Unfair Dismissal: Seven Years’ Service, No Proper Warnings and Significant Underpayment

Case: Christie v Kennedys Personal Training Pty Ltd t/a Kennedys Health and Fitness [2015] FWC 7274
Commission Member: Commissioner Roe
Decision date: 23 October 2015
Outcome: Dismissal found unfair; compensation of $13,923 plus superannuation ordered.

Case Overview

The Fair Work Commission found that a small business employee’s dismissal for alleged poor performance was harsh, unjust and unreasonable. The employee had worked for the business for more than seven years, but had not received a proper warning that her employment was at risk or a reasonable opportunity to improve.

The decision also highlights that the Small Business Fair Dismissal Code does not protect an employer where the required warnings and opportunity to respond have not been provided.

Background

The employee worked in reception and administration for a personal training and health business. She also performed some cleaning duties, which were discontinued shortly before her dismissal.

Her employer dismissed her on 23 June 2015, citing alleged poor performance, including:

General diligence;
Data-entry accuracy; and
The quality of cleaning work.

The employee was a casual, but had worked regular shifts on a systematic basis. She had been employed for more than seven years.

The employer did not attend the Commission hearing. Commissioner Roe nevertheless considered the employer’s written response and submissions.

Small Business Fair Dismissal Code

The employer argued that the dismissal complied with the Small Business Fair Dismissal Code.

The Commission was not satisfied that the employee had been given a warning that her employment could be terminated if her performance did not improve.

Although the employer had raised concerns about data-entry errors and cleaning, these discussions did not amount to a clear warning of possible dismissal. Even if the concerns raised shortly before termination could be treated as a warning, the employee had not been given a reasonable opportunity to improve.

The Commission therefore found that the requirements of the Code had not been met.

Was There a Valid Reason?

The Commission accepted that the employer may have had some concerns about cleaning and data-entry performance. However, it was not satisfied that there were serious performance problems sufficient to provide a valid reason for dismissal.

The employee had been employed for more than seven years, and the evidence did not establish serious or persistent deficiencies warranting termination.

Procedural Fairness

The employee was told she was being dismissed for poor performance, but the Commission found that she had not been given a reasonable opportunity to respond to the allegations at the dismissal meeting.

The employer had also failed to provide a proper performance warning before termination.

While Commissioner Roe accepted that the small size of the business and its lack of human resources expertise may have affected the procedures followed, those circumstances did not outweigh the absence of a valid reason and the procedural deficiencies.

Significant Underpayment

The Commission also considered evidence that the employee had been significantly underpaid over a lengthy period.

The employer’s payment in lieu of notice was not treated as an adequate offset against the underpayments. The Commission considered that the notice payment should reasonably be regarded as wages, given the substantial shortfall in remuneration.

Decision and Compensation

The Commission found the dismissal to be harsh, unjust and unreasonable.

Reinstatement was not sought and was not considered appropriate. Compensation was awarded, taking into account the employee’s lengthy service, efforts to find alternative employment, lack of earnings after dismissal and the likely period of continued employment.

The compensation was limited by the statutory cap:

Compensation: $13,923
Superannuation: Additional
Total gross amount: $15,245.68

The amount was ordered to be paid within 14 days, subject to appropriate taxation.

Representatives

Applicant: Alan Dircks, Just Relations
Respondent: No appearance at the hearing