s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - whether dismissal harsh, unjust and unreasonable - application granted - compensation ordered

• [1] These proceedings are brought under section 394 of the Fair Work Act 2009 (Cth) ("the Fair Work Act").

• [2] The hearing was held on 19 November 2024, and the parties gave their closing submissions in writing. I also dealt with an application for an indefinite adjournment raised in the course of those closing written submissions.

• [3] In Yi-Hsien Chou v Steadfast Shareholding Pty Ltd [2025] FWC 769 I dismissed certain jurisdictional objections. In Yi-Hsien Chou v Steadfast Shareholding Pty Ltd [2025] FWC 1617. I dismissed the Respondent's adjournment application. The outstanding matters for determination are whether the dismissal was harsh, unjust and unreasonable, and, if so, the question of remedy.

• [4] I set out the legislative framework, procedural history, evidence and submissions in this matter in previous decisions. I will not repeat myself here unnecessarily.

• [5] For the reasons that follow I have decided to grant the substantive application, and order payment of compensation.

• [6] I have previously found that the initial application was made in time. I have found that the Applicant was "protected from unfair dismissal" at the time his employment ended, for the purposes of section 382 of the Fair Work Act.[1] I have previously found that he was dismissed, that the dismissal was not consistent with the Small Business Fair Dismissal Code, and that the dismissal was not a case of genuine redundancy, for the purposes of section 385 of the Fair Work Act.

• [7] I can now consider whether the dismissal was harsh, unjust, or unreasonable, and, if so, whether to order a remedy.[2]

• [8] Section 387 of the Fair Work 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 Commission considers relevant.

• [9] These are mandatory criteria that should be taken into account and weighed, to the extent they are relevant to the factual circumstances before me.[3]

• [10] I set out the evidence in detail in the previous decisions in these proceedings. I will refer to the evidence as necessary in my consideration below.

• [11] The Applicant's closing submissions were filed on 27 November 2024. The Respondent's closing submissions were filed on 4 December 2024. The Applicant's closing submissions in reply were filed on 11 December 2024. There were subsequent submissions exchanged about a discrete issue, referred to in [2025] FWC 769, and then about the adjournment application.

• [12] Mr Chou submitted there had been no valid reason for his dismissal. He said the Respondent had failed to provide notice of termination, or an opportunity to respond to any allegations or concerns. He said the Respondent had failed to afford him procedural fairness. He said he was owed a redundancy payment, payment in lieu of notice, and an annual bonus which had been withheld in 2023-2024. He said the dismissal had been abrupt and had caused him emotional distress. He did not seek reinstatement. He made submissions as to compensation that should be ordered.

• [13] Steadfast submitted that Mr Chou engaged in serious misconduct that caused deliberate harm to Steadfast's business and points out it is pursuing Mr Chou for remedies in the District Court. It submitted that even if the dismissal was unfair Mr Chou was not entitled to any compensation because he had been provided with ample notice that the buyer of the management rights business did not require his continued involvement once the sale settled. It says Mr Chou had been aware that the settlement of the sale was originally to be 1 August 2024, and as at 8 August 2024, Mr Chou was aware that the settlement could potentially occur within 7 days. It submits that Mr Chou had been provided with more than two weeks' notice, having been aware of a requirement to vacate the manager's unit by 1 August 2024, later extended to 15 August 2024, for months. Accordingly, it submits that on Mr Chou's best case he would be entitled to no more than two days' pay (for the period between the date of termination on 13 August and the date on which he had to vacate, 15 August), or alternatively two weeks' pay, for payment in lieu of two weeks' notice had been required.

• [14] In reply the applicant submitted that the dismissal had been pre-meditated given that the respondent had hired someone else to begin working with Ms Hsueh within a few days of the dismissal. This issue had not previously been raised in submissions and does not appear to have been before me on the evidence.

• [15] The foregoing is a concise, not exhaustive, summary of the parties' submissions as relevant to this decision. I have taken into account all of the parties' submissions and the evidence.

• [16] In Yi-Hsien Chou v Steadfast Shareholding Pty Ltd [2025] FWC 769 I found that Ms Hsueh and Mr Ang, and therefore Steadfast, genuinely believed that Mr Chou may have been or was likely to have been trying to sabotage the sale of its management business, but that Steadfast had not established that it had reasonable grounds on which to form this genuine belief. Proving "reasonable grounds" is less demanding than establishing the existence of the valid reason in fact. On the basis of the evidence before me, the sabotage has not been demonstrated. I find that there was no valid reason for the dismissal related to Mr Chou's conduct. Further, Mr Chou was not notified of the reason for the dismissal. Steadfast was trying to avoid tipping him off that they were onto what they believed to be his attempt to sabotage their sale. It follows that Mr Chou was not given an opportunity to respond to the conduct issue. The foregoing considerations weigh in favour of a finding that the dismissal was harsh, unjust and unreasonable.

• [17] There was no unreasonable refusal by the employer to allow Mr Chou to have a support person present to assist at any discussions relating to dismissal. Also, the dismissal did not relate to unsatisfactory performance. These considerations do not weigh heavily in favour of, or against, a finding that the dismissal was harsh, unjust, and unreasonable.

• [18] The employer's enterprise was small. That would be likely to impact on the procedures followed in effecting the dismissal to a reasonable degree. Further, the employer's enterprise lacked dedicated human resource management specialists or expertise. Though they had lawyers, it is not clear how familiar those lawyers were with industrial or employment law. The absence of specialists and expertise in the enterprise would have been likely to impact on the procedures followed in effecting the dismissal to a reasonable degree. These considerations weigh against a finding that the dismissal was harsh, unjust, and unreasonable.

• [19] The next consideration is "any other matters that the Commission considers relevant." I consider the sale of the business, and the impact of the sale on Mr Chou's employment, to be relevant. Mr Chou had been aware since February 2024 that his employment would come to an end once the business was sold. However, the employment was brought to an end sooner. This consideration does not weigh heavily in favour or against a finding that the dismissal was harsh, unjust, and unreasonable. This consideration is also relevant to the question of remedy, which I will discuss below.

• [20] Having considered and weighed each of the matters specified in section 387 of the Fair Work Act, I am satisfied that the dismissal of the Applicant was harsh, unjust and unreasonable.

• [21] Being satisfied that the Applicant made an application for an order granting a remedy under section 394 of the Fair Work Act, was a person protected from unfair dismissal, and was unfairly dismissed within the meaning of section 385, the Commission may, subject to the Fair Work Act, order the Applicant's reinstatement, or the payment of compensation to the Applicant.

• [22] Under section 390(3) of the Fair Work Act, the Commission must not order the payment of compensation to the Applicant unless the Commission is satisfied that reinstatement of the Applicant is inappropriate, and the Commission considers an order for payment of compensation is appropriate in all the circumstances of the case. In this case reinstatement is inappropriate given the sale of the business, with the buyer appointing their own residential manager. Reinstatement will not be ordered.

• [23] I will now consider whether a payment for compensation is appropriate in all the circumstances. Having found that reinstatement is inappropriate, it does not automatically follow that an order for compensation must be made. The power to make such an order is discretionary.[4] Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[5]

• [24] The sale of the business settled two months and two days after the dismissal. This would have given rise to termination for redundancy. This application was not defended on the basis that the dismissal was for genuine redundancy, no doubt because the termination occurred in advance of the sale, for reasons set out in this and previous decisions. I have not found that the dismissal was for genuine redundancy. However, that does not preclude me from being satisfied that the employment would have subsequently ended for redundancy but for the dismissal.

• [25] The evidence was Mr Chou had commenced working for Steadfast on 12 October 2021, so three years and three days before his position would have become redundant on the settlement of the sale of the business. If he had still be an employee at that time he would have been entitled to, in addition to any accrued entitlements:
  • • three weeks' notice (or payment in lieu thereof);[6] and
  • • a severance payment equal to seven weeks' pay.[7]

• [26] By dismissing him the respondent caused Mr Chou the loss of those payments to which he would otherwise have been entitled. The dismissal caused Mr Chou the loss of the two months and two days' pay that he would have earned but for the dismissal, along with the additional entitlements he would have accrued during that time, and superannuation.

• [27] In all of the circumstances having regard to the evidence referred to in this and previous decisions I consider it appropriate to exercise the discretion.

• [28] Section 392(2) of the Fair Work Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:

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

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

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

(e) the amount of any remuneration earned by the Applicant 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 the Applicant 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.

• [29] As I said in the first decision in these proceedings, the parties were on notice that the hearing would deal with the issue of remedy, in addition to the jurisdiction and liability issues. The Directions issued on 9 October 2024 explicitly reminded the Applicant to deal with loss and mitigation in his materials. The parties also attended a case management conference on 16 October 2024, at which I took them through the directions that had been issued on 9 October.

• [30] No party made submissions as to the effect of an order for compensation on the viability of the Respondent's enterprise.

• [31] As stated above the Applicant's length of service would have been slightly more than three years. I consider that the Applicant's length of service does not support reducing or increasing the amount of compensation ordered.

• [32] I have found that if the actual dismissal had not occurred, the employment would have been terminated on and from 15 October because of the settlement of the sale of the business. I have set out, above, my findings as to the remuneration the applicant would have received had his employment terminated for redundancy on 15 October 2024. As I have indicated, the remuneration would have included an amount in lieu of notice, if notice was not provided.

• [33] I do not consider any component for payment in lieu of notice should be included in the loss, because of the long period for which Mr Chou had been on notice that his employment would likely end because of the sale of the business. In that regard:

(a) it was common ground that Mr Chou was aware of the impending sale of the business from at least 5 February 2024;

(b) Ms Hsueh said, and I accept, that Steadfast entered into a contract to sell its management rights business to a third-party buyer on 21 March 2024;

(c) Ms Hsueh said, and I accept, that as the directors of the buyer indicated that they did not require a third-party onsite manager, she and Mr Ang informed Mr Chou that Fresh First's engagement with Steadfast would be terminated once the contract was settled, and that Mr Chou would need to provide vacant possession of Unit 1;

(d) Ms Hsueh said, and I accept, that the settlement date for the sale of the business was initially set for 1 August 2024, but was later revised to 15 August;

(e) the documents show that negotiations between Mr Chou and Steadfast, in relation to his proposal for a redundancy package, occurred from February 2024 and throughout the subsequent months;

(f) Ms Hsueh met with Mr Chou on 8 August 2024 and discussed the impending finalisation of the sale of the business;

(g) on 10 August Ms Hsueh sent Mr Chou a notice to leave the residential tenancy by 10 October 2024;[8]

(h) the termination letter that Ms Hsueh and Mr Ang handed to Mr Chou on 13 August proposed that Mr Chou vacate the residence by 2 September 2024.[9]

(i) the business sale finally settled on 15 October 2024, after Steadfast negotiated an extension with the buyer.

• [34] In the circumstances I will disregard any amount that would later have been paid on termination for redundancy, in lieu of notice, but for the dismissal.

• [35] The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[10] What is reasonable depends on the circumstances of the case.[11] In this case the Applicant has not provided such evidence. Nor did he provide evidence as to whether he had any earnings from employment or other work during the period between the dismissal and the making of the order for compensation.

• [36] In light of this I do not consider it appropriate to provide for any compensation for the period following the date of the settlement of the sale of the business. I also consider that absence of evidence that the Applicant sought to mitigate his loss warrants applying a discount of 50% to the amount of compensation attributable to the period between the dismissal and the date of the settlement.

• [37] There is no evidence as to the amount of income reasonably likely to be earned by the Applicant during the period between the making of the order for compensation and the payment of compensation, so I am unable to make a finding in that regard. However, for the reason set out above I do not consider it appropriate to provide for any compensation for any of the period after 15 October 2024.

• [38] Other relevant matters include the long period for which the Applicant was on notice that the employment would come to an end on the sale of the business. I have dealt with this alone.

• [39] To calculate compensation, the approach set out in Sprigg v Paul's Licensed Festival Supermarket (Sprigg) is applied,[12] as follows:

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

Step 2: Deduct monies earned since termination. Workers' compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.

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.

• [40] I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated the employment to be $33,691.00 on the basis of:

(a) the evidence before me as to Mr Chou's remuneration being $9,166.66 gross per month (or $2,115.38 per week);

(b) my finding that he would likely have remained in employment for a further period of two months and two days, or 2.06 months ("the anticipated period of employment"), a period for which he would have been paid $18,883.32 based on the monthly rate;[13] and

(c) my finding as to the amount severance (seven weeks, $14,807.68) (but not in lieu of notice) that Mr Chou would have received had his employment ended for redundancy at the date of the settlement of the sale of the business, which I considered to have been lost as a consequence of the dismissal.

• [41] For the reasons set out above I cannot deduct any amount for monies earned, or likely to be earned, since termination. However, I apply a discount of 50%, to the amount calculated by reference to the anticipated employment period, for failure to demonstrate efforts to mitigate. That reduces the total amount to $24,249.34 gross.

• [42] I now need to consider the impact of contingencies on the amounts likely to be earned by the Applicant for the remainder of the anticipated period of employment.[14] The parties made no submissions as to the amounts, if any, to be deducted for contingencies. A discount for contingencies is a means of taking into account the various probabilities that might otherwise affect earning capacity.[15] However, given the anticipated period of employment has entirely passed, I do not consider that in the circumstances of this case, a deduction should be made for contingencies. This is because there is no relevant uncertainty that needs to be accounted for in that period.

• [43] I have considered the impact of taxation. Compensation will be determined as a gross amount, and it will be left to the Respondent to deduct any amount of taxation required by law.

• [44] Having applied the formula in Sprigg, I am nevertheless required to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.[16]

• [45] I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the Fair Work Act.

• [46] There being no findings of misconduct by Mr Chou, I am not required by s 392(3) of the Act to reduce the amount of compensation.

• [47] Applying this reduction to the amount determined at step 4 above, the gross amount of compensation to be ordered is to $24,249.34. This does not meet or exceed the compensation cap in section 392 of the Fair Work Act.

• [48] In light of the above, I will make an order that the Respondent pay $24,249.34, gross less taxation as required by law to the Applicant in lieu of reinstatement, plus applicable superannuation calculated at the 2024/25 rate by reference to the amount of compensation attributable to the anticipated employment period, within 28 days of the date of this decision.

• [49] The application is granted. An order for compensation will be issued separately.

Applicant's closing submissions in reply: 11 December 2024

[1] Fair Work Act 2009 (Cth) s 382

[2] Fair Work Act 2009 (Cth) s 390.

[3] 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].

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

[5] Vennix v Mayfield Childcare Ltd [2020] FWCFB 550, [20]; Jeffrey v IBM Australia Ltd [2015] FWCFB 4171, [5]-[7].

[6] Fair Work Act 2009 (Cth) s 117.

[7] Fair Work Act 2009 (Cth) s 119.

[8] Exhibit R1, statutory declaration of Ms Hsueh, filed 6 November 2024, exhibit ACCH-4, the notice sent on 10 August.

[9] Exhibit A1, statement of Mr Chou filed 23 October 2024, appendix YC4, termination letter.

[10] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].

[11] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.

[12] [1998] AIRC 989; (1998) 88 IR 21.

[13] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].

[14] Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39].

[15] Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53, 184 CLR 485; Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) at [43]

[16] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, [17].

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