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How $80 lead to a successful unfair dismissal claim

Submitted on Wednesday, 6th June 2018

The Fair Work Commission (“Commission”) has recently determined that an employee who had an $80 weekly allowance revoked has been unfairly dismissed.

The employee, who was employed in late-2011 in a warehouse/forklift driver role, was informed the allowance would no longer be paid as of 27 September 2017.

The employee started receiving the weekly payment in mid-2013 and continued to do so until 27 September 2018. The employee asserted he was assigned the position of metro supervisor and received the payment in recognition of additional duties and responsibilities. The business confirmed the employee was continuously paid $80 per week from mid-2013 until September 2017. However, the business argued the payment and additional duties did not amount to a promotion but reflected a temporary arrangement.

In September 2017, the business sent correspondence to the employee withdrawing the payment stating, “the allowance you currently receive for the fill in supervisor position will cease as of Wednesday 27 September 2017”.

In a subsequent conference call on 20 September 2017 with the HR and compliance Manager and Melbourne depot manager, it was reiterated to the employee would no longer receive the payment or be required to perform supervisory duties. The employee was also informed a new employee would perform the supervisory duties.

Whilst the business conceded a decision was made without consulting with the employee, it objected to the unfair dismissal claim arguing the employee had not been dismissed. The Commission rejected this argument noting “there is no documentary evidence or persuasive oral evidence...which supports…the contention that this was to be a temporary arrangement”. To the contrary, the Commission found that the payment, and the employee’s readiness to perform supervisory duties, extended throughout the whole period for which the payment was made and he “was reasonably entitled to expect that the arrangement would continue into the future”.

The Commission therefore found the discussion on 20 September 2017, which resulted in this employee’s weekly wage being reduced by slightly more than 9%, amounted to a significant reduction in remuneration and/or duties.

In line with section 386 of the Fair Work Act 2009 (Cth), “a demotion in employment which does not involve a significant reduction in an employee’s remuneration or duties is not a dismissal within the meaning of the Act”. Noting the significant reduction, the Commission determined the demotion amounted to a dismissal. The Commission labelled the reasons relied upon by the business for its decision-making as “generalised, non-specific and ultimately not a valid reason” to dismiss the employee.

The Commission found, amongst other reasons, the dismissal was unjust because the reasons had not been identified to the employee prior to the decision being made and because the employee did not have an opportunity to make correction to the behaviour the business was allegedly concerned about.

The Commission acknowledged the employee did not trust the business to any appreciable extent and expects the alleged inappropriate conduct of the employee as referenced by the business, would continue if he was reinstated.

Unsatisfied there would be a “sufficient level of trust and confidence restored to make the employment relationship viable and productive”, the Commission determined in all the circumstances it would be inappropriate to reinstate the employee.

The Commission awarded the employee $5,136 in compensation, applying a $500 discount to reflect the employee’s failure to mitigate his loss by seriously considering the proposal put forward by the business to return to a forklift operator/truck driver role.

As demonstrated in this case, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly. Attend our Managing Termination, Redundancy and Unfair Dismissals training to increase your knowledge of the dismissal process, including what constitutes a significant reduction in an employee’s remuneration or duties. This course also provides invaluable information regarding counselling and discipline processes, and how to best manage an unfair dismissal claim.

Written by Benjamin CironaWorkplace Relations Advice Line Advisor

Fair Work Commission Decision [2018] FWC 2560

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