Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - Small Business Fair Dismissal Code - dismissal consistent with Code - application dismissed.

• [1] Ms Xiaofeng Lu (Applicant) has applied under s.394 of the Fair Work Act 2009 seeking an unfair dismissal remedy following her dismissal by The Trustee for SKC Phoenix Trust (Respondent) on 24 April 2025.

• [2] The Respondent objects to the application on the basis that it is a small business and the dismissal of the Applicant was consistent with the Small Business Fair Dismissal Code (the Code).

• [3] The application was heard by video on 8 August 2025. At the hearing, the Applicant appeared on her own behalf with the assistance of an interpreter, and Mr S Sueng, the Director of the Respondent, appeared for the Respondent.

• [4] For the reasons set out below, I find that the Applicant's dismissal was consistent with the Code and so the application is dismissed.

• [5] The Respondent operates two Just Cuts salons located in the suburbs of Fyshwick and Manuka in ACT. The Applicant commenced employment with the Respondent as a hairdresser in December 2023. She was engaged on a casual basis and worked in both locations.

• [6] On 24 April 2025 the Applicant was notified of her dismissal by text message from Ms Chea, the Operations Manager. The message stated:

"Hi Lou, following our discussion today, it's clear we have differing views on how the workplace should function. Regrettably, I believe it's best for us to part ways, effective today, so you will have no further shifts from Saturday onward. Your final pay will be processed as usual next week per our fortnightly schedule. Alex is still handling your super, so please reach out to him with any questions. Thank you for your contributions, and I wish you the best in your future. Sincerely, Kelly."

• [7] The Applicant's dismissal followed a discussion that took place earlier that day at the Fyshwick salon between the Applicant and Ms Chea. The discussion concerned a one-star Google Review posted by a client which referred to a Chinese-speaking staff member.

• [8] The parties provided differing accounts of this interaction and the subsequent events, details of which will be examined later in this decision. However it is not disputed that, following the conversation, Ms Chea instructed the Applicant to end her shift early and subsequently reported the matter to Mr Sueng, her husband and the Director of the Respondent. That evening, Ms Chea sent the text message to the Applicant advising her of the dismissal.

• [9] The Respondent asserts that the dismissal was consistent with the Code and was based on serious misconduct involving aggressive, disrespectful and disruptive behaviour in the workplace.

• [10] The Applicant denies the allegations and contends that her dismissal was unfair and was motivated by her complaints regarding unpaid superannuation and racial discrimination.

• [11] Section 396 of the Act requires the Commission to decide certain matters before considering the merits of an application for an unfair dismissal remedy. Relevantly, it provides:

396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 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 Small Business Fair Dismissal Code;

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

• [12] There is no dispute that the Applicant was dismissed, and subsections (a) and (d) do not apply. The Respondent employs fewer than 15 employees and is therefore a small business employer for the purposes of the Act. The matter that must first be determined is whether the Respondent complied with the Code in dismissing the Applicant. If the Respondent complied with the Code, there can be no successful claim of unfair dismissal under s.385(3) of the Act. If the Code was not complied with, consideration is required to determine whether the dismissal was unfair in accordance with s.387 of the Act.

• [13] Section 388(2) of the Act provides that a person's dismissal was consistent with the Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person's employer was a small business employer; and

(b) the employer complied with the Code in relation to the dismissal.

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

• [15] The Applicant submitted a written statement and gave oral evidence in support of her application. The Applicant also submitted written statements from Ms Ning Stuart and Ms Yu Lin. Ms Stuart is the Applicant's accountant, and Ms Lin is a family member and an employee of the Australian Taxation Office.

• [16] The Applicant gave evidence that she has over 20 years' experience working as a professional hairdresser, including in various salons operated under the same franchise network as the Respondent. She stated that she had received multiple awards for customer service from the franchisor's head office over the course of her career.

• [17] Much of the Applicant's remaining evidence and submissions were not relevant to the issues to be determined in the context of her unfair dismissal claim. These submissions included allegations concerning unpaid superannuation, unlawful adverse action, racial discrimination and breaches of privacy and bullying. The Applicant seeks findings in relation to these alleged breaches and claims general damages as compensation. Such remedies, however, fall outside the jurisdiction of the Commission.

• [18] The evidence provided by Ms Stuart and Ms Lin related solely to the Applicant's superannuation affairs, and neither had any direct knowledge of the circumstances surrounding the Applicant's dismissal. For the reasons outlined above regarding relevance, their statements are not pertinent to the matters under consideration and were therefore not admitted into evidence.

• [19] The Applicant stated that from the beginning of her employment until April 2025, the Respondent failed to pay any superannuation contributions to her nominated fund, despite payslips indicating that contributions were being accrued. She stated that in early April 2025, after checking her superannuation account and seeing no contributions had been made, she raised the matter with the Respondent.

• [20] The Applicant said that following her enquiries regarding unpaid superannuation, Ms Chea's attitude towards her changed. She described Ms Chea as becoming rude, defensive, and critical, and said that she felt she was being targeted in the workplace as a result of raising a legitimate concern.

• [21] On 24 April 2025, the Applicant sent an email to the Respondent requesting an update on the status of her superannuation payments. The Applicant submits that it was for this reason that she was targeted at the meeting later that day and was subsequently dismissed.

• [22] The Respondent denied failing to pay the Applicant's superannuation. Mr Sueng explained that the accounting software 'Xero' used by the Respondent had incorrectly stated the superannuation fund as 'Australian Retirement Fund' rather than 'Australian Retirement Trust'. This resulted in the superannuation contributions being paid quarterly by the Respondent into the incorrect fund.

• [23] According to the Respondent, the Applicant did not raise issue of not receiving the contributions until 10 April 2025, despite the fact that all her past payslips indicated the superannuation payments were being made to the wrong fund.

• [24] The Respondent said that after the Applicant advised that the superannuation fund details were incorrect on 10 April 2025, they immediately corrected the details in Xero. Since then, the issue was rectified by making the necessary contributions to the correct fund and seeking to recover the misdirected funds.

• [25] Ms Chea is the Operations Manager as well as the spouse of the Respondent's Director, Mr Sueng. In her role she is responsible for overseeing the day-to-day management of both the Manuka and Fyshwick salons.

• [26] Ms Chea gave evidence that she had a discussion with the Applicant on 24 April 2025 in response to a one-star Google review referencing to a Chinese-speaking staff member. Ms Chea stated that it is standard practice to speak with employees mentioned in negative reviews to provide feedback and address any service concerns.

• [27] Ms Chea said that when she attempted to discuss the review with the Applicant, the Applicant immediately became defensive and was unwilling to engage in a constructive discussion. She said:

"In this discussion, throughout our conversation, the applicant was dismissive, continuously scrolling on her phone despite being on shift. She refused to consider the feedback, take responsibility, or engage in a professional dialogue. At one point, she put her finger to her mouth and told me to "shush." She also verbally disparaged me, stating that I didn't understand how hard she worked and that I "only come in to 'la la'," a phrase she explained was a Chinese expression meaning "bullsh*t" and incompetence."

• [28] Ms Chea stated that following this exchange she asked the Applicant to finish her shift early in order to de-escalate the situation. She gave evidence that the Applicant responded with overt hostility, abruptly gathered her belongings, and behaved in an aggressive and disruptive manner.

• [29] Ms Chea described the Applicant's behaviour before leaving the salon as including slamming cabinet doors, forcefully discarding a used towel into a bin near clients, and creating a visibly tense atmosphere in the salon. She stated that this occurred in front of clients, including two children and their father, who appeared visibly uncomfortable.

• [30] Ms Chea's explanation of the events was supported by the evidence of Ms Connelly who was working in the salon that day. She confirmed that Ms Chea seemed calm when she returned to the salon after her discussion with the Applicant, however the Applicant was angry and aggressive, with her behaviour including slamming cupboards and throwing a towel aggressively.

• [31] Ms Chea stated that based on this conduct, she believed the Applicant had engaged in serious misconduct and that her continued presence in the salon was untenable. She reported the incident to the Director and supported the decision to terminate the Applicant's employment. She later sent the text message confirming the termination that evening.

• [32] The Applicant in contrast gave evidence that the meeting was hostile from the outset and that she had merely requested Ms Chea not to reference her name in a public response to the online review for privacy concerns. She alleges Ms Chea became visibly angry, raised her voice in the public shopping area, and made the following discriminatory remark:

"You are the only Chinese staff with a Chinese accent, and you work with the white people. If anything is wrong, it must be you."

• [33] The Applicant said she felt shocked and humiliated by this comment, which she regarded as discriminatory and offensive. She denied raising her voice during the incident and stated that she tried to remain calm. The Applicant stated that she was humiliated in front of customers and other staff, and that Ms Chea threatened to send her home early in anger.

• [34] She said that she completed her tasks and left the salon at about 4:00 pm. Later that evening, at approximately 7:30pm, she received the text message from Ms Chea advising that her employment was terminated. She denies engaging in any aggressive or inappropriate behaviour on 24 April 2025 and rejects the Respondent's version of events, including claims that she slammed doors or threw items in the workplace.

• [35] The evidence in the proceedings also included CCTV footage taken from inside the salon that afternoon, and showed the few minutes before the Applicant left the salon.

• [36] The Applicant submits that her dismissal was harsh, unjust, and unreasonable. She claimed it was at least in part motivated by her complaints about unpaid superannuation and constituted adverse action under the Act. She also alleges that the dismissal was tainted by racial discrimination, given the comments attributed to Ms Chea during their conversation on 24 April 2025.

• [37] The Applicant submits that the manner of the dismissal had caused her significant emotional distress, reputational harm within the small hairdressing community, and financial hardship. She described the dismissal as sudden, public, and humiliating.

• [38] The Respondent submits that the Applicant was dismissed for serious misconduct based on reasonable grounds. The Applicant's alleged serious misconduct was outlined in the Respondent's submissions as follows:

"i. Failure to engage respectfully in discussions, which also includes a belittling and dismissive attitude towards management. This was clearly demonstrated when the applicant told Kelly to 'shush' and stated that Kelly can only 'la la' (which the applicant explained meant 'bullsh*t' and incompetence in Chinese). These comments were not only deeply disrespectful but also left Kelly feeling bullied and intimidated. While the applicant may have believed that her senior age and cultural background provided justification for such behaviour, no employee is entitled to use offensive language or act in a rude or aggressive manner in the workplace towards management. Even if the applicant is undergoing personal issues at home, professionalism must be maintained when addressing work-related matters, especially when interacting with management. This kind of conduct is unacceptable and undermines the values of a respectful and collaborative workplace.

1. The creation of a hostile and intimidating workplace environment, particularly through aggressive actions such as slamming doors and drawers and throwing towels in front of clients, and staff is a serious concern. These actions not only disrupted the workplace atmosphere but also undermined the professionalism expected in a client-facing setting. After reviewing the incident, the employer believes these behaviours posed an immediate and significant risk to the reputation of the business, as they occurred in front of clients, including children, as well as other staff members in the salon. Such conduct is unacceptable, as it negatively impacts client perceptions and creates an unsafe, uncomfortable atmosphere for both clients and colleagues.

1. A deliberate and wilful refusal to engage in discussions or comply with reasonable instructions regarding expected service standards, client service, and skill improvements is a clear indication of an inability to adapt to the role. This behaviour demonstrates a fundamental incompatibility with continued employment in a position where client satisfaction, and expected service standards are critical to the success of a small business. The refusal to adhere to these essential expectations not only undermines the quality of service provided but also jeopardises the reputation and viability of the business, making it untenable for continued employment.

1. Completely undermining the trust and confidence essential to the employment relationship through these hostile actions, rendering continued employment untenable."

• [39] The Respondent denies any racial discrimination and states that references to the Applicant's nationality were only made to identify the individual named in the online review.

• [40] The Applicant was summarily dismissed for serious misconduct. In respect of a summary dismissal, the Code requires that the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal.

• [41] The Full Bench in John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edwin Domingo[1] considered the approach taken in previous cases in determining whether the employer believed on reasonable grounds that the employee's conduct justified summary dismissal:

"[27] Deputy President Bartel in Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe said:

"[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant's conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based."

[28] Senior Deputy President O'Callaghan in Harley v Rosecrest Asset Pty Ltd T/A Can Do International said:

"[8] For an employer to believe on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s.387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred.

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held."

[29] We believe that the approach and observations in these two decisions are correct. 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.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned."

• [42] Having carefully considered all the evidence and submissions before me, I find that the dismissal of the Applicant was consistent with the Code.

• [43] First, I prefer the evidence of the Respondent's witnesses over that of the Applicant as to the events in question. This is because the CCTV footage supports their evidence that the Applicant slammed a cupboard and threw her bag and a towel shortly before leaving the salon on 24 April 2025. I also consider that Ms Chea and Mr Sueng gave their evidence in an honest and forthright manner.

• [44] I accept Ms Chea's evidence that she found the Applicant's comments to the effect that she engaged in 'bullshit' and was incompetent as deeply disrespectful, and that she found the Applicant's behaviour to be intimidating and bullying.

• [45] Based on the evidence of the Respondent's witnesses, I am satisfied and find that Ms Chea and Mr Sueng genuinely held the belief that: (i) the Applicant engaged in the conduct in question; (ii) the conduct was serious; and (iii) the conduct justified immediate dismissal.

• [46] In such a small salon where the few employees need to work closely together, I also accept that the Applicant's behaviour caused other staff to feel uncomfortable and created an unsafe and intimidating atmosphere.

• [47] I reject the Applicant's submission that her dismissal was motivated by her raising issue about the superannuation payment. I am satisfied and find that the superannuation payments were paid inadvertently to the incorrect fund, caused by a simple error of mistaking the Australian Retirement Trust with the Australian Retirement Fund. The evidence is clear that payments were made, and this was not a case of the Respondent failing to make the required payments. The evidence is also clear that as soon as the error was raised with the Respondent, steps were taken to rectify the error. I am satisfied that this was not a reason for the Applicant's dismissal.

• [48] Had I not found the dismissal to be consistent with the Code, I would have found that the dismissal was not unfair. The conduct of the Applicant in these particular circumstances was sufficient to ground a finding of a valid reason, and to the extent there was any procedural defects, it would not have warranted the order of the payment of compensation.

• [49] Given my finding that the dismissal was consistent with the Code, the application is dismissed.

[1] [2012] FWAFB 1359.

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