This decision of the Fair Work Commission deals with the application of the Small Business Fair Dismissal Code.
“Was the dismissal consistent with the Small Business Fair Dismissal Code?
[39] CareToDance raised that the dismissal was not unfair because it complied with the Small Business Fair Dismissal Code. The argument was put as a factor to be considered under s. 387(f) and (g) which refer to the size of the employer’s business as factors to be taken into account when considering whether a dismissal was harsh, unjust or unreasonable for the purposes of s.
385(b). The question arises separately, however, and directly under s. 385(c), which requires for the purpose of determining that a person has been unfairly dismissed whether the Commission is satisfied that the dismissal was not consistent with the Small Business Fair Dismissal Code. The effect of s.385(c) of the Act is that when a dismissal is consistent with the Code, it is not an unfair dismissal, and the application must then be dismissed.
[40] The Small Business Fair Dismissal Code is defined in s. 388:
388 The Small Business Fair Dismissal Code
(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.
(2) A person’s dismissal was consistent with the Small Business Fair Dismissal 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 Small Business Fair Dismissal Code in relation to the dismissal.
[41] The Code came into operation for the purposes of s. 388(1) on 1 July 2009. It relevantly reads:
The Code Summary 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.
Other Dismissal
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.
Procedural Matters
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.
[42] Section 23 provides that an employer is a small business employer if the employer employs fewer than 15 employees. At the time Mr Colmenares was dismissed CareToDance employed fewer than 15 employees. The question is whether in dismissing Mr Colmenares CareToDance complied with the Code.
[43] Mr Colmenares was not dismissed for serious conduct. The paragraph of the Code dealing with summary dismissal does not apply.
[44] CareToDance contends that Mr Colmenares was issued a number of warnings about his conduct. It relied upon a final written warning dated 17 May 2024. That warning was attached to the email of 27 July 2024. It referred to tardiness and disrespectful behaviour and insubordination and relevantly stated:
Disrespectful Behaviour and Insubordination:
In addition to your tardiness, you have repeatedly exhibited rude and disrespectful behaviour towards the directors of CareToDance. This includes questioning business decisions, talking over the directors’ multiple times, rolling your eyes, failure to follow orders, reluctancy to perform assigned tasks, shifting responsibilities onto other colleagues and displaying a general lack of respect in front of other staff members. Specific instances include but not limited to:
28/09/2023; 16/11/2023; 16/5/2024; 17/5/2024.
Such behaviour is unacceptable and has a negative impact on our team and overall productivity. We expect all employees to adhere to our standards of professional conduct and demonstrate a commitment to their responsibilities
Final Warning:
This is your final written warning. You are expected to correct your behaviour immediately. We will monitor your behaviour and performance over the next 4 months. Any further instances of tardiness or disrespectful behaviour will result in the termination of your employment with CareToDance Pty Ltd. Additionally, as your conduct continues to violate our professional standards, we will proceed with cancelling your visa.
[45] This warning meets the description of a warning in the Code, in so far as it provides reasons why Mr Colmenares was at risk of being dismissed. The reasons appeared to be based on Mr Colmenares’ conduct. The warning was in writing and stated that Mr Colmenares risked being dismissed if there was no improvement. It is a warning that related to the circumstances for which Mr Colmenares was dismissed. The events on the evening of 23 July 2024, where Mr Colmenares failed to undertake the assigned task of putting out the rubbish and his reluctance on 24 July 2024 to take the rubbish out at the finish of his shift on 24 July 2024, and Mr Basescu’s concerns about how Mr Colmenares spoke to him at the meeting with Mr Nunez on 24 July 2024 are caught by the warning.
[46] Mr Basescu indicated that this warning was emailed to Mr Colmenares on 17 May 2024. He also said that at no stage did he discuss the warning with Mr Colmenares. Mr Colmenares did not contest that the warning was emailed to him and confirmed that he was never given the opportunity to discuss the warning with Mr Basescu. He also had no recollection of the instances referred to in the warning and those matters had not been explained to him.
[47] The procedural requirements of the Code require the employer to 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. The evidence is that no such discussions occurred. It follows that there were no discussions with Mr Colmenares where he could have another person present to assist. Those two requirements of the Code were not met.
[48] As CareToDance failed to meet the procedural requirements in the Code I am satisfied for the purposes of s. 385(c) that the dismissal was not consistent with the Code.
Was the dismissal harsh, unjust or unreasonable?
[49] The third question is whether the dismissal harsh, unjust or unreasonable for the purposes of s. 385(b). In considering that question I must take into account the matters set out in s. 387 of the Act.
[50] Section 387(a) directs my attention to whether there was a valid reason for the dismissal related to Mr Colmenares’ conduct. Mr Colmenares was dismissed on 24 July 2024 due to his failure to take out the rubbish on 23 July 2024 and his reluctance to do so on 24 July 2024. CareToDance did not press the reasons in the letter of 27 July 2024 other than to point to insubordination in relation to the incident concerning taking out the rubbish. It was not open to rely on the reasons in the letter that went beyond those events in in any event as Mr Colmenares was dismissed 3 days earlier and the reason was the events of 23 and 24 July 2024.
[51] The failure to take out the rubbish on 23 July 2024 did not justify dismissal. So far as it could be considered misconduct for failing to follow an instruction it was a minor matter. Mr Colmenares cleaned the studio at the end of his classes, was aware he had to take the rubbish out, but decided to follow a common practice of not doing so at the end of the night and intended to do so the next day. The warning issued to Mr Colmenares on 17 May 2024 indicated that there had been some concerns about his failure to perform assigned tasks, but I do not consider that the failure to take the rubbish out at the end of a shift to be of such moment that it met the description of a failure to perform an assigned task as Mr Colmenares intended to take the rubbish out the next day but was prevented in doing so by Mr Nunez taking it out after Mr Colmenares left. I note there was a practice of not taking the rubbish out at night but taking it out the following day and Mr Colmenares was willing to perform the task in accordance with that practice.
[52] A further aspect of Mr Colmenares’ conduct that led to his dismissal was his reluctance to take the rubbish out on 24 July 2024 unless he could finish his classes early. Again, I do not regard this as conduct justifying dismissal. Mr Colmenares was willing to take the rubbish out the next morning. The failure to take the rubbish out in the evening was not of such moment that it was going to impact on CareToDance’s business in any significant way, if at all. This was a minor matter that did not justify dismissal.
[53] I also find that taken together Mr Colmenares conduct regarding the rubbish on 23 and 24 July 2024 did not amount to misconduct justifying dismissal. My finding includes the conduct of Mr Colmenares during the meeting with Mr Basescu and Mr Nunez. Mr Basescu expressed the view that the way Mr Colmenares spoke to him at the meeting, in particular his refusal to take the rubbish out, amounted to insubordination. Mr Colmenares objected to taking the rubbish out after his shift finished and indicated he would take it out in the evening if he could end his last class early to allow time to do so. This was a minor matter that may have been resolved if Mr Colmenares was more flexible in his attitude to working time but his inflexibility and the manner in which he raised his concern was not insubordination. It was not conduct that justified dismissal either on its own or in the context of the issues concerning the removal of the rubbish. Mr Colmenares was entitled to express the views that he did. The exchange should not have resulted in Mr Colmenares’ dismissal.
[54] My findings under s. 387(a) weigh in favour of a finding that the dismissal was harsh, unjust or unreasonable.
[55] Section 387(b) and (c) go to whether the employee was notified of the valid reason related to capacity or conduct and given an opportunity to respond to those matters. CareToDance submitted that it had written to Colmenares on 28 August 2023 as well as the letter of 17 May 2024 raising issues with his conduct. The 28 August 2023 communication was an email. It went to the issue of tardiness. It was said to be a second warning and that if a third warning was issued on the topic, then Mr Colmenares’ employment status may be affected. The letter did not apply to the circumstances that led to the dismissal and is not relevant to the dismissal which had nothing to do with tardiness.
[56] I have dealt with the warning letter of 17 May 2024 above. I do not consider it to constitute a notification as contemplated by ss. 287 (b) and (c). It was not notice that he would be dismissed for the type of conduct that occurred on 23 and 24 July 2024.
[57] So far as the meeting in Mr Basescu’s office on 24 July 2024 could be considered notification of the reason for dismissal I consider that the way in which that discussion occurred did not amount to the type of notice contemplated by s. 387(b). The discussion resulted in Mr Colmenares being given an ultimatum rather than the type of discussion a reasonable employer may hold with an employee who was faced with dismissal for misconduct. I also find that Mr Colmenares was not giving an opportunity to respond to the reason for dismissal.
[58] Instead, I find that the procedure followed by Mr Basescu and the way in which Mr Colmenares was treated on 24 July 2024, having been called to a meeting and given an ultimatum about his employment, was contrary to with the procedure contemplated by s. 387 (b), (c) and weighs in favour of a finding that the dismissal was harsh, unjust or unreasonable.
[59] Section 387(d) goes to whether there was an unreasonable refusal to allow the employee to have a support person present to assist at any discussion relating to dismissal. Mr Colmenares did not ask to have representation and so it was not refused. CareToDance submits that as Mr Colmenares did not ask to be represented CareToDance complied under 387(d) and this weighs in favour of finding that the dismissal was not harsh, unjust or unreasonable. I reject the submission. As no request was made there was no refusal, and the matter is neutral in my consideration.
[60] Section 387(e) relates to dismissals for unsatisfactory performance. There was no suggestion that Mr Colmenares did not perform his job as a dance instructor well. The evidence of commendations from his students suggest he was a good instructor.
[61] Section 387(f) and (g) go to the size of the employer’s enterprise or lack of dedicated human resources management specialists and how they may have had an impact on the procedures followed in effecting the dismissal. CareToDance is a small business. Its lack of dedicated human resources may explain the way the dismissal occurred. I note the practice of sending emails to the Accounts Team. I was not told who the Accounts Team were or if they had any human resources expertise. Nor was I told whether the Accounts Team was a dedicated team supporting the business. I expect not. I consider this matter neutral in my assessment of fairness.
[62] CareToDance contends that while it was a small business it nonetheless provided procedural fairness to Mr Colmenares. It also submitted that it complied with the Small Fairness Dismissal Code. I have dealt with these matters earlier. There was not procedural fairness as contemplated by s. 387 (b) and (c) and the Code was not followed. I reject the submission.
[63] Section 386(h) requires that I consider other relevant matters. CareToDance submitted that relevant to this paragraph I should take into account that Mr Colmenares resigned, alternatively he abandoned his employment, and thirdly he did not make any attempt to return to work. I have already found Mr Colmenares was dismissed. There was no resignation. As to whether he abandoned his employment, in the correspondence of 25 July 2024 Mr Colmenares said he did not want to terminate his employment. He quite clearly did not abandon his employment. In his email Mr Colmenares said that he believed he had been dismissed the day before. There is no basis for CareToDance claiming, either in its letter of 27 July 2024, nor its submissions in these proceedings, that the employment came an end because Mr Colmenares abandoned his employment. These matters do not tell against a finding that the dismissal was harsh, unjust or unreasonable.
[64] There is one matter in the material that I find relevant to the dismissal. Mr Colmenares was from the Philippines. He was recruited by CareToDance to fill a skill shortage. CareToDance sponsored Mr Colmenares so that he could obtain a visa to allow him to work. He relocated to Australia to work for CareToDance. Mr Colmenares travelled from overseas to fill a skill shortage, and he performed well in performing the work for which he was recruited. I consider these matters weigh in favour of a finding that it was particularly harsh to dismiss Mr Colmenares for such a minor matter when considered against this background.
[65] My conclusion after considering the matters in s. 387 is that Mr Colmenares dismissal was harsh, unjust and unreasonable.
[66] Accordingly, I find that Mr Colmenares was unfairly dismissed.
Remedy
[67] Mr Colmenares did not seek reinstatement. He does not want to work in a hostile environment. CareToDance is a small workplace. I find the relationship has broken down and reinstatement is inappropriate.
[68] Mr Colmenares seeks compensation. I am satisfied that it is appropriate to make an order for payment of compensation in lieu of reinstatement. CareToDance submits that two factors should be taken into account in determining the amount of compensation. First, that Mr Colmenares had only worked for CareToDance for less than two years. Second that he had engaged in misconduct and the compensation should be reduced on account of that misconduct. I will consider those matter as well as the other matters required by s. 392.
[69] Subsection 392(2) of the Act requires all the circumstances of the case be taken into account when determining an amount to be paid as compensation in lieu of reinstatement. The subsection requires me to consider the matters listed in s. 392 (2)(a) to (g). In relation to paragraph (a) I note that there is no suggestion that an order for compensation will have an impact on the financial situation of the business. For the purposes of s. 392(b) I note that Mr Colmenares commenced work for CareToDance in January 2023 so only worked for the company for 18 months.
[70] In relation to paragraph (c), there is some uncertainty associated about how long Mr Colmenares would have remained with the business. CareToDance had raised concerns about his conduct in its letter of 17 May 2024. The specific issues referred to, such as tardiness, had been resolved and there was only a general concern described as insubordination that might be said to still have currency at the time of the dismissal. I do not regard those matters as suggesting that the employment would have ended by Mr Colmenares being validly dismissed as a result of his conduct in the near future. There appeared to be some tension in the relationship between Mr Colmenares and the owners of the business. That tension did not prevent him from teaching his dance classes to a high standard. Mr Colmenares said that he certainly would not have left the business before the end of the current semester, which ran until the end of September 2024. Another factor is that his visa was valid until January 2025.
[71] Applying this consideration involves some speculation, and my view is that Mr Colmenares would have continued to work for the company at least until his visa expired in January 2025. I was not provided with the visa, but I understand it to have been a 2 year visa which would have expired around 23 January 2025. Had he worked for that time he would have earned a further 26 weeks’ pay. For the purposes of giving that time a monetary value for the purposes of calculating a compensation order Mr Colmenares’ weekly rate, derived from the salary set out in his contract of $62,229.18, was $1,196.72 per week. He would have received 26 weeks further pay, or $31,114.69
[72] As to mitigation, which is mentioned in s. 392(2)(d), Mr Colmenares sought and gained other employment. He started in a regional dance company in late October 2024 albeit on reduced hours and pay. He provided a pay slip from 4 November 2024 from the other dance company. The payslip indicates that he worked for 1 week at 15 hours per week and was paid at a salary of $31,286.00 or $601.65 per week. For the purposes of s.392(2)(e) and (f) Mr
Colmenares has received earnings to date of since the dismissal and that must be taken into account in making the order.
[73] Section 392(2)(g) requires me to consider any other matter I consider relevant. I do not consider any other matter relevant.
[74] The approach taken in the Commission to the assessment of the quantum of compensation under s.392 of the Act is to apply the Sprigg formula derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket.1 Put briefly, it involves estimating the remuneration the employee would have received but for the dismissal, deducting monies earned since termination, discounting that amount for contingencies and assessing the tax implications to ensure no adverse impact on the employee.
[75] Section 392(5) provides that an order for compensation can be no more than 26 weeks’ pay.
[76] On the basis that Mr Colmenares’ relevant rate of pay derived from the salary set out in his contract which was $62,229.18, amounted to $1,196.72 per week, Mr Colmenares’ loss arising from the dismissal was as follows:
Projected earnings 2/7/24 to 23/1/25 26 weeks $31,114.69
Less earnings since the dismissal: 8 weeks at $601.65 ($4,813.20)
Less expected earnings up to the time of the order: 3 weeks at $601.65 ($1,804.95)
Earnings lost: $24,496.54
[77] I consider that Mr Colmenares should receive compensation of $24,496.54 in lieu of reinstatement. This amount will be subject to taxation which I do not regard as adversely impacting Mr Colmenares.
[78] Under s.292(3) I may reduce this amount if the employee’s conduct warrants doing so. I do not propose to do so here. Mr Colmenares conduct did not justify a reduction in the amount of compensation.
Conclusion
[79] For the reasons outlined I consider that Mr Colmenares was unfairly dismissed and will order that CareToDance pay him an amount of compensation of $24,496.54 less applicable taxation in lieu of reinstatement.
[80] An order requiring payment in this amount will issue separately. CareToDance will be given 21 days to pay this amount. This timeframe will also be included in the order.”
Colmenares v Caretodance Pty Ltd [2024] FWC 3580 delivered 24 December 2024 per Slevin DP