s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - applicant unfairly dismissed - reinstatement not appropriate- compensation in lieu of reinstatement ordered

• [1] Ms Joanna Pascua alleges that she was unfairly dismissed by Doessel Group Pty Ltd. She seeks an unfair dismissal remedy pursuant to s 394 of the Fair Work Act 2009 (Cth). Doessel objected to the application on the basis that Ms Pascua was not dismissed because she was not an employee. That issue was decided in an earlier decision[1] and was the subject of an appeal. The appeal was dismissed[2]. This decision deals with Ms Pascua's claim that she was unfairly dismissed.

• [2] The application was heard by way of conference and Ms Pascua represented herself. The Respondent was represented by Mr Graham Doessel.

• [3] I find that Ms Pascua was unfairly dismissed and award compensation in lieu of reinstatement in the sum of $10,800.00. These are my reasons.

• [4] Section 390 provides that the Commission may order a person's reinstatement, or the payment of compensation in lieu of reinstatement if satisfied the person was protected from unfair dismissal and has been unfairly dismissed.

• [5] Section 382 provides that a person is protected from unfair dismissal if the person is an employee who has completed a period of employment of at least the minimum employment period and is covered by a modern award, an enterprise agreement applies to the person, or the person earns less than the high-income threshold. The Respondent's contention that Ms Pascua was not an employee was dealt with in the earlier decisions. It is not contended that Ms Pascua is otherwise not protected from unfair dismissal. I am satisfied that she was.

• [6] Section 385 relevantly provides that a person has been unfairly dismissed if the Commission is satisfied of four things: the person has been dismissed; the dismissal was harsh, unjust or unreasonable; the dismissal was not consistent with the Small Business Fair Dismissal Code, and the dismissal was not a case of genuine redundancy. I am satisfied that Ms Pascua was dismissed, the dismissal was not consistent with the Small Business Fair Dismissal Code, and the dismissal was not a case of genuine redundancy

• [7] The Respondent contends that Ms Pascua was not unfairly dismissed because her dismissal was not harsh, unjust or unreasonable.

• [8] Ms Pascua performed work as a legal assistant for an entity known as MyCRA Lawyers. MyCRA Lawyers operates a business providing specialist credit repair services. It operates out of premises located in Queensland. Ms Pascua lives and performed work from her home in the Philippines.

• [9] Ms Pascua commenced employment on 21 July 2022 as a paralegal. She described the work as involving working from her computer, at home, at times that matched business hours in Australia. Her hours of work were 8.30 am to 5.00 pm. She was allocated files by email each day and was required to liaise with clients of MyCRA Lawyers and with banks and other credit providers on behalf of those clients. She did so by telephone and email. She described the work as involving investigating credit claims on clients' behalf.

• [10] Ms Pascua's work was initially supervised by a solicitor. Within 12 months of commencement Ms Pascua's work was unsupervised and Ms Pascua conducted written communications using correspondence based on pro forma documents which she would modify as necessary. She also took on the work of training others in conducting investigations. Ms Pascua said that for the last 7 months she performed the work, she was the only one conducting the investigation work.

• [11] Ms Pascua was paid $18.00 an hour on the basis that that her hours were capped at 8 hours per day across 5 days making her weekly wage $720.

• [12] Ms Pascua described the last 7 months working for the respondent as difficult. She was supervised by the firm's principal, Mr Doessel. She described Mr Doessel as micromanaging her work, being overly critical of her, overworking her, setting unreasonable expectations, and refusing to approve overtime.

• [13] Ms Pascua was dismissed by Mr Doessel during a Skype call on 20 March 2024 which commenced at 1.27 pm. Ms Pascua had sent an email to a credit provider on behalf of a client asking that an enquiry the provider had made to a credit agency be withdrawn. Mr Doessel was concerned that the email had been sent without following specific instruction and proper procedures, and that it was deficient in a number of respects. Mr Doessel provided a transcript of part of that conversation which was recorded using software called Skype. The conversation reads:

Respondent: Here is another very clear example that I gave you the same instructions several times Joanna, I gave you the same instruction several times, and you ignored my instruction.

Respondent: You did it doesn't matter why you did it, but you ignored my instruction.

Respondent: And that's the primary instruction that I said not to do Joanna. That's the thing I said not to do.

Applicant: It was an error in clicking the Send button.

Respondent: No, it's not Joanna because I said to put it on a Word document. You didn't even bother putting it in a Word document.

Respondent: Check the Skype Joanna. I said it very clearly, added to a letterhead.

Respondent: Just press the scroll down button so you get to the bottom please.

Respondent: There, right there in the middle 10:37

Respondent: please follow my instructions and add the client details.

Respondent: Once it's formatted, add to a letterhead and ready to send, then show me for final

Respondent: It's not good enough Joanna, it is absolutely not good enough.

Applicant: You're firing me. What else? What else can I do?

• [14] Mr Doessel later provided a copy of the audio recording of the conversation. The conversation went for 37 minutes. The extract is from the beginning of the conversation. It does not reflect the entirety of what was discussed.

• [15] The conversation commenced with Mr Doessel asking Ms Pascua about the correspondence that had been sent contrary to instructions. Mr Doessel expressed frustration at Ms Pascua not following instructions and the amount time it was taking him to supervise her work. It was at this point that Mr Doessel dismissed Ms Pascua using the words "Yeah, you're fired_"._

• [16] The conversation continued after the dismissal. Ms Pascua provided some reasons for having sent the correspondence, including that she was under pressure and had been distracted by a work call. The conversation then turned to the files that were on Ms Pascua's computer. It is clear from the conversation that Mr Doessel could see what was on Ms Pascua's computer screen, was remotely controlling her computer, and was looking through her files. The conversation was at time heated. Ms Pascua was clearly agitated.

• [17] Ms Pascua protested at Mr Doessel looking through her files. Mr Doessel continued to look through the computer and raised concerns that the Respondent's files had been copied to the desktop. He also looked through Ms Pascua's emails and made complaints that Ms Pascua had been doing work for others. Ms Pascua complained that she had been overworked as others who had left the business had not been replaced. Mr Doessel raised that Ms Pascua was making daily mistakes. Ms Pascua denied constantly making mistakes. She pointed out that she was under pressure, she was not a lawyer, was working remotely from the Philippines, and had not been trained. Ms Pascua complained that her workload was excessive causing her to make mistakes.

• [18] Mr Doessel was not receptive to Ms Pascua's concerns; he told her she was talking like a crazy woman and recommended she seek psychological help. Ms Pascua responded that this was demeaning. Ms Pascua was told she was simply required to follow procedures. Ms Pascua told Mr Doessel that he had been rude and condescending.

• [19] The conversation went on to further discuss concerns about the way Ms Pascua was working including previous matters where issues were raised about her work.

• [20] Following a long pause, in which Mr Doessel was continuing to go through Ms Pascua's computer, Mr Doessel made it clear that Ms Pascua's computer had files and information on it that should not have been copied. Ms Pascua protested that Mr Doessel was accessing her private files. Mr Doessel alleged that Ms Pascua had committed cybercrime and that if he was not permitted to look through her computer the alternative was that he contact the Australian Federal Police who would contact the Philippine police who would throw her in gaol for theft.

• [21] Ms Pascua maintained that she did not give Mr Doessel permission to go through her private files. There was then discussion about whether there were company files on Ms Pascua's computer. Mr Doessel had to leave the conversation and asked Ms Pascua to not touch her computer for an hour when he would return to continue to access her computer. He asked her for permission to continue to do so and said that if she did not provide permission she would not be paid outstanding payments, and he would contact the police. Mr Doessel confirmed that Ms Pascua had been dismissed and said he would return to inspect the computer in an hour and stated that if Ms Pascua touched the computer in the meantime, he would take steps to protect his interests.

• [22] Mr Doessel also provided extracts from earlier conversations with Ms Pascua which he contended demonstrated her poor work performance and justified her dismissal. They included:

a) A series of messages to Ms Pascua in three instances in January, July and October 2023 where suggestions were made to correct correspondence she had drafted.

b) A conversation on 26 October 2023 where Mr Doessel raised with Ms Pascua an error where she confused a creditor's mailing address, which was a post office box, with their residential address.

c) A conversation 27 October 2023 where Mr Doessel corrected Ms Pascua about legal requirements to prove matters specified associated with credit reports and information.

d) A series of conversations on 30 October 2023 where Mr Doessel discussed various matters with Ms Pascua including the need to seek an extension of time in relation to a particular file, the effect of a settlement offer, and whether a client's credit report should have been amended by a credit agency. The conversations end with Mr Doessel and Ms Pascua disagreeing about the correct course.

e) A conversation on 5 December 2023 where Mr Doessel raised with Ms Pascua that she had made a mistake and that he was thinking about firing her.

f) Further examples in February 2024 of Ms Pascua's work being corrected.

• [23] The Respondent also relied upon a witness statement of Kathleen Curry. the Practice Managerwho supervised Ms Pascua's work. Ms Curry provided examples of conversations she had with Ms Pascua about her work. Those matters included an instance in February 2024 where instructions were given to Ms Pascua to amend correspondence being sent by the company but failed to do so.

• [24] During the proceedings Mr Doessel described a number of instances where concerns were raised by clients about Ms Pascua's work. He accepted that he did not warn her about that work but that the made changes to the work she was required to do to accommodate what were perceived as her shortcomings.

• [25] Ms Pascua was notified in writing that her contract was terminated in an email sent at 9.54 pm on 20 March 2024. The email referred to Ms Pascua unlawfully copying company information and client information to the personal drive on her computer. Mr Doessel stated that while he discovered that Ms Pascua had unlawfully taken confidential records and saved them to her personal computer that was after he dismissed her. She was not terminated for copying the material. She was dismissed for poor performance in making repeated mistakes, failing to follow procedures, and failing to follow instructions.

• [26] The first question is whether the dismissal was harsh, unjust or unreasonable. In considering that question I must take into account the matters set out in s.387 of the Act.

• [27] The Respondent dismissed Ms Pascua following an incident where she sent correspondence to a credit provider that included mistakes and included content that was contrary to instructions. The incident was said to have followed a pattern of conduct that included similar mistakes. The reason for the dismissal was therefore related to the Ms Pascua's capacity or conduct. Section 387(a) directs my attention to whether there was a valid reason for the dismissal related to capacity or conduct of the employee.

• [28] The valid reason criterion in s. 387(a) was described by a Full Bench of the Commission in Brock Austin v Sandgate Taphouse Pty Ltd T/A Sandgate Post Office Hotel [2024] FWCFB 323 at [57] as follows:

[57] The principles applicable to the consideration required under s. 387(a) are well established. A valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced. A valid reason for dismissal may be based on the capacity (as in the present case) or conduct of the person dismissed. Capacity is the person's ability to do the job as required by the employer and includes the person's ability to do the work they were employed to do. For a person's conduct to be a valid reason for dismissal, the Commission must find that the conduct occurred and that it justified dismissal.[66] Conduct that did not occur, or occurred but was trivial and did not justify dismissal, is not a valid reason for dismissal.

• [29] I was provided with the email correspondence that led to the dismissal. I was also provided with an account of Ms Pascua's performance during her employment. Poor performance can ground a valid reason for dismissal. Where that poor performance occurs repeatedly, against firm instruction to improve, combined with assistance to do so, then it there will undoubtedly be a valid reason for dismissal. My assessment of the circumstances however leads to the conclusion that this was not the case here.

• [30] I was provided with the email sent by Ms Pascua. It did contain errors. I do not consider that those error justified the dismissal. They did not cause damage to the Respondent other than perhaps some embarrassment that it was not presented in a professional manner. Sending the email was also contrary to instructions to correct errors before sending. Ms Pascua explains that she was rushed when she sent the email and that caused her to send it without making the required corrections. She admitted at the time that it was a mistake to press the send button. That incident alone does not justify dismissal on performance grounds.

• [31] I have also taken into account the claims that Ms Pascua had made many mistakes. The evidence of earlier mistakes was not strong. The messages I was taken to present as day to day incidents of supervision. Corrections were made to work. Reminders were given of procedures that should be followed. I do not consider those earlier matters as constituting "many mistakes" nor do I consider them to constitute a pattern of poor performance. In hindsight it is clear that the Respondent considered that Ms Pascua did not meet its expectations. There was little evidence of assistance being provided to Ms Pascua to improve her performance to meet those expectations.

• [32] Consequently, I find that Ms Pascua's poor performance did not provide a valid reason for dismissal, as it did not justify dismissal.

• [33] The principles relevant to a consideration of the matters in s. 387 (b) and (c) were summarised by a Full Bench in Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429 at [19] as follows:

[19] The relevant principles as to the meaning and application of s 387(b) and (c) are well-established. 9 They may be summarised as follows:

(1) Each of the matters specified in s 387, including those in paragraphs (b) and (c), must be taken into account as matters of significance, to the extent that they are relevant to the particular case at hand, and given due weight.

(2) Proper consideration of s 387(b) requires a finding to be made as to whether the applicant has been notified of "that reason" - that is, the reason for dismissal relating to the capacity or conduct of the applicant found to be valid under s 387(a) - prior to the decision to dismiss being made.

(3) Proper consideration of s 387(c) requires a finding to be made as to whether the applicant has been given a real opportunity to respond to the reason for dismissal. As a matter of logic, unless the applicant has been notified of the reason, it is difficult to envisage that it could be found that the applicant has been afforded an opportunity to respond to that reason.

(4) Once findings are made in relation to s 387(b) and (c), they may then be weighed together with the other matters required to be taken into account in order to form a conclusion as to whether the applicant's dismissal was harsh, unjust or unreasonable. Where it is found that the applicant was not notified of the reasons for dismissal and/or was not given an opportunity to respond, a relevant consideration as to the weight to be assigned to this is whether this meant that the applicant was deprived of the possibility of a different outcome in terms of avoiding his or her dismissal.

• [34] As I have found that there was no valid reasons and s.387 (b) and (c) go to whether the employee was given an opportunity to respond to a valid reason and was permitted to have a support person. They are also not directly relevant.

• [35] Section 387(d) goes whether the Respondent unreasonably refused to allow Ms Pascua to have a support person present to assist in any discussions relating to the dismissal. No request was made for Ms Pascua to have a support person present in the discussion on 20 March 2024 and so the factor is neutral.

• [36] Section 387(e) goes to whether there had been a warning about unsatisfactory performance. The Respondent waivered on this question. In submissions the earlier incidents that I have found to be examples of supervision were relied upon. During the proceedings it appeared that there had been threats of dismissal in previous conversations although specifics were not provided. Mr Doessel however accepted that no formal warning was given. I find that there was no formal warning given to Ms Pascua that if she failed to improve her performance then she would be dismissed.

• [37] Sections 387 (f) and (g) goes to the size of the enterprise and whether it had access to dedicated human resources specialists. The Respondent is a small business. I suspect that if the Respondent had access to correct advice prior to the dismissal it would have taken a different course by providing Ms Pascua an opportunity to respond to concerns about her performance, formal warnings reflecting those concerns, and proper support to allow her to improve. And while these matters are relevant under s. 387(h), I do not consider the size of the business or failure to access to expertise as telling one way or the other in a consideration of whether the dismissal was harsh unjust or unreasonable.

• [38] Section 386(h) requires that I consider other relevant matters. I believe that the procedure followed in effective the dismissal was unfair. Mr Doessel rang Ms Pascua over mistakes on a particular file. He dismissed her immediately. He was unreceptive to her explanations for the error. He was also dismissive of her complaints about being overworked and undertrained. He then then proceeded to inspect her computer remotely without her consent. These matters indicate that Mr Doessel's decision to dismiss Ms Pascua was made in an agitated state and done without the careful consideration that should accompany a decision to dismiss someone.

• [39] Taking into account the matters set out above, I find that the dismissal was harsh unjust, and unreasonable. Ms Pascua was dismissed at the commencement of the conversation on 20 March 2024. The catalyst for that decision was her sending correspondence that contained a number of mistakes. Mr Doessel stated that there had been too many mistakes by Ms Pascua and that he was "firing" her. I do not consider that the mistake made on 20 March 2024 justified dismissal. Nor do I consider, on the evidence presented, that the 20 March mistake combined with earlier mistakes justified dismissal. Consequently, I find there was no valid reason for dismissal. Ms Pascua was given no warning of the dismissal and there was no discussion with her prior to Mr Doessel announcing his decision to "fire" her. These procedural matters also make the dismissal unfair. The dismissal was related to performance and while the Respondent had raised issue with Ms Pascua's performance in the past, she was not formally warned that those mistakes would lead to her dismissal. Earlier threats of dismissal were referred to during the proceedings but these were not particularised and there was no written record nor structured process in place specifying the nature of the poor performance and the means by which it might be improved that is expected in a fair process that leads to dismissal for poor performance. I am satisfied that Ms Pascua was unfairly dismissed within the meaning of s.385 of the FW Act.

• [40] Ms Pascua did not seek reinstatement. I find that in any event the relationship has broken down and reinstatement is inappropriate. Ms Pascua seeks compensation. I am satisfied that it is appropriate to make an order for payment of compensation in lieu of reinstatement.

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

Section 392(2) requires me to consider the matters listed in s. 392 (a) to (g). In relation to paragraph (a), it is not clear that an order for compensation will have an impact on the financial viability of the business. Nothing was put on this topic by Mr Doessel. For the purposes of paragraph (b) I note that Ms Pascua had only worked for the Respondent for a period of 18 months. In relation to paragraph (c), I am required to make an assessment of the amount of remuneration Ms Pascua would have received had she not been dismissed. This requires some speculation. Ms Pascua had found the 7 months prior to the dismissal difficult. She felt she was overworked and was not receiving adequate support from the business. There is evidence of her becoming frustrated with the way she was treated. The evidence also suggests that the Respondent was becoming increasingly frustrated by mistakes Ms Pascua was making. I consider that the parties would have parted ways one way or another by the end of June 2024. Consequently, Ms Pascua would have worked a further 15 weeks. I am not aware of any earnings made by Ms Pascua since the dismissal. It is unlikely that she has made earnings since the proceedings. I do not consider any other factors relevant to the quantum of compensation.

• [42] The often quoted approach to the assessment of the quantum of compensation under s. 392 of the Act is to apply the "Sprigg formula". That formula is derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket Print [1998] AIRC 989; (1998) 88 IR 21. The application of the formula was explained by the Full Bench of this Commission in Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206. The first step is to consider s. 392(2)(c) and determine what Ms Pascua would have received, or would have been likely to receive, if she had not been dismissed. As I have observed this requires some speculation about how long she would have remained working for the Respondent. The next step is to make the various adjustments in accordance with s.392 for matters that include the impact on the business, monies earned since dismissal, any reduction on account of the employee's misconduct and the application of the cap of six months' pay. A reduction for contingencies has also been commonly applied to take into account likely changes in circumstances that may impact ongoing employment. This approach is subject to the overarching requirement to ensure that the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.

• [43] Applying that approach here I consider that Ms Pascua would have worked for 15 weeks. I do not propose to make any adjustments for matters that include the impact on the business, monies earned since dismissal, nor any reduction on account of contingencies or Ms Pascua's misconduct. I consider 15 week's pay is appropriate having regard to all the circumstances of the case. Ms Pascua was paid $720.00 per week, and 15 weeks' pay equates to $10,800.00. I will order compensation of that amount.

• [44] I find that Ms Pascua was unfairly dismissed. I find that reinstatement is not an appropriate remedy. I order that the Respondent pay Ms Pascua an amount of $10,800.00 as compensation in lieu of reinstatement.

[1] [2024] FWC 2669

[2] [2025] FWCFB 43

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