Annette Maglovski v Neirbo Real Estate Pty Ltd T/A Homes Group Estate Agents [2018] FWC 3402

1 Fair Work Act 2009 s.394—Unfair dismissal Annette Maglovski v Neirbo Real Estate Pty Ltd T/A Homes Group Estate Agents (U2017/9547) DEPUTY PRESIDENT MASSON MELBOURNE, 28 JUNE 2018 Application for an unfair dismissal remedy - small business employer – compliance with Small Business Fair Dismissal Code. Introduction [1] Ms Annette Maglovski (the Applicant) commenced employment with the Neirbo Real Estate Pty Ltd T/A Homes Group Estate Agents (the Respondent) on 30 November 2015, initially as an administration assistant and was subsequently appointed as a Property Management Associate on attaining the necessary qualifications. She was dismissed by the Respondent on 24 August 2017 due to serious misconduct. At the time of her dismissal, the Applicant’s weekly gross wages were $742.90. [2] The cited reason for the dismissal was that the Applicant breached The Estate Agent’s (Professional Conduct) Regulations 2008 by allowing tenants to take occupancy of a rented property without providing an amount of one month’s rent as the security deposit (bond). [3] On 1 September 2017, the Applicant made an application pursuant to s 394 of the Fair Work Act 2009 (the Act) for a remedy in respect of her dismissal by the Respondent. The application indicated that the date that the Applicant’s dismissal took effect was 24 August 2017. [4] On 7 September 2017, the Respondent filed a response to the unfair dismissal application. In its response, the Respondent raised a jurisdictional objection to the application, that being the Respondent was a small business and that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code). [5] The Respondent declined to participate in conciliation and the matter was listed for hearing on 22 February 2018. That proceeding was subsequently adjourned and the matter was ultimately listed before me on 1 June 2018. The Hearing [2018] FWC 3402 DECISION -- 1 of 16 -- [2018] FWC 3402 2 [6] At the Hearing, the Commission sought submissions from the parties as to whether the Commission should conduct either a conference (s 398) or a hearing (s 399) in relation to the matter. Taking into account the number of witnesses and the parties wishes, it was decided that a conference would be the most effective and efficient way to conduct the matter. [7] At the conference the Applicant was self-represented and gave evidence on her own behalf. Mr Matthew O’Brien appeared for and gave evidence on behalf of the Respondent. Initial matters to be considered [8] I am required by s 396 of the Fair Work Act 2009 (Cth) (the Act) to decide four matters before I consider the merits of the application. There is no dispute between the parties and I am satisfied on the evidence that: (a) The application was made within the period required by s 394(2) of the Act; (b) The Applicant was a person protected from unfair dismissal; and (c) The Applicant’s dismissal was not a case of genuine redundancy. [9] I will now turn to consider whether the Respondent was a “small business employer” as defined in s 23 of the Act and, if so, whether the Applicant’s dismissal was consistent with the Code. Small Business Fair Dismissal Code [10] Section 388 of the Act provides: “388 The Small Business Fair Dismissal Code (1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code. (2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if: (a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and (b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.” [11] Section 23 of the Act provides a definition of a “small business employer” for the purpose of the Act. Relevantly, s 23(1) provides that a “national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time”. [12] For the purpose of calculating the number of employees employed by the employer at a particular time: -- 2 of 16 -- [2018] FWC 3402 3 (a) all employees employed by the employer at the time (including the dismissed employee who has made the unfair dismissal application) are to be counted subject to the caveat that a casual employee is not to be counted unless, at the time, he or she has been employed by the employer on a regular and systematic basis (ss.23(2) & (4) of the Act); and (b) associated entities are taken to be one entity (s.23(2) of the Act). The expression associated entity has the meaning given by section 50AAA of the Corporations Act 2001 (Cth) (Corporations Act). [13] Mr O’Brien gave evidence that he was the sole director and owner of the business1 and that there were 11 employees including the Applicant at the time of the dismissal.2 He gave further evidence that there were no associated entities to the business.3 The Applicant did not challenge Mr O’Brien’s evidence. [14] I am satisfied that there are no associated entities and that the Respondent employed 11 employees as at 24 August 2017. Accordingly, immediately before the time of the Applicant’s dismissal, the Respondent was a ‘small business employer’ within the meaning of the Act. [15] Having determined that the Respondent was a “small business employer” within the meaning of the Act as at 24 August 2017, it is necessary for me to now consider and determine whether the Applicant’s dismissal was consistent with the Code. Applicant Case [16] The Applicant gave evidence that she was at the relevant time the designated property manager of 1/90 Theodore St, St Albans (the Property)4 for which an exclusive leasing and managing authority (the Exclusive Managing and Leasing Authority) had been entered into between the Respondent and the owners of the Property.5 She gave further evidence that in her role she reported to three senior staff: (a) Mr Matthew O’Brien, Owner and Principal; (b) Ms Emma Dang, Senior Property Manager; and (c) Mr Dalibor (Danny) Trkuljka, General Manager. [17] The Applicant stated that when entering into a lease of a property it was necessary for the property manager to obtain a bond from the new tenants at the time of signing the lease.6 She acknowledged the importance of obtaining a bond, having undertaken training for her property agent qualification and Mr O’Brien having strongly emphasised the importance of obtaining the bond.7 The Applicant was in no doubt as to the importance placed by the Respondent on obtaining a bond at the time of signing a lease.8 [18] The Applicant conceded that in completing the schedule of lease for the Property (the Schedule of Lease) dated 3 March 20179 with the new tenants, she had not obtained the bond and noted on the signed document that the bond was “pending”. She could not recall whether the bond was subsequently paid.10 The Applicant stated that she could not recall why the bond -- 3 of 16 -- [2018] FWC 3402 4 was not collected at the time of the Schedule of Lease being signed, but believed that she would not have signed off on the Schedule of Lease for the Property without payment of the bond unless she had secured approval from the General Manager, Mr Trkulja. [19] The Applicant was certain that she would have spoken with Mr Trkulja regarding the issue of the bond for the Property at the time, but was not categorical. The following testimony is relevant: “MS MAGLOVSKI: And I'm going by memory now because this was six months prior and I don't know what happened with the bond. There's some statements there that I don't agree on, but I would never - without my general manager, because that's who we had to go to, general manager or senior property manager, which was Emma Dang, I cannot make no changes to the bond. Obviously they haven't paid, they didn't put money for the bond, but without their approval, I wouldn't have been able to write "pending". The mistake I probably did was not get Danny Trkulja to put his initials there. THE DEPUTY PRESIDENT: Is that your initial where it says "signed by the landlord agent"? MS MAGLOVSKI: Yes, that is. THE DEPUTY PRESIDENT: Is that your writing next to "$1820 paid to the agent and lodged with RTBA"? MS MAGLOVSKI: Yes. THE DEPUTY PRESIDENT: You have written on the lease form and the bond hasn't been collected? MS MAGLOVSKI: That's right. Now, in saying that, Deputy President, they already had occupancy two days before and started moving their belongings. THE DEPUTY PRESIDENT: I know that's your evidence and Mr O'Brien will have an opportunity to talk to that evidence. I am just going on the formal documentation at this stage and that is I'm trying to establish that the lease document was signed by you, there was an amendment made to the bond section, but the bond wasn't collected? MS MAGLOVSKI: That's correct. THE DEPUTY PRESIDENT: Are you able to explain why it wasn't collected? MS MAGLOVSKI: I honestly don't recall why it wasn't collected. I know they were saying that they were going to go through - and this is going by Mr O'Brien on the day of when he was talking to me on the 24th about getting the security bond from the government to help them out - I've gone blank - I don't even know what it's called now. But, in saying that, I can't recall why the bond wasn't received that day, but I can recall and I can - I've done hundreds of - you know, a few of these lease agreements where I would be signing, for example, my general manager or my senior property manager would say, you know, "This new tenant from this particular property is -- 4 of 16 -- [2018] FWC 3402 5 coming in, sign their lease agreement, get their bond", so I've always collected the bond because I know how important that is and Mr O'Brien, I will admit, stressed that all the time, that the bond is really important. In saying that, I don't - I can't recall why they didn't have a bond, but I am certain that I would have gone up to Mr Trkulja and told him, "Their bond isn't here, what should I do?" and he would have told me to just write "pending" on the lease agreement and that they would come in, they were tenants from a previous address and…”11 [20] The Applicant denied the alleged misconduct of leasing the Property without securing the bond on the grounds that she claimed the Property had already been effectively handed over to the tenants. She claimed that Mr Trkulja had given the keys to the Property to the new tenants on 1 March 2017. This was before the Applicant met with the tenants on 3 March 2017 to sign the Schedule of Lease for the Property. To support this assertion, the Applicant tendered as evidence, a text message she claimed to have received from one of the tenants of the Property that indicated that they (the tenants) had already received the keys from Mr Trkulja on 1 March 2017.12 [21] The Applicant acknowledged that as the real estate agent’s representative for the Property, she had an obligation to advise the Respondent’s officer in effective control (OIEC) of any breach of the landlord’s requirements.13 She claimed, however, that she was not sure who the OIEC was after a Mr Brad Carlin Smith had left the organisation and she was not aware that Mr O’Brien was the OIEC.14 She further claimed that she thought Mr Trkulja was the OIEC but wasn’t sure. [22] The Applicant gave evidence that on her return from annual leave on 24 August 2017, she was summonsed into a meeting with Mr O’Brien at approximately 9.30am and was questioned regarding the lease of the Property in March 2017. The Applicant claimed that during the meeting she was unable to recall events or answer many of Mr O’Brien’s questions as she was not provided with an opportunity to access her computer and work diary at the time. At the conclusion of the meeting, Mr O’Brien advised the Applicant that she was to be dismissed. A letter of termination dated 24 August 2017 was subsequently provided to the Applicant.15 The letter of termination outlined the reasons for termination on the grounds of serious misconduct as follows: “……….. You have breached The Estate Agents (Professional Conduct) Regulations 2008, by way of serious misconduct with relation to the leasing of the property 1/90 Theodore Street, St Albans. You allowed tenants to take occupancy of the property without payment of the amount of one month’s rent as the security deposit. This was not in the best interests of the landlord and was done without my approval. This was also against written instructions from the landlord to the company contained in the authority to manage, which was signed by you. You are also of full knowledge that I would NOT allow a tenant to lease a property without paying a bond, as we have discussed on numerous occasions. -- 5 of 16 -- [2018] FWC 3402 6 The tenants involved in the lease of the before mentioned property state that one of them was approved by the Director of Housing for part payment towards bond, however you declined to accept this and advised that they return to the Director of Housing and the tenants state that you gave advice to re-apply stating only two of the three occupants named on the lease resided at the property named on the lease resided at the property and that they would certainly be granted a full bond from the Director of Housing. Annette you conduct with relation to the leasing of the property at 1/90 Theodore Street, St Albans is of serious nature, as a agent you firstly do not act outside of the landlords instructions and breach the Estate Agents Act, Residential tenancies Act or The Estate Agents (professional Conduct) Regulations, further more you do not give advice, offer suggestions to customers on how to misuse Government Agencies. Your conduct is of a serious risk to the reputation of Homes Group Estate Agents and we consider that your actions constitute serious misconduct warranting summary dismissal. …….” [23] The Applicant also stated that she believed that her termination stemmed from her pregnancy and that Mr O’Brien’s attitude towards her changed to her detriment following her advising Mr O’Brien of her pregnancy in February 2017.16 Respondent Case [24] Mr O’Brien gave evidence that the Applicant had been dismissed on 24 August 2017 for serious misconduct in that she had allowed tenants to enter into the Schedule of Lease for the Property without securing a bond.17 In doing so, she acted contrary to the Exclusive Managing and Leasing Authority entered into with the Property owner18; was in breach of the Homes group estate agents Residential Tenancy Agreement19; and breached the Applicant’s obligations to Mr O’Brien, as the licenced real estate agent and the OIEC, to report that no bond had been collected from the tenants prior to entering into the Schedule of Lease for the Property. [25] Mr O’Brien also relied generally on the Applicant’s breaches of the Estate Agents Act 198020, the Estate Agents (Professional Conduct) Regulations 200821 and Residential Tenancies Act 199722 as founding the basis for the Respondent’s findings of serious misconduct and dismissal of the Applicant. In his evidence23, Mr O’Brien specifically referred to s 21 of the Estate Agents (Professional Conduct) Regulations 2008 which provides as follows: “21 Good practice of agents’ representatives (1) An agent’s representative must exercise all due skill, care and diligence in performing his or her functions as agent representative. (2) An agent’s representative must not engage in conduct that is unprofessional or detrimental to the reputation of the estate agency industry. -- 6 of 16 -- [2018] FWC 3402 7 (3) An agent’s representative must complete all work on behalf of a principal as soon as reasonably possible. (4) Unless a landlord otherwise instructs in writing, an agent’s representative who is acting for or on behalf of a licensed estate agent managing a rental property, must promptly notify the landlord of the property of any breach of the tenancy agreement in relation to the property. ………….” [26] Mr O’Brien gave evidence that the Applicant was well aware of her legal obligations and the importance that he placed on the securing of a bond prior to allowing tenants to commence a lease. Mr O’Brien stated that he had specifically raised with the Applicant the bad practices of other agents with respect to their failure to collect bonds. The following exchange during the Conference is relevant: “MS MAGLOVSKI: But in saying that, he has stressed out - he has stressed how important it is for a bond, but as far as training, there was no training. MR O'BRIEN: Could I clarify that? THE DEPUTY PRESIDENT: Yes. MR O'BRIEN: That date that you referred to, Deputy President, is in relation to a transfer of management from another agency where the agent's representative of that organisation on the transfer documents had just written the words "no bond" with no reason as to why there was no bond. THE DEPUTY PRESIDENT: Yes. MR O'BRIEN: I had at one point in time worked for that agency, but the tenancy that was transferred was not a tenancy that I had been involved in. THE DEPUTY PRESIDENT: Right. MR O'BRIEN: And I explained the importance of agents who have bad practices in their business of not following through to Ms Maglovski on that day. The property agent that was the transferring agent to us was also the previous managing agent of Ms Maglovski's partner's four investment properties, so that's why I recall explaining to her extremely sternly what (name redacted) from (name redacted) in St Albans had and was doing was against legislation, against owners' instructions and against the Residential Tenancies Act. So I had explained to her all details to why. THE DEPUTY PRESIDENT: Ms Maglovski, you say you don't have any recollection? MS MAGLOVSKI: I recall that conversation. I didn't realise that that was a training, but I do recall - that's why I say he has stressed - - - -- 7 of 16 -- [2018] FWC 3402 8 THE DEPUTY PRESIDENT: Sorry, I characterised it as "training", I apologise, it was more the instruction or the information that was being provided to you to stress the importance of the appropriate recovery of bond prior. MS MAGLOVSKI: Yes, he has, yes.”24 [27] Mr O’Brien rejected the Applicant’s evidence that she had obtained the approval of Mr Trkulja to allow the tenants to commence the lease without obtaining a bond and that Mr Trkulja had given the keys to the new tenants of the Property prior to the lease being entered into. Mr O’Brien further stated that regardless of Mr Trkulja’s conduct, the Applicant was required to advise Mr O’Brien of any breach of the tenancy agreement and she failed to do this. The following exchange during Mr O’Brien’s evidence is relevant: “THE DEPUTY PRESIDENT: Ms Maglovski says that the keys were given to the tenants prior to her completing the lease form. Is that correct, to your knowledge? MR O'BRIEN: It's not correct to my knowledge, Member, and if it was correct, Ms Maglovski, on 3 March 2017, should have brought that to my attention. THE DEPUTY PRESIDENT: So if it were correct, what action would have been taken against the person who handed the keys across prior to the bond being received? MR O'BRIEN: I would have taken disciplinary action against that person. THE DEPUTY PRESIDENT: Did you investigate that complaint? MR O'BRIEN: Yes, I have. THE DEPUTY PRESIDENT: And what was the response of the individual? MR O'BRIEN: It's been declined by Mr Trkulja, who Ms Maglovski has said had given the keys. THE DEPUTY PRESIDENT: Unfortunately, he's not here for me to test that, but that seems to be at the core of Ms Maglovski's case, that she was, she says, not authorised but she was advised by - her words, not yours - the general manager that the keys had already been given to the tenants. You say that's not correct? You say that's not correct? MR O'BRIEN: That's not correct, but I'm also saying that Ms Maglovski had a duty, as an agent's representative, to advise the officer in effective control who is responsible for the conduct of the proprietary limited company and the corporate licence of the estate agent's estate agency that there had been a breach in the landlord's requirements, which was that a bond would be taken. She had the instruction from the landlord. She has then altered a lease agreement with the word "pending" and she hasn't brought it to the officer in effective control.”25 [28] Mr O’Brien gave evidence that he became aware of the failure of the Applicant to obtain a bond for the Property during the Applicant’s period of annual leave in August 2017 when an issue of rent arrears arose with respect to the Property. On retrieving the Property file -- 8 of 16 -- [2018] FWC 3402 9 to prepare for the commencement of legal proceedings in the Victorian Civil and Administrative Tribunal (VCAT), Mr O’Brien identified that there was no official bond receipt from the Residential Tenancy Bond Authority (RTBA). [29] Mr O’Brien gave further evidence26 that following his check of the Property file, he conducted an investigation of the matter prior to the Applicant’s return from annual leave on 24 August 2017 which included the following steps: (i) Logging onto the RTBA website as an agent and confirming by an electronic search that there was no record of a bond having been lodged for the Property by the Respondent or by the tenants; (ii) Printing off and checking the entire bond ledger for the Respondent, which confirmed that of the 482 bonds submitted by the Respondent to the RTBA, a bond had not been submitted for the Property; (iii) Reviewing past financial transactions which confirmed that a personal cheque had not been used and subsequently dishonoured; (iv) Making direct contact with the RTBA which confirmed that no bond had been lodged; (v) Contacting the Respondent’s auditor to advise of a bond discrepancy, consistent with Mr O’Brien’s obligation as the OIEC for the Respondent ; (vi) On the auditor’s instructions, transferring an amount of $1820.00 from the Respondent’s general account to the trust account; (vii) Advising the Property owner of the breach of the tenancy agreement; and (viii) Contacting the tenants who advised Mr O’Brien that the Applicant had told them on the day of signing the lease that the Department of Human Services would pay the bond on their behalf. [30] Mr O’Brien gave evidence that on the Applicant’s return from annual leave, he met with her on the morning of 24 August 2017 and sought an explanation from her as to why she had marked Item 10 Bond on the Schedule of Lease as “pending” and had not collected the bond. Mr O’Brien in his evidence described the meeting in the following terms: “MR O'BRIEN: So I asked Ms Maglovski to come into my office and close the door to discuss the situation of 1/90 Theodore Street and that there was no bond held with the RTBA. Ms Maglovski came in and I showed her the lease agreement and asked her what the word "pending" meant and what that was to be understood as. I then discussed with Ms Maglovski that the tenants had stated that she had told them to go back to the Ministry of Housing because only one tenant had been approved for - - - THE DEPUTY PRESIDENT: I am going to give you the same warning at this stage. That's hearsay. -- 9 of 16 -- [2018] FWC 3402 10 MR O'BRIEN: I understand that's hearsay, but I'm saying that she's stating that she was not allowed the opportunity to go through her phone or emails. THE DEPUTY PRESIDENT: Right. MR O'BRIEN: She never asked for an opportunity. When I said that it was a serious matter - - - THE DEPUTY PRESIDENT: Ms Maglovski, you may disagree. You will have an opportunity to respond - okay. MR O'BRIEN: When I said it was a serious matter, her behaviour was that, you know, "So am I sacked, are you sacking me for this?" She'd asked that question repetitively and I said, "I want to know what the word 'pending' means, Annette; I want to know why you would have allowed someone to move into a house or being in a house and not have a bond and not have come and told me; this is serious." I explained to her the seriousness of it that our landlords expect us to do what we're told to do by our landlords and by the Act. She kept saying to me, "Am I sacked, so are you sacking me for this, am I sacked?" I was honestly just looking for why you'd done it; is there a conspiracy in my business; are there other staff members involved in this? And she couldn't give answers. In the end, I said, "Well, Annette, it is serious, I will have to let you go based on this" because I couldn't get honest answers from her, I couldn't get any answers. She didn't tell me at that point in time, "Oh, the tenants were already living there", and I'm finding it………”27 [31] Mr O’Brien stated that he regarded the Applicant’s conduct as constituting serious misconduct due to - the Applicant’s breach of the Exclusive Managing and Leasing Authority; her breach of her legal obligations as an estate agent’s representative; financial loss to the Respondent’s business; regulatory compliance; reputational and business risk to the Respondent that flowed from the Applicant’s conduct. Findings [32] It was not contested and I am satisfied that the Applicant was well aware of the importance of obtaining a bond from tenants on entering into lease agreements, both from her training and through Mr O’Brien having emphasised its importance with staff and the Applicant specifically. I am also satisfied that real estate agent representatives have specific obligations and duties under the relevant legislation and regulations governing their conduct, of which the Applicant was trained and fully aware. [33] I am further satisfied that the Applicant amended the Schedule of Lease on 3 March 2017 for the Property to indicate that payment of the bond was “pending”. In doing so the Applicant had – breached the Exclusive Managing and Leasing Authority entered into by the Respondent with the Property owner; breached ss 23 (1), (2), (3) and (4) of the Estate Agents (Professional Conduct) Regulations 2008; subsequently failed to advise the Respondent’s OIEC of the breach, exposed the Respondent to financial loss, regulatory compliance breach, business and reputational risk through her conduct. [34] The Applicant and Respondent provided conflicting evidence as to whether the Applicant’s conduct of allowing the tenants to take occupancy of the Property without -- 10 of 16 -- [2018] FWC 3402 11 providing a bond was authorised by the Respondent’s Mr Trkulja. Mr O’Brien was adamant that he had questioned Mr Trkulja about the Applicant’s claim that he (Mr Trkulja) had authorised the conduct and which he denied. The Applicant expressed the view that she would not have engaged in the conduct without first obtaining approval from Mr Trkulja, but could not say with certainty that she had obtained such authority. In the absence of direct evidence from Mr Trkulja it is difficult to reconcile the evidence of the Applicant and Mr O’Brien as to the role of Mr Trkulja. [35] The Applicant also referred in her evidence to a text message she claimed to have received on 1 March 2017 that indicated that the tenants of the Property had received the keys from Mr Trkulja on 1 March 2017. I am unable to accord any weight to that text message as the source and authenticity of it cannot be tested in the absence of direct witness evidence. [36] Even were I satisfied that the text message received by the Applicant was authentic the Applicant was still obliged to obtain the bond from the tenants on entering into the Schedule of Lease for the Property. In the absence of obtaining the bond, the Applicant was obliged to immediately advise the Respondent’s OIEC of the breach of the Exclusive Managing and Leasing Authority. She failed to do so. I found the Applicant’s expressed confusion as to who was the Respondent’s OIEC unconvincing and unsatisfactory having regard to her admitted understanding of the role of the OIEC and the training she had undertaken. [37] To the extent that Mr Trkulja’s knowledge or approval of the Applicant’s conduct would exculpate her, I am not able to reach the requisite level of satisfaction that Mr Trkulja did in fact authorise the Applicant’s conduct. This finding is based on the unconvincing evidence of the Applicant as to the authority she believes that she would have obtained from Mr Trkulja. In any event, the Applicant did not raise the alleged role of Mr Trkulja in authorising her conduct when she was interviewed by Mr O’Brien on 24 August 2017 and provided no credible explanation to rebut the reasonable conclusion reached by Mr O’Brien that she had leased the Property without securing a bond. [38] As regards the Respondent’s evidence that the tenants of the Property had claimed that the Applicant had advised them at the time of signing the Schedule of Lease that they could secure the bond’s payment by going back to the Department of Human Services, I place no weight on that evidence in the absence of direct evidence from the tenants. I am unable to be satisfied of that particular allegation. Importantly, however, for the purpose of compliance with the Code, Mr O’Brien did form a belief based on his enquiries with the tenants during his investigation that the Applicant had provided incorrect advice to the tenants regarding obtaining financial support from the Department of Human Services for the payment of the bond for the Property. [39] I am satisfied that the Respondent conducted a reasonable investigation into the suspected breach in the period immediately following the detection of the bond not having been obtained for the Property. The investigation included a review of Respondent and RTBA records, consultation with the Respondent’s auditors and an interview by Mr O’Brien of the Applicant on her return from annual leave on 24 August 2017. I am also satisfied that the Applicant was unable to provide an acceptable explanation during the interview with Mr O’Brien as to why the amendment was made to the Schedule of Lease for the Property and why the bond had not been collected. -- 11 of 16 -- [2018] FWC 3402 12 [40] I am satisfied that on completion of the investigation and after interviewing the Applicant, the Respondent concluded that her conduct presented a serious risk to its business and that dismissal on the grounds of serious misconduct was justified. I am not persuaded that the reasons for the dismissal were in any way related to the pregnancy of the Applicant. I am satisfied that that the Applicant was dismissed without notice on 24 August 2017. Was the dismissal consistent with the Small Business Fair Dismissal Code – Summary Dismissal? [41] The Code applies to small business employers with less than 15 employees. A person is not unfairly dismissed if the dismissal is consistent with the Code and immediately before dismissal or at the time notice of the dismissal is given, whichever is earlier, the employer is a small business employer. I have already found that the Respondent was a small business employer at the relevant time. [42] The Code declared by the Minister pursuant to s 388(1) of the Act relevantly provides as follows: “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. Other dismissal In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job. The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations. Procedural matters In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity. -- 12 of 16 -- [2018] FWC 3402 13 A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.” [43] In Pinawin v Domingo28, the Full Bench considered whether, in the context of a summary dismissal under the Code, the Commission had to be satisfied that the serious misconduct which was the basis for the dismissal actually occurred: “[29] … 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. [30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. The circumstances include the experience and resources of the small business employer concerned. … [38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well …” [44] Another Full Bench of the Commission recently examined the summary dismissal part of the Code in detail in Ryman v Thrash Pty Ltd29 and concluded as follows: “[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates the following way: If a small business employer has dismissed an employee without notice – that is, with immediate effect – on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code. -- 13 of 16 -- [2018] FWC 3402 14 In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectivity speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.” [45] The Applicant was dismissed without notice by the Respondent. Consequently, my role in this matter is to determine whether the employer genuinely held a belief that the employee had committed an act of serious misconduct and whether that belief was, objectively speaking, based on reasonable grounds. It is not necessary to determine whether the serious misconduct did in fact occur or that the employer was correct in the belief that it held. [46] The Respondent conducted an investigation and concluded that the Applicant’s conduct was in breach of the Exclusive Managing and Leasing Authority for the Property, was in breach of her legal obligations she held as an estate agent’s representative and constituted a serious reputational and business risk to the Respondent. I am satisfied that the belief of Mr O’Brien that the Applicant was guilty of serious misconduct was genuinely held by him at the time of the dismissal. [47] I am further satisfied, based on my findings, that Mr O’Brien’s belief as to the serious misconduct of the Applicant was reasonably formed on the basis of his investigation, the evidence of the Applicant’s failure to obtain the bond for the Property, her knowledge of both her legal obligations as an estate agent’s representative and the importance that the Mr O’Brien placed on its staff securing a bond on entering into a property lease. Furthermore, the Applicant was interviewed by Mr O’Brien and was unable to provide any credible explanation for the conduct. [48] I am satisfied, based on an objective assessment that the Mr O’Brien had reasonable grounds on which to form his belief, that the Applicant’s behaviour constituted serious misconduct. Conclusion [49] For the reasons set out above, I am satisfied that: (1) The Applicant is a person protected from unfair dismissal. (2) Immediately before the Applicant’s dismissal, the Respondent was a small business within the meaning of the Act; (3) The Respondent dismissed the Applicant on 24 August 2017 because she had allowed tenants to take occupancy of a rented property without providing an amount of one month’s rent as the security deposit (bond). (4) The Respondent genuinely believed that the Applicant’s conduct presented such a serious risk to its reputation and business interests as to constitute serious misconduct justifying summary dismissal. -- 14 of 16 -- [2018] FWC 3402 15 (5) The belief held by the Respondent as to the nature of the Applicant’s conduct was, objectively speaking, formed on the basis of reasonable grounds. [50] I am satisfied that the Applicant’s dismissal was consistent with the Code. Consequently, the application is dismissed. An Order to that effect will be issued with this decision. DEPUTY PRESIDENT Appearances: Ms A. Maglovski on her own behalf. Mr M. O’Brien on behalf of the Respondent. Hearing details: 2018 Melbourne 1 June 2018 Printed by authority of the Commonwealth Government Printer <PR608001> 1 Transcript at PN198. 2 Transcript at PN154-196. 3 Transcript at PN201-216. 4 Transcript at PN241. 5 Exhibit R11, Exclusive Leasing and Managing Authority for 90A Theodore St, St Albans. 6 Transcript at PN247, PN266. 7 Transcript at PN289, PN293. 8 Transcript at PN324 – PN326. 9 Exhibit R8, Schedule of Lease, dated 3 March 2017. 10 Transcript at PN309. 11 Transcript at PN270 – PN281. 12 Exhibit A5, Text message exchange between Jasmina and Applicant. -- 15 of 16 -- [2018] FWC 3402 16 13 Transcript at PN445 – PN446. 14 Transcript at PN431. 15 Exhibit A4, Letter of Termination, dated 24 August 2017. 16 Exhibit A3, Witness Statement of Ms. Annette Maglovski, dated 2 October 2017 at paragraph [4] – [8] and Transcript PN556 – PN560. 17 Exhibit R8. 18 Exhibit R11. 19 Exhibit R9, Standard Residential Tenancy Agreement of Homes Group Estate Agents. 20 Exhibit R5, Estate Agents Act 1980. 21 Exhibit R6, Estate Agents (Professional Conduct) Regulations 2008. 22 Exhibit R7, Residential Tenancies Act 1997. 23 Transcript at PN355 – PN367. 24 Transcript at PN315 – PN326. 25 Transcript at PN368 – PN377. 26 Transcript at PN332 – PN 335. 27 Transcript at PN531 – PN537. 28 [2012] FWAFB 1359. 29 [2015] FWCFB 5264. -- 16 of 16 --