s.394 - Application for unfair dismissal remedy

• [1] Shashi Mathew has made an application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). Mr Mathew was employed by the Australian Guild of Education Pty Ltd (AGE), which is a provider of education services to international students. Mr Mathew's position was described in a contract dated 20 March 2024 as including the roles and responsibilities of quality and risk director, chief technology officer and IT support officer. AGE dismissed Mr Mathew after concluding that he was not suitably qualified to do his job. Mr Mathew disputes this and contends that his dismissal was unfair because there was no valid reason for it and because the termination process was unfair. AGE objects to the application on the ground that Mr Mathew was not a person protected from unfair dismissal because his annual rate of earnings exceeded the high income threshold, and on the ground that the dismissal complied with the Small Business Fair Dismissal Code (Code). It says that in any event the dismissal was not unfair because it occurred for a good reason following a fair process.

• [2] Shortly before the commencement of the determinative conference, Mr Mathew's representative advised the Commission that he was unwell and would not be attending the conference, but that he nevertheless wanted the matter to proceed. I explained to Mr Mathew's representative that if Mr Mathew did not attend, he would not be able to give sworn evidence, and that unsworn or hearsay evidence could not be expected to carry the same weight as sworn evidence that might be given by witnesses for AGE. Mr Mathew's representative confirmed that she understood this and that Mr Mathew's did not seek to have the matter adjourned until he was fit to attend.

• [3] It is convenient to commence the consideration of this unfair dismissal application with the letter dated 7 May 2025 by which AGE confirmed the termination of Mr Mathew's employment. The letter was sent to Mr Mathew by the chief executive officer of AGE, Greg Whateley. It stated that AGE required a director of quality and risk who had extensive experience with the 'CRICOS' (the Commonwealth Register of Institutions and Courses for Overseas Students), and who could be on campus full time. It further stated that Mr Mathew's resume did not show any experience in higher education-related quality and risk, the needs of international students, the ESOS Act (Educational Services for Overseas Students Act 2000) or the National Code, and that Mr Mathew had advised that he was unable to attend campus full-time. The letter then stated that, further to an email that Mr Whateley had sent Mr Mathew earlier that day, and to their meeting on 28 April 2025, Mr Mathew's employment would terminate on 28 May 2025, this being the end of a 4 week notice period that was said to have commenced on 30 April 2025.

• [4] Mr Whateley gave evidence that at his meeting with Mr Mathew on 28 April 2025, he told Mr Mathew that the organisation was too small to have a director for quality and risk and that his employment would be terminated. Mr Mathew replied that he would write to Mr Whateley about what had been discussed at the meeting. On 1 May 2025, Mr Whateley received an email from Mr Mathew posing a number of questions, including whether he could be transitioned to another area or role, and whether his termination was a redundancy.

• [5] On 7 May 2025, prior to sending the termination letter referred to above, Mr Whateley sent Mr Mathew a lengthy email in response to his message of 1 May 2025. In the email, Mr Whateley thanked Mr Mathew for writing to him about his concerns regarding the termination of his position, and said that he would like to provide some further 'background'. Among other things, Mr Whateley stated that in December 2024, when the ownership of the company changed, a sustainability review was conducted which revealed that Mr Mathew had been given his role 'in name only' and that he was 'not equipped to fulfil the position requirements'. Mr Whateley then identified the following concerns about Mr Mathew's performance:

• Mr Mathew should have been familiar with CRICOS but his lack of knowledge meant that a contractor had to be engaged to complete a certain piece of work;

• Mr Mathew had not contributed to the onboarding and compliance management of international students, which was a key responsibility of his role;

• AGE's recent application for a graduate diploma in early childhood education should have undergone a quality review by Mr Mathew, but this did not occur;

• a 'data migration' project had been redirected because Mr Mathew lacked knowledge of the relevant systems; and

• many of the day to day tasks associated with Mr Mathew's role were not being performed without the support or guidance of Mr Whateley or Jim Mienczakowski, an adviser: 29 tasks were cited as examples.

• [6] Next, Mr Whateley responded to the questions in Mr Mathew's message of 1 May 2025. As to whether the role was redundant, Mr Whateley said that it was not a 'full' redundancy, because a 'downgraded' role would continue, but that the issue of concern was Mr Mathew's unsuitability to undertake the existing role. Mr Whateley's evidence to the Commission was that as it transpired, the downgraded role never eventuated.

• [7] Mr Whateley's evidence was that, although the termination letter of 7 May 2025 had referred to Mr Mathew's unsuitability for the role as the reason for his dismissal, there were in substance three reasons: first, the company had shrunk and it was now too small for a role like that of Mr Mathew; secondly, the functions of that role could be redistributed; and thirdly, Mr Mathew was simply not up to the job. Mr Whateley acknowledged that prior to sending Mr Mathew the email of 7 May 2025, he had not raised with him the detailed performance concerns set out in that message.

• [8] Although Mr Mathew did not attend the proceeding and did not give evidence, I have had regard to the written materials filed by him, and the submissions of his representative, which address various factual matters. In particular, I note that Mr Mathew said that his performance was consistently rated highly and that he had received commendations as recently as March 2025, and I infer that he generally denies that his performance had been inadequate, either for the reasons referred to in Mr Whateley's email of 7 May 2025 or otherwise. Mr Whateley's evidence was that the content of his email of 7 May 2025 was true and correct.

• [9] I accept Mr Whateley's evidence that Mr Mathew was unable to carry out the 29 tasks and functions referred to in the email of 7 May 2025 without the assistance of Mr Whateley or Mr Mienczakowski. I prefer the sworn and detailed evidence to Mr Mathew's unsworn statements that his performance had been good. The evidence of Mr Whateley leads me to conclude that Mr Mathew was not able to do his job effectively. I also accept the evidence of Mr Whateley that he had concluded that the role undertaken by Mr Mathew - quality and risk director, chief technology office and IT support officer - was not needed, particularly because the company had shrunk in recent times. Proof that the position was indeed not required is the fact that when Mr Mathew's employment ended, he was not replaced, the downgraded role that had been contemplated never materialised, and the IT function was outsourced. The simple fact is that Mr Mathew had not been up to the job and, as often happens in such situations, the employer realised that it did not need his position.

• [10] Mr Mathew's representative suggested in her submissions that there were ulterior motives for the dismissal, and that one reason was the fact that Mr Mathew was actually doing his job very well, and had uncovered risks and other problems which had prompted the company to end his employment. Mr Whateley denied this. I believe him. This is unsubstantiated speculation. It is clear that AGE had a long list of concerns about Mr Mathew's performance and no longer needed his position in any event.

• [11] AGE submitted that Mr Mathew's remuneration at the time of his dismissal was $186,475, because this was the full-time equivalent of his salary. The F3 filed by AGE stated that Mr Mathew's gross pay per week at the time of dismissal was $2,510.24, for which he worked 26.6 hours per week, which equates to $130,520 per annum. AGE contended, in effect, that this figure had to be divided by 0.7, because 26.6 hours is 0.7 of a 38 hour full-time job. I reject this submission.

• [12] A person is protected from unfair dismissal if they have completed the minimum period of employment (which Mr Mathew has done) and any one or more of the following applies: the person is covered by a modern award; an enterprise agreement applies to the person's employment; or the person's 'annual rate of earnings' is less than the high income threshold, which at the time of Mr Mathew's dismissal was $175,000 (see s 382). Mr Mathew's annual rate of remuneration was $130,520. One does not increase this amount to derive a full-time equivalent figure. Section 382 says nothing about any such calculation. It is concerned with the rate of earnings. 'Earnings' is defined in s 332. It includes wages and various other amounts. It makes no reference to the number of hours worked. There is simply no basis in s 382 or any other provisions of the Act to extrapolate a requirement to ascertain a 'full-time equivalent' rate of earnings. Other members of the Commission have reached the same conclusion (see Florenca v Industrial Foundation for Accident Prevention [2019] FWC 144 at [29]- [33]).

• [13] AGE also contended that, for various reasons, the 2024 contract was invalid, and that this meant that Mr Mathew was not an employee. This is misconceived. Even if the validity of the 2024 contract were impugned in some way, this would not have the consequence that Mr Mathew was never employed by AGE. There would be an unwritten contract of employment, with terms implied by law and fact in the usual way. It is plain that Mr Mathew was an employee of AGE. He performed work as an employee, and was treated and paid as such.

• [14] It is unnecessary to consider whether, as the 2024 contract stated, Mr Mathew was covered by the Higher Education Industry - General Staff Award 2020. This question is irrelevant, because his annual rate of earnings was below the high income threshold. I find that Mr Mathew was a person protected from unfair dismissal as defined in s 382.

• [15] As to the second jurisdictional objection, I find that the dismissal was not consistent with the Code. The first limb of the Code concerns summary dismissal and is not relevant. The second limb is potentially of relevance but was not complied with. It requires that the employer 'give the employee a reason why he or she is at risk of being dismissed' and that the employee 'be warned verbally or preferably in writing that he or she risks being dismissed if there is no improvement.' In addition, the second limb of the Code requires that the employer provide the employee with an 'opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem'. It is clear from the evidence that these things did not occur. In particular, the performance concerns set out in Mr Whateley's email of 7 May 2025 had not previously been raised with him.

• [16] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the matters in s 387. The first of these is whether there was a valid reason for the dismissal related to the person's capacity or conduct (s 387(a)). A valid reason is one that is both factually substantiated and a good reason to end the person's employment. In his termination letter of 7 May 2025, Mr Whateley told Mr Mathew that the reason for his dismissal was his lack of experience and his inability to attend the workplace on a full-time basis. In its written submissions, AGE contended that this reason was one related to Mr Mathew's lack of capacity and unsuitability for the role, not his performance. I do not accept this characterisation. There is no clear line that separates capacity from performance, and it is clear from Mr Whateley's email to Mr Mathew on 7 May 2025, and from his oral evidence, that he was dissatisfied with the manner in which Mr Mathew had undertaken his work. The email recites numerous shortcomings, including the list of 29 areas where Mr Mathew was said to require the assistance of Mr Whateley and Mr Mienczakowski.

• [17] Mr Whateley's evidence that there were in fact three reasons for his decision to dismiss Mr Mathew: AGE was too small a company for a position such as his; the tasks of the role could be redistributed; and that Mr Mathew was not able to do his job to an acceptable standard. The first two reasons were related; the company did not require Mr Mathew's position, as Mr Whateley had told Mr Mathew at the meeting on 28 April 2025. This was a statement of fact. As noted above, Mr Mathew was not replaced, nor did the mooted 'downgraded' position ever materialise. The fact that a role is no longer needed is a good reason to end an employee's employment. Consistent with Commission authority, such a reason is not a valid reason for dismissal under s 387(a), because it relates to operational requirements, rather than the conduct or capacity of the employees. It is therefore considered under s 387(h) as another relevant matter. It was also the case, as I have found earlier, that Mr Mathew was not able to perform all of the duties of his role to an acceptable standard. This was a valid reason for dismissal.

• [18] The termination letter of 7 May 2025 framed the reason for dismissal as one relating to Mr Mathew's lack of experience. I do not consider that this was a valid reason for dismissal. I am not persuaded that his past experience and qualifications precluded him from reasonable appointment to the position that he held. This is not a case where the employee failed to meet a regulatory requirement in respect of qualifications for office. It seems that the new CEO formed the view that, based on his CV and prior experience, Mr Mathew had been a poor choice for the position in question and that this was a valid reason to dismiss him. To my mind, this was not a good reason to end Mr Mathew's employment. This was a hiring decision of the previous CEO (Mr Mathew's representative), whose relationship with the company has evidently soured. Nevertheless, a valid reason for dismissal does not need to be the reason relied on by the employer at the time of dismissal. It is for the Commission to determine whether it considers there to have been a valid reason for dismissal. I consider that there was a valid reason for dismissal, as well as a good operational reason to end the employment, as explained above.

• [19] Section 387(b) requires the Commission to consider whether the employee was notified of a valid reason for dismissal. The termination letter did not notify Mr Mathew of the valid reason that I have found to exist, namely his performance. However, the performance concerns were set out in detail in Mr Whateley's email of 7 May 2025 which preceded the sending of the termination letter. I find that Mr Mathew was notified of the valid reason for dismissal. However, AGE did not give Mr Mathew an opportunity to respond to the valid reason for dismissal (see s 387(c)). I accept that Mr Whateley raised concerns with Mr Mathew about his performance at the meeting on 28 April 2025. But there is little detail of what was said. The company's concerns about Mr Mathew's performance were not explained to him until Mr Whateley's email of 7 May 2025, and while this was sent prior to the formal termination letter, it is clear that by this time the decision to end his employment had been made. The opening line of the email thanks Mr Mathew for raising his concerns about the termination of his position. Based on the evidence before me, I do not consider that Mr Mathew had a fair chance to respond to Mr Whateley's dissatisfaction with his performance. Similarly, in regard to s 387(e), I find that the dismissal did relate to unsatisfactory performance and that Mr Mathew was not warned about this before the dismissal.

• [20] Section 387(d) requires the Commission to take into account any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal. Mr Mathew submitted that this consideration weighed in favour of a conclusion that his dismissal was unfair. I disagree. There is no requirement for the employer to arrange for discussions about dismissal, or ensure that a support person is present. It is for the employee to request the presence of a support person, and if this occurs, the request cannot be unreasonably refused. There is no evidence of any request for, or refusal of, a support person.

• [21] Sections 387(f) and (g) require the Commission to take into account the degree to which the size of the employer's enterprise, or the absence of dedicated human resources specialists, would be likely to impact on the procedures followed in effecting the dismissal. AGE is a small business employer and does not have internal human resources expertise, however I afford this little weight.

• [22] Section 387(h) provides that the Commission must take into account any other matters that the Commission considers relevant. One such matter is the existence of an operational reason for the dismissal, which was that the position was not needed. Another relevant matter is that Mr Mathew was suffering from a serious health condition, of which the company was aware. On the other hand, in his response to the termination discussion on 28 April 2025, Mr Mathew did not make any reference to his illness, or invoke this as a consideration that should lead AGE to reconsider the proposed termination of his employment.

• [23] Taking into account all of the circumstances, I consider that, because Mr Mathew was not afforded an opportunity to respond to the concerns about his performance, the dismissal was harsh, and therefore unfair. There was a good and valid reason to dismiss Mr Mathew because he was not able to do his job effectively. But the detail of the company's performance concerns was not explained to Mr Mathew until after the decision to dismiss him had been made. The company did not make any real effort to assist Mr Mathew to improve his performance. Because the company no longer needed his position anyway, it may have believed that there was no point in going through its performance concerns with Mr Mathew. But whatever the reason, the process was unfair in this respect.

• [24] Mr Mathew seeks compensation rather than reinstatement. Section 390(3) of the Act provides that the Commission must not order the payment of compensation unless it is satisfied both that the reinstatement of the person is inappropriate, and that it considers an order for the payment of compensation is appropriate in all the circumstances. Reinstatement is not sought and is inappropriate because the position is not needed.

• [25] Section 392(2) provides that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(a) to (g). The principles that apply to the question of how compensation should be calculated are well-established. The method for calculating compensation under s 392 of the Act is informed by the decision of the Full Bench in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc [2013] FWCFB 431. (See also Sprigg v Paul's Licensed Festival Supermarket [1998] AIRC 989; (1998) 88 IR 21 and Ellawala v Australian Postal Corporation AIRCFB, Print S5109, 17 April 2000), [33])

• [26] No submissions were made as to what effect any compensation order would have on the viability of the employer's enterprise (s 392(2)(a)). As to Mr Mathew's length of service (s 392(2)(b)), I note that he had worked for the company for several years. Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed. This requires the Commission to consider what would have occurred if the person was not dismissed, and in particular, how long the person would have remained employed. In light of the numerous concerns, it is highly improbable that the process would have resulted in a decision to continue with the employment. Further, the company had decided that it did not need the position in any event. This does not mean that affording Mr Mathew a chance to respond to the performance concerns would have been a pointless and perfunctory exercise. A fair process is not only for the purpose of ensuring that a dismissal occurs for reasons that are substantiated. It also has an intrinsic worth. Here, even if dismissal was inevitable, a fair dismissal would have allowed Mr Mathew a chance to have his say about the allegations of poor performance. I estimate that a fair process would have taken one week. This marks the limit of compensable loss in this case.

• [27] However, s 392(d) requires the Commission to take into account the person's efforts to mitigate the loss suffered because of the dismissal. At the proceeding, Mr Mathew's representative said that following his dismissal, Mr Mathew did not apply for any jobs, and that he had been thinking about retiring. She said that from around 4 or 5 weeks after dismissal, Mr Mathew was too unwell to apply for jobs, or to work. In my view, the failure to take any steps to mitigate loss means that it would be inappropriate to award compensation in this case. Although I accept that Mr Mathew was later too ill to work, if no efforts were made to look for jobs in the first 5 weeks, I am not persuaded that, but for the onset of illness, Mr Mathew would have changed his mind and started to look for work. I do not consider that an award of compensation is appropriate in this case.

• [28] I note that s 392(4) of the Act prohibits the Commission from awarding compensation in respect of shock, distress, humiliation or other analogous hurt caused by the manner of the dismissal. Mr Mathew alleged that he had been underpaid in various respects, but the Commission has no power to deal with such matters.

• [29] Mr Mathew was a person protected from unfair dismissal. His dismissal was not consistent with the Code. The dismissal occurred for good reasons but was procedurally unfair. However, taking into account the matters in s 392, it is not appropriate to award compensation.

G. Singh, G. Whateley and A. Calabrese for Australian Guild of Education Pty Ltd

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