Employer argues dismissal caused by financial difficulty
The Fair Work Commission (FWC) recently dealt with an unfair dismissal case that highlights the complexities surrounding employee terminations and redundancy claims.
A worker challenged his dismissal, arguing it wasn't a genuine redundancy but rather retaliation for his complaints about unpaid wages and superannuation.
The case brings to light important issues about employee rights, proper dismissal procedures, and the responsibilities of employers, especially in small businesses facing financial difficulties.
Dismissed due to genuine redundancy or retaliation?
The worker, a construction estimator, was employed by a small construction company from October 2022 to April 2024. During his employment, he made several complaints about late wage payments and unpaid superannuation contributions.
The worker said he was threatened with dismissal on three occasions when he pursued these complaints, specifically in May 2023, November 2023, and April 2024.
In April 2024, the employer ended the worker's employment. The worker received a termination letter stating the company was undergoing restructuring to ensure sustainability. The letter, provided in English without a Mandarin translation, gave the worker two weeks' notice.
The worker contested this, arguing that his dismissal was not a genuine redundancy but retaliation for his complaints about unpaid wages and superannuation.
Could no longer afford worker’s salary
The employer, represented by the company director, said that the dismissal was necessary because the company could no longer afford the worker's salary. The director said a dispute with a builder over unpaid work had led to financial problems.
The worker presented evidence that shortly after his dismissal, the company had advertised for a new estimator position. This advertisement, he argued, contradicted the employer's claim that his position was no longer needed due to financial difficulties.
The worker also pointed out that he had found new employment within a week of his dismissal, but at a significantly lower salary. His previous role paid $135,000 per year, while his new job paid $70,000 per year.
Is it a genuine redundancy?
The FWC examined whether the dismissal was a genuine redundancy as defined by the Fair Work Act 2009. The Commission found that the main element of redundancy - that the job was no longer required to be performed by anyone due to changes in operational requirements - had not been met.
The FWC noted:
"The overall circumstances suggest that on 8 April 2024, [the director's] threats came to fruition, with [the worker] being dismissed at least partly in retaliation for having made the complaints that he did."
The Commission also considered whether the dismissal was harsh, unjust, or unreasonable. In its assessment, the FWC found:
"I find that [the worker's] dismissal was harsh, unjust and unreasonable. It was harsh since the termination did not need to take place when it did, even viewed through a prism that [the employer] faced financial pressures which required addressing. It was unjust as it was implemented without regard to [the worker's] workplace rights in respect of payment of superannuation. His dismissal was unreasonable since, to the extent that [the employer's] finances played any operative part in the decision to dismiss, there was no attempt to discuss any alternatives with [the worker]."
The FWC decided that reinstatement was not appropriate due to the strained relationship between the parties and the company's potentially worsened financial position.
Instead, the Commission awarded compensation. In calculating the compensation, the FWC used the "Sprigg formula," which involves estimating the remuneration the worker would have received if not dismissed, deducting any earnings since termination, and considering other relevant factors.
The Commission's reasoning for the compensation amount was explained as follows:
"Because of this I am satisfied that the compensation to be ordered by me is proportionate to the circumstances of the case. In this regard, I consider the total quantum to be appropriate, with no deductions either for efforts to obtain further employment, or post-termination earnings."
The final order required the employer to pay the worker $8,366 in wages (subject to taxation) and $920 in superannuation within 14 days of the decision.
