UNREPRESENTED EMPLOYER ORDERED TO PAY 6 MONTHS COMPENSATIONS PLUS COSTS FOR UNFAIR DISMISSAL

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1 EMPLOYMENT UPDATE UNREPRESENTED EMPLOYER ORDERED TO PAY 6 MONTHS COMPENSATIONS PLUS COSTS FOR UNFAIR DISMISSAL This Employment Update outlines the risks associated with improper handling of unfair dismissal claims. Minimal Evidence Supplied 2 No valid reason 2 No evidence 2 Maximum Awarded Compensation Costs Awarded 3 Lessons for Employers 3 Amendments to FWA 3 2 The Fair Work Commission (FWC) has awarded the maximum 6 months compensation to an employee who was terminated by their employer for alleged redundancy reasons. In Sempf v Transportable Shade Sheds Pty Ltd, the employee had been employed for approximately 4 years as a swagger / bender / driver in the employer s production facility. In September 2012, the employee was handed a letter by his manager which stated: Please be advised that, due to a lack of available work, we unfortunately find it necessary to terminate your at Transportable Shade Sheds effective immediately. We will provide you with 2 weeks paid notice and ensure other entitlements are met including your annual leave to date. At the hearing, the employer was represented by the company s JULY 13 Human Resources Manager ( HRM ) who had only been employed by the company some three months prior to the hearing taking place. The HRM had no first-hand knowledge of the events leading to the termination of the employee and was therefore reliant on the accounts and submissions of others. The employee, on the other hand, was represented by a solicitor who was granted leave to appear in the proceedings, with such leave being unopposed by the HRM at the commencement of the proceedings. The represented employee called a number of witnesses and made submissions that supported his case. The HRM refused Unfair Dismissal

2 2. an opportunity provided by SDP Blake to consult with the employee and his representative in an attempt to resolve the matter, citing that the only person capable of making a decision to resolve the matter was overseas. Minimal evidence provided by employer To complicate matters for the HRM and the employer, the submissions provided for in the employer s written response were drafted by a marketing employee who was not called to give evidence in the matter. Further, the employee s manager, who was no longer employed by the employer, refused to voluntarily provide evidence and no attempt was made by the employer to summons the manager to provide evidence. The employee argued that there was no genuine redundancy citing that another person was now engaged to perform the duties that the employee had previously been engaged to perform. The only evidence adduced by the employer to respond to the submissions of the employee were two financial reports, which were held by the FWC to only be evidence that the business had recently achieved two adverse financial results, not that the employee s position was redundant. The FWC was also critical of the employer s submissions that the employee was chosen for retrenchment as he was the highest paid production employee. The FWC also noted that the employer did not attempt to find alternative for the employee within the employer s business or any associated entity of the employer. No valid reason and no procedural fairness The FWC held that the position was not redundant as it continued to be performed by other employees and that the employer has also failed to consult with the employee as required under the relevant industrial instruments. On this basis, the FWC held that Transportable Shade Sheds did not have a valid reason for dismissal. The FWC also found that the employer had failed to follow a fair process, both in terms of the failure to consult with the employee and the termination procedure itself. No evidence on small business employer submission The employer also submitted that it was a small business employer as it employed less than 15 employees and therefore was not required to make redundancy payments to redundant employees. The only evidence adduced on the employer s behalf in this regard was the HRM s own submission that the employer engaged less than 15 employees. The employee provided evidence to the effect that even if Transportable Shade Shed employed less than 15 employees, the entity was an associated entity of Hahn Environmental Services (Hahn) and by operation of s23(3) of the Fair Work Act 2009 (Cth), any employees engaged by Hahn were to be included when calculating the size of the employer. The FWC accepted that Hahn was an associated entity and therefore the addition of Hahn employees to the 14 employees of Transportable Shade Shed meant that Transportable Shade Sheds was not a small business employer. Maximum compensation awarded to employee In determining the appropriate remedy, the FWC noted that the employee was vehemently Unfair Dismissal

3 3. opposed to reinstatement and therefore compensation was the appropriate remedy. FWC indicated that there were no submissions made with regards to the impact of a compensation remedy on the employer s business. The FWC considered the following indicia in determining the quantum of compensation: The length of the employee s ; That, but for the termination, the employee would have continued in his for at least 12 months; That the employee had made all possible efforts to mitigate his loss; and That he was at an age which would make it difficult for him to find work, and thus he was at a considerable financial and social disadvantage as a result of the termination. The FWC noted that had the employee sought reinstatement, it would have ordered this. In the absence of the employee seeking this, the FWC considered that 6 months wages as compensation was appropriate. Costs awarded against the employer The employee s representative made an application for costs and the HRM on behalf of the employer did make any submissions in reply. The employee argued that the employer should have reasonably known that it had no reasonable prospects of success in pursuing this matter to hearing. In awarding the employee costs, the FWC commented that the employer s conduct up to the hearing in the matter led to costs being incurred that were completely unnecessary in the circumstances. Lessons for Employers The way that this matter progressed, from the refusal to conciliate to the failure to make proper submissions prior to and at the hearing, resulted in the employer not only paying the maximum compensation to the employee but also the employee s legal costs as well. This matter may have been able to be resolved at a much earlier stage and at a much lower cost if the employer had been more proactive in seeking advice as to their legal position. Amendments to Fair Work Act 2009 from 1 July 2013 The Fair Work Act Amendment Bill 2013 was assented to on 28 June 2013, bringing with it some changes to a number of provisions that are designed to increase the family friendliness of the Act. These changes commenced on 1 July 2013: Safe Job Transfers Pursuant to the amendments, pregnant women are now entitled to transfer to a safe job even where they have not been employed with their current employer for 12 months. An employer will be required to transfer the pregnant employee to a safe job where employee is able to provide evidence that she is unable to complete her current duties safely, but that she is still able to work in some other capacity. Where there is no safe job available, the employer may require the employee to take paid no safe job leave, which is calculated on the employee s base rate for her ordinary hours. If the employee has not served 12 months with her employer, then she will not be entitled to paid no safe job leave. Special Maternity Leave Where an employee experience a pregnancy related illness or if her pregnancy ends for a reason other than the birth of a living child within 28 weeks of the expected birth date, then the employee will be entitled to unpaid special maternity leave. The employee needs to provide notice to the employer as soon as possible of her intention to take the leave, and the expected duration of the leave. Unfair Dismissal

4 4. This period of unpaid maternity leave is not deducted from the employee s entitlement to unpaid parental leave. Increase in concurrent parental leave for employee couples Concurrent leave, which is the period of time where an employee couple may take parental leave at the same time has now increased from 3 weeks to 8 weeks under the new amendments. The 8 weeks may be taken in two separate periods, commencing on or after the birth of the child. Expanded access to Flexible Working Arrangements The following persons will now have the right to request flexible working arrangements from their employers: Persons who: have been with their current employer for at least 12 months or are a casual employee who: o has been employed regularly and systematically for at least 12 months; and o is likely to continue working regularly; are a parent or guardian of a child who is school age or younger; are a carer (as defined in the Carer Recognition Act 2010); have a disability ; are 55 or older; are experiencing family or domestic violence; or are caring for or supporting an immediate family or household member who requires care or support because of family or domestic violence. The definition of carer is one that requires a person to be actively providing personal care, support and assistance to another person who: a) has a disability; or b) has a medical condition (including a terminal or chronic illness); or c) has a mental illness; or d) is frail and aged. An employer may refuse a request for flexible working arrangements only on reasonable business grounds. The Fair Work Ombudsman provides some examples of what may be considered reasonable business grounds to refuse a flexible working arrangement request, including when the new working arrangements: are too expensive for the employer to implement; would result in a significant loss in efficiency or productivity; or would be likely to have a significant negative impact on customer service. Employers need to be wary of the changes that are now in force and ensure that they assess each request for flexible working arrangements on its merits. Discriminating or taking adverse action against a person because they have made a request for flexible working arrangements is unlawful and employer may be subjected to civil penalties under the Fair Work Act 2009 for engaging in such conduct. Mark Bunch Unfair Dismissal

5 5. WE CAN HELP YOU WITH Contracts of Employment Enterprise Agreements Understanding the Fair Work Act and other legislation Employment & Employee Misconduct & Issues Discrimination, & Bullying Health & Policies & Employee Handbooks Employee Entitlements & the Fair Work Ombudsman Reviewing & Appealing Workers Compensation Determinations Unfair Dismissal & FOR MORE INFORMATION PLEASE CONTACT AITKEN LEGAL Sunshine Coast Office Level 2 20 Innovation Parkway, Birtinya Qld 4575 LISA AITKEN Managing lisa.aitken@aitkenlegal.com.au PO Box 256 Wurtulla Qld 4575 Phone: Fax: info@aitkenlegal.com.au Gold Coast Office Level 6, The Rocket 203 Robina Town Centre Drive Robina Qld 4226 Phone: Fax: info@aitkenlegal.com.au CHRISTOPHER CAMPBELL chris.campbell@aitkenlegal.com.au MARK BUNCH mark.bunch@aitkenlegal.com.au Disclaimer: The information contained this update is intended as a guide only. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this update, Aitken Legal does not accept liability for any errors it may contain. Liability limited by a scheme approved under professional standards legislation. Contact Aitken Legal here. Unfair Dismissal