section 390(3) of the Act, I must not order the payment of compensation to Ms Molina 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.

[167] I am satisfied that reinstatement is inappropriate and Ms Molina does not seek reinstatement.

[168] I am also satisfied that an order for the payment of compensation is appropriate, for the reasons I have found Ms Molina's dismissal was unfair.

[169] 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 the Respondent;

• (b) the length of Ms Molina' service;

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

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

• (e) the amount of any remuneration earned by Ms Molina 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 Molina 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.

[170] 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).[21] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[22]."

Step 1: Estimate the remuneration the Applicant would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

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

[171] While the evidence in this regard is limited, and while there is clearly an element of speculation in determining specifically how long Ms Molina would have remained employed, I consider that it is likely that Ms Molina' employment would have continued for six months. I consider the effects of COVID-19 on business may have impacted on whether her employment would have continued beyond this time.

[172] Her earnings over that period would have been $60,675 gross.

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

[173] Ms Molina commenced new employment on 20 July 2020, being 17.7 weeks after her dismissal, on an annual salary of $73,059 plus superannuation.

[174] Ms Molina had been employed for just under 10 years. This is a reasonably lengthy period of employment, however I consider it does not support reducing or increasing the amount of compensation ordered.

[175] There is no direct evidence before me as to the effect of an order for compensation might have on the viability of the Respondent.

[176] Ms Molina secured alternative employment after 17.7 weeks. This was a reasonable effort to mitigate her loss in the circumstances. I do not consider it appropriate to reduce the amount of compensation otherwise calculated for this factor.

[177] 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 Molina was subject might have brought about some change in earning capacity or earnings.

[178] I have found that misconduct is not a relevant factor in this matter.

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

[180] Ms Molina's estimated remuneration for 26 weeks is $60,675. She had been unemployed for 17.7 weeks at the time she secured other employment on $73,059 per annum, and so had lost $41,305.78 gross (being 17.7 x $2333.66). The shortfall between her old and new salary was $928.67 gross weekly, which for 8.3 weeks was $7,707.96. She seeks the maximum compensation available to her, being $49,013.74 gross.

[181] As stated earlier, I do not consider that a discount should be applied for contingencies.

[182] This amount is less than the amount of remuneration Ms Molina was entitled in her employment with the Respondent during the 26 weeks immediately before the dismissal.

[183] In my view, the application of the Sprigg formula does not yield an amount that is clearly excessive or inadequate.

[184] For the reasons outlined above, I am satisfied that a remedy of compensation in the amount of $49,013.74 less appropriate taxation in favour of Ms Molina is appropriate in the circumstances of this case. An order to that effect will be issued with this decision.

P McGirr of McGirr Lawyers for APT Corporation Pty Ltd.

[1] [2002] FCA 1137.

[3] See Transcript PN64, 15 October 2020.

[4] [2012] FWAFB 1359.

[5] Transcript PN33 to PN54, 15 October 2020.

[6] (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.

[7] Sayer v Melsteel [2011] FWAFB 7498.

[8] Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378.

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

[11] Edwards v Giudice [1999] FCA 1836; (1999) 94 FCR 561.

[12] King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24].

[13] Miller v University of New South Wales [2003] FCA 180; (2003) 132 FCR 147

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

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

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

[17] (2000) 98 IR 137.

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

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

[21] (1998) 88 IR 21.

[22] [2013] FWCFB 431.

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