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[2018] FWC 942
General information, not legal advice.
Fair Work Commission
2018-02-12
Original judgment source is linked above.
Section 394 - Application for unfair dismissal remedy
Application for an unfair dismissal remedy - conduct based dismissal on notice - Small Business Fair Dismissal Code - construction of "Other Dismissal" section of Code - alternate constructions considered - compliance with Code - application dismissed
[1] On 5 November 2017 Mrs Crystal Hart applied to the Fair Work Commission (the Commission) under section 394 of the Fair Work Act 2009 (the FW Act) for an unfair dismissal remedy in relation to her (alleged) dismissal by RentCleva trading as Rentorilla (Rentorilla or 'the employer'). She claims to have been unfairly dismissed on 30 October 2017, with the dismissal taking effect that day.
[2] Mrs Hart's application to the Commission was lodged within the statutorily required 21 days after her (alleged) dismissal took effect.
[3] Rentorilla is a small business within the meaning of the FW Act. When fully staffed, it employs six persons in an office and adjacent warehouse facility in the northern suburbs of Adelaide. Its principal is Mr David Beechey, who currently manages the business from Victoria. Rentorilla supplies members of the public with household items (such as whitegoods, computing and furniture) on a rental basis. Its business is largely conducted on-line and by phone but with some direct customer interface. Between two and four administrative staff work in the office. A warehouse manager and delivery driver are also employed. Until her dismissal, Mrs Hart was one of the administrative employees.
[4] Mrs Hart began working for the business on 30 November 2015 and worked continuously as a full time employee until 30 October 2017. At all relevant times she was a Sales and Administrative Officer employed under a written Employment Contract.[1] Under the terms of that contract, she reported to the Store Manager.
[5] Mrs Hart seeks a finding that she was unfairly dismissed within the meaning of the FW Act and an order for compensation. She also seeks an apology, an employment separation certificate and the return of personal property. She considers that reinstatement would be inappropriate.
[6] I note that under the unfair dismissal provisions of the FW Act the Commission, should it find a dismissal to have been unfair and the employee protected from unfair dismissal, can only order a remedy in the form of reinstatement and (if reinstatement is not appropriate), compensation (where appropriate, and subject to a cap). It is not within the Commission's powers to order an apology, an employment separation certificate or the return of personal property, as sought by Mrs Hart.
[7] Rentorilla oppose the application. It claims that Mrs Hart was dismissed for misconduct with two weeks' notice paid in lieu. It opposes an order for compensation but agrees that reinstatement would be inappropriate. It says it offered Mrs Hart an employment separation certificate which she rejected because it referred to "misconduct" as the reason for termination. It says Mrs Hart has been advised that she can collect her personal belongings from the Store Manger's home.
[8] Conciliation of the matter on 27 November 2017 was unsuccessful. On 21 December 2017 I issued pre-hearing directions requiring the lodgement of written materials by the parties.[2] These were complied with. I conducted a hearing by determinative conference on 31 January and 5 February 2018. Evidence and submissions on merits and remedy were presented. Mrs Hart was self-represented with assistance from Mr Hart. Rentorilla was self-represented by Mr Beechey. At the conclusion of proceedings, I reserved my decision.
[9] At the Directions hearing on 21 December 2017 I ordered, by consent, that the name of the employer be amended to reflect the legal entity identified in Mrs Hart's contract of employment, being Forex1 Pty Ltd ATF The Rental Trading Trust.
[10] Two issues arise for decision: first, was Mrs Hart's dismissal unfair; that is, was it consistent with the Small Business Fair Dismissal Code (section 385(c) of the FW Act) and if not, was it "harsh, unjust or unreasonable" (within the meaning of section 387); and secondly, if so, what is the appropriate remedy?
[11] It was common ground between the parties that Mrs Hart was a person protected from unfair dismissal under the FW Act (section 382); the Small Business Fair Dismissal Code applied to this employer (section 388) and that Mrs Hart's termination was not a case of genuine redundancy (section 385(d)). On the evidence, I am satisfied this is correct.
[12] I heard evidence from seven witnesses:
[13] The evidence of Mrs Budd and Mrs Miller has little relevance to the matter. Mrs Budd resigned in 2014 and Mrs Miller left in December 2016. Neither was involved in the events leading up to Mrs Hart's dismissal. Mrs Budd was not employed during the period Mrs Hart was employed. Their evidence concerned their experiences working alongside Mrs Rogers.
[14] The evidence of the other five witnesses is directly relevant to the determination of the matter. All other than Mrs Crossley presented a written statement of evidence on which they gave oral evidence and were cross examined.
[15] At the hearing, I granted Mrs Hart's request for Mrs Crossley to be called at short notice and without a witness statement given her involvement in the events of 26 October 2017. I did not find the evidence of Mrs Crossley particularly convincing or helpful. As it turned out, while she was involved in the events of 26 October critical parts of the altercation between Mrs Hart and Mrs Rogers on that day were neither seen nor heard by her.
[16] Although I received considerable evidence from the remaining four witnesses, and although this matter involves issues of conflict between individuals in a small workplace, there are relatively few disputed facts about the events and the sequence of events. There are more disputed opinions than disputed facts. However, there are at least two areas where disputed facts are relevant to my determination: the content of the first and third of the three telephone conversations between Mrs Hart and Mr Beechey on 30 October; and the altercation between Mrs Hart and Mrs Rogers on 26 October. I make findings on those specific matters in the body of this decision.
[17] Otherwise, I do not consider it necessary to make general findings about whether the evidence of one of the primary witnesses in this matter should be preferred over the others. I consider Mrs Hart, Mr Beechey, Mrs Smart and Mrs Rogers to have all been truthful in giving me their version of events to the best of their knowledge and belief. Mrs Hart's evidence was coloured somewhat by the firmness of view she now holds about the unfairness of what occurred and her understandable emotional connection to her case but it was nonetheless honestly presented. Mr Beechey's evidence was clear and credible. Mrs Smart's evidence was direct notwithstanding the evident conflict she felt between her responsibilities to the business and her personal friendship with Mrs Hart. Mrs Rogers evidence was also honestly given with very specific recall and was not excessively defensive despite Mrs Hart's case placing her management style and work under scrutiny.
[18] In addition to hearing from these witnesses, I also received and brought into evidence relevant documentary material.
[19] In determining this matter, I am not bound by the rules of evidence but consider them to be a good and useful general guide. I adopt the approach of the Full Bench of this Commission which recently said:
"The Commission is obliged by statute to perform its functions in a manner that is fair and just pursuant to s. 577(a) of the Act. Although it is not bound by the rules of evidence and procedure, the Commission tends to follow the rules of evidence as a general guide to good procedure. However, that which is ultimately required is judicial fairness, and that which is fair in a given situation depends on the circumstances."[3]
[20] As noted, some of the oral evidence and evidence in witness statements tendered strayed into the field of irrelevant considerations, hearsay, opinion and assumption. I place reduced levels of weight on such evidence except where it is corroborated by direct evidence, is uncontested or is inherently believable.
[21] I note that this is not an inquiry into the general staffing relationships between persons employed by Rentorilla or the employment status of persons other than Mrs Hart. I only take into account evidence about personal relationships or conduct where it is relevant to the facts that need to be determined on Mrs Hart's application and the employer response to it.
[22] I determine this matter on the basis of all the evidence and submissions before me.
[23] The events leading up to the altercation between Mrs Hart and Mrs Rogers on 26 October 2017 are largely uncontested.
[24] I make the following findings on the basis of the evidence before me.
[25] Mrs Hart was one of up to four administrative employees working in the Rentorilla office. The four employees worked in close proximity to each other. Mrs Hart worked primarily on the front counter which was also occupied from time to time by a trainee employee (Mrs Crossley). Mrs Smart and Mrs Rogers worked primarily from behind a two-way partition immediately behind Mrs Hart. Conversations could be heard through and around the partition especially if the door between front and back of the partition was not closed.
[26] Mrs Hart reported to the Store Manager Mrs Smart. When the store manager was absent Mrs Hart reported to Mrs Rogers who was formally designated as 2IC.
[27] Mr Beechey was actively involved in the management of the business but from Victoria. He spoke almost daily to Mrs Smart and from time to time by phone or email to the other employees. He visited in person occasionally and usually for a specific purpose. He had less direct interaction with Mrs Hart than he did with Mrs Smart or Mrs Rogers.
[28] Each of the administrative employees had designated roles. Being a small office, it was expected that each would assist the other to the extent allowed by their core duties. The workload was heavy and opportunities to help or do the work of others were limited.
[29] Mrs Hart's role was customer facing. She processed applications on-line, took calls from customers and dealt with them in person at the front counter. Her workload was intense and from time to time she felt overwhelmed and overworked.
[30] Mrs Hart knew that if she encountered problems with her work or within the office she could and should approach Mrs Smart. She did so on many occasions. Mrs Hart was also told by Mr Beechey that she could contact him directly if there were problems. He gave her his mobile phone number for that purpose. However, from time to time, Mrs Hart was told by Mrs Smart that it was not appropriate to contact Mr Beechey if matters could be sorted in Adelaide because he was a busy person.
[31] Mrs Hart was a full time employee who worked in the same role from commencement on 30 November 2015 until her termination on 30 October 2017.
[32] In her first six months of employment Mrs Hart did not get on well with Mrs Smart. However, after those early months Mrs Hart developed an excellent relationship with Mrs Smart and vice versa, so much so that they developed a social friendship outside of work and a strong professional working relationship until the day of dismissal.
[33] Conversely, Mrs Hart initially got on well with Mrs Rogers and vice versa. However, in the last 12 months of her employment Mrs Hart and Mrs Rogers had a deteriorating and strained relationship. In part this was reflected in the absence of any personal warmth or social friendship; but even the working relationship was up and down. Mrs Rogers acknowledged in her evidence that she became more withdrawn partially because she took exception to some instances of gamesmanship in the office that involved Mrs Hart and others trying to stir or send her up, criticising her work or not taking direction from her. Mrs Rogers resorted to seeing a professional psychologist for counselling in 2017 to address her work stress which she in part put down to difficulties with Mrs Hart. For her part, Mrs Hart found Mrs Rogers rude and impolite. The working relationship was not however always negative, but was rather on a progressively downward trajectory. As Mrs Hart put it to Mrs Smart a month before her dismissal, 'we are going okay but we will never be friends'.[4]
[34] Mrs Hart was a hardworking and productive employee whose work performance was highly valued by Mrs Smart and by Mr Beechey. This remained the view of the employer up to and including the day of termination. For her part, she was committed and enjoyed her job despite the work intensity and the deteriorating relationship with Mrs Rogers.
[35] Mrs Hart was professional with customers but had an emotional disposition and under pressure occasionally used profane language inside the work environment.
[36] A serious incident occurred in the workplace between Mrs Hart and Mrs Rogers on 23 and 24 March 2017. A disagreement arose over a dirtied bed. Words were exchanged between them on 23 March resulting in Mrs Hart walking away from the conversation to attend her other duties and ultimately having to deal with the customer concerned and missing a pre-arranged private appointment due to the kerfuffle. Mr Beechey was notified of the altercation that evening. The following day the disagreement continued after Mrs Rogers asked Mrs Hart to speak to her out the back about what had upset her the day prior. During the conversation Mrs Hart raised her voice and yelled words to the effect "You have changed Jo, I don't fucking care and you can get fucked", and walked off.[5] In answer to questions from me, Mrs Hart agreed that she probably said that. Mrs Rogers evidence was clear that this is what was said. I accept that evidence and make that finding.
[37] Mr Beechey investigated the incident and flew to Adelaide to resolve the conflict. He considered the language used and disrespect shown to be serious misconduct justifying immediate dismissal of Mrs Hart. However, after speaking to Mrs Smart and considering her record and overall contribution to the business, he decided to give a formal written warning. At a meeting with Mrs Hart on 27 March Mrs Hart was told she would be given a written warning. She agreed her conduct was inappropriate and agreed to apologise to Mrs Rogers. At a subsequent meeting that day in the presence of Mrs Rogers, Mrs Hart apologised. Mr Beechey and Mrs Smart then decided not to issue the written warning on the basis that her apology was contrite, Mrs Hart had been verbally counselled and Mr Beechey and Mrs Smart concluded that a written warning may impede the resolution that had been reached at the joint meeting.
[38] Notably, Mrs Smart went on a period of extended sick leave from October 2017. Mrs Rogers as 2IC, became acting manager.
[39] Although the relationship with Mrs Rogers continued to be strained, no further incident of significance between the two arose until 26 October. However, in early October 2017 Mr Beechey attended the Adelaide office in person. He spoke to each staff member individually to see how things were going and to conduct other interviews. He briefly met with Mrs Hart but it was a truncated meeting due to his other commitments. At that meeting Mrs Hart raised a concern that the office chairs were not ergonomically sound. Mr Beechey agreed to look into it.
[40] Once Mr Beechey had left Mrs Hart told Mrs Rogers that she felt "brushed off" by Mr Beechey. I accept the evidence of Mrs Rogers that Mrs Hart then said, in frustration, words to the effect "David is nothing but a fucking wanker".[6]
[41] The uncontested evidence is that in the days which followed Mr Beechey did order and provide ergonomic chairs for the Adelaide office.
[42] The events of 26 October involve some differences between the versions of Mrs Rogers and Mrs Hart, and to an extent Mrs Crossley. Where there are differences, I generally prefer the evidence of Mrs Rogers. It was more specific as to the conversations that occurred[7] than the general evidence of Mrs Hart, and Mrs Rogers was unmoved in questions from me. However, I also accept much of Mrs Hart's evidence about the events of that day especially in areas where it is not in conflict with the version set out by Mrs Rogers.
[43] In the days prior to 26 October, Mr Beechey decided to make some changes to internal procedures for assessing applications. Mrs Rogers was tasked to inform Mrs Hart of those changes. At the same time, Mr Beechey had employed a new trainee in the office, Mrs Crossley. Mrs Hart was asked to train Mrs Crossley on front desk duties, including dealing with applications.
[44] On the morning of 26 October Mrs Rogers commenced to explain to Mrs Hart, with both at Mrs Rogers desk, the new procedures required by Mr Beechey. Mrs Hart took the instruction but became defensive believing that Mrs Rogers was criticising her past work.[8] Mrs Rogers told her this was not so.
[45] Mrs Hart then moved onto the front counter and continued her training of Mrs Crossley. Shortly after, another disagreement arose between Mrs Rogers and Mrs Hart. Mrs Rogers observed that certain tasks being required of the trainee by Mrs Hart were not necessary. Mrs Hart became frustrated believing that Mrs Rogers was providing inconsistent instructions on what was required. Mrs Rogers denied this. Mrs Hart, supported by Mrs Crossley, told Mrs Rogers that she had indeed given an earlier instruction that was now being altered.
[46] I am satisfied that the disagreement continued with Mrs Rogers situated in the office behind the partition and Mrs Hart next to the front counter with the door open between the front and rear office. With the trainee at the front counter in view of Mrs Hart and hearing the disagreement, Mrs Rogers asked Mrs Hart to close the door and come into the rear office area and discuss the matter out of earshot of the trainee.
[47] It is the uncontested evidence that Mrs Hart refused to do so.[9] Although Mrs Hart denied it, I am satisfied that she did raise her voice (yell) when speaking to Mrs Rogers at the height of the disagreement. This was Mrs Rogers's evidence, and it was also Mr Beechey's evidence that this is what Mrs Rogers reported to him by phone immediately following the incident. However, and unlike the March 2017 incident, I find that Mrs Hart did not use foul language during this altercation.
[48] Mrs Hart walked to her car and sat in it for about ten minutes. She called her husband. She then returned to the office and spoke briefly to another employee, the delivery driver who sympathised with her.
[49] Mrs Rogers left the workplace and found a private space to call Mr Beechey, and reported the incident to him.
[50] Mr Beechey decided that he would need to investigate the incident. He rang Mrs Smart who was recuperating at home on personal leave. They jointly decided, as a first step, to send Mrs Hart home on full pay for the remainder of the week "so that everyone had a chance to calm down and process what had occurred".[10]
[51] Then follows a telephone conversation of some significance. Mr Beechey phoned Mrs Hart. I accept his evidence that three things happened during that call on 26 October: firstly, he told Mrs Hart that she would be stood down on full pay for the remainder of the week; secondly, he asked Mrs Hart to send him in writing her version of events; and thirdly, Mrs Hart acknowledged to him "that she wouldn't like to be spoken to in the way she had spoken to Jo."[11]
[52] Mrs Hart sent Mr Beechey a lengthy and heartfelt email on 27 October in response to his request.[12] It provided her version of events. She commented on her troubles with Mrs Rogers. Relevantly, it contained a written apology for the events of the preceding day in the following terms "Yesterday I do apologies (sic)". It was not disputed in Mrs Hart's oral evidence that this was an expression of apology to the business owner. Mrs Hart went on to say in her email:
"You keep asking what went wrong with me and Jo and to be honest it has been like this since Tracy left and Jo wasn't very nice to her either, and I feel I was just next in line (I can't help the way I feel)...I love my job..."[13]
[53] Mr Beechey also sought Mrs Rogers version of events.
[54] Over the weekend of 28 and 29 October Mr Beechey considered his options. He did so in regular discussion by phone with Mrs Smart. By the Sunday evening Mr Beechey, supported by Mrs Smart, decided that rather than dismiss, he would give Mrs Hart another chance but this time would issue a formal written warning.
[55] Both Mr Beechey and Mrs Smart telephoned Mrs Hart Sunday evening 29 October - Mr Beechey to advise that he wanted to speak to her by phone on Monday morning, and Mrs Smart to give Mrs Hart a heads up that "everything was going to be okay".[14]
[56] When the working day Monday 30 October 2017 commenced no-one, neither Mrs Hart, Mr Beechey nor Mrs Smart intended that Mrs Hart would no longer be employed by day's end. Yet that is what occurred.
[57] Three telephone conversations occurred between Mr Beechey and Mrs Hart that day.
[58] The first was lengthy. It went for about one hour at about 9am that morning after Mr Beechey called. The evidence of Mrs Hart and Mr Beechey concerning that call differ. More particularly, what differs is not the version of what was said but the interpretation of both parties on what was occurring between them. Mrs Hart claims that Mr Beechey was not listening to her but rather "ripping apart" her side of her story as set out in her email and taking Mrs Rogers side. For his part, Mr Beechey says that he told Mrs Hart at the outset that she would receive a formal written warning for misconduct but that Mrs Hart then recanted the view that she had done anything wrong that needed to be apologised for.
[59] To the extent necessary, I prefer the version of events of this telephone conversation set out in Mr Beechey's evidence[15]. Mr Beechey's evidence was specific and credible. I accept that Mr Beechey was taken aback by what he believed to be a change of position by Mrs Hart compared to the discussion he had with her on 26 October and the email of 27 October which contained a simple apology. I find that he listened to Mrs Hart and invited her to provide examples of unreasonable management conduct by Mrs Rogers but considered the examples given unreasonable and, when they concerned Mrs Rogers work performance as distinct from management conduct, he considered it to not be Mrs Hart's business.
[60] I further find that Mrs Hart did in fact harden her position and recant the view she had expressed the Thursday prior to Mr Beechey that acknowledged that she had spoken badly to Mrs Rogers and (on the Friday prior) had apologised. In answer to questions from me, Mrs Hart was direct in saying that over the weekend of 28 and 29 October she had reflected on what occurred and had formed a view that she had done nothing wrong and no longer felt the need to apologise. I find that she conveyed this altered view to Mr Beechey in the phone call on the morning of 30 October, and that this took Mr Beechey aback.
[61] What is not in dispute on the evidence is that the one hour telephone call ended with no outcome other than Mrs Hart exhausted and Mr Beechey frustrated. He indicated that he would further consider his position.
[62] A short time later Mrs Hart telephoned Mr Beechey (the second telephone conversation). It was very short. She said that she was feeling unwell and would be going home. Mrs Hart went home, went to her doctor and was given a medical certificate for the reminder of that week.
[63] Mr Beechey called Mrs Smart to inform her of the one hour conversation and discuss the employer's response. Mrs Smart's evidence, which I accept, was as follows:
"David called me after the call with Crystal to discuss the outcome. He advised me that Crystal had changed her mind about her behaviour and was no longer sorry for the outburst that had occurred. We agreed that Crystal had to be terminated as her behaviour was unacceptable. David and I discussed the conversation, and decided it would be unreasonable to expect Josephine to continue working with Crystal, as she had already sought counselling in regards to Crystal's behaviour towards her. This was an extremely hard decision for me to arrive at due to the close friendship Crystal and I had."[16]
[64] Although the decision was made jointly with Mrs Smart, the final decision was Mr Beechey's to make and to communicate. Mr Beechey's evidence was that he made his decision to dismiss during the telephone discussion with Mrs Smart. At the end of that phone call he waited another thirty to forty-five minutes before calling Mrs Hart, but that time period did not alter his view. In his evidence Mr Beechey explained his decision as follows:
"I deliberated on the conversation I had with Crystal and spoke to Tracey about Crystal's changed position regarding her behaviour. We agreed that Crystal had to be terminated. This was a very difficult decision, as we valued Crystal as an employee, but given that she could not acknowledge she had done anything wrong and was the instigator in both incidents, we decided it was unfortunately impossible to move forward with her in a cooperative work environment. I felt that it would be unreasonable to expect Josephine to continue working with Crystal, given that I had every reason to believe that Crystal's behaviour would continue and Josephine had made me aware that she had sought counselling regarding Crystal's behaviour. I felt that Josephine's emotional wellbeing was highly likely to suffer if the behaviour continued, which I believed it would, given Crystal's position. I also felt that if the behaviour was allowed to continue, that other staff and the business would suffer. We are a team of only 6 when fully staffed, which includes 3-4 in the office. [17]
[65] Mr Beechey phoned Mrs Hart mid-afternoon and she returned his call (the third telephone conversation). It too was brief. There is a relevant contest in the evidence over what was said, and specifically the reason given. Mrs Hart says that she was told that she was being terminated with two weeks' pay in lieu of notice because "he can't resolve the issue in the office".[18] Mr Beechey on the other had says that "I advised her due to her unwillingness to acknowledge her behaviour was unacceptable, we could not move forward and her employment with Rentorilla would be terminated with 2 weeks' notice to be paid".[19]
[66] I prefer Mr Beechey's evidence of this third telephone call. Mrs Hart acknowledged in her evidence that she was "completely upset" on receiving this call. It is reasonable in those circumstances that her recall may not be as reliable as Mr Beechey's. Mr Beechey was clear in his evidence that he communicated a reason specifically directed at his belief that the absence of acknowledgement of wrongdoing made it impossible for the relationship to move forward. Mrs Smart's evidence was that this was a factor discussed between her and Mr Beechey. I accept that this is what was said to Mrs Hart and find that that the absence of her acknowledgement of wrongdoing was at the heart of the reason for dismissal and that this was communicated orally to Mrs Hart in this third telephone conversation.
[67] I find on the basis of the evidence that Mr Beechey dismissed Mrs Hart for misconduct, not for performance reasons. Further, I find that the misconduct relied upon by Mr Beechey was the conduct of Mrs Hart in the incident with Mrs Rogers on 26 October. In particular I find that he formed the view that she had refused to obey a lawful direction from Mrs Rogers to move into the back office and close the door to discuss their disagreement, had raised her voice during the disagreement, that she (Mrs Hart) had instigated the altercation, that she remained reluctant to accept instruction from Mrs Rogers without quarrel and, importantly, that she had a change of heart on 30 October that she had done nothing wrong on 26 October and did not need to apologise (a view which differed from her position on 26 and 27 October). I also find, that in deciding to dismiss, Mr Beechey had regard to Mrs Hart's work record including the face to face counselling given to her following the March 2017 incident, her overall good work performance and his view that a recognition of wrongdoing in the 26 October incident was a precondition for the relationship with Mrs Hart to remain ongoing.
[68] There was no written letter of termination or other confirmation of dismissal.
[69] However, in December 2017, after Mrs Hart sought an employment separation certificate in order to claim Centrelink benefits, Mr Beechey completed the certificate with "misconduct" as the reason for dismissal. Mrs Hart rejected that certificate.
[70] Mrs Hart had at least two telephone conversations with Mrs Smart (still on leave) after her dismissal. On the evening of the dismissal, Mrs Hart telephoned Mrs Smart and was told by Mrs Smart that she (Mrs Smart) was aware of what had occurred. Mrs Smart sympathised with Mrs Hart but I do not find that she distanced herself from the decision.
[71] Mrs Hart and Mrs Smart spoke again by telephone a few days later. Mrs Smart asked Mrs Hart if she was okay. Mrs Hart said no and that what had occurred had been very unfair. Mrs Smart advised that her personal belongings could be collected from her house. Mrs Hart asked if she could get a copy of the warning letter and a separation certificate. Mrs Smart said that a warning letter wouldn't be provided as she had been terminated. She suggested Mrs Hart approach Mr Beechey directly about the separation certificate.
[72] Mrs Hart received two weeks' pay in lieu of notice and her accrued entitlements but did not otherwise return to the workplace nor did she collect her personal belongings from Mrs Smart's home.
[73] Under the FW Act, a dismissal is not an unfair dismissal if the employer was a small business (as defined) immediately prior to the dismissal and the small business employer complied with the Small Business Fair Dismissal Code (the Code).[20]
[74] The Small Business Fair Dismissal Code provides as follows:[21]
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements."
[75] The legislative intent of the Code is to provide a simpler procedure for small business (as defined) to navigate the unfair dismissal jurisdiction and for dismissal decisions by small business to not be subject to the same degree of review by the Commission if the Code has been complied with at the workplace level. This much is evident from the Explanatory Memorandum to the FW Act:
"A principal aim of the unfair dismissal framework is balancing the needs of businesses and employees, with particular accommodation of the needs of small business"[22]; and
"If a person's dismissal is consistent with the Small Business Fair Dismissal Code then the dismissal will be considered fair and the other factors relating to unfair dismissal do not need to be considered."[23]
[76] As Commissioner Hampton said in Grigonis v Adelaide Coffee Company Pty Ltd:[24]
"In establishing the Fair Dismissal Code and the preliminary (jurisdictional) point associated with unfair dismissals in that context, the evident intention of Parliament was to establish a particular benchmark against which small business unfair dismissals would be initially considered. The question of fairness is to be assessed having regard to a modified set of considerations that recognise the more informal nature and circumstances of small business and the needs of employees."
[77] The Code sets out substantive requirements relating to a "Summary Dismissal" and different requirements relating to "Other Dismissal". In relation to either form of dismissal, it sets out certain requirements concerning "Procedural Matters".
[78] Where the Commission is satisfied that a small business employer (as defined) has "complied with the Small Business Fair Dismissal Code" then the dismissal will have been "consistent with the Small Business Fair Dismissal Code".[25] In that instance the dismissal will not be an "unfair dismissal" within the meaning of Part 3-2 of the FW Act and the merits of the dismissal not further inquired into. In other words, this finding obviates the need for the Commission to determine whether the dismissal was "harsh, unjust or unreasonable" having regard to factors in section 387 of the FW Act. If however, the Commission finds that the small business employer has not complied with the Code, then the Commission is obliged to undertake the exercise required by section 387.
[79] In applying the Code, the Commission should have regard to the legislative intent and in particular the objective of providing a framework for a simpler method of determining whether a dismissal by a small business employer is fair or unfair. However, the Code is a legislative instrument made under the FW Act and, as such, must be interpreted against the generally accepted principles of statutory construction. This requires the language used to be given its ordinary and plain meaning and aids to construction only considered where there is ambiguity or uncertainty.
[80] Where a small business employer has dismissed an employee instantly without notice for serious misconduct the "Summary Dismissal" provisions of the Code apply. In these instances, the Commission's role (if an application is made) is to determine whether the employer genuinely held a belief that the employee had committed an act of serious misconduct and whether that belief was, objectively speaking, based on reasonable grounds.[26] Unlike dismissals by non-small business employers, the Commission does not determine whether there was a "valid reason"[27] for dismissal in the sense of whether the serious misconduct did or did not occur. The Commission does not need to determine whether the employer was correct in the belief that it held. Moreover, the Commission does not assess the dismissal against the other seven factors in sub-sections 387(b) to (h), except where they overlap with the procedural requirements of the Code.
[81] Given this, the Code appears to provide a framework for a simpler method of determining whether a summary dismissal by a small business employer is fair or unfair.
[82] However, this matter does not concern a summary dismissal. Mrs Hart was dismissed on notice. It was a conduct based dismissal but not viewed by the employer as serious misconduct. Nor was it performance based. In simplified terms, it was a dismissal for a failure to comply with what was believed by the employer to be a reasonable request by a manager and the employee's subsequent unwillingness to accept wrongdoing for having failed to comply with that request.
[83] The provisions of the Code do not comfortably cater for a dismissal that is conduct based but not serious misconduct. The terms of the Code under the heading "Other Dismissal" appear to cater more readily for performance based dismissal than conduct dismissals on notice. Yet, the Commission is required to apply the Code to conduct based dismissals on notice.
[84] Interpreting the Code's requirements under "Other Dismissal" is no straightforward task. At best, they are inelegantly expressed. At least in the context of conduct based dismissals on notice, the language is open to multiple interpretations. I agree with the observation of Vice President Watson in Puri v Sydney Strata Pty Ltd:[28]
"the terms relating to "Other Dismissal" are somewhat confusing. It is not clear to me whether the requirements of the Code include the existence of a valid reason for the dismissal, as distinct from a valid reason being given to an employee that there is a risk of being dismissed."
[85] Unlike the summary dismissal part of the Code, the language of the "Other Dismissals" section makes no reference to the employer simply having to hold a reasonable belief that the conduct occurred. Nor is fairness assessed by determining whether certain factors exist or not and weighing those factors (as for non-small business dismissals under section 387). The giving of a prior reason, the giving of a prior warning, the giving of a chance to respond, the giving of a chance to rectify and the giving of a valid reason are all expressed as mandatory. The employer "must" do each of these things. Due to its drafting, depending on the interpretation adopted and the type of dismissal, there is a real likelihood that the "Other Dismissals" section of the Code operates in a way that is more stringent on a small business than determining fairness under the general provisions of the FW Act. This would be an outcome at odds with the legislative intent.
[86] Read as a whole, the plain language of the "Other Dismissal" section of the Code appears to require a prior warning that dismissal for certain conduct or capacity is a possibility, for an opportunity to respond to the warning, for an opportunity to rectify the problem and for a valid reason for dismissal based on that conduct or capacity.
[87] If this is so, the Code suggests that in a conduct based dismissal on notice, an employer must have given a prior warning. Two consequences flow if that is so. Either the conduct must have occurred previously, meaning that the dismissal can only occur if the misconduct has occurred for a second time; or the employer has anticipated misconduct in advance of it occurring and issued a warning of some hypothetical nature. Both consequences appear impractical and unsatisfactory given what the legislature was intending to achieve.
[88] I now turn to apply the specific terms of the Code to the matter before me.
[89] The Code provides that "in other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job."
[90] Two interpretations of this requirement are open. Does the language require a valid reason for the dismissal (in the sense that the Commission must be satisfied that the conduct occurred and justified dismissal), or (alternatively) a valid reason being given to an employee that there is a risk of being dismissed?
[91] I prefer the second construction of this part of the Code. Otherwise the Code would impose an equivalent and arguably more stringent requirement on a small business than the general criteria in section 387 of the FW Act, which would appear to sit at odds with its policy intent. Nonetheless, for the purposes of this decision I address both constructions.
[92] With respect to the second construction, I am satisfied that at the face to face discussions on 27 March Mrs Hart was made aware of why she was at risk of being dismissed.[29] The nature of her response that morning, including her apology to Mrs Rogers, is evidence that she understood the seriousness with which the employer viewed her outburst on 24 March. She was concerned for her job. She knew that insubordination to a manager was a valid reason for dismissal. She knew the reason why she was being counselled by the owner in a formal meeting which he had travelled to South Australia to conduct. I conclude that the employer's conduct was consistent with this requirement of the Code.
[93] Should the alternate construction of this part of the Code be applied (requiring a valid reason to be found) I would reach the same conclusion. The telephone discussion between Mr Beechey and Mrs Hart on 26 October, his request for her version of events to be put in writing, his advice to her that she was being stood down for the remainder of the week and his hour long conversation with her on the morning of 30 October individually and collectively made Mrs Hart aware that the employer was investigating the incident of 26 October, considering how to respond (including in relation to her employment) and the reason why it was doing so. The terms of Mrs Hart's emailed response of 27 October make it clear that she was aware of each of these matters being live issues. I find that the reason given to Mrs Hart for the employer's consideration of her employment future in advance of the decision to dismiss was Mr Beechey's concern that Mrs Hart had refused to obey a lawful direction from Mrs Rogers to move into the back office and close the door to discuss their disagreement, had raised her voice during the disagreement, that she (Mrs Hart) had instigated the altercation and that she remained reluctant to accept instruction from Mrs Rogers without quarrel. I also find that during the one hour telephone discussion on 30 October Mr Beechey expressed concern to Mrs Hart that her position had altered and that she no longer demonstrated contrition. I find that each of these elements of the conduct on which the employer relied did in fact occur.
[94] I conclude that these were, in a collective sense, valid reasons for dismissal based on Mrs Hart's conduct. Although Mrs Hart's conduct in the October 2017 incident was less serious in that she did not use foul language to Mrs Rogers, it was nonetheless a refusal to take reasonable instruction and direction from her manager. While removing herself from the workplace was her attempt to avoid the heat of the moment, walking out on the manager's request was insubordinate. Moreover, the dismissal was based not only on that conduct but Mrs Hart's subsequent change of mind about whether she had done anything wrong. In combination, these were sound, defensible and well-founded reasons for dismissal given the small business context in which Mrs Hart worked, their impact on the business and in particular the need for effective working relationships between the administrative staff in the small Adelaide office.
[95] The Code provides "the employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement."
[96] In this instance, there had been a prior incident of insubordination in March 2017. The dismissal was preceded by two incidents (March and October) of similar but not identical nature.
[97] The uncontroverted evidence is that on 27 March Mr Beechey declined to give Mrs Hart a formal written warning even though one had been prepared. He chose to verbally counsel, accept Mrs Hart's contrition and then bring Mrs Rogers into the meeting to receive the apology and, as a collective group, resolve to move forward professionally and respectfully.
[98] The Code expresses a preference that a prior warning is "in writing" but does not mandate that requirement.[30] A verbal prior warning can meet the requirements of the Code provided it was a warning. In this instance the prepared written warning was not given to Mrs Hart following the face to face verbal discussion. Was that face to face verbal discussion on the morning of 27 March a "warning" within the meaning of the Code?
[99] Mrs Hart, in her evidence, does not characterise what was said to her as a warning. Mr Beechey submitted that it was in the nature of a verbal warning. The determination of whether it was a "warning" or something lesser is to be made objectively based on the circumstances. A label given by the parties to a disciplinary dialogue is relevant but not determinative.
[100] Mr Beechey's evidence, which I accept, is that "Crystal was advised that the behaviour was unacceptable and that nothing of that nature was to happen again if she was to continue on. A written warning had been prepared and she was advised that she would be given this."[31] Mrs Smart's evidence, which I also accept, was that "during the meeting Crystal was quite distressed but was told that the behaviour was unacceptable and it was never to happen again".[32]
[101] On the basis of this evidence, I am satisfied that the statements made by Mr Beechey to Mrs Hart at their initial meeting on the morning of 27 March to have constituted a verbal warning. Later in the morning Mr Beechey decided, and told those present, that a written warning would not be issued given the apology and contrition displayed by Mrs Hart when Mrs Rogers was subsequently brought into the meeting. He did not however recant the employer's view expressed earlier in the day that that Mrs Hart's behaviour had been unacceptable and that nothing of that nature was to happen again.
[102] Further, I am satisfied that what was said and done at the sequence of meetings on 27 March put Mrs Hart on notice that her employment could be terminated if such or similar conduct was repeated.
[103] In these circumstances, I conclude that the employer's conduct was consistent with the requirement of the Code that the employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
[104] The Code provides that "the small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations."
[105] To the extent that the Code requires a previous incident of misconduct to have occurred, I interpret this part of the Code as requiring an opportunity to respond to the earlier warning and rectify behaviour following the earlier warning. However an alternate construction of this part of the Code could be that the obligation to provide an opportunity to respond refers to the dismissal incident (or both incidents) and not just the prior warning incident. I do not prefer this latter construction because this part of the Code uses the phrases "respond to the warning" and "rectify the problem" in the same tense and in relation to the same subject matter.
[106] I am satisfied that Mrs Hart was given an opportunity to respond on 27 March, and had a reasonable opportunity over the following six months to reflect on her conduct and what triggered it, and to rectify it. For conduct of the type committed on 24 March, retraining was not provided, nor do I consider it to have been necessary. Management of her emotions and language, even where she considered her 2IC to be providing wrong or inadequate instruction, required Mrs Hart to exercise self-control. She was provided access to Mrs Smart and ultimately Mr Beechey to deal with those challenges.[33] I conclude that the employer's conduct was consistent with this requirement of the Code.
[107] To the extent that the alternate construction applies, I find that Mrs Hart was provided an opportunity to respond to the concerns Mr Beechey held about the incident on 26 October and was given a reasonable chance (three days) to rectify her behaviour by acknowledging error, apologising and committing to re-establish the necessary working relationship. That she did not do so, but rather chose to harden her position in the other direction, was a choice made by Mrs Hart.
[108] The Code provides that "in discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity." I agree with the observations of Commissioner Hampton in Grigonis v Adelaide Coffee Company Pty Ltd[34] that this aspect of the Small Business Code is permissive rather than directive, with no apparent requirement that an employee be offered this form of assistance.
[109] It is not clear whether this part of the Code relates to events prior to dismissal or events relating to prior warnings, or both. There is no evidence that Mrs Hart had a representative present on 27 March. Nor is there evidence that she requested a representative or that the employer unreasonably refused to provide a representative. Mrs Smart, who was both Store Manger but also a close personal friend of Mrs Hart, was present on 27 March.
[110] In relation to the discussions on 26 or 30 October, these were conducted by telephone. There is likewise no evidence that Mrs Hart had a representative present, nor is there evidence that she requested a representative or that the employer unreasonably refused to provide a representative. I conclude that in the discussions with Mrs Hart where dismissal was possible the employer's conduct was consistent with this requirement of the Code.
[111] Finally, the Code provides that "a small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal."
[112] I am satisfied that the employer has met this requirement. The employer produced evidence on the above matters in writing from witnesses and those witnesses were placed on oath and subject to examination and cross examination at the hearing of this matter.
[113] For these reasons, I conclude that Rentorilla was a small business within the meaning of the FW Act at the time of dismissal and that Rentorilla complied with the Small Business Fair Dismissal Code in its dismissal of Mrs Hart.
[114] In those circumstances I am not able to otherwise consider whether the dismissal of Mrs Hart on 30 October 2017 was harsh, unjust or unreasonable. Nor do issues of remedy arise.
[115] Before leaving this matter I draw to the attention of policy-makers responsible for the Small Business Fair Dismissal Code my observations concerning its confusing interpretation and (in some respects) its potentially more onerous application than the general provisions of the FW Act pertaining to harsh, unjust or unreasonable dismissals. Given that in this decision I have considered it necessary to deal with constructions of the Code in the alternative, this matter has been attended to by an unnecessary degree of complexity. This would appear to be at odds with the legislative intent to provide a simpler procedure for small business employers and employees to navigate the unfair dismissal jurisdiction as expressed in the Explanatory Memorandum to the FW Act and in decisions of the Commission.
[116] Mrs Hart's application is dismissed. An order to this effect is issued in conjunction with the publication of this decision.
C. Hart and T. Hart (in support), for the Applicant
[2] Directions and Amended Directions, 21 December 2017 Deputy President Anderson
[3] Pearse v Viva Energy Refining Pty Ltd [2017] FWCFB 4701 at [14]. See also section 591 of the FW Act and King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, 17 March 2000) Print S4213 at [61] - [62]; Enterprise Flexibility Agreement Test Case (Print M0464) at page 13; Pochi v Minister for Immigration and Ethnic Affairs [1979] AATA 64; (1979) 36 FLR 482 at 509
[4] Exhibit R5 Statement of Tracey Smart paragraph 11
[5] Exhibit R6 Statement of Jo Rogers paragraph 7
[7] See particularly Exhibit R6 Statement of Jo Rogers paragraph 13
[8] Exhibit R6 Statement of Jo Rogers paragraph 13
[9] Exhibit A1 Statement of Crystal Hart page 2 "she asked me to come in the back office and close the door and I refused because of the way I was spoke (sic) to...". Exhibit R6 Statement of Jo Rogers paragraph 13 "I said...can you come in and close the door so we can have a private conversation?...Crystal said no."
[10] Exhibit R4 Statement of David Beechey paragraph 7. See also Statement of Tracey Smart paragraph 13
[13] Ibid. The reference to "Tracy" in this sentence is interpreted as a reference to Tracy Miller not Tracey Smart
[14] Exhibit A1 Statement of Crystal Hart page 3
[15] Exhibit R4 Statement of David Beechey paragraph 9
[16] Exhibit R5 Statement of Tracey Smart paragraph 15
[17] Exhibit R4 Statement of David Beechey paragraph 11
[18] Exhibit A1 Statement of Crystal Hart page 4
[19] Exhibit R4 Statement of David Beechey paragraph 12
[21] Fair Work Act 2009 - Declaration under subsection 388(1) - Small Business Fair Dismissal Code Ministerial Declaration 24 June 2009 commencement from 1 July 2009
[22] Explanatory Memorandum to the Fair Work Bill 2008 paragraph 1507
[26] Ryman v Thrash Pty Ltd t/as Wisharts Automotive Services [2015] FWCFB 5264. See also Grandbridge Limited v Wiburd [2017] FWCFB 6732, Steri-Flow Filtration Systems (Aust) Pty Ltd v Erskine [2013] FWCFB 1943 and Pinawin v Domingo [2012] FWAFB 1359
[29] Exhibit R5 Statement of Tracey Smart paragraph 8
[30] Grigonis v Adelaide Coffee Company Pty Ltd [2011] FWA 1586 at [67] - [68] per Hampton C:
"The Small Business Code, for good reason, expresses a preference that warnings are given in writing. It is also evident from the Code that this is not required however I consider that the effect of the Code is that an employer will be required to demonstrate that the relevant warning has in fact been given and that this may be done by way of direct evidence. On that basis, I need to assess the evidence pertaining to the issue. Given the nature of the Small Business Code, it would not be appropriate to attempt to establish the precise form or set of words that would need to be used to demonstrate compliance with this element of the Code. Rather, the evident intent of the Code is clear. The respondent must have, at least once, taken steps that would have, or should have, left the applicant with the understanding that she risked being dismissed if there was no improvement in her job performance."
[31] Exhibit R4 Statement of David Beechey paragraph 5
[32] Exhibit R5 Statement of Tracey Smart paragraph 8
[33] Exhibit A1 Statement of Crystal Hart page 2 "I trusted Tracey (Smart) and I always went to her with my complaints because she advised me not to call David because he was busy..."; Exhibit R4 Statement of David Beechey paragraph 14 "I have personally told Crystal on a number of occasions that she can always call me if there is something she feels she cannot speak to the Store Manager about or for any other reason."
Printed by authority of the Commonwealth Government Printer
Mrs Crystal Hart
Forex 1 Pty Ltd ATF Trading Rental Trust [2018] FWC 942
(1979) 36 FLR 482