Angela Curley v Worldsbackpack.com T/A 5 Dogs Franchise [2021] FWC 4834

1 Fair Work Act 2009 s.394—Unfair dismissal Angela Curley v Worldsbackpack.com T/A 5 Dogs Franchise (U2020/11953) DEPUTY PRESIDENT LAKE BRISBANE, 6 AUGUST 2021 Application for an unfair dismissal remedy – jurisdictional objection – applicant resigned –– no final outcome – not forced to resign by the Respondent - application dismissed. [1] Ms Angela Curley (the Applicant) has made an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that the way in which her employment ended with Worldsbackpack.com T/A 5 Dogs Franchise (the Respondent / 5Dogs) constituted a dismissal, and was harsh, unjust or unreasonable. [2] The Applicant commenced employment with the Respondent on around 1 March 2019. She says she was notified on 17 August 2020 that her employment would come to an end on 23 August 2020. The Respondent raised a jurisdictional objection to the application on the basis that the Applicant was not dismissed, but rather had voluntarily resigned on 10 August 2020. [3] It is not in dispute that the application was made within time, that the Applicant is a person protected from unfair dismissal, that the Small Business Fair Dismissal Code does not apply and the dismissal did not involve a genuine redundancy.1 These matters were not in dispute and I find that the preliminary issues set out in s.396 of the Act are satisfied. [4] The pertinent question is whether the Applicant was dismissed within the meaning of the Act, in circumstances that constituted constructive dismissal. The Applicant also raised in their submissions, arguments which go to the merits of the dismissal. These were not considered for the purpose of this Decision, given its jurisdictional scope. [5] Directions were set for the filing of material and the matter was dealt with by way of hearing on 28 June 2021. The Applicant sought to be represented by Mr Dryley-Collins (solicitor) and Mr Heffernan (industrial advocate) from Supportah Operations, while the Respondent sought be represented by Mr Cooper (workplace consultant) from Mapion. 1 Fair Work Act 2009 (Cth) s.396. [2021] FWC 4834 DECISION -- 1 of 11 -- [2021] FWC 4834 2 [6] Granting permission to be represented under s 596 requires the satisfaction of two elements. 2 The first pre-requisite: the presence of one of the criteria under s 596(2), does not immediately invoke the right to representation and establishing satisfaction “involves an evaluative judgment akin to the exercise of discretion.”3 Once that first step is satisfied, the second step “involves consideration as to whether in all of the circumstances the discretion should be exercised in favour of the party seeking permission.”4 [7] Given the contested nature of the facts I determined that to elicit the requisite evidence that representation would be of assistance. Further, given some of the allegations made by the Applicant against Mr Robert Hueston, the owner and director of the Respondent, I was satisfied that it was appropriate for the representatives to cross-examine the witnesses and make submissions. Relevant Facts [8] The Applicant contends that she did not resign, but rather that she was terminated. The Applicant maintains that her employment was ended on 23 August 2020 by the conduct of the Respondent. The Applicant further states that the Respondent did not have a valid reason to dismiss her and that the dismissal was harsh, unjust and unreasonable. [9] The Respondent refutes the Applicant’s version of events and contends that the Applicant resigned of her own initiative and that she was not dismissed. Applicant’s Evidence [10] The Applicant states that during her employment she reported directly to Mr Hueston. She performed the duties of an Area Manager for 5Dogs, which was the active business that Mr Hueston operated with his business partners. [11] On 3 August 2020, Mr Hueston informed the Applicant that there was a meeting that she had to attend with him at the 5Dogs Mt Gravatt store. The Applicant attended the meeting with Mr Hueston, and in the early afternoon, they were joined by Mr Michael Cassidonis, Mr John Nikolaidis (John) and Mr Kostantinos Nikolaidis (Kostantinos). John led the meeting, which the Applicant says was about her and her employment. She states that John asked many questions about her experience in hospitality and gave her an ‘ultimatum’ that she would need to decide by 1 January 2021 to either take a pay cut of $30,000 in a different role focused upon compliance or to manage the 5Dogs Loganlea store and build the business to sell as a franchise. [12] The Applicant stated that she was not given any opportunity to respond or give any input. She recalled that at the end of the meeting John told her words to the effect of, “Don’t worry, we feel that you’re part of the family. We’ll give you a good deal on the next franchise.” [13] Following the meeting, the Applicant says it was clear to her that the role she currently occupied was not going to exist after 1 January 2021. 2 Wellparks Holdings Pty Ltd t/as ERGT Australia v Mr Kevin Govender [2021] FWCFB 268. 3 Asciano Services Pty Ltd v Zak Hadfield [2015] FWCFB 2618, [19(3)]. 4 Wellparks Holdings Pty Ltd t/as ERGT Australia v Mr Kevin Govender [2021] FWCFB 268, [48]. -- 2 of 11 -- [2021] FWC 4834 3 [14] On 10 August 2020, the Applicant wrote to Mr Hueston in the following terms: “Dear Rob, The past few months have been very challenging for me as an Area Manager. I came on board with you 18 months ago and am proud to have assisted you with your goal of getting 5dogs to where we are today, and subsequently this is turning to my goal too. You know I am passionate, driven and a hard worker. I have integrity and respect from all staff’s members. Communication is a fundamental part of a successful business, and I feel this is one area where we need to improve. As you are aware, the meeting last week on the 3rd August 2020 was unprofessional and I feel I was blindsided. I know this was not your fault as you indicated you were not aware of the nature of the agenda of the meeting. Regardless, I feel the matters I have brought to your attention have gone unnoticed. You hear what I have to say, and you don’t take in board the issues I’ve raised. Consequently, I have decided to move over to the Logan store, build the business up and then sell it as per discussions during out meeting on the 3rd August. I’ll start at the Loganlea store full time from Monday 24/08/2020 as the Venue Manager and I will refer any suppliers for any other store (other than Loganlea) from this date. As I’ll only be managing 5Dogs Loganlea effective as of the 24th August 2020, I will be removing my name and details from the Food Safety License and Liquor Licensee at 5Dogs Toowong from this date forward. It is with sadness and regret that I step back from my current role as an Area Manager to focus and grow the Loganlea store. However, I look forward to working with you and your team in the business and in any future projects you wish to undertake. Yours Sincerely, Angela Curely” [15] The Applicant contends that she did not intend to resign and did not feel that the language in the letter indicated that she wished to resign. [16] The Applicant initiated a meeting at Mr Hueston’s residence, at which she handed him the letter. She says he read it and shrugged. The Applicant then went to work. From 14 August 2020, the Applicant noticed that she was no longer able to access a number of the Respondent’s administration systems (which she used in the normal course of her work) and notes that the wage she received had changed. [17] On 17 August 2020, she received an email from Mr Hueston in which he claimed that he was accepting her resignation effective 24 August 2020. [18] On 18 August 2020, the Applicant replied stating that she had not resigned. -- 3 of 11 -- [2021] FWC 4834 4 [19] On 23 August 2020, the Applicant received a further email from Mr Hueston that referred to her as a “former employee” and requested that she no longer talk with employees of 5Dogs. [20] The Applicant received a further email from Mr Hueston sometime between 18 and 23 August 2021. That letter referred to her letter dated 10 August 2020 and her email dated 18 August 2020 and claimed to be accepting her resignation. Upon receiving that letter from Mr Hueston, the Applicant understood that as of 23 August 2020, she would no longer be employed. Respondent’s Evidence [21] The Respondent operates a business as a food vendor selling hotdogs, they have four locations, being Fortitude Valley, Loganlea, Toowong and Mt Gravatt in Brisbane. Mr Hueston has an interest in each of the operations. The Applicant was employed by the Respondent, full-time as an Area Manager working from the Mount Gravatt operation. [22] The Respondent agrees that on 3 August 2020, Mr Houston, the Applicant, Mr Cassadoni, Kostantinos and John had a meeting. However, the Respondent’s evidence – based on the testimony of John, Kostantinos and Mr Hueston – was that this meeting was to discuss proposed plans for the future of the 5Dogs business which included the divestment of the current ownership and a move towards a franchise model. It was accepted that John led the meeting. The Respondent’s evidence was that John indicated that, at the request of the equity partners, he had investigated what would be required to transition to a franchising business model. He had met with lawyers in Adelaide and discussed with them what would be required to make such a move. During this presentation, he advised the Applicant that she had several options as an equity partner and an employee of Worldbackpack.com, should the franchising model come to fruition. The options included her selling her 50% stake in the 5Dogs Loganlea operation, purchasing the operation as a franchisee or taking up a new role in the yet to be established corporate office. Should she be interested in the latter option, there would be further discussions at a later date. [23] The Respondent’s witnesses stated that all these discussions were expressed as hypothetical. That is, if a decision was made to franchise, then the following options would be available to the Applicant. However, all the Respondent’s witnesses stated that no decision to go through with the franchise had, at the that time, been made. [24] Further, the Respondent submits that no decisions were made regarding employment options at the meeting. The Respondent contends that, at the conclusion of the meeting, the Applicant thanked John for sharing the proposed plans. None of the attendees at that meeting received any further communication from the Applicant until 3 August 2020, when Mr Hueston received what he understood to be a notice of resignation. [25] Mr Hueston confirmed that, on 10 August 2020, the Applicant visited his personal residence. His evidence was that she informed him that she was leaving her employment to focus on the growth of 5Dogs Loganlea and handed him the letter. Following this exchange, Mr Hueston decided to remove her email access and treat her as an employee who had resigned. -- 4 of 11 -- [2021] FWC 4834 5 Legislation and Case Law Meaning of dismissed [26] Section 386 of the Act provides that: “(1) A person has been dismissed if: (a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or (b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.” [27] Section 386 of the Act has created a clear “bifurcation in the definition of ‘dismissal’ and has created two clear grounds on which a claim could potentially proceed.5 The Full Bench in City of Sydney RSL & Community Club Ltd v Balgowan provided clarity as to these two distinct grounds: “[9] The distinction between a dismissal falling under s.386(1)(a) and one falling under s.386(1)(b) is sought to be explained in the Explanatory Memorandum to the Fair Work Bill 2008 as follows: “Clause 386 – Meaning of dismissed 1528. This clause sets out the circumstances in which a person is taken to be dismissed. A person is dismissed if the person’s employment with his or her employer was terminated on the employer’s initiative. This is intended to capture case law relating to the meaning of ‘termination at the initiative of the employer’ (see, e.g., Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200). 1529. Paragraph 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Conduct includes both an act and a failure to act (see the definition in clause 12). 1530. Paragraph 386(1)(b) is intended to reflect the common law concept of constructive dismissal, and allow for a finding that an employee was dismissed in the following situations: ● where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or ● where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.” 5 Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941, [47]. -- 5 of 11 -- [2021] FWC 4834 6 [10] It seems clear from the above that the concept of constructive dismissal is to be accommodated by s.386(1)(b) and that concept is not subsumed in s.386(1)(a). [11] Section 386(1)(a) seems plainly to be intended to capture the case law determining the meaning of termination (of the employment relationship) at the initiative of the employer. In Mohazab the Court considered that the expression “termination at the initiative of the employer” was: “. . . a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘‘termination of employment.’’ [12] Importantly, in Mohazab the Court did not decide that the termination of employment in that case was at the initiative of the employer because there had been a constructive dismissal. Indeed, the Court expressly observed that it was “. . . unnecessary to consider whether the facts fall within or without the notion of constructive dismissal.” [13] As s.386(1)(b) is intended to capture or reflect the common law concept of constructive dismissal and as the Commissioner concluded that “the applicant was constructively dismissed” because she had accepted the Appellant’s repudiation of the contract of employment and thereby brought the contract and the employment under it to an end, we consider that when read in its entirety the Commissioner concluded that the Respondent had been dismissed within the meaning of s.386(1)(b) of the Act.” 6 [28] In Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli, the Full Bench expanded on the content of the two limbs: “[47] Having regard to the above authorities and the bifurcation in the definition of “dismissal” established in s.386(1) of the FW Act, we consider that the position under the FW Act may be summarised as follows: (1) There may be a dismissal within the first limb of the definition in s.386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a 6 City of Sydney RSL & Community Club Ltd v Balgowan [2018] FWCFB 5, [9]-[13] (Balgowan). -- 6 of 11 -- [2021] FWC 4834 7 reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer. (2) A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable (sic) result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element.” 7 (emphasis added) [29] Mohazab v Dick Smith Electronics (No 2) is foundational when considering what is classified as a ‘forced resignation’.8 There it was stated: “In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.” 9 (emphasis added) [30] In Bupa Aged Care v Tavassoli, the Full Bench helpfully expounded on Mohazab: “[31] The approach taken in Mohazab that a termination of employment at the initiative of the employer could be constituted by a “forced” resignation was followed in numerous decisions made in respect of the various iterations of the termination of employment scheme in the Workplace Relations Act 1996. These decisions most notably include Rheinberger v Huxley Marketing Pty Limited and O’Meara v Stanley Works Pty Ltd. In the former decision, the Industrial Relations Court (Moore J) referred to Mohazab and said: “However it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer’s conduct.” 7 Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941. 8 Mohazab v Dick Smith Electronics (No 2) (1995) 62 IR 200. 9 Mohazab v Dick Smith Electronics (No 2) (1995) 62 IR 200, 205-206 (Mohazab). -- 7 of 11 -- [2021] FWC 4834 8 [32] In the latter decision a Full Bench of the Australian Industrial Relations Commission said: “[23] ... It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.” [33] Notwithstanding that it was clearly established, prior to the enactment of the FW Act, that a “forced” resignation could constitute a termination of employment at the initiative of the employer, the legislature in s.386(1) chose to define dismissal in a way that retained the “termination at the initiative of the employer” formulation but separately provided for forced resignation. This was discussed in the Explanatory Memorandum for the Fair Work Bill…” 10 (emphasis added). [31] The onus to prove that a resignation was not voluntary and formed a constructive dismissal lies with the employee alleging constructive dismissal occurred.11 Case law regarding constructive dismissal has established that the line distinguishing conduct which leaves an employee no real choice but to resign, from an employee resigning at their own initiative is a narrow one, which must be “closely drawn and rigorously observed.”12 Construction of ‘forced’ [32] The decision of Senior Deputy President Richards in Megna v No 1 Riverside Quay (SEQ) Pty Ltd provides instruction on how to interpret “forced”: [14] It seems that the term “forced” is the past tense of the verb form “to force”, and as such, an understanding of the plain meaning of the term “force” is relevant to applying s.642(4). [15] Relevantly, the Macquarie Dictionary defines “force” as: … strength or power exerted upon an object; physical coercions; violence … power to influence, affect or control; power to convince … to compel; constrain or oblige (oneself or someone) to do something … to bring about or effect by force; bring about of necessity or as a necessary result … to put or impose (something) forcibly on or upon a person … to press, urge or exert to violent effort or to the utmost … 10 Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941. 11 Australian Hearing v Peary [2009] AIRCFB 680 (Giudice J, Kaufman SDP, Larkin C, 28 July 2009) at [30]. 12 Doumit v ABB Engineering Construction Pty Ltd Print N6999 (AIRCFB, Munro J, Duncan DP, Merriman C, 9 December 1996). -- 8 of 11 -- [2021] FWC 4834 9 [16] The term “force” appears to encompass both the application of physical power to directly achieve a result and the actions of a person to persuade or otherwise convince another for the same purpose. In either case, there is an important element of compulsion present. [17] In the contextual circumstances now before the Commission, the issue is whether the Applicant herself is able to demonstrate:  That she did not voluntarily resign her position or employment;  But that her employer, because of its actual conduct, forced her to do so, such that there was an element of compulsion present.” 13 (emphasis added) No effective or real choice but to resign [33] In determining whether the Applicant was left with “no effective or real choice but to resign”, there are numerous case law examples from which to draw. In Boulic v Robot Building Supplies, it was held: “From the many authorities on this subject it appears that there must be a “critical action” or “critical actions” of the employer which was intended to bring the “employment relationship” to an end and perhaps action which would on any reasonable view probably have that effect. In identifying both the critical action of the employer and its intent “it is a matter of objectively looking at the employer’s conduct as a whole and determining whether its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it.” The examination of the employer’s conduct must also take into account that the employer is under an implied obligation that it “will not without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.” 14 [34] In Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaide Riviera, Senior Deputy President O’Callaghan stated that there must be consideration of all alternative options available to the employee.15 Consideration [35] Following the meeting of 3 August 2020, it is clear that the Applicant was deeply concerned about her future. She seems to have understood that her current role would be non- existent by January 2021 if the franchising arrangement occurred. In her mind, she was thus forced to choose one of the options put to her by John. None of those options seemed amenable to her. Rather, she considered that she should move full-time to the Loganlea store, which she partially owned, and attempt to grow that business. This had not been proposed by John at the meeting, nor was it raised with anyone else prior to the Applicant indicating that this was her plan in the letter of 10 August 2020. 13 PR 973462, 11 August 2006. 14 Boulic v Robot Building Supplies [2010] FWA 6905, [16]. 15 Bruce v Fingal Glen Pty Ltd T/A Comfort Inn Adelaide Riviera [2013] FWC 3941, [28]. -- 9 of 11 -- [2021] FWC 4834 10 [36] That letter indicated that the Applicant would “be stepping back” from her current role to work full-time at the Loganlea store. While the Applicant did not expressly state that she was resigning from her current role, it clearly and unambiguously communicates that she would no longer perform the duties of her current role. She also indicated that she would take her name off the Food Safety and Liquor Licence of the Toowong store. Thus, the words in the letter implied her resignation. [37] Had the Applicant instead written her concerns and attempted to engage with Mr Hueston regarding options moving forward, there may have been a different result. However, unfortunately she did not do so but instead indicated that she was leaving the role in her letter of 10 August 2020. [38] It is perhaps telling that at the time of receiving the Applicant’s letter on 10 August 2020, Mr Hueston took no steps to clarify with the Applicant that the franchising arrangement itself had not yet been decided upon and therefore that the Applicant’s current role was not at risk and that it would not be so, unless and until it had been decided that the franchising arrangement would be embarked upon. That is, that the franchising arrangement was still hypothetical. Mr Hueston also did not seek to inform the Applicant that she could not invent a new role for herself at Loganlea, nor could she draw a particular salary from that business, without his agreement. She simply did not have the authority to unilaterally do so. One would have thought that a reasonable business partner and employer may have seen the confusion or misapprehensions within the Applicant’s letter and sought to clarify her position. Mr Hueston did not do so. He simply let her continue under her misimpression or fear of future events. [39] I have also considered whether this was a case of a forced resignation. Taking into account all of the circumstances and evidence in this matter, I am also not satisfied that the Respondent’s actions left the Applicant no option but to resign. The Applicant was part of a meeting that indicated that the Respondent was seriously considering a change to its business model. I accept that the discussions regarding what the new model could look like and the recognition that there was work to be done to prepare for the transition, was followed by a conversation regarding the Applicant’s situation as an employee. The potential options outlined to her were far from a finished plan that was being implemented. Rather, it was a discussion about what steps would need to be taken to move to the franchised model and the options that would be available to her, should that decision eventually be made. No final decisions had been made and in fact there was a good deal of work and preconditions to be met prior to the plan becoming definite. For example, each of the stores had to become profitable (which was not then the case), manuals had to be written, a franchising agreement to be developed. Even if a preliminary timetable for implementation was agreed to be January 2021, it could not be viewed as a concrete or definite plan. Participating in an information session, though clearly somewhat worrying for the Applicant, does not meet the test of the Applicant being forced to resign because of conduct or a course of conduct engaged in by the Respondent. The Applicant was entirely capable of seeing out the process, if indeed the franchising arrangement was embarked upon at all. [40] It appears that the Applicant of her own volition – albeit pre-empting a potential future event – decided to initiate a plan to leave her current role and work in the business in which she had equity. She thought that this gave her more security in the short terms and a greater benefit in future if she could build the business up and sell it as a franchise under the new model. -- 10 of 11 -- [2021] FWC 4834 11 [41] Consequently, for the reasons set out above, I am not satisfied that the Applicant was dismissed from her employment within the meaning of s.386 of the Act. Rather, by her letter dated 10 August 2020, she removed herself from her employment. I therefore lack the jurisdiction to consider the merits of the application. [42] Accordingly, I order that the application be dismissed. DEPUTY PRESIDENT <PR732574> -- 11 of 11 --