Background
In Panchal v Bulla Mushrooms (Aust) Pty Ltd,[1] the Applicant was employed by Bulla Mushrooms (Aust) Pty Ltd (‘Bulla’) as a harvest team leader on a casual basis in 2019 before commencing full time work in 2021. On 31 May 2024, the Applicant received a letter of allegations from the Chief Executive Officer, inviting her to respond to the following allegations:
- On 5 January 2024, the applicant bullied a staff member by intentionally reducing her work hours after they raised a question concerning work;
- On 5 September 2023, the applicant raised her voice at a staff member;
- On 29 June 2023, the applicant delegated unreasonable tasks to a staff member and demanded that tasks be done ‘really fast’ whilst also dismissing a bullying concern that was raised to her;
- Between 30 May 2022 and 13 October 2022, the applicant bullied and religiously discriminated against another staff member by putting the other staff member in a container by herself to pick mushrooms;
- Between 14 July 2022 and 19 September 2022, the applicant bullied and racially discriminated against a staff member by intentionally and inappropriately not including her in the picker performance program which resulted in the staff member not achieving a financial bonus;
- On 19 August 2022, the applicant bullied and racially discriminated against a staff member by reducing his hours at the last minute and financially penalising him by not including him in the picker performance program;
- Between 9 May 2022 to 19 June 2022, the Applicant bullied and racially discriminated against another staff member by repeatedly yelling at them and financially penalising them;
- Between 3 May 20222 to 17 May 2022, the Applicant bullied another staff member by inappropriately forcing her to carry out tasks she was uncomfortable with such as cleaning the kitchen and toilet.
The Applicant denied all allegations in her written response to the employer at 11.40am on 6 June 2024. On the same day at 4pm, she received a response stating that ‘on the balance of probabilities that all of the allegations were substantiated,’ [2] and that a termination was being proposed. The Applicant was invited to respond by 4pm the following day.
Whilst the Applicant sought further time to respond, at 4:30pm on 7 June 2024 she received a letter stating her employment was terminated with immediate effect.
The Applicant made an application to the Commission for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (Cth) (‘FWA’). Bulla stated that there was compelling evidence that the Applicant had engaged in a pattern of bullying and discrimination of employees which made her continuing employment viable. To ensure that a safe working environment was maintained, Bulla stated that there was a valid reason for the dismissal and that a fair procedure had been followed. Accordingly, Bulla asserted the dismissal was not unfair.
Unfair Dismissal Considerations
The FWA provides that a person has been unfairly dismissed if the Commission is satisfied that the dismissal was ‘harsh, unjust or unreasonable’.[3]
Section 387 of the FWA provides a criterion for the Commission in determining whether a dismissal is ‘harsh, unjust or unreasonable.’ One of these is whether there was a ‘valid reason for the dismissal related to the person’s capacity or conduct’.[4]
On 7 October 2024, Deputy President Colman found that the allegations of bullying, discrimination and inappropriate conduct made against the Applicant by Bulla were unsubstantiated; and concluded that there was no valid reason for dismissal. In his considerations, Deputy President Colman stated:
“A valid reason is one that is both a good reason to dismiss the person, and also a reason that is substantiated. In cases where an employee is accused of misconduct, the Commission is required to determine whether on the balance of probabilities the misconduct actually occurred. I am not satisfied that Ms Panchal bullied or discriminated against anyone. Contrary to the company’s contention, the evidence in this matter is not compelling. It is scanty, conclusory, and largely second hand, that is to say, hearsay.”[5]
With respect to the other considerations of section 387 of the FWA, it was concluded that:
“Ms Panchal was not notified of a valid reason for dismissal because the reason cited was an invalid one (s 387(b)). Ms Panchal had an opportunity to respond to the allegations (s 387(c)). In my view, her responses were compelling, but Bulla chose to reject them. Ms Panchal was not refused a support person (s 387(d)). Ms Panchal’s dismissal related to conduct rather than performance, and accordingly s 387(e) is not strictly relevant, however I note that she received no warning about her conduct. The considerations in s 387(f) and (g) carry some weight; although Bulla is not a small business employer for the purposes of the Act, I accept Ms Beattie’s evidence that it has a small turnover and that it feels like a small company.” [6]
Compensation & Mitigation of Loss
Although a reinstatement is the primary remedy for a successful claim,[7] the Deputy President did not consider it appropriate. In her submissions, the Applicant sought compensation, a statement of service, payment of entitlements by Bulla, and six months compensation. It should be noted that in such circumstances, it would be outside of the Commission’s authority to make orders for a statement of service or outstanding entitlements. Therefore, the only suitable remedy was compensation. In assessing compensation, the Commission must consider the entirety of the matter, including the criteria in section 392(2) of the FWA.
The Commission considered the reasonable steps the Applicant took to mitigate her loss.[8] However, since the dismissal, she did not seek employment and therefore did not mitigate the loss.[9] Deputy President Colman stated:
“Compensation that is ordered under the Act is for loss of income that has been caused by an unfair dismissal. If no effort is made to seek new employment, at some point the absence of income becomes attributable to the failure of the individual to apply for new jobs. The Act also states clearly that compensation must not include any component referable to shock, distress, humiliation or other analogous hurt (s 392(4)).”[10]
In calculating compensation, the Commission determined the remuneration the applicant would have received had they not been dismissed by reference to an anticipated period of employment. Deputy President Colman further determined that an order for compensation would not affect Bulla’s viability; the Applicant had a number of years of service with Bulla; and if she had not been dismissed, the Applicant would have remained employed for at least another six months.
This passage from Panchal v Bulla Mushrooms outlines a practical analysis of the doctrine of mitigation of loss:
“I draw on the Commission’s industry experience and note that jobs in the agricultural sector are not in short supply… I estimate that there is a reasonable likelihood that Ms Panchal could have obtained another job on a similar income within two months (eight weeks) from her dismissal. Bulla said that Ms Panchal received payment in lieu of notice. Based on her permanent employment since 28 June 2021, Ms Panchal had less than 3 years of service … which would have seen her paid 2 weeks’ in lieu of notice. This should be deducted from the eight weeks referred to above. In my view, the compensation to be awarded to Ms Panchal should be confined to the six week period where her loss of income was more clearly causatively connected to the unfair dismissal, rather than to Ms Panchal’s failure to seek a new job. Six weeks’ gross pay is $7269.24. To this should be added 11.5% superannuation of $835.96.”
The analyses from the recent unfair dismissal decision of the Commission encompasses valuable observations about the legal principles involved in calculating compensation for unfair dismissal and particularly that a failure by a dismissed employee to seek alternative employment will reduce his or her compensation for unfair dismissal. Furthermore, the Commission does not have the authority to order an employer who has been held to have unfairly dismissed an employee to provide a reference or statement of service.
Take away points for Employers
- Complaints should be dealt with as per workplace policies and procedures as quickly as possible to prevent further discourse within the workplace.
- Ensure that an investigation into a bullying complaint is well documented and includes a written record of any witness statements, personal accounts of events, and communication between parties to the dispute rather than providing hearsay comments. The Commission will be required to make findings of fact as to whether the allegations of misconduct are substantiated.
- During proceedings, employers ought to request and seek evidence from applicants about their efforts to mitigate their loss by applying for new roles.
Vocare Law is well equipped to assist our employment and discrimination clients with a wealth of collective knowledge and over two decades’ experience providing insight and advice in this area. Please don’t hesitate to contact our office if you have any questions regarding unfair dismissals , contact us on 1300-VOC-LAW / 1300-862-529 or email: enquiry@vocarelaw.com.au
This article was written by Eva Williams.
**The information contained herein does not, and is not intended to, constitute legal advice and is for general informational purposes only.
Footnotes
[1] [2024] FWC 2784.
[2] Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784 at 12.
[3] Fair Work Act 2009 (Cth), s 385.
[4] Fair Work Act 2009 (Cth), s387(a).
[5] Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784 at 24.
[6] Ibid, at 32.
[7] Fair Work Act 2009 (Cth), s390(3).
[8]Ibid, s392(2)(d).
[9] Ibid, s392(2)(d).
[10] Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784 at 35.[/vc_column_text][/vc_column][/vc_row]
