Fair Work Commission|2025-03-26

Takeshi Sekigawa v Yuaus Enterprise Pty Ltd [2025] FWC 837 (26 March 2025)

s.394 - Application for unfair dismissal remedy

Application for relief from unfair dismissal - dismissal not consistent with the small business fair dismissal code - no valid reason - lack of procedural fairness - unfair dismissal - compensation ordered.

[1] Takeshi Sekigawa commenced employment with Yuaus Enterprise Pty Ltd (Yuaus) as Head Chef in its Sou Ramen Lab restaurant at North Sydney on 29 August 2022. Jonathan Yu is the sole owner and director of Yuaus, which also opened a ramen restaurant at Chatswood after Mr Sekigawa commenced employment. Mr Sekigawa was dismissed on 1 September 2024 for alleged misconduct and poor performance. Mr Sekigawa filed an unfair dismissal application on 20 September 2024. There is no dispute that Yuaus had less than 15 employees when Mr Sekigawa was dismissed. This decision concerns whether Mr Sekigawa's dismissal was consistent with the Small Business Fair Dismissal Code (SBFDC) and, if required, whether Mr Sekigawa was unfairly dismissed.

[2] I issued directions for the filing of evidence and submissions and listed the application for hearing in person on 18 March 2025. I granted permission for Mr Sekigawa to be represented at the hearing by Junko Katsuda from Katsuda Synergy Lawyers on the basis that representation would enable the matter to be dealt with more efficiently. This was not opposed by Yuaus. Mr Yu appeared on behalf of Yuaus. A Japanese interpreter was arranged to translate everything that was said during the hearing for Mr Sekigawa.

[3] Mr Sekigawa provided a witness statement dated 30 January 2025. Mr Sekigawa provided background information and confirmed he was paid an annual salary of $75,000 per year plus superannuation during his employment with Yuaus. Mr Sekigawa states he was not issued with any warnings during his employment with Yuaus. Mr Sekigawa states that while Mr Yu would ask him for input about business decisions, Mr Yu would make the final decisions. Mr Sekigawa states he was provided with a 5% share in Yuaus in mid-2023 but this was removed in January 2024. The shares did not generate any income for Mr Sekigawa.

[4] Mr Sekigawa complains that his suggestions for the business were ignored by Mr Yu and that another staff member informed him that Mr Yu had advised the other staff members not to listen to Mr Sekigawa. Mr Sekigawa states this reduced his motivation to work for Mr Yu, but he continued to perform his Head Chef duties without issue. Mr Sekigawa states a Michelin chef named Mr Yomoda was engaged by Mr Yu to try and assist the business in April 2024. Mr Sekigawa states a potential purchaser from Japan also attended the North Sydney restaurant in August 2024.

[5] Mr Sekigawa states Mr Yu was noticeably tired in August 2024 and was attending the North Sydney restaurant only one or two days per week. Mr Sekigawa states his relationship with Mr Yu started deteriorating around this time.

[6] Mr Sekigawa states he was contacted by Mr Yu on 6 August 2024 and asked to attend a meeting at 7am on 7 August 2024. Mr Sekigawa states Mr Yu began the meeting by asking if Mr Sekigawa wanted to continue working as a Head Chef. Mr Sekigawa states Mr Yu spoke generally about him lacking motivation during the meeting and complained about the financial performance of the business. Mr Yu stated he was eager to sell the business. Mr Sekigawa says the meeting ended with Mr Yu telling Mr Sekigawa to go away and think about what he wants to do and that there would be another meeting in around a week's time.

[7] Mr Sekigawa says a subsequent meeting was arranged but could not proceed because Mr Yu was not at the restaurant outside of operating hours. Mr Sekigawa states he continued his regular duties after this time without issue. Mr Sekigawa says there was no noteworthy communication between he and Mr Yu from 7 August 2024 to 31 August 2024.

[8] Mr Sekigawa says he took his kitchen knife home from work on 30 August 2024 to use over the weekend. Mr Sekigawa stated the knife is his property and he had taken it from the restaurant on other occasions.

[9] Mr Sekigawa states he received a text message from Mr Yu on 1 September 2024. Mr Sekigawa provided a copy of the text message. The message relevantly states:

"... Knowing you have already packed all your own items away on Friday, I know you are done working at Sou.

I will send you an official release letter to conclude your employment with Sou, you should receive it sometime tonight at the latest.

Please note the release letter will contain information that were discussed during our last meeting with recording. This letter along with the meeting recording will be lodged with fairwork for reviewing any future dispute reference.

Nevertheless still thank you for working at Sou and hopefully you will find something that will suit your working and lifestyle better..."

[10] Mr Sekigawa responded to Mr Yu's text message later on 1 September 2024. Mr Sekigawa relevantly stated:

"... Um, first of all, I'm not sure I understand what you're talking about. I just took my own knife home on Friday night to use on Saturday? Why is that such a big deal? Did someone say something to you?

And I never thought you would say that to me. Does that mean you are going to fire me?"

[11] Mr Yu sent a further message to Mr Sekigawa on 1 September 2024 which states:

"Here is the letter of employment termination, it stated everything that I have observed and wanted to say from all the legal perspectives. Sou North Sydney will not be trading as of starting from tomorrow. Once again, I sincerely hoping you find or starting your potential new business venture and all the best and thank you for the past 2 years."

[12] Mr Sekigawa provided a copy of his termination letter dated 1 September 2024. The letter relevantly states:

"We regret to inform you that your employment with Sou Ramen Lab will be terminated effective 1st of September 2024. This decision has been made after careful consideration and is final.

On August 7, 2024, we recorded a one-on-one meeting to discuss various concerns that have led to this decision. The key points discussed include but not limited to:

1. Failure to Respond to Instructions: At the conclusion of our meeting, you were instructed to provide a formal decision regarding your future with the company. Your failure to respond to this directive, as has been the case in previous instances, was a significant factor in our decision.

2. Non-Performance of Duties: You admitted that since December 2023, you have not fulfilled your duties as Head Chef. This is a serious breach of your employment agreement and may necessitate further review by Fair Work to determine if restitution for unfulfilled duties is warranted. It is important to note that your position and responsibilities, as reflected in your payslips and tax documents, are recorded as Head Chef.

3. Involvement in Business Decisions: You have denied involvement in the decision to pursue a new business venture at Chatswood Westfield. This venture has adversely impacted the financial stability of the business and has placed significant strain on the business owner, who has taken on substantial debt. Your apparent detachment from this issue is concerning.

4. Allegations of Conflict of Interest: There are concerns that you may have influenced the decision to invest in the new business venture for personal reasons, which could be seen as an attempt to harm the business. Yuaus Enterprise Pty Ltd reserves the right to seek legal recourse to address any potential damages or losses incurred during your tenure.

5. Violation of Company Policies: Several policy violations have been noted, including the unauthorized removal of company property (e.g., onigiri mould) and misuse of the company credit card for personal expenses (e.g., 1.25lt bottled sparkling mineral water purchased more than 50 times). These actions are considered serious breaches of our policies and may warrant further action if not resolved.

6. Conflict of Interest: There have been multiple reports of unauthorized inquiries to suppliers and visits from unknown individuals to the kitchen, which were conducted without proper authorization.

Given these issues, we have determined that it is in the best interest of the company to terminate your employment. We wish you the best in your future endeavours.

Please arrange to return any company property in your possession and complete any outstanding tasks before your departure. Should you have any questions regarding your final salary payment or other employment matters, please contact the owner directly."

[13] Mr Sekigawa states he was shocked to be summarily dismissed and felt insulted by several of the allegations, which he says were concocted to get rid of him. Mr Sekigawa states he was not invited to a meeting to discuss the issues raised in the termination letter. Mr Sekigawa returned his work keys on 2 September 2024 and gathered his belongings from the restaurant on 3 September 2024. Mr Sekigawa provided a text message from Mr Yu sent on 7 September 2024. The message states Mr Yu had the right to terminate Mr Sekigawa's employment after their meeting and accused Mr Sekigawa of trespassing in the restaurant after his dismissal.

[14] Mr Sekigawa denied all the allegations in his termination letter and provided a response to each allegation. Mr Sekigawa states he performed his role as Head Chef without issue and denied there were operational issues at the North Sydney restaurant. Mr Sekigawa accepts he lost some motivation when Mr Yu rejected his business ideas but states he continued performing his role without issue. Mr Sekigawa denies having any conflict of interest and denies violating any policies. Mr Sekigawa states he used the company credit card to purchase soda water for use in tempura dishes. Mr Sekigawa also complained about Mr Yu deducting annual leave without his approval during June and July 2024.

[15] I marked Mr Sekigawa's statement and the attached documents Exhibit A1.

[16] Mr Sekigawa provided a reply witness statement dated 13 March 2024 which responded to issues raised in the material filed by Yuaus. Mr Sekigawa states that he asked a supplier a general question about how they organise their accounts, but states he did not mention opening a third restaurant as suggested by Mr Yu.

[17] Mr Sekigawa states he had dinner with a potential buyer, Mr Nakamura, who he met through Mr Yomoda. Mr Sekigawa says they discussed the Australian hospitality industry.

[18] Mr Sekigawa states he was approached by Mr Nakamura to take up a senior position in his Australian business after he had been dismissed by Yuaus. Mr Sekigawa agreed to this and was appointed as a local director to allow the company to be registered in Australia. Mr Sekigawa did not commence performing any duties or receiving income until January 2025. Mr Sekigawa states he recorded on his Facebook page that he has been a director since September 2024 to fill the gap in his resume.

[19] I marked Mr Sekigawa's reply statement Exhibit A2.

[20] After the hearing Mr Sekigawa provided a statutory declaration dated 18 March 2025 to provide evidence about his earnings since being dismissed by Yuaus. The declaration confirms Mr Sekigawa has earned a total of $17,142.86 since 1 January 2025 for work performed in Japan for Mr Nakamura's business.

[21] Mr Sekigawa was not required for cross-examination.

[22] Ms Katsuda provided a comprehensive outline of submissions dated 30 January 2025 which addresses the factors the Commission must consider when determining whether an employee has been unfairly dismissed and the issue of remedy. Mr Sekigawa does not seek reinstatement but seeks compensation of 26 weeks or $37,500 plus superannuation in lieu of reinstatement. Ms Katsuda provided oral submissions at the end of the hearing. I have considered all the submissions.

[23] Mr Yu provided Yuaus' version of events in a Form F3 employer response form. Mr Yu also provided evidence in a SBFDC checklist document dated 14 October 2024. Mr Yu also provided a submission which contained further evidence about Mr Sekigawa's dismissal dated 21 February 2025 and a series of bank statements to establish that Yuaus owes around $200,000 in loans and is not in a good financial position.

[24] Mr Yu provided copies of various messages between himself and Mr Sekigawa. Mr Yu relies on these messages to demonstrate Mr Sekigawa was not training other employees and did not follow a direction to change the menu at the North Sydney restaurant. Mr Yu provided a text message from Mr Sekigawa dated 2 September 2024 which states:

"I received a termination dated yesterday. However, I had planned to provide a one-month notice, considering the necessary handover process. This is the first time I have heard that my employment would end on September 1st.

I find it difficult to accept this sudden termination, as well as several aspects of the termination notice. I will gather my thoughts on these matters and provide a detailed response at a later date.

In the meantime, I would like to understand your position regarding the payment."

[25] Mr Yu provided further evidence in a reply submission dated 2 March 2025. Mr Yu identified some alleged discrepancies in Mr Sekigawa's evidence about his dinner and relationship with Mr Nakamura and stated a supplier congratulated him on planning to open a third restaurant. Mr Yu says that comment was made based on information provided by Mr Sekigawa. Mr Yu refers to the status of his lease for the North Sydney restaurant and refers to Mr Sekigawa's involvement with Mr Nakamura after his dismissal. Mr Yu provided screenshots of social media posts showing Mr Sekigawa's involvement with Mr Nakamura's business.

[26] I marked the evidence filed by Mr Yu collectively as Exhibit R1.

[27] Mr Yu was cross-examined on his evidence. During cross-examination Mr Yu accepted that he had only discussed one of the issues identified in Mr Sekigawa's termination letter with Mr Sekigawa prior to his dismissal on 1 September 2024. The issue he had discussed was Mr Sekigawa's perceived lack of motivation which led to Mr Yu asking Mr Sekigawa to reflect on whether he wished to remain employed by Yuaus and advise him of the outcome. Mr Yu says Mr Sekigawa never responded to this request.

[28] Mr Yu also provided an audio file which records the meeting between Mr Yu and Mr Sekigawa on 7 August 2024. Mr Sekigawa objected to this audio recording being admitted as evidence on the basis that he was not aware the meeting was being recorded. Mr Yu stated under an affirmation that the security cameras in the North Sydney restaurant record visual and audio content. Mr Yu stated that he sought the recording of the 7 August 2024 meeting after he became aware of Mr Sekigawa's unfair dismissal application and was able to access it. Mr Yu accepted that the recording of the meeting was not discussed with Mr Sekigawa on 7 August 2024 but stated Mr Sekigawa was aware of the security cameras. There is no evidence that Mr Sekigawa was aware that the cameras recorded audio and visual content.

[29] Mr Sekigawa's lack of knowledge and consent casts doubt on whether Mr Yu lawfully obtained the audio recording. However, the Commission does not have jurisdiction to determine whether any surveillance legislation has been contravened by Mr Yu. In any event, the Commission has the discretion to admit evidence that is unlawfully obtained under s.590 of the Fair Work Act 2009 (FW Act).[1]

[30] I advised the parties during the hearing that I had decided to admit the audio recording as evidence and marked the recording Exhibit R2. I indicated that I would take account of Mr Sekigawa not being aware of the recording when assessing what weight to afford to the recording. Ms Katsuda did not identity anything prejudicial about the recording, aside from the issue of Mr Sekigawa not being aware of it.

[31] I have listened to the entire recording which goes for around 50 minutes. The recording reveals Mr Yu and Mr Sekigawa had a very high level and general discussion about Mr Sekigawa's employment on 7 August 2024. Mr Yu questioned Mr Sekigawa's motivation and was critical of his perceived lack of initiative in helping the business. It is clear from the recording that Mr Yu's business was struggling, that Mr Yu was stressed about this and was overworking to try and save the business. Mr Yu was critical of Mr Sekigawa's role in the opening of the Chatswood store and lack of support for the other restaurant. None of the issues identified in Mr Sekigawa's termination letter were raised by Mr Yu during the meeting. However, the meeting did end with Mr Yu asking Mr Sekigawa to think about whether he wanted to resign and to inform him of his decision.

[32] Mr Yu provided oral submissions at the end of the hearing. I have considered all the submissions.

[33] Under s.396 of the FW Act, the Commission is obliged to decide the following matters before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the SBFDC;

(d) whether the dismissal was a case of genuine redundancy.

[34] It is not disputed, and I find, that Mr Sekigawa's application was filed within 21 days of the dismissal taking effect.

Was Mr Sekigawa a person protected from unfair dismissal?

[35] Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person's annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[36] There was no dispute, and I find, that Mr Sekigawa's employment with Yuaus was terminated at the initiative of Yuaus effective 1 September 2024. I am therefore satisfied that Mr Sekigawa has been dismissed within the meaning of s.386 of the FW Act.

[37] It is not in dispute, and I find, that Mr Sekigawa was a person protected from unfair dismissal. Mr Sekigawa had completed the minimum employment period of twelve months for a small business employer. Mr Sekigawa's salary rate of $75,000 plus superannuation means his earnings were well below the high-income threshold of $175,000.

[38] It is unlikely that Mr Sekigawa's employment with Yuaus was covered by a modern award, although it appears Yuaus operates in the restaurant industry. The highest classification level for a chef in the Restaurant Industry Award 2020 is that of a sous chef or equivalent. That indicates Mr Sekigawa's role as Head Chef was not covered by the Restaurant Industry Award 2020. However, given Mr Sekigawa's earnings are below the high-income threshold, the issue of award coverage does not need to be conclusively determined.

[39] Mr Sekigawa was summarily dismissed by Yuaus on 1 September 2024.

[40] In Pinawin v Domingo [2012] FWAFB 1359; (2012) 219 IR 128, a Full Bench of then Fair Work Australia stated the following concerning the test to be applied for summary dismissal under the Small Business Fair Dismissal Code at [29]:

"There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee's conduct was sufficiently serious to justify immediate dismissal.

Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held."

[41] Mr Yu presented as a genuine witness during the hearing on 18 March 2025. I am prepared to accept that Mr Yu held a belief that Mr Sekigawa's conduct was sufficiently serious to justify immediate dismissal.

[42] However, I consider Mr Yu's belief was not based on reasonable grounds. I am not entirely sure why Mr Yu decided to immediately dismiss Mr Sekigawa on 1 September 2024. A meeting was held on 7 August 2024 where Mr Yu questioned Mr Sekigawa's motivation and suggested he should reflect on whether he wanted to remain employed by Yuaus. The only available conclusion is that Mr Sekigawa decided not to resign because he continued working as normal until he was dismissed without notice on 1 September 2024. I generally agree with Mr Sekigawa's submission that Mr Yu "concocted" the issues identified in Mr Sekigawa's termination letter to justify his sacking. Mr Yu accepted that the misconduct alleged in Mr Sekigawa's termination letter had not been discussed with him at all prior to the termination letter being issued. The issues were not properly investigated by Mr Yu and Mr Sekigawa was not provided with any opportunity to give his version of events. I consider Mr Sekigawa has been able to provide compelling answers to the allegations during the unfair dismissal proceedings. These answers could have been provided to Mr Yu if a proper investigation had occurred.

[43] I find Mr Sekigawa's summary dismissal was not consistent with the SBFDC because Yuaus did not carry out a reasonable investigation into the allegations against Mr Sekigawa, or for that matter any investigation.

[44] Had Mr Sekigawa not been summarily dismissed, the dismissal would still not have been consistent with the SBFDC given Mr Sekigawa was not given any formal warnings and was not afforded procedural fairness.

[45] Yuaus did not argue that Mr Sekigawa's dismissal was a case of genuine redundancy. Mr Sekigawa was dismissed for alleged serious misconduct and performance issues.

[46] Given my findings above in relation to the initial matters, I am required to consider the merits of Mr Sekigawa's unfair dismissal application.

[47] Section 387 of the FW Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account:

(a) whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person - whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

[48] I am required to consider each of these factors, to the extent they are relevant to the factual circumstances before me.[2]

Was there a valid reason for dismissal related to Mr Sekigawa's capacity or conduct?

[49] In order to be a valid reason, the reason for the dismissal should be "sound, defensible or well founded"[3] and should not be "capricious, fanciful, spiteful or prejudiced."[4] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[5]

[50] Where a dismissal relates to an employee's conduct, the Commission must be satisfied that the conduct occurred and justified termination.[6] The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.[7]

[51] I make the following findings regarding the six reasons for dismissal identified in Mr Sekigawa's termination letter:

Failure to respond to instructions. I am not satisfied on the evidence that Mr Sekigawa failed to respond to instructions during his employment with Yuaus. The main issue identified by Mr Yu is that Mr Sekigawa did not tell him whether he wanted to remain employed after their meeting on 7 August 2024. However, Mr Sekigawa gave uncontested evidence that a further meeting was scheduled during the next week to discuss the matter further, but the meeting could not be held because Mr Yu was not at the restaurant outside of operating hours. In any event, it was obvious that Mr Sekigawa had not decided to resign because he continued working from 7 August 2024 until his dismissal on 1 September 2024.

Non-performance of duties. The evidence does not establish that Mr Sekigawa was not performing his Head Chef duties. The evidence indicates the restaurant was operating normally, albeit potentially not profitably, during Mr Sekigawa's employment. Mr Yu raised concerns about Mr Sekigawa not changing the menu for the North Sydney restaurant and not training other employees. There is insufficient evidence to substantiate either of these allegations. The evidence consists solely of issues raised in text messages by Mr Yu to Mr Sekigawa. Mr Sekigawa responded to the issues raised at the relevant time. The allegations are not substantiated merely because Mr Yu raised issues with Mr Sekigawa in text messages. The substance of the allegations needs to be proven with evidence.

Involvement in business decisions. This allegation appears to be an attempt to blame Mr Sekigawa for the lack of success with the new Chatswood restaurant. It is clear Mr Yu made the decision to invest in the Chatswood restaurant. Even if Mr Sekigawa gave bad advice about that decision to Mr Yu (which has not been established), that would not constitute misconduct by Mr Sekigawa in his role as Head Chef.

Allegations of conflict of interest. Mr Yu has not established that any lack of motivation from Mr Sekigawa in his role as Head Chef was due to a conflict of interest. Mr Yu has not identified what interest Mr Sekigawa allegedly had which conflicted with his role as Head Chef for Yuaus. A conflict of interest cannot be established if the competing interest is not identified.

Violation of company policies. The termination letter refers to Mr Sekigawa removing onigiri moulds from the restaurant and using the company credit card to purchase sparkling water. I consider Mr Sekigawa has adequately explained his actions in relation to both matters. I accept the onigiri mould removal was an extremely minor and innocent event and that Mr Sekigawa was purchasing sparkling water for use in his cooking at the restaurant.

Conflict of interest. This allegation appears directed at Mr Sekigawa's comments to a supplier about opening a new restaurant and his dinner with Mr Nakamura. The evidence does not establish that Mr Sekigawa did anything untoward in relation to these matters.

[52] Given my findings above, I am not satisfied that there was a valid reason for Mr Sekigawa's dismissal. I am not satisfied that the alleged misconduct or poor performance occurred, based on the evidence before me. This factor weighs in favour of finding that Mr Sekigawa's dismissal was unjust and unreasonable.

[53] I am confused as to why Mr Yu suddenly decided to dismiss Mr Sekigawa on 1 September 2024. My best guess is that Mr Yu's understandable stress and concern about the financial state of his business led him to treat Mr Sekigawa as a scapegoat for his problems given his lack of enthusiasm for the Head Chef role. That was the sense I got from listening to the audio recording of the meeting on 7 August 2024. A lack of enthusiasm from an employee is not a valid reason for dismissal if the employee is continuing to perform their duties competently.

Was Mr Sekigawa notified of the reason for dismissal?

[54] Proper consideration of s.387(b) requires a finding to be made as to whether Mr Sekigawa "was notified of that reason". Contextually, the reference to "that reason" is the valid reason found to exist under s.387(a).[8]

[55] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,[9] in explicit[10] and plain and clear terms.[11]

[56] I find that Mr Sekigawa was not notified by Yuaus of the reason for his dismissal before the decision was made to terminate his employment. Mr Yu accepted during cross-examination that the allegations raised in Mr Sekigawa's termination letter had not been raised with him previously, aside from the request for Mr Sekigawa to confirm if he wished to remain employed on 7 August 2024. The general high-level meeting which occurred on 7 August 2024 did not constitute Mr Sekigawa being notified of the reason for his dismissal.

[57] This factor weighs in favour of finding that Mr Sekigawa's dismissal was unjust and unreasonable.

Was Mr Sekigawa given an opportunity to respond to the valid reason?

[58] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee's employment.[12]

[59] The opportunity to respond does not require formality and this factor is to be applied in a common-sense way to ensure the employee is treated fairly.[13] Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements.[14]

[60] I find that Mr Sekigawa was not provided with an opportunity to respond to the reasons for his dismissal before the decision was made to terminate his employment. Mr Yu accepted during cross-examination that the allegations made in Mr Sekigawa's termination letter had not been raised with him previously, aside from the request for Mr Sekigawa to confirm if he wished to remain employed on 7 August 2024. The general high-level meeting which occurred on 7 August 2024 did not constitute Mr Sekigawa being provided with an opportunity to respond to the reason for his dismissal.

[61] This factor weighs in favour of finding that Mr Sekigawa's dismissal was unjust and unreasonable.

Did Yuaus unreasonably refuse to allow Mr Sekigawa to have a support person present to assist at discussions relating to the dismissal?

[62] This is a neutral factor given there were no discussions relating to the dismissal.

Was Mr Sekigawa warned about unsatisfactory performance before the dismissal?

[63] The reasons for dismissal include a mixture of concerns about Mr Sekigawa's conduct and performance. Mr Sekigawa was not given any verbal or written warnings during his employment with Yuaus concerning his performance. I consider this factor weighs marginally in favour of finding Mr Sekigawa's dismissal was unjust and unreasonable.

To what degree would the size of Yuaus' enterprise be likely to impact on the procedures followed in effecting the dismissal?

[64] I accept Yuaus is a very small business and that this substantially impacted the procedures that were followed in effecting Mr Sekigawa's dismissal. I consider this factor reduces the weight that should be given to the procedural fairness issues in the overall assessment of unfairness.

To what degree would the absence of dedicated human resource management specialists or expertise in Yuaus' enterprise be likely to impact on the procedures followed in effecting the dismissal?

[65] I accept the absence of dedicated human resource specialists had a substantial impact on the procedures that were followed in effecting Mr Sekigawa's dismissal. I consider this factor reduces the weight that should be given to the procedural fairness issues in the overall assessment of unfairness.

[66] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.

[67] Neither party argued there were any other relevant factors that should be considered. I find there are not any other relevant matters.

[68] I have made findings in relation to each matter specified in s.387 of the FW Act. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[15]

[69] Having considered each of the matters specified in s.387 of the FW Act, I am satisfied that the dismissal of Mr Sekigawa was unjust and unreasonable. There was not a valid reason for Mr Sekigawa's dismissal relating to his conduct or performance. Yuaus has failed to substantiate the allegations raised in Mr Sekigawa's termination letter. The process implemented to dismiss Mr Sekigawa was also extremely flawed. Sending a text message to an employee over the weekend to communicate their immediate dismissal is not appropriate. However, I accept Mr Yu means well overall and that the size of his business and the lack of support contributed heavily to the lack of procedural fairness afforded to Mr Sekigawa.

[70] I find Mr Sekigawa was unfairly dismissed.

[71] Mr Sekigawa does not seek reinstatement. I find reinstatement is inappropriate. The relationship between Mr Yu and Mr Sekigawa has irretrievably broken down. Mr Yu also confirmed during the hearing that the North Sydney restaurant where Mr Sekigawa worked has been closed since the end of November 2024.

Is an order for payment of compensation appropriate in all the circumstances of the case?

[72] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, "[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one..."[16]

[73] Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[17]

[74] Mr Sekigawa has suffered financial loss in circumstances where I have found he was unfairly dismissed. In all the circumstances, I consider that an order for payment of compensation is appropriate.

Compensation - what must be taken into account in determining an amount?

[75] Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to Mr Sekigawa in lieu of reinstatement including:

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

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

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

(e) the amount of any remuneration earned by Mr Sekigawa from employment or other work during the period between the dismissal and the making of the order for compensation;

(f) the amount of any income reasonably likely to be so earned by Mr Sekigawa during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the Commission considers relevant.

[76] I consider all the circumstances of the case below.

Effect of the order on the viability of Yuaus' enterprise

[77] Mr Yu has provided evidence which demonstrates Yuaus owes a significant amount of money and is not currently a profitable business. I consider a substantial compensation order would be likely to threaten the viability of Yuaus. This factor weighs in favour of a lower compensation order.

[78] Mr Sekigawa was employed by Yuaus for around two years. This is a reasonably short period of employment. I consider this factor weighs marginally in favour of a lower compensation order.

Remuneration that Mr Sekigawa would have received, or would have been likely to receive, if Mr Sekigawa had not been dismissed

[79] As stated by a majority of the Full Court of the Federal Court, "[i]n determining the remuneration that the employee would have received, or would have been likely to receive... [the Commission must] address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination."[18]

[80] Taking all the evidence into account, I find Mr Sekigawa would likely have remained employed with Yuaus for a further six weeks had he not been unfairly dismissed. This is the "anticipated period of employment."[19] Mr Sekigawa sent a message to Mr Yu on 2 September 2024 indicating he was planning to resign with a month of notice. However, I consider that message must be viewed in the context of Mr Sekigawa having already being summarily dismissed on 1 September 2024. It is not certain that Mr Sekigawa would have given a month's notice of his resignation on 2 September 2024, if he had not been dismissed on 1 September 2024. However, the message is a strong indication that the employment was not going to last much longer. Mr Yu also confirmed the North Sydney restaurant has been closed since the end of November 2024 due to Yuaus' financial issues. This is a further indication that Mr Sekigawa's employment would not have continued for a lengthy period.

[81] Mr Sekigawa's annual salary was $75,000.00 plus superannuation. I calculate the remuneration Mr Sekigawa would have been likely to receive working for Yuaus for six weeks from 2 September 2024 to 14 October 2024 to be $8,653.85 plus superannuation.

Efforts of Mr Sekigawa to mitigate the loss suffered because of the dismissal

[82] Mr Sekigawa must provide evidence that he has taken reasonable steps to minimise the impact of the dismissal.[20] What is reasonable depends on the circumstances of the case.[21]

[83] It appears Mr Sekigawa actively pursued a new business opportunity with Mr Nakamura after his dismissal on 1 September 2024. Mr Sekigawa did not commence receiving any payments for this role until January 2025. However, I consider Mr Sekigawa's efforts to establish a new working relationship with Mr Nakamura constitute reasonable steps to mitigate the impact of the dismissal. I consider this is a neutral factor.

Amount of remuneration earned by Mr Sekigawa from employment or other work during the period between the dismissal and the making of the order for compensation

[84] Mr Sekigawa did not receive any income from other employment during the anticipated period of employment, which ended on 14 October 2024.

Amount of income reasonably likely to be so earned by Mr Sekigawa during the period between the making of the order for compensation and the actual compensation

[85] Given the anticipated period of employment has finished, I do not need to take this into account.

[86] Neither party submitted that there were any other relevant matters.

[87] As noted by the Full Bench, "[t]he well-established approach to the assessment of compensation under s.392 of the FW Act... is to apply the "Sprigg formula" derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket (Sprigg).[22] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc[23]."[24]

[88] The approach in Sprigg is as follows:

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

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

Step 3: Discount the remaining amount for contingencies.

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

[89] I have estimated that Mr Sekigawa would have remained employed by Yuaus for six weeks until 14 October 2024.

[90] The remuneration Mr Sekigawa would have received, or would have been likely to have received, from his dismissal on 1 September 2024 until 14 October 2024 is $8,653.85 gross plus superannuation.

[91] Only monies earned since termination for the anticipated period of employment are to be deducted.[25]

[92] Mr Sekigawa did not receive any remuneration during the anticipated period of employment.

[93] For the reasons outlined above, I have not applied a deduction for failing to mitigate loss because Mr Sekigawa was actively pursuing a new opportunity with Mr Nakamura.

[94] A figure of $8,653.85 plus superannuation remains given there are no deductions to be applied.

[95] I now need to consider the impact of contingencies on the amounts likely to be earned by Mr Sekigawa for the remainder of the anticipated period of employment.[26]

[96] I know Mr Sekigawa's earnings during the anticipated period of employment. I therefore do not need to make a deduction for contingencies.

[97] I have considered the impact of taxation but have elected to settle a gross amount of $8,653.85 plus superannuation and leave taxation for determination.

Compensation - is the amount to be reduced on account of misconduct?

[98] If I am satisfied that misconduct of Mr Sekigawa contributed to the employer's decision to dismiss_,_ I am obliged by s.392(3) of the FW Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct.

[99] I am not satisfied that Mr Sekigawa engaged in misconduct. No deduction is required to be made for misconduct.

Compensation - how does the compensation cap apply?

[100] Given Mr Sekigawa's annual salary, a compensation cap of $37,500 plus superannuation applies in accordance with s.392(6) of the FW Act.

[101] Having applied the formula in Sprigg, I am nevertheless required to ensure that "the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case."[27]

[102] The application of the Sprigg formula has resulted in an outcome where Mr Sekigawa would be awarded compensation of $8,653.85 gross plus superannuation of $995.19.

[103] I am concerned that a compensation order of this size will impact the viability of Yuaus. Mr Sekigawa was not a long-term employee, and it appears he has now landed a positive opportunity with Mr Nakamura. I also have some sympathy for the position of Mr Yu given the financial issues with Yuaus and his health issues. I consider a marginal deduction to the compensation order should be applied.

[104] I will reduce the compensation order to $7,000.00 gross plus superannuation of $805.00.

[105] Given my findings above, I will make an order[28] that Yuaus must pay Mr Sekigawa $7,000 less taxation, plus superannuation of $805.00 to be paid into Mr Sekigawa's nominated fund, with both payments to be made within 28 days of the date of this decision.

Ms Katsuda from Katsuda Synergy Lawyers representing Mr Sekigawa.

[1] Krav Maga Defence Institute Py Ltd t/a KMDI v Saar Markovitch [2019] FWCFB 4258 at [46].

[2] Sayer v Melsteel Pty Ltd [2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].

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

[5] Walton v Mermaid Dry Cleaners Pty Ltd [1996] IRCA 267; (1996) 142 ALR 681, 685.

[6] Edwards v Justice Giudice [1999] FCA 1836, [7].

[7] King v Freshmore (Vic) Pty Ltd Print S4213 (AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000), [23]-[24].

[8] Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429, [19]; Reseigh v Stegbar Pty Ltd [2020] FWCFB 533, [55].

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

[10] Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).

[12] Crozier v Palazzo Corporation Pty Ltd Print S5897 (AIRCFB, Ross VP, Acton SDP, Cribb C, 11 May 2000), [75].

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

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

[15] ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]-[7].

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

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

[18] He v Lewin [2004] FCAFC 161, [58].

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

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

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

Takeshi Sekigawa v Yuaus Enterprise Pty Ltd [2025] FWC 837

At a glance

Court

Decision date

Source

Judgment (207 paragraphs)

Takeshi Sekigawa v Yuaus Enterprise Pty Ltd [2025] FWC 837 (26 March 2025)

Parties

Legislation Cited (1)

Cases Cited (8)