Amy-Leigh Perry v Far West HACC Services Inc T/A Far West HACC Services [2018] FWC 1497

1 Fair Work Act 2009 s.394—Unfair dismissal Amy-Leigh Perry v Far West HACC Services Inc T/A Far West HACC Services (U2017/12223) SENIOR DEPUTY PRESIDENT HAMBERGER SYDNEY, 20 MARCH 2018 Application for an unfair dismissal remedy – Fair Work Act 2009 (Cth) s.385(c) – Small Business Fair Dismissal Code – valid reason for dismissal – respondent held the belief that the applicant’s conduct sufficiently serious– belief held on reasonable grounds – investigation conducted – dismissal consistent with Small Business Fair Dismissal Code – dismissal not unfair – application dismissed. [1] Ms Amy-Leigh Perry (the applicant) has applied under s.394 of the Fair Work Act 2009 (Cth) (the FW Act) for an unfair dismissal remedy against her former employer, Far West HACC Services Inc. (the respondent). [2] The respondent objected to the application for unfair dismissal on the basis that it is a small business, and the dismissal was consistent with the Small Business Fair Dismissal Code. Background [3] The applicant was employed as the respondent’s office manager until she was summarily dismissed on 26 October 2017. The respondent is an incorporated not-for-profit association that provides home maintenance, transport and social support services to various disadvantage groups in the local community.1 [4] Prior to being promoted to this role on 8 February 2012, the applicant was employed as an administration assistant in the Maintenance and Modifications area of the respondent’s business, commencing her employment on 19 August 2008.2 [5] The applicant was a senior member of staff and part of the management team.3 The applicant’s role required her to keep accurate records of monies received and make deposits into relevant bank accounts, inputting cash received into the respondent’s Quickbooks accounting computer program.4 [6] The applicant was dismissed without notice after the respondent uncovered a number of accounting irregularities. These irregularities resulted in the loss of a significant amount of [2018] FWC 1497 DECISION -- 1 of 8 -- [2018] FWC 1497 2 money. The respondent formed the view that, at the very least, the applicant had been grossly negligent in performing her duties and that this conduct amounted to serious misconduct. The evidence [7] This matter was heard in Broken Hill on 13 February 2018. The applicant represented herself, and the respondent was represented by Mr A Doyle of the Australian Federation of Employers and Industries. [8] At the hearing, the respondent tendered:  the witness statement and further witness statement of Ms Marion Browne, Chairperson and Board Member, and annexures relevantly including the ‘Audit Review Cash Transactions’ auditors report dated 24 September 2017 and spreadsheet;5  the witness statement of Mr Brian Slater, Board Member;6 and  the witness statement of Mr Tony Casey, Manager of Home Maintenance and Modifications.7 [9] The applicant tendered her own statement of evidence which referred to a number of attachments, including inter alia:  ‘Audit Review Cash Transactions’ report from the external auditor dated 24 September 2017;  a letter dated 29 September 2017 from the respondent to the applicant outlining the allegations made against her, directing her to attend a meeting on 3 October 2017, and advising that the applicant was ‘being stood down on full pay… until the conclusion of this matter’;  a letter dated 23 October 2017 from the respondent to the applicant outlining the findings of the auditor’s report and directing her to attend a further meeting on 25 October 2018, inviting the applicant to show cause why her employment should not be terminated for serious misconduct; and  a letter dated 26 October 2017 from the respondent to the applicant terminating her employment without further notice.8 [10] All of the witnesses appeared before the Fair Work Commission to give evidence and were cross-examined. The legislation [11] It is not in dispute that the applicant is a person protected from unfair dismissal.9 I am satisfied that she is so protected. [12] Section 385 of the Act provides: ‘385 What is an unfair dismissal A person has been unfairly dismissed if the FWC is satisfied that: (a) the person has been dismissed; and -- 2 of 8 -- [2018] FWC 1497 3 (b) the dismissal was harsh, unjust or unreasonable; and (c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and (d) the dismissal was not a case of genuine redundancy. Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.’ [13] It is agreed that the applicant was dismissed from her employment with immediate effect on 26 October 2017 and neither party contended that the dismissal was a case of genuine redundancy. Accordingly, ss.385(a) and (d) of the FW Act are satisfied. [14] The respondent submitted that the applicant’s dismissal was consistent with the Small Business Fair Dismissal Code.10 [15] It is not in dispute that at the time of the applicant’s dismissal, the respondent had 8 permanent employees. Therefore, the business was a small business as defined by s.23 of the FW Act. [16] The Small Business Fair Dismissal Code was declared by the Minister for Employment and Workplace Relations on 24 June 2009. It relevantly provides: ‘Summary Dismissal It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.’ [17] In John Pinawin T/A RoseVi.Hair.Face.Body v Domingo11 (Pinawin), the Full Bench set out a two-step test to determine if an employer had complied with the summary dismissal aspect of the Code: ‘There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.’12 [18] The respondent submitted that the applicant’s dismissal was consistent with the Small Business Fair Dismissal Code because the applicant’s conduct constituted ‘serious -- 3 of 8 -- [2018] FWC 1497 4 misconduct’.13 The respondent submitted that at the time of her dismissal it believed that, at the very least, the applicant had been grossly negligent in performing her duties, which in turn had caused a loss of approximately $10,000. The respondent asserted that the negligence was sufficiently serious to warrant immediate dismissal. Consideration The applicant’s conduct [19] In August 2017, the applicant took a period of annual leave, in which time another employee carried out some of the applicant’s duties, including performing cash reconciliations.14 The employee undertaking this task discovered a number of discrepancies in the recording of cash transactions, including that significant amounts of cash had not been deposited into bank accounts and, where cash had been banked, the deposits were often less than that which was recorded as banked.15 The employee also noticed that cash received was often not recorded in Quickbooks and was not deposited into bank accounts.16 [20] On 21 September 2017, an audit of the respondent’s finances was conducted by an external auditor.17 On 24 September 2017, Ms Browne received the auditor’s report.18 The audit reviewed the respondent’s cash handling procedures and audited cash transactions for the period 1 July 2017 to 21 September 2017. The auditor’s report found a number of discrepancies in the period from February to September 2017 and identified: ‘1. HHM Account …numerous occasions where cash receipts have not been banked. Most have not been entered into Quickbooks. We have attached our worksheet which reveals approximately $5264 has been withheld from the bank account. 2. CT Account …numerous occasions where cash receipts have not been banked. Most have not been entered into Quickbooks. We have attached our worksheet which reveals approximately $4014 has been withheld from the bank account. 3. Admin We did not find any discrepancies in this account. 4. Seniors Lounge Account – There was one receipt 13264 dated 20/07/2017 deposit $779. Has not been deposited or entered into Quickbooks.’19 [21] The auditor’s report concluded: ‘Our work has found that cash receipts totalling $10057 have not been deposited into FWHACC’s bank accounts. Although we cannot be certain (sic) but the evidence implicates Amy Perry. Amy is the person who has been preparing banking and entering receipts into Quickbooks. -- 4 of 8 -- [2018] FWC 1497 5 We would however, recommend that the board interview all staff involved in the receipting of cash to determine their involvement in the receipting of cash, banking deposits and entering into Quickbooks…’20 [22] By letter dated 29 September 2017, the respondent advised the applicant that $10,057 was missing from three accounts that she was responsible for managing. The respondent alleged that she had failed to discharge her responsibilities in relation to recording cash transactions and depositing cash, and that if the allegations were substantiated, this would constitute serious misconduct, which may result in disciplinary action up to and including dismissal.21 The applicant was directed to attend a meeting on 3 October 2017. The letter further stated: ‘… before a decision is made we would like to give you the opportunity to respond to our allegations and also to provide any information you may have to assist in locating and recovering the missing funds.’22 [23] Following the 3 October 2017 meeting, the respondent sent the applicant a further letter dated 23 October 2017, which relevantly stated: ‘On Tuesday 3 October 2017, we met with you and your chosen support person, providing you with an opportunity to respond to the allegations and to provide an explanation for the missing funds. You responded by denying having misappropriated the funds, but acknowledging that you have been performing your duties poorly over the last few months and that you do not know where the funds have gone.’23 [24] The letter concluded by stating that the respondent had considered the applicant’s responses together with all available evidence and found: ‘…you have been negligent in relation to the performance of your accounting duties in a manner that amounts to serious misconduct.’24 [25] The applicant was invited to a further meeting on 25 October 2017 to ‘show cause’ why her employment should not be terminated on the basis of serious misconduct. [26] Ms Browne gave evidence in her witness statement that at the meeting she asked the applicant if she had any explanation about the missing funds described in the correspondence that had been sent to her.25 Ms Browne’s evidence is that the applicant responded ‘…by saying “I have no explanation”’. 26 At the hearing, the applicant said that she could not explain where the money was and therefore could not offer an explanation.27 When asked to give an explanation at the hearing, the applicant said: ‘Without any knowledge - recollection of this exact occurrence, I can't say with any certainty how or why this happened, but I know at the time I was distracted, I wasn't focusing. … I'm not going to offer an explanation, because I don't remember, but knowing that I didn't deliberately - I haven't done this deliberately. The only thing I can say is that I have made a mistake.’28 [27] During cross-examination, the applicant was taken to the auditor’s report and spreadsheet. She confirmed she had previously been provided a copy of that report and had an opportunity to examine it.29 The applicant agreed that there were a number of discrepancies -- 5 of 8 -- [2018] FWC 1497 6 in the accounts, amounting to a loss of over $10,000.30 She also agreed that it was her job to maintain the respondent’s accounts and to provide accurate financial reports to the board.31 [28] The applicant gave evidence that she was ‘struggling’ and ‘overwhelmed’, was doing reconciliations a few weeks at a time, rather than each week, and would use bank statements to reference the receipts to be entered, which she knew was ‘not the correct procedure’.32 When asked why she did not alert anyone that she was having problems, the applicant replied, ‘I suppose embarrassment. I didn’t want to admit that I couldn’t do my job.’33 [29] Ms Browne also gave evidence that: ‘At no time during the meetings on 29 September 2017 or 3 and 25 October or throughout the investigation process did Amy raise her alleged mental illness as an explanation for discrepancies or a reason as to why she should not be terminated.’34 [30] Further, Ms Browne states that it was only on 1 September 2017, after the applicant became aware of the discrepancies, that the applicant had sent Ms Browne a text message stating that her ‘work [had] been gradually slipping’ on account of her mental health.35 Whether the respondent held a belief that the applicant’s conduct was sufficiently serious to justify immediate dismissal [31] The respondent submitted that at the time of the dismissal, it believed that the applicant’s conduct ‘was at the very least grossly negligent’ and that ‘such negligence was sufficiently serious to justify immediate dismissal, given the discrepancies were recurring and significant in value’.36 [32] In relation to the first step of the Pinawin test, I accept that at the time of dismissal, Ms Browne (acting on behalf of the respondent) believed that the applicant’s actions were sufficiently serious to justify immediate dismissal. The uncontested evidence is that the applicant was responsible for all accounting processes and thus responsible for the loss incurred by the respondent.37 Given that the applicant was solely responsible for these accounts, it was reasonable for the respondent to believe that the applicant had been grossly negligent in performing her duties and that such conduct was of a sufficiently serious nature. On the balance of probabilities, I find that Ms Browne held the requisite belief at the time of the applicant’s dismissal, as evidenced by the letters sent to the applicant prior to her dismissal and in the letter terminating her employment. Whether the respondent’s belief was based on reasonable grounds [33] The second step of the Pinawin test requires that the belief held be based on reasonable grounds. In order to satisfy the second limb of the test, the respondent is required to have carried out a reasonable investigation. In this case, the respondent carried out a thorough investigation with the assistance of an external auditor. The auditor’s report made clear that the available evidence implicated the applicant. Following the auditor’s report, the applicant was afforded an opportunity to respond to the allegations and to provide information about the discrepancies and missing funds at the meetings on 3 and 25 October 2017. She provided no satisfactory explanation. Ms Browne also gave evidence that shortly after receiving the auditor’s report; she continued her investigation by speaking with two other members of the administrative team.38 I find that in engaging an external auditor and by Ms -- 6 of 8 -- [2018] FWC 1497 7 Browne conducting her own enquiries, the respondent carried out a reasonable investigation. Taking into account that the respondent carried out a reasonable investigation, I find that the respondent’s belief that the applicant had at the very least been grossly negligent in relation to managing the respondent’s accounts was based on reasonable grounds. While the auditor’s report states that it was not ‘certain’ that the applicant was responsible for the loss of $10,057, it is not necessary for me to determine whether this belief was correctly held.39 As such, I make no finding about the applicant’s culpability. Conclusion [34] I am satisfied that the dismissal was consistent with the Small Business Fair Dismissal Code. Therefore, the applicant was not unfairly dismissed, because s.385(c) of the FW Act is not satisfied. It is not necessary to consider s.385(b) of the FW Act. [35] The respondent’s jurisdictional objection is therefore upheld. The application for an unfair dismissal remedy is dismissed. SENIOR DEPUTY PRESIDENT Appearances: A Perry, the applicant, in person. A Doyle, of AFEI, for the respondent. Hearing details: Broken Hill. 2018. February 13. Printed by authority of the Commonwealth Government Printer <PR601129> 1 Exhibit 1, [9]. 2 Exhibit 1, [13]-[21]. 3 Exhibit 1, [17]. 4 Employer Response to Unfair Dismissal Application (Form F3), [2]. -- 7 of 8 -- [2018] FWC 1497 8 5 Exhibit 1 and exhibit 2. 6 Exhibit 3. 7 Exhibit 4. 8 Exhibit 5. These documents were also tendered as annexures to Exhibit 1. 9 Fair Work Act 2009 (Cth) s.382. 10 Respondent’s outline of submissions, [1]. 11 [2012] FWAFB 1359, [29]. 12 Ibid. 13 Respondent’s outline of submissions, [3], [12]-[19]. 14 Employer Response to Unfair Dismissal Application, [4]. 15 Ibid, [5]. 16 Ibid. 17 Exhibit 1, [33]. 18 Ibid. 19 Ibid, annexure E. 20 Ibid. 21 Ibid, annexure G. 22 Ibid. 23 Ibid, annexure H. 24 Ibid. 25 Ibid, [92]. 26 Ibid, [93]. 27 PN243. 28 Ibid. 29 PN210-215; PN235. 30 PN219-220. 31 PN249-254. 32 PN275. 33 PN286. 34 Exhibit 1, [108]. 35 Ibid, [109] and annexure L. 36 Respondent’s outline of submissions, [16]-[17]. 37 PN222-224. 38 Exhibit 1, [43]. 39 John Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359, [29]. -- 8 of 8 --