Worker claims he suffered financial hardship due to improper dismissal process
The Fair Work Commission (FWC) recently dealt with an unfair dismissal case that highlights the complexities workers and employers face during company liquidation.
The worker argued he was unfairly dismissed without proper notice, despite years of service. He sought compensation, claiming the dismissal caused financial hardship and was carried out improperly.
The case raises important questions about employee rights and employer obligations during times of financial distress.
Employer’s financial difficulties and insolvency
The case involved a worker employed at a stud farm for approximately four years before being dismissed on 3 April 2024. The employer, facing financial difficulties, was in the process of being wound up due to insolvency.
On 28 March 2024, the worker was directed to vacate the stud and remove all personal belongings. He was also told to return work equipment, including vehicle keys, horse ID cards, and the employer's debit card.
Following these events, the worker moved to his parents' home in Geelong, about four hours away from the stud, as he was unsure if the employer would cover nearby hotel accommodation costs.
The worker no longer had access to the equipment needed to perform his job duties after 31 March 2024. On 31 May 2024, an application was filed with the Supreme Court of Queensland to wind up the employer's business due to insolvency.
The court issued an order on 6 August 2024 for the company to be wound up, appointing a liquidator for this purpose.
Dismissal claim proceeds despite liquidation
Despite the employer's liquidation, the FWC determined that the unfair dismissal claim could proceed. The Commission explained that its proceedings are not considered "court proceedings" under the Corporations Act 2001, allowing the case to continue without court permission.
The FWC said: "[The Commission] can continue dealing with [the worker's] application for an unfair dismissal remedy without the leave of the court. This is because s 471B of the Corporations Act 2001, which deals with a compulsory winding up in insolvency or by the court, applies to court proceedings. The Commission is not a court."
The liquidator did not appear at the remedy hearing, stating that the liquidation was unfunded. However, they did provide written submissions for the Commission to consider.
Worker’s compensation amid liquidation
The FWC's task was to determine a suitable remedy for the unfair dismissal. Reinstatement was ruled out as the worker didn't seek it and the company was being wound up. The Commission then focused on calculating appropriate compensation.
In doing so, the FWC looked at several factors, including how long the worker would likely have stayed employed if not dismissed, the pay he would have received during this time, his efforts to find new work, and any income earned since the dismissal.
The Commission decided that if the dismissal hadn't happened, the worker would have stayed employed for only 1.5 more weeks. This was based on the evidence that the worker had been told to leave the stud and return work equipment shortly before being dismissed.
The FWC said: "I estimate that had [the worker] not been dismissed on 3 April 2024, he would have continued to be employed by [the employer] for a further period of 1.5 weeks, to 13 April 2024 (inclusive)."
The FWC's compensation calculation included the estimated 1.5 weeks of lost wages and an amount equal to the notice period in the worker's employment contract. The Commission explained:
"[The worker] was dismissed without notice nor payment in lieu of notice, which pursuant to his contract of employment would otherwise have been a period of one month."
The final compensation order was $5,769.24 gross, plus $158.65 in superannuation. The FWC said:
"I am satisfied that the above analysis takes into account the matters set out in s 392(2) of the Act, and the compensation that I have determined is, appropriately, neither excessive nor inadequate having regard to all the circumstances of the application."
This case shows that unfair dismissal claims can go ahead even when a company is in liquidation. It also highlights that employers should follow proper procedures and honour contract terms, like notice periods, even when facing financial troubles.
