Employer maintains redundancies due to store closure
The Fair Work Commission (FWC) recently dealt with unfair dismissal claims from two workers who argued they were abruptly dismissed when their workplace became entangled in a dispute between its directors, who were ending their marriage.
The workers claimed they received no warning or chance to respond before their termination.
While the employer maintained the dismissals were genuine redundancies due to a store closure, the case revealed how personal relationships and business decisions can significantly impact employment rights and obligations.
The dispute arose from a 4WD parts and accessories business operating two stores on the NSW north coast.
After the marriage between the directors ended in early 2024, the husband removed his wife as a director - an action she claimed was fraudulent. This sparked a chain of events that divided the business operations.
Initially, both stores operated under the same company through a franchise arrangement. In February 2024, the wife demanded either a buyout of her shares and control of one store or the appointment of an administrator.
The situation led to an unofficial split where staff aligned with the wife, including her daughter and her daughter's de facto partner, worked at one location while the husband managed the other store.
The daughter served as a part-time salesperson and store manager, while her partner worked as a full-time salesperson and manager while completing a mechanic apprenticeship. Both were responsible for handling cash and electronic payments from customers.
By mid-May 2024, the husband, as sole director, claimed no money was being banked into the company accounts despite ongoing business operations and new parts orders.
He said the business was paying wages and ordering stock but receiving no income from the store.
The situation deteriorated when the husband sent a message to staff saying:
"Unfortunately, due to [the ex-wife] diverting all money from work being completed... into her own personal bank account, and not that of the Business account (stealing), I am forced to put the following option to you... Should you decide you wish to continue to work in the long term for [the company]... you will be expected to either continue this from [the other] store."
The ex-wife replied with a counter-message to staff:
"On the advice of my solicitor and accountant yesterday afternoon I set up a company to direct the money that customers are paying into a business account to try and keep us going until court day. This money will cover invoices e.g. cash payments to [suppliers], fuel for forklift and the wages while fair work investigates [the director] if he continues to not pay us."
On May 27, 2024, the husband closed the store by changing the locks. The same day, both workers received termination letters and filed workers' compensation claims.
The letters cited the store's closure as the reason for termination, offering two weeks' pay in lieu of notice.
The FWC found that while closing the store provided a valid reason for the dismissals, the process failed to meet fair dismissal requirements. The Commission stated:
"[The employer] through [the director] should have taken the time to give [the workers] a reasonable opportunity to respond to [the director's] concerns about the viability of the store."
Despite the challenging circumstances, the Commission emphasised that procedural fairness remained necessary:
"I am deeply sceptical about whether giving this opportunity would have made any difference to the circumstances at the store, but [the director] should have nonetheless provided [the workers] with this opportunity."
The Commission concluded: "Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. The question whether to order a remedy remains a discretionary one."
Considering that both workers had been receiving workers' compensation benefits since their dismissal, the Commission determined a limited compensation was appropriate.
Each worker received 24 hours' pay as compensation - the female worker received $960 plus superannuation based on her $40 hourly rate, while the male worker received $1,080 plus superannuation based on his $45 hourly rate.
