s.394 - Unfair dismissal

Unfair dismissal - jurisdictional objection - applicant dismissed - dismissal harsh, unjust or unreasonable - applicant unfairly dismissed - reinstatement not appropriate - compensation ordered

• [1] Zoma & Saba Pty Ltd (the Salon) is an eyebrow and eyelash salon in the inner south of Melbourne. It provides services involving the colouring, shaping and styling of eyebrows and eyelashes. Occasionally, it performs other beauty services such as the application of makeup. The Salon is the respondent and is a small business.

• [2] The director and founder of the Salon is Ms Shazia Choudhary. Ms Choudhary has been successful in establishing and conducting the Salon, despite some latterly challenging personal circumstances relating to her health. Ms Choudhary gave evidence in this matter on behalf of the Salon.

• [3] Ms Veda Thota is the applicant. Ms Thota has a degree in technology (electrical and engineering) from a university in India. Like many migrants, the opportunity to work in her field of professional qualification does not readily arise. But Ms Thota is clearly resilient and has endeavoured to seize the opportunities that do present. Ms Thota gave evidence in this matter on her own behalf.

• [4] In late 2023, Ms Thota visited the Salon as a customer. At that time, Ms Thota was looking for a job. Fortuitously, Ms Choudhary was looking to employ a beautician. Ensuing discussions between them resulted in Ms Thota being employed by the Salon as a beautician. There was happily, at least at that time, a convergence of interest between them, made possible by happenstance.

• [5] The employment commenced in January 2024. There was no written contract of employment or letter of appointment. The employment was characterised as casual, despite Ms Thota working between 10:30am - 5:30pm each Sunday and each weekday (except Monday when the Salon was closed).

• [6] During her employment, Ms Thota successfully completed a Diploma of Beauty Therapy from a registered training organisation. She was awarded the diploma in March 2024. The diploma involves completion of some 29 units, directed at the building of business acumen and the development of technical skills required of a beautician. One of the units she completed was "Provide lash and brow services". The diploma was clearly a relevant and useful field of study given Ms Thota's new vocational direction. Obtaining this qualification was clearly indicative of Ms Thota's ethic and industry.

• [7] The relationship between Ms Choudhary and Ms Thota was, until about early May 2025, a close and productive one. During much of that time, Ms Thota evidently had a real respect for Ms Choudhary and appreciated the professional opportunity Ms Choudhary had provided her. Ms Choudhary seemed to reciprocate and derive satisfaction from mentoring Ms Thota. There was a certain familiarity in their exchanges. Ms Thota referred to Ms Choudhary as "Didi", a Hindi expression for "sister". The expression is used respectfully to refer to a familiar older female.

• [8] During the employment, which lasted until May 2025, Ms Thota was the only employee of the Salon. Ms Thota was a productive worker. She tendered into evidence many positive customer reviews of her work. I accept that she was skilled and diligent in her work. No doubt this was, at least in part, due to mentoring provided by Ms Choudhary.

• [9] Initially, Ms Thota only performed beautician services. However, from about February 2024, she was also responsible for marketing and taking customer bookings. The marketing involved posting content on various social media sites, as is the way of the times. In performing her various duties, she would liaise closely with Ms Choudhary via WhatsApp or by phone.

• [10] Ms Choudhary lived some distance away from the Salon. Whilst Ms Choudhary occasionally worked in the Salon, the commute and Ms Choudhary's health made that more difficult over time. In that regard, as I have already noted, Ms Choudhary was having to deal with a significant health issue.

• [11] Ms Choudhary's health was also affecting her ability to administer aspects of the business. From time to time, her health was such that she did not arrange timely payment of Ms Thota's wages. Ms Choudhary would tell Ms Thota to instead take her pay from either the business cash receipts or have customers transfer payments directly to Ms Thota. I accept Ms Thota's account that she would only do so when authorised by Ms Choudhary. Ms Thota struck me as an honest and credible witness.

• [12] Ms Choudhary desired to establish a similar beauty business closer to her home. She was considering selling the Salon in order to do so. Some potential buyers had made offers to Ms Choudhary to purchase the Salon. Ms Choudhary informed Ms Thota of the offers. Ms Choudhary encouraged Ms Thota to consider purchasing the business.

• [13] In early 2025, Ms Choudhary and Ms Thota commenced discussions about such a purchase. In early April 2025, discussions between them had advanced such that Ms Thota was of the view that there was an understanding between them that she would purchase the business of the Salon. As a consequence of this understanding, Ms Thota opened a business bank account. Ms Thota gave evidence that there was an understanding that the sale would involve Ms Thota paying Ms Choudhary a monthly sum for a certain period of time. I accept Ms Thota's evidence in that regard.

• [14] During April 2025, Ms Thota paid Ms Choudhary a sum of $1600, which represented a deposit in advance of written terms. I accept Ms Thota's evidence that this sum came from her own properly obtained personal funds.

• [15] Ms Thota gave evidence of other aspects of the understanding with Ms Choudhary regarding purchase of the Salon. This involved an arrangement whereby the takings of the Salon business would be divided as between payment of salon costs (especially rent), and a split of the remaining takings as between Ms Choudhary and Ms Thota. Ms Thota's split was to deposited in her new business bank account. Ms Thota would write these details down in a book kept in the premises of the Salon. Ms Thota would take pictures of the book and send them to Ms Choudhary on WhatsApp. In anticipation of the sale being finalised, Ms Thota would also not be in receipt of other remuneration in the nature of wages.

• [16] Ms Choudhary denies that she authorised Ms Thota to pay any takings of the Salon into Ms Thota's business bank account. I asked Ms Choudhary if she ever sent a WhatsApp message to Ms Thota telling her not to make such payments into her business bank account. Ms Choudhary initially indicated that she believes she did. I asked her to identify any such messages and provide them to me. During the Determinative Conference, she looked for those messages, but was unable to find any sent during the period of the employment. Ms Choudhary then insisted in her evidence that she spoke to Ms Thota and told her not to make any payments to her business bank accounts.

• [17] Ms Thota denied that Ms Choudhary spoke to her and told her this. I accept Ms Thota's denial. The absence of any responsive WhatsApp message from Ms Choudhary to Ms Thota indicating that the splitting of the funds was not authorised, is consistent with Ms Thota's oral evidence that the splitting of the funds was done with Ms Choudhary's agreement, knowledge and consent. Furthermore, it is inexplicable why Ms Thota would send Ms Choudhary pictures of the amounts split between them, if the splitting of the funds was not authorised by Ms Choudhary.

• [18] In about early to mid-May 2025, Ms Choudhary was uncertain whether Ms Thota could commit to or complete a purchase of the business of the Salon. Part of this uncertainty may have emerged from a discussion Ms Choudhary had had with the real estate agent who managed the lease of the Salon premise. Ms Choudhary's evidence was that the real estate agent had indicated to her that the lease of the premise wouldn't be transferred to Ms Thota because of her absence of funds and her lack of business record.

• [19] For her part, by early to mid-May 2025, Ms Thota also felt that there was uncertainty regarding the purchase of the business of the Salon. Ms Thota was waiting for Ms Choudhary to provide her some proposed written terms of the sale before she made any further payments to Ms Choudhary related to the purchase of the Salon business.

• [20] Matters came to a head on 12 and 13 May 2025. On 12 May 2025, Ms Choudhary and Ms Thota exchanged WhatsApp messages. The relevant effect of those messages is as follows. Ms Choudhary indicated that she could "reduce [her] profit" but that she needed a deposit. Ms Thota indicated that she was worried about the status of the sale. She told Ms Choudhary that she had paid a deposit and wanted to be secure and did not want to 'trust just words' (meaning to rely on a verbal agreement with Ms Choudhary). A WhatsApp voice discussion then occurred between Ms Choudhary and Ms Thota. At the end of the discussion, the matter of the sale and the means to effect it was still unresolved. Ms Choudhary then sent Ms Thota a further WhatsApp message and said that she would come to the Salon premises the next morning and they would talk further about the sale and come to an arrangement as to how it would work.

• [21] On 13 May 2025, Mr Choudhary went to the Salon premises together with her sister.

• [22] Ms Thota says that, on that day, a conversation to the following effect occurred. After Ms Choudhary arrived, Ms Thota attempted to speak to her about how Ms Thota should manage a client complaint. Ms Choudhary deflected this inquiry and then asked Ms Thota directly whether she would pay a deposit and buy the business. Ms Thota responded that she wanted the paper documents (evidently a reference to a contract of sale) and then she would buy the business. Ms Choudhary was angry and said to Ms Thota that if she didn't want to buy the Salon, she could leave. Ms Choudhary told Ms Thota to get her key (evidently a requirement to give Ms Choudhary Ms Thota's Salon key), take her [Ms Thota's] possessions, not touch her [Ms Choudhary's or the Salon's] possessions and to leave immediately. Ms Thota says that she did as instructed by Ms Choudhary, packed her possessions and obtained what she thought was the spare key which she handed to Ms Choudhary and then left the Salon premises.

• [23] Ms Choudhary's account of the conversation is different and is as follows. Ms Choudhary says that she politely told Ms Thota that she [Ms Thota] was taking money from the clients, that the business was hers [Ms Choudhary's] and that Thota would have to return the money taken. Ms Thota responded by saying that the money was hers. Ms Choudhary asked Ms Thota if she wanted to work at the Salon. Ms Thota said that she didn't want to work at the Salon and would only do so if Ms Choudhary transferred the business and lease to her. Ms Choudhary responded by saying that if she [Ms Thota] didn't want to work, she [Ms Thota] would have to transfer the money back or she [Ms Choudhary] would call the police. Ms Thota said that she wasn't going to give money back and that she [Ms Choudhary] could call the police. Ms Thota then handed her keys in and left.

• [24] I prefer Ms Thota's account of the conversation on 13 May 2025. Ms Thota struck me as a forthright and honest witness. I found her evidence more reliable than that of Ms Choudhary. As I have noted, Ms Choudhary gave varying accounts of how she purportedly communicated to Ms Thota that the deposit of funds into Ms Thota's business account was not authorised.

• [25] After Ms Thota left the Salon, there were subsequent WhatsApp messages between Ms Thota and Ms Choudhary. This concerned the key handed over by Ms Thota. It was apparently the wrong key. Ms Choudhary also asked Ms Thota to provide her bank statements for April and May.

• [26] In any event, Ms Thota returned to the Salon premise the next day (14 May 2025) and handed Ms Choudhary the correct key. Ms Thota also provided Ms Choudhary the bank statements from her business bank account. Somewhat surprisingly, Ms Choudhary asked Ms Thota to help her with clients that day. Ms Thota acceded to this request and did so voluntarily, evidently without payment. Ms Choudhary then asked Ms Thota to work the rest of the month. Ms Thota indicated that she would do so, if she was paid an hourly rate. Ms Choudhary told Ms Thota that she would not pay Ms Thota because Ms Thota owed her money and had to transfer that money to Ms Choudhary. Consequently, Ms Thota declined to work as Ms Choudhary requested.

Consideration regarding jurisdiction, initial matters and merits

• [27] The Salon did not file a Form F3 in response to Ms Thota's F2 unfair dismissal application. However, it is apparent from the material filed by Ms Choudhary on behalf of the Salon, that she claims Ms Thota resigned and was not dismissed.

• [28] I am satisfied that Ms Thota was dismissed within the meaning of s 386(1)(a). As I have noted above, I prefer Ms Thota's account of the conversation on 13 May 2025. Ms Choudhary told Ms Thota to leave the Salon, hand in the key, take her possessions and leave immediately. Clearly, this is a termination at on the employer's initiative. The dismissal was effective immediately, i.e. on 13 May 2025.

• [29] Furthermore, I do not consider that Ms Thota's voluntary work on 14 May 2025, changed or in any way affected the status of a dismissal effective 13 May 2025. Ms Thota only returned to the Salon premise to return the correct key and provide Ms Choudhary a copy of her business bank account statements. It is clear that Ms Thota was willing to resume working in the Salon for a period, even if the sale fell through, if she was paid for the hours she worked. This is evident from her preparedness to work for the remainder of May 2025 if she was paid an hourly rate. But Ms Choudhary refused to pay Ms Thota for doing so. Clearly then, the employment was not reconstituted.

• [30] For the sake of completeness, I note that Ms Thota's F2 was filed in the Commission on 29 May 2025, so the application was filed as required by s 394 within 21-days of a dismissal taking effect on 13 May 2025. I am also satisfied that Ms Thota is a person protected from unfair dismissal at the time of the dismissal and that this is not a matter involving a genuine redundancy.

• [31] The evidence of Ms Choudhary, which I accept, is that the Salon was a small business as at 13 May 2025, employing only Ms Thota. Therefore, as required by s 396(c), it is necessary to consider whether the dismissal was consistent with the Small Business Fair Dismissal Code (Code) declared under s 388. I do not consider the dismissal was in accordance with the Code.

• [32] There are some infelicities in assessing Code compliance by an employer where the employer denies dismissal. However, I will endeavour to do so.

• [33] To the extent that Ms Thota's deposit of Salon takings in Ms Thota's business account was a reason for an immediate dismissal constituting a summary dismissal, I do not consider that Ms Choudhary, as the directing mind of the Salon, believed on reasonable grounds that Ms Thota's conduct was sufficiently serious to justify immediate dismissal. In that regard, I have found above that Ms Thota and Ms Choudhary had an understanding relating to the sale of the Salon business, an aspect of which permitted Ms Thota to deposit part of the Salon takings into Ms Thota's business bank account. Ms Thota kept Ms Choudhary appraised of such deposits. I am not satisfied that Ms Choudhary could hold the relevant reasonable belief that Ms Thota's conduct was sufficiently serious misconduct so as to justify her immediate dismissal. .

• [34] This case involves an immediate dismissal, so no issue arises under the "Other dismissal" part of the Code. Nevertheless, I note that no warning was given by Ms Choudhary to Ms Thota relating to her conduct or capacity, prior to the dismissal.

• [35] There was also no opportunity given to Ms Thota to have any person present during the dismissal discussion on 13 May 2025. Ms Thota had no idea that she may possibly be dismissed during this conversation, especially in circumstances where she believed the conversation would be about her future purchase of the business. Consequently, the Salon has not complied with the "Procedural matters" part of the Code.

• [36] For the reasons that follow, I am satisfied that the dismissal was harsh unjust or unreasonable having regard to the relevant considerations set out in s 387 of the Act.

• [37] In relation to whether there is a valid reason under s 387(a) related to Ms Thota's capacity or conduct, I do not consider that there was any such valid reason.

• [38] To the extent that the reason for the dismissal was because Ms Thota had deposited part of the Salon takings into her business account, this does not constitute a valid reason for the dismissal. Ms Thota only did so as part of the understanding she had with Ms Choudhary regarding the sale of the Salon. Those transfers were made with the knowledge and assent of Ms Choudhary. Consequently, there was no valid reason based on Ms Thota's conduct related to such transfers.

• [39] I find that the real reason for the dismissal was that Ms Choudhary was frustrated that Ms Thota did not unequivocally commit on 13 May 2025 to make further payments to purchase the business of the Salon absent a concluded sale agreement recording the terms. This was not a valid reason for dismissal.

• [40] The absence of a valid reason as set out in s 387(a), weighs in favour of Ms Thota.

• [41] As there was no valid reason, the consideration in s 387(b), relating to a notification of a valid reason, does not arise.

• [42] Ms Thota was not given an opportunity to respond to any reason related to her capacity or conduct. She was dismissed on 13 May 2025 at the end of a discussion related to the sale of the business. On 13 May 2025, Ms Choudhary did not ask Ms Thota whether she would be prepared to continue to work, if the sale of fell through. Furthermore, insofar as the reason for the dismissal related to the funds of the Salon, Ms Choudhary did not give Ms Thota any opportunity to respond to any such matter prior to dismissing her.. Consequently, the consideration in s 387(c) weighs in favour of Ms Thota.

• [43] The considerations in s 387(d) and (e) do not arise in the circumstances.

• [44] In relation to s 387(f) and (g), as I have noted, the Salon is a small business and Ms Choudhary appears to be the only person managing the business. It obviously has no dedicated human resources personnel. No doubt, the size of the business and absence of specialist human resources expertise or personnel impacted on the manner in which the dismissal was conducted. Pursuant to s 387(h), I have also had regard to the fact that Ms Choudhary was dealing with a significant medical condition at the time. My assessment is that these matters impacted on her judgement about how to manage her evident frustration regarding the sale of the business. These matters, to some extent, are ameliorating for the Salon.

• [45] Weighing all of the relevant considerations together, I am satisfied that the dismissal was harsh, unjust or unreasonable.

• [46] As set out above, I am satisfied that Mr Thota was dismissed, that the dismissal was harsh, unjust or unreasonable, and that the dismissal was not consistent with the Code. Further, I am satisfied that Ms Thota's dismissal was not a case of genuine redundancy. Consequently, I am satisfied of all matters in s 385 and therefore that Ms Thota has been unfairly dismissed.

• [47] As I am satisfied that Ms Thota is a person protected from unfair dismissal and has been unfairly dismissed, it is appropriate to consider the issue of remedy.

• [48] Reinstatement is clearly inappropriate in the circumstances including for the reason that Ms Thota does not seek reinstatement. This is entirely understandable. She clearly feels deeply offended by the suggestion that she has been dishonest in her dealings regarding the funds of the Salon. She has a proper basis for this sentiment.

• [49] Therefore, it is necessary to consider whether it is appropriate to order compensation. I consider that compensation is appropriate in all of the circumstances of the case. In determining the amount of compensation, it is necessary to take into account the matters referred to in s 392(2).

• [50] In terms of s 392(2)(a), I have had regard to the fact that the Salon is a small business and I accept Ms Choudhary's evidence that it is currently running at a loss. In determining the amount of compensation, a discount for these matters is appropriate.

• [51] In terms of s 392(2)(b), I have had regard to Ms Thota's length of service with the employer in the period between January 2024 and 13 May 2025.

• [52] In terms of s 392(2)(c), it is necessary to consider the likely duration of the employment had Ms Thota not been dismissed on 13 May 2025. In my view, the likely duration would not have been long. Clearly the relations between the parties had become strained by matters relating to a sale of the business. I consider that if Ms Thota had not been dismissed on 13 May 2025, the employment would likely have lasted only a further eight weeks. But there was a prospect (not immaterial) that the employment may have come to an end earlier that eight weeks. Consequently, in determining a final amount of compensation it is appropriate to factor in a discount for this contingency. There is also some lack of clarity about Ms Thota's weekly remuneration and it seems likely that some pay practices may not have been in accordance with the Act. However, based on payslips produced by the Salon, Ms Thota was paid the sum of $1282.50 gross for a 40-hour week. Therefore, I assess that during the eight-week period of likely further employment after 13 May 2025, Ms Thota would have earned a gross sum in order of $10,260.

• [53] In terms of s 392(2)(d), I note that Ms Thota gave evidence that she had applied for between 10-15 jobs since her dismissal. Ms Thota indicated that she had started alternative employment about two weeks prior to hearing the matter. In that job, she is earning a gross sum of $1200 per week. In the period immediately after the dismissal, Ms Thota indicated that her well-being was such that she was not immediately able to commence a job search. I accept her evidence in this regard and have had regard to that matter. I am satisfied that she has made reasonable efforts to mitigate her loss.

• [54] In terms of s 392(2)(e), I have regard to the fact that Ms Thota has been earning in order of $1200 per week since about 8 September 2025. I note that 8 September 2025, is well after the eight-week period I have assessed that Ms Thota would have been employed by the Salon if she had not been dismissed on 13 May 2025.

• [55] In terms of s 392(2)(f), I have had regard to remuneration likely to be earned by Ms Thota between the date of the compensation order and 13 November 2025, which is the date when the actual compensation is payable under the order. As Ms Thota is now earning in the sum of $1200 per week, this sum will be $2400.

• [56] Having regard to the above matters and taking into account all of the circumstances of the case (including the discounts referred to in paragraphs [50] and [52] above) I consider compensation equivalent to six weeks' pay is appropriate, being a gross sum of $7695.

• [57] The Commission will issue an Order[1] along with this Decision to the following effect:

a) Zoma & Saba Pty Ltd pay Veda Thota the sum of $7695 compensation in lieu of reinstatement; and

b) The payment referred to in paragraph (a) above, be made within 28 days of the date of the order.

[1] PR792693.

Printed by authority of the Commonwealth Government Printer