Unfair dismissal compensation and small business obligations

In an interesting decision of the Fair Work Commission in an unfair dismissal case concerning the redundancy of the applicant’s position, the Commission has concluded that the dismissal was unfair because the employer dd not comply with consultation obligations of the an applicable modern award and could not therefore rely upon the jurisdictional defence that it was a genuine redundancy but that the Applicant was not entitled to compensation for unfair dismissal because she had received a severance payment to which she was not strictly speaking entitled to because the employer was a small business employer.

“Compliance with consultation obligations

[146] Ms Jankovic contends she was a Social and Community Service employee Level 8 under the Award. It is immaterial as to whether her written employment contract says she was covered by the Award, as parties cannot contract out of award coverage. 12 Award coverage is by way of statutory operation of s.48(1) of the Act.

[147] It was submitted that the Award is somewhat different from other awards in the sense managerial positions are contemplated within the social and community services sector. Ms Jankovic notes the observations in Cubillo v North Australian Aboriginal Family Violence Legal Service [2011] FWA 6818 at [43] (noting the employee in that matter was the CEO):

“The history surrounding the making of the Modern Award indicates that it was intended to cover managerial positions in the social and community services sector of the type occupied by the Applicant.”

[148] In support of her contention the Deputy Director role was covered by the Award, Ms Jankovic relies on her statement and says:

“a) she was subject to broad direction from the Executive Director role, and by extension, the Leadership Table of the Respondent and other leadership organs. This is consistent with characteristics identified in clause B.8.1 (a) of the Award;

  1. b) furthermore, whilst the Deputy Director role did have discretion in decision-making ability, this was within the constraints of agreed delegations by the Board. Ms Jankovic had significant involvement in initiatives and programs of the Respondent and exercised initiative in their formulation and implementation. These matters are consistent with characteristics identified in clause B.8.1 (h) of the Award;
  2. c) Ms Jankovic assisted in building frameworks and models to best align with the Respondent’s strategic objectives. These matters are consistent with characteristics identified in clause 8.8.1 of the Award; and
  3. d) Ms Jankovic brought her knowledge of social work (together with knowledge of governance requirements) to assist her colleagues and other stakeholders relevant to the Respondent’s organisation. It can be said she was a ‘subject matter expert’ during her involvement with projects and community engagement. These matters are consistent with characteristics identified in clause B.8.1 (a) of the Award.”

[149] Applying the ‘principal purpose test’, it is submitted that this leads to a conclusion that the Deputy Director role cannot be easily described as an “executive level type role involving duties which do not traditionally fall within the coverage of modern awards”. A person with mere managerial experience in an executive position would not be able to effectively discharge the Deputy Director role. Ms Jankovic submitted that the essential character of the Deputy Director role requires the incumbent employee to have an intimate understanding of social work in practice and applying that towards their duties. This formed part of her principal purpose of employment, placing her role within the ambit contemplated by the Award.

[150] On that basis, Ms Jankovic says her role should be appropriately classified as a social and community service employee Level 8 under the Award, therefore requiring the Respondent to consult with her in accordance with its obligations under s.389(1)(b) of the Act.

[151] Ms Jankovic submitted that at no time was she consulted with, and certainly not in writing as required by the Award……………………………………..

 

Consideration

[183] I turn now to a consideration of the criteria set out in s.389 of the Act. For Ms Jankovic’s dismissal to be a case of genuine redundancy, the Respondent must meet each of the criteria set out in s.389 of the Act.

s.389(1)(a) – the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise

[184] The test to be considered where there has been a reorganisation or redistribution of duties is whether the employee has any duties left to discharge.13 Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.14

[185] The decision in Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt15 considered this point and established that the test is whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form. The Full Bench in Ulan Coal Mines Limited v Howarth and others16 considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals17 and said:

“[17] It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:

‘What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant… (at p.308)’

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the ‘job’ of that employee no longer exists.”

[186] The evidence before the Commission is that the Respondent, through Dr Lucas, conducted an analysis of its staffing requirements and decided that it could do without the Deputy Director role, together with one other role. Dr Lucas has taken on the supervisory responsibilities previously performed by the Deputy Director. There are, of course, less people to supervise given the reduction of staff in mid-2021.

[187] There is no serious contest that the role of Deputy Director is being performed by any person. The analysis undertaken by Dr Lucas and approved by the Board removed the role of Deputy Director and instead included the role of First Nations Engagement and a tentative Project Officer, with the Project Officer role at around 1/3 of the cost of the Deputy Director total cost.

[188] Dr Lucas’ proposal sought to reduce wages and contractor costs by approximately $400,000 per annum and to come under budget. It appears that if all of the changes had not been made, the Respondent would have been in deficit by approximately $200,000 per annum. 18

[189] It was clear that Dr Lucas was brought on by the Respondent to make changes to the organisation. She did what she was tasked to do. It is not necessary in consideration of s.389(1)(a) to determine if there was a stronger reason to dismiss on account of the role not being required, as against the reasons put by Ms Jankovic, that there was a campaign to have her exited from the business. Nor does it matter that Mr Cox, in his time with the Respondent would not be aligned with the restructure ultimately proposed by Dr Lucas to the Board.

[190] I am satisfied the Respondent no longer required the role of Deputy Director to be performed by anyone because of changes in the operational requirements of its enterprise.

[191] The criterion in s.389(1)(a) of the Act is satisfied.

s.389(1)(b) – the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy

[192] There is a contest as to whether Ms Jankovic’s employment was covered by the Award. For Ms Jankovic to be covered by the Award, she would need to satisfy the matters of characteristics of the classification, responsibilities and requirements of the position.

[193] With respect to matters to determine in responsibilities, I am satisfied that Ms Jankovic met the Level 8 responsibilities, without being too senior for the responsibilities described within the Award. I consider that Ms Jankovic was subject to broad direction from the Executive Director and she exercised managerial responsibility for the Respondent. I consider she did operate as a senior specialist providing multi-functional advice to her colleagues, the Respondent and the Board.

[194] Ms Jankovic had considerable input into the Respondent’s projects, goals and objectives. I accept that Ms Jankovic had significant independence of action, only constrained by organisational policy, but otherwise was responsible for being an independent thinker and doer.

[195] With respect to responsibilities of the role, I accept that Ms Jankovic was required to undertake work of significant scope and complexity requiring initiative. She did not require very much professional direction. She supported many colleagues in their varied roles. Ms Jankovic certainly was required to implement organisational objectives within corporate goals and develop and recommend ongoing plans and programs.

[196] As for requirements of the position, Ms Jankovic has extensive post-graduate experience and detailed knowledge of policy, programs, guidelines, procedures and practices of the Respondent and external bodies.

[197] I am not satisfied that Ms Jankovic was too senior to be classified as a Level 8 employee covered by the Award. I consider the description of her role to be extremely compatible with the Level 8 employee described within the Award.

[198] I find that Ms Jankovic’s employment was covered by the Award. Accordingly, there was a requirement to consult with Ms Jankovic if the Respondent made a definite decision to make major changes in organisation or structure that are likely to have significant effects on employees including termination.

[199] What is clear is that Dr Lucas had formulated the view that the role of Deputy Director would be removed from the organisation on account of operational requirements. She had put a proposal to the Board on 11 October 2021, and the Board had given provisional approval to implement the restructure, subject to Dr Lucas providing financial information.

[200] I am not satisfied that the Respondent had, as of 11 October 2021, made a definite decision to make the major changes as contemplated by the consultation clause within the Award. I am satisfied the Respondent had provisionally agreed, but it had not made a definite decision. The definite decision was not made until 12 October 2021, and only after Dr Lucas had put the hurried proposal to the Board on that date on account of Ms Jankovic’s desire to have the redundancy implemented expeditiously.

[201] The Respondent certainly had not made a definite decision to make major changes in July 2021 or even in September 2021 when organisational change had been hinted at or suggested. The Respondent’s submission that because organisational change was being talked about amounted to consultation is not accepted. While employees, including Ms Jankovic and Ms Brown clearly had the jitters as to the security of their respective roles, evidenced by their respective discussions with Dr Lucas in September 2021, there was no formal plan until 11 October 2021, and no commitment by the Board until 12 October 2021. Ms Jankovic’s proposal could easily have been rejected by the Board on 11 October 2021 for whatever reason it might have chosen.

[202] At the conclusion of the 11 October 2021 Board meeting, Dr Lucas was not afforded any discretion or authority by the Board to terminate Ms Jankovic’s employment on account of redundancy.

[203] The Award obligation is prescriptive; once the definite decision is made, the employer must, in writing, give notice to the affected employees and discuss the introduction of the changes, their likely effect on them and measures to avoid or reduce the adverse effects of the changes on them.

[204] The definite decision to make Ms Jankovic redundant was not made until 12 October 2021. Accordingly, the obligations to consult arose from that time. The obligations were not met by the Respondent. I accept that this is because Ms Jankovic sought Dr Lucas out and directly asked her if her role was being contemplated for redundancy. Dr Lucas did not placate Ms Jankovic and inform her that a process was required before this could be formally discussed with her. Instead, Dr Lucas informed Ms Jankovic of the provisional view of the Board, causing Ms Jankovic considerable distress at the news.

[205] While the news was swirling in Ms Jankovic’s head, she was rapidly wanting to know if the redundancy could be fast-tracked. I accept that this was a difficult discussion for both parties, however Dr Lucas had a responsibility under the Award which I do not think she appreciated at the time.

[206] At no time was Ms Jankovic provided with the written communication required by the consultation clause within the Award. Accordingly, I cannot be satisfied that the Respondent complied with the obligation in the Award that applied to Ms Jankovic to consult about the redundancy.

[207] As I am not satisfied that s.389(1)(b) of the Act has been met, the dismissal cannot be a genuine redundancy. Having reached such a conclusion, it is not necessary for me to determine if it would have been reasonable in all the circumstances for Ms Jankovic to be redeployed in the Respondent’s enterprise, however I consider it appropriate to do so.

s.389(2) – a person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within: (a) the employer’s enterprise; or (b) the enterprise of an associated entity of the employer.

[208] Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal.19

[209] In Hallam v Sodexo Remote Sites Australia Pty Ltd,20 a Full Bench of the Commission stated the following:

“…..Subsection 389(2) states that a person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed. Subsection 389(2) places no obligation on an employer to redeploy, or to do everything possible to achieve a redeployment outcome. The exception is applied at the time of dismissal. It operates so that a dismissal that would otherwise be a case of genuine redundancy under subsection 389(1) will not be so if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise, or with an enterprise of an associated entity of the employer.”

[210] As the Full Bench observed in TAFE NSW v Pykett,21 to show that it would have been reasonable for the Respondent to redeploy Ms Jankovic, it is not necessary to identify a particular job or position in which Ms Jankovic could have been redeployed. However, the Commission must be satisfied on the balance of probabilities, and based on the evidence, that there was a “job or a position or other work” to which it would have been reasonable to redeploy Ms Jankovic.

[211] The CCCM role is the only role relevant for consideration. I have considered all of the evidence of the parties and submissions made by each of them. Where there is a contest of facts between the evidence of Dr Lucas and Ms Jankovic, I prefer the evidence of Dr Lucas. I do not say so on the basis of credit, as I have no reason to doubt the credit of Ms Jankovic. I do, however, consider that Dr Lucas had more objectivity and clarity of thought when the discussion was held on 12 October 2021.

[212] Ms Jankovic was, understandably in a state of distress during the conversation with Dr Lucas. She was processing a significant event in her life, and she accepts that she sought to expedite the redundancy on account of her distress, how she would feel working for the remainder of the week, and she accepts that during this conversation she concluded, “This is a good development for the organisation.” Further, I accept that she said, “Yes, I guess with the team diminishing in size, you don’t need a Deputy Director any longer.” Ms Jankovic has now had time to process the dismissal and in bringing her unfair dismissal application, and now does not think it was a good development for the organisation.

[213] I accept that because the news was very sudden, Ms Jankovic said things to Dr Lucas she may not have said had she been afforded the opportunity to be given the news, in writing, of a definite decision to make her role redundant, and allowed the necessary time to consult.

[214] I am satisfied that Dr Lucas did refer to the CCCM role to Ms Jankovic during the 12 October 2021 meeting, and Ms Jankovic responded, “No….it is time to go.” Ms Jankovic accepted during the hearing that this was said in the context of the conflict she had with Mr E.

[215] The meeting was not a quick, five-minute meeting. It was for an extended period of time, and Dr Lucas was concerned enough to obtain the support and comfort of Ms Dunning on account of Ms Jankovic’s distress. Ms Dunning attended upon Ms Jankovic for a period of approximately 15 minutes where Ms Jankovic stated that she knew her role would not survive Dr Lucas’ review.

[216] Ms Jankovic had helped create the position description of the CCCM role. An email was sent to the team on 13 October 2021, announcing the role. Ms Jankovic’s evidence is that she did not read the email. Ms Jankovic was still an employee on this date and for a few more days. If she had been interested in the CCCM role which I accept was put to her for her consideration during the meeting of 12 October 2021, it was within her domain to hold discussions with Dr Lucas about her suitability for the role.

[217] I accept Dr Lucas’ evidence that she put the role to Ms Jankovic for consideration during the 12 October 2021 meeting, and she accepted that Ms Jankovic was not interested in the role and preferred to have the redundancy fast-tracked. Accordingly, she did not raise the matter for discussion again and in the termination letter dated 13 October 2021, referred Ms Jankovic to their previous discussion (the day before), and stated that there was no alternative position available for her. Ms Jankovic did not, on receipt of the termination letter, challenge Dr Lucas as to the discussion they were supposed to have had, or that she would like to be considered for the CCCM role. Ms Jankovic’s challenge to those two matters only arose in her unfair dismissal application.

[218] As to Ms Jankovic’s suitability for the CCCM role, I was disturbed with Ms Jankovic’s evidence given during the hearing that she considered she had suitable communication skills, but some parts of the role might need to be contracted out. The CCCM role is a high paying role and would, I expect, be required to be performed in full. The whole purpose of the organisational restructure was to reduce costs paid to contractors, casuals, and to better align roles, including a First Nations engagement role.

[219] Had Ms Jankovic not refused the CCCM role, it would have been necessary for the Respondent to turn its mind to whether Ms Jankovic could, in fact, perform the requirements of the role. I consider it would have been a relevant consideration the Board may have become involved in, and if Ms Jankovic had continued to express concerns about her thinking it was time to leave the organisation, there is no guarantee she would have been suitable to have been offered the role. It appears that Ms Jankovic’s issues with Mr E were not a secret, and if Ms Jankovic’s immediate reaction to learning her role was being made redundant was to express understanding, agreement and resignation to the decision, to then turn that around to enthusiastically embrace a brand new role would have been very difficult to achieve.

[220] For the above reasons, I am not satisfied that it would have been reasonable in all the circumstances for Ms Jankovic to have been redeployed within the Respondent’s business or any of its associated entities.

Conclusion on the issue of genuine redundancy

[221] The jurisdictional objection that the dismissal was a case of genuine redundancy requires two affirmative elements and one negatory element which must be satisfied, so as to establish whether a dismissal was or was not a case of genuine redundancy.

[222] For all of the reasons set out above I am not satisfied that Ms Jankovic’s dismissal was a case of genuine redundancy because:

  • While the Respondent no longer required Mr Jankovic’s job to be performed by anyone because of changes in the operational requirements of its enterprise; and
  • It would not have been reasonable in all the circumstances for Ms Jankovic to be redeployed within the Respondent’s enterprise or the enterprise of an associated entity; and
  • The Respondent did not comply with its obligation in the Award that applied to the employment to consult about the redundancy.

[223] The Respondent’s jurisdictional objection is dismissed.

Was the dismissal harsh, unjust or unreasonable?

[224] A dismissal may be unfair, when examining if it is ‘harsh, unjust or unreasonable’ by having regard to the following reasoning of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd:22

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[225] I am duty-bound to consider each of the criteria set out in s.387 of the Act in determining this matter.23

s.387(a) – whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)

[226] When considering whether there is a valid reason for termination, the decision of North J in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373 provides guidance as to what the Commission must consider:

“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, common-sense way to ensure that the employer and employee are treated fairly.”

[227] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.24

[228] I am satisfied that the Respondent no longer required Ms Jankovic’s job to be performed by anyone because of changes in the operational requirements of the enterprise. I am not satisfied that any part of the reason for the dismissal was to see Ms Jankovic removed in a ‘cleaning out’ as has been suggested. My view is if that had been the case, Ms Jankovic would have been instructed by the Board to find a way to end Ms Jankovic’s employment. On the evidence before the Commission, that has not been put to Ms Jankovic, and I consider the Board would not have hesitated when reviewing Dr Lucas’s proposal on 11 October 2021; instead it asked Dr Lucas to come back at a later time with more information around the proposal.

[229] Dr Lucas also formed the view that her discussions with Ms Jankovic in September 2021 produced a lacklustre response from Ms Jankovic, confirming her view that the role of Deputy Director was not required and duties performed by Ms Jankovic could be absorbed by others, including by Dr Lucas. I consider Dr Lucas’ assessment to be fair.

[230] The reason for Ms Jankovic’s dismissal was not related to her capacity or conduct. As such, this is a neutral factor with respect to whether Ms Jankovic’s dismissal was harsh, unjust or unreasonable.

s.387(b) – Whether the person was notified of that reason

[231] As Ms Jankovic’s dismissal did not relate to capacity or conduct, this is a neutral factor. I note, however, Ms Jankovic was notified of the reasons for the dismissal in the termination letter dated 13 October 2021.

s.387(c) – Whether there was an opportunity to respond to any reason related to the capacity or conduct of the person

[232] This criterion deals with procedural fairness in respect of a reason for dismissal related to an employee’s capacity or conduct. As Ms Jankovic’s employment ended by way of redundancy this is a neutral factor.

s.387(d) – Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal

[233] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.

[234] There is no positive obligation on an employer to offer an employee the opportunity to have a support person. The Explanatory Memorandum, Fair Work Bill 2008 (Cth) at [1542] states the following:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”

[235] In the circumstances, I find that the Respondent did not unreasonably refuse to allow Ms Jankovic to have a support person present at discussions relating to the dismissal on 12 October 2021, however I note that the meeting spontaneously became a meeting about the proposed redundancy.

s.387(e) – Was there a warning of unsatisfactory work performance before dismissal

[236] Ms Jankovic’s dismissal did not relate to unsatisfactory performance. This is a neutral factor.

s.387(f) – Whether the respondent’s size impacted on the procedures followed and s.387(g) – Whether the absence of a dedicated human resource management specialist impacted on the procedures followed

[237] The Respondent became a small business shortly before Ms Jankovic’s dismissal, having months earlier had just in excess of 15 employees. It did not have any internal human resource management expertise. I consider that the size of the business and its lack of internal expertise impacted on the procedures followed.

s.387(h) Other matters

[238] I am satisfied that the Respondent had a valid reason to dismiss Ms Jankovic having regard to its operational requirements. The valid reason was not related to Ms Jankovic’s capacity or conduct; it was nonetheless a bona fide reason. It is a consideration that tells against a finding that the dismissal was unfair.

[239] Dr Lucas was not ready to discuss the issue of redundancy with Ms Jankovic on 12 October 2021, however Ms Jankovic initiated the conversation and asked Dr Lucas a direct question. Dr Lucas told Ms Jankovic the truth; that her role was being contemplated for redundancy and a proposal had been put to the Board. She could have chosen to not properly answer the question, however she could see that Ms Jankovic was pained and expected a truthful answer.

[240] Upon learning that truth, the expected course of events was altered by the fact that Ms Jankovic asked that the proposed redundancy be expedited and she declared that it was time for her to go, which I accept was her expressing her views that it was appropriate that she depart the organisation, not the meeting itself.

[241] Following the meeting, Dr Lucas put all other commitments aside and tasked herself with effecting approval of the redundancy. This was something she was not expecting to do that day.

[242] A more rational course of action might have been to allow Ms Jankovic to work from home for the rest of the week without having to be present in the office, while time was taken to properly put to Ms Jankovic, in writing, the concept of the redundancy, approved by the Board, and to offer to Ms Jankovic some breathing space to determine if she wished to be considered for the CCCM role. Instead, all of the decision making was compacted into a very short space of time while individuals were under emotional pressure. I do note, however, that Ms Jankovic did not, in the days thereafter, seek to be considered for the CCCM role.

[243] Regrettably, the Respondent was of the view that it did not hold an obligation to consult with Ms Jankovic with respect to the redundancy on account of her being award-free. I have concluded that her employment was covered by the Award.

[244] I have also had regard for the fact that the dismissal was conducted in breach of the consultation provisions of the Award and that issue weighs heavily for a finding that the dismissal was harsh, unjust or unreasonable. The Respondent’s submission that complying with the Award by informing Ms Jankovic in writing of the redundancy and inviting consultation was futile is utterly rejected. It is a lawful requirement of the Respondent.

Conclusion

[245] The jurisdictional objection that the dismissal was a case of genuine redundancy requires two affirmative elements and one negatory element which must be satisfied so as to establish whether a dismissal was or was not a case of genuine redundancy.

[246] I have determined that the second affirmative element was not satisfied in this case. Specifically, the Respondent has not complied with an obligation in the Award that applied to Ms Jankovic’s employment to consult about her redundancy. Therefore, the dismissal did not satisfy the meaning of genuine redundancy as contained within s.389(1)(b) of the Act.

[247] It is necessary for the Commission to determine if the dismissal was consistent with the Code. As stated, the Code does not provide any relevant application in the instance of dismissal for redundancy, where the dismissal is not connected with any conduct, capacity or performance issues but instead arose from a financial imperative.

[248] Consequently, the jurisdictional objection have been determined and rejected, and consideration has turned to the substantive merits of the application. Having appropriate regard for the various factors contained within s.387 of the Act, I determine that Ms Jankovic’s dismissal on 15 October 2021 was unjust and therefore she has been unfairly dismissed. The primary reason for this is the failure to consult with Ms Jankovic as required by the terms of the Award.

[249] I have formed a view that had the Respondent consulted with Ms Jankovic over a period of one week from the date the definite decision was made to dismiss her on the grounds of redundancy, in those circumstances the dismissal would not have been harsh, unjust or unreasonable, and therefore not unfair.

Remedy

[250] Section 390 of the Act reads as follows:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.”

[251] Ms Jankovic is a person protected from unfair dismissal for the Act’s purposes and is a person who has been unfairly dismissed. Accordingly, I am empowered to exercise discretion as to whether she can be reinstated.

[252] I am satisfied that it is inappropriate to order reinstatement due to the size of the business, the roles available, Ms Jankovic’s incomplete skill-set for the CCCM role and her stated issues with Mr E.

[253] I now turn to consideration of compensation.

Compensation

[254] Section 392 of the Act provides:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

Authorities

[255] The approach to the calculation of compensation is set out in a decision of a Full Bench of the Australian Industrial Relations Commission in Sprigg v Paul’s Licensed Festival Supermarket.25 That approach, with some refinement, has subsequently been endorsed and adopted by Full Benches of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages inc T/A Ottrey;26 Jetstar Airways Pty Ltd v Neeteson-Lemkes27 and McCulloch v Calvary Health Care (McCulloch).28

[256] I have had regard to the above authorities, and I have considered the submission of each party.

The effect of the order on the viability of the respondent

[257] Having regard to the assets of the Respondent, I am satisfied that an award of compensation would not affect the viability of the Respondent’s enterprise.

The length of Ms Jankovic’s service

[258] Ms Jankovic had approximately 2.5 years’ service. This is not a long period of time.

The remuneration that Ms Jankovic would have received, or would have been likely to receive, if she had not been dismissed

[259] I am satisfied that had the Respondent consulted with Ms Jankovic as required by the Award, it would have properly and fairly determined to dismiss Ms Jankovic. I am satisfied on the evidence before me that Ms Jankovic would not have been employed in the CCCM role and she had stated during the meeting of 12 October 2021 that it was time to leave the business. Ms Jankovic accepted during the hearing that she used this expression in the context of Mr E’s impact upon her. I cannot accept Ms Jankovic’s submissions that she would have been employed in the CCCM role for a period of at least six months.

[260] In all of the circumstances, I consider that it would have been appropriate to consult with Ms Jankovic over a period of one week, given the size of the Respondent and the matters for consideration.

The efforts of Ms Jankovic (if any) to mitigate the loss suffered because of the dismissal

[261] I accept the news of the redundancy came as a shock to Ms Jankovic and she was not in a position to immediately look for other work. She later did and also engaged in contracting work with Mr Cox, not long after the dismissal.

The amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation

[262] Ms Jankovic earned sizeable remuneration in November and December 2021. It is a not a relevant consideration given I am satisfied that Ms Jankovic’s employment would have only lasted one week on account of the obligation of consultation.

[263] If, however, I had found that the employment would have continued throughout November and December 2021, it would have been necessary to make an appropriate deduction for the sums earned by Ms Jankovic in her contracting work.

The amount of any income reasonably likely to be so earned by Ms Jankovic during the period between the making of the order for compensation and the actual compensation

[264] This factor is not relevant in the circumstances of this matter.

Other relevant matters

[265] I have had regard to the fact that the Respondent paid to Ms Jankovic an amount of eight weeks’ severance pay equalling $23,672.48. This was taxed as a bona fide redundancy, with only a minute amount taxed, and the majority falling under the Australian Taxation Office’s tax-free threshold.

[266] On account of the Respondent being a small business at the time of Ms Jankovic’s dismissal, Ms Jankovic was not entitled to any redundancy pay at all. On account of her length of service, if the Respondent had not been a small business, she would have been entitled to six weeks’ redundancy pay. The Respondent chose to pay an additional two-week gratuity, but it had no obligation to make any payment to Ms Jankovic at all, other than for notice and annual leave accrual.

[267] The gross sum of $23,672.48 is, on Ms Jankovic’s calculations, equal to approximately 13.67 weeks’ pay having regard to usual taxation of wages. While eight weeks’ (almost) tax-free payment was made to her, it represents what she would have earned in 13.67 weeks if she had been taxed.

[268] I consider this to be a very generous payment by the Respondent to Ms Jankovic in all of the circumstances. Even if Ms Jankovic had been entitled to six weeks’ redundancy pay, and her consultation period would have been for a period of one week, I would have declined to have awarded Ms Jankovic compensation on account of the additional two-week payment made to her by the Respondent.

Misconduct reduces amount

[269] Section 392(3) of the Act requires that if the Commission is satisfied that the misconduct of a person contributed to the employer’s decision to dismiss the person then the Commission must reduce the amount it would otherwise order by an appropriate amount on account of the misconduct.

[270] The section requires that consideration be given by the Commission, amongst other things, as to whether a person’s misconduct contributed to the decision to dismiss an employee even if the Commission has found that there was no valid reason for the person’s dismissal. However, if there was no valid reason for the dismissal that may be relevant to the Commission’s decision as to the appropriate amount by which the amount of compensation should be reduced.29

[271] I do not find that Ms Jankovic engaged in any misconduct that would reduce the amount to be awarded to her.

Shock, distress etc. disregarded

[272] I confirm that any amount ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to Ms Jankovic by the manner of the dismissal.

Compensation Cap

[273] As is evident below, the compensation cap is not in issue.

Payment by instalments

[274] This is not a relevant consideration.

No order of compensation

[275] I have determined that the generous payment by the Respondent to Ms Jankovic exceeds the amount of one weeks’ pay representing a period for consultation I would have ordered. Accordingly, I decline to make an order of compensation to Ms Jankovic.”

Jankovic v Logan Child Friendly Community Limited (2022) FWC 1108 delivered 23 June 2022 per Hunt C