The Fair Work Commission (FWC) has recently held that an employee at an e-commerce support firm was unfairly dismissed without a valid reason. The employer have sought to focus on a variety of reasons none of which were accepted by the Commission, and this included the employee working from home without notice on a mandated office day.
Background
Mr Tomaso Moro was employed as a full-time Digital Growth Associate at Insider Au Pty Ltd (the employer). Following COVID-19 the employer instituted two mandatory office days per week. Mr Moro had previously not attended the office on several of the mandatory office days and had been spoken to informally about his behaviour by his employer.
On 30 August 2023, Mr Moro did not attend for work on a mandatory office day. He had updated his work calendar to confirm that he would be working from home but had failed to communicate his whereabouts through the correct work channel being WhatsApp.
His manager made an enquiry regarding his working from home status and Mr Moro advised that he had not attended the office because a tradesperson was at his home repairing his dishwasher.
Mr Moro's manager responded "Sorry Tom, I'm calling BS on this. This is not good enough – you are supposed to give us a heads-up WAY in advance as opposed to having me chase you like this."
The following day Mr Moro's manager advised him in a telephone conversation that it was "best to part ways" and asked Mr Moro to provide a letter of resignation. Mr Moro declined to resign. He however confirmed he would be prepared to accept termination on the basis that his 8-week notice period, as stipulated in his contract, was paid out.
It was found Mr Moro's employment was terminated the following day when his access to the employer's systems was removed. He was advised that he would receive 2 weeks' pay in lieu of notice.
Mr Moro subsequently filed an unfair dismissal application in the FWC, and in his application he referenced:
i. his high performance as an employee;
ii. the lack of prior warning given by his employer; and
iii. the minimal explanation behind the reason for his
dismissal
In response, the employer noted:
i. Mr Moro's frequent unexplained absences, poor
collaboration, challenging behaviour and dishonesty;
ii. Mr Moro's failure to attend the work premises on several
mandatory in office attendance days; and
iii. Mr Moro's further absenteeism without notice on 30 August
2023
The Decision
The FWC was not satisfied there was a valid reason for Mr Moro's dismissal and further found that Mr Moro was not given adequate warning from his employer's perspective that his previous behaviour was problematic.
The FWC noted that the non-attendance on 30 August 2023 was the only reason provided for the termination rather than Mr Moro's previous non-attendance also being a factor.
The FWC found that Mr Moro was not provided with an opportunity to respond on 31 August 2023 and could not access a support person during that discussion which was procedurally unfair.
Considering all the factors under section 387 of the Fair Work Act 2009 (Cth), the FWC held that Mr Moro was unfairly dismissed. The FWC determined that it was not appropriate to consider reinstatement of employment. It then became an issue as to how to calculate the compensation payable to him. The FWC was bound by section 392 and this included section 392(2)(c) which provides:
"The remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed;"
This issue involves the FWC seeking to inform itself as to the likely period of future employment. Of necessity, it is an estimate and here the FWC was satisfied despite discussions around resignation and ceasing services for non-work related reasons that the Applicant would have remained in service for at least three months.
In Fair Work Commission proceedings there are repeated references to the Sprigg formula which has been developed in a range of cases including:
i. Sprigg v Paul's Licensed Festival Supermarket (1998) 88IR21,
ii. Ellawala v Australian Postal Corporation (print S5109) and more recently, in
iii. Smith v Fearon Howard Real Estate Pty Ltd [2021] FWCFB581
The Fearon Howard decision involves a consideration of the traditional principles as were developed under formulations of the then relevant Federal Industrial legislation and the Smith v Fearon Howard decision deals with the current legislation.
It is useful to refer to paragraph 19 of the Fearon Howard decision which provides:
[19] The Full Bench of the AIRC in Sprigg said:
"26. Ross VP addressed the construction of the relevant provision through a detailed examination of decisions by Members of the Court. The substance of his decision is adequately summarised in the following passages:
"It can be seen that the approach taken in a number of cases in the Industrial Relations Court is to assess the appropriate amount of compensation in the light of all relevant circumstances, including the remuneration that the employee would have received, or have been likely to have received, if the employer had not terminated the employment and, if that amount exceeds the permissible figure, reduce the compensation to that figure. [16] The following general principles regarding reinstatement and compensation may be extracted from the cases referred to:
(5) Lost remuneration is a fundamental element in assessing compensation though it is not the only matter that may be considered: Krupp-Geir v Open Family (Australia) Inc.
(6) In assessing the amount of compensation to be awarded the following approach has been adopted by the Court:
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.
STEP 2: Deduct moneys earned since termination. Workers compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation awarded.
STEP 3: The remaining amount of compensation is discounted for contingencies.
STEP 4: The impact of taxation is calculated to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
STEP 5: The legislative cap on compensation is applied... [17]
[our emphasis, footnotes omitted]"
These are the steps to be considered however, it is not a case of each 'Step' necessarily having the same weight.
The Full Bench in substance endorsed the Sprigg formula and in this particular matter allowed the Appeal as of first instance the Commissioner failed to give adequate reasons as to how the compensation amount was calculated.
What does this mean for employers?
Any employer seeking to manage non-compliance with office attendance mandates should be aware that it is unlikely to provide a valid reason for dismissal unless the employee has been given formal prior warnings regarding their non-compliance with work directives.
It is important to document such communications so that there is no scope for uncertainty or imprecision as to the nature of the direction given and the requirement of the employee to comply.
It is also an important reminder that any dismissal process where an employee is protected by the unfair dismissal provisions, employers must ensure:
i. that there is a valid reason for dismissal;
ii. that if the reasons for dismissal include multiple breaches of a return to office mandate, this must be clearly explained and each occasion of non-compliance relied upon, referenced and put to the employee;
iii. that the employee is given an opportunity to respond;
iv. the dismissal must be carried out in a procedurally fair manner (including considering the opportunity of a support person and who that support person might be).
The issue of procedural fairness applies to small business employees subject to the employee having been in service for 12 months or more.
Small business owners should make it their business to be alert to the mandatory provisions of the Small Business Fair Dismissal Code.
For convenience, you can read the full Decision here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.