Being a Small Business is no Excuse

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Ignorance is bliss. However, when it comes to the law this is not so. Just because someone does not know the law does not discharge them of their liability for any breaches. This is so even for small business employers. Though small businesses are less likely to have the funds to employ or retain dedicated employment law specialists they are still required to fulfil their employment law obligations.

Two recent unfair dismissal cases in the Fair Work Commission (the FWC) provide a warning to small business employers that ignorance is no excuse. In both cases the employers did not comply with the Small Business Fair Dismissal Code.

Mr Troy Currie v The Trustee for B & S Hambleton Trust T/A Perfect Coat Painting [2019] FWC 7462, concerned the dismissal of Mr Currie, a second-year apprentice painter for Perfect Coat Painting. Mr Currie agreed to the employer’s request to receive a flat rate of pay, meaning he received no overtime or penalty rates. Mr Currie was dismissed by text message after not attending work on a Sunday after working the Monday to Saturday before. Mr Currie’s request not to work on the Sunday was denied. Perfect Coat Painting required all employees to work in order to meet the deadline.

Commissioner Hunt held that Mr Currie had been dismissed unfairly. Commissioner Hunt held that it was unreasonable for Perfect Coat Painting to require Mr Currie to work the Sunday after Mr Currie had worked the Monday to Saturday before and would not be paid penalty rates. Commissioner Hunt stated that it was ‘inconceivable’ that in 2019 an employer, even a small business employer, did not know they were required to pay penalty rates to employees who worked weekends in addition to working all week. The amount of compensation payable to Mr Currie is to be determined at a further decision.

Gail Ayton v You Come Pty Ltd t/a Foodworks Ashmont [2019] FWC 6585, concerned the dismissal of Ms Gail Ayton, a casual shop assistant employed for over 20 years, though under different ownership. Ms Ayton was also dismissed by text message. Mr Wang, owner of You Come Pty Ltd, submitted that Ms Ayton was dismissed because her register was short on multiple occasions and she did not notify him when she was absent from work. Ms Ayton submitted that Mr Wang wanted to fire her because she was not Chinese. Due to the lack of evidence Deputy President Sams conducted his own investigation which found job advertisements on Chinese Australian job forums stating, ‘Asian lady preferred’, ‘Asian staff preferred’ and ‘prefer oversea people’.

Deputy President Sams found that Ms Ayton was unfairly dismissed. Deputy President Sams held that Ms Ayton’s non-attendance on the day she was dismissed and the minor cash shortages did not amount to serious misconduct, Ms Ayton was not informed of any risk to her employment and Ms Ayton was not dismissed because of conduct or performance. The job advertisements supported the view that Ms Ayton was dismissed because she was not Asian. Deputy President Sams stated that being a small business with no HR expertise did not justify Mr Wang terminating Ms Ayton in a ‘disgraceful and grossly unfair’ way.

In the decision for remedy, Gail Ayton v You Come Pty Ltd t/a Foodworks [2019] FWC 7029, You Come Pty Ltd was ordered to pay Ms Ayton six months wages minus the amount she had earned in her new position, amounting to $11,803.01 less tax. The matter has been referred for consideration of whether You Come Pty Ltd breached anti-discrimination laws.

Take Home

Ignorance of the law is not bliss. Though the FWC takes into consideration the size of a business and its lack of expert HR support, the FWC does not accept ignorance of the law as an excuse or justification for failing to comply with the law. Any breaches can be quite costly for a small business. Small business employers should learn about their obligations to employees under employment law.

It should be noted that in both cases the employees were dismissed via text message. Employers are strongly advised against this method of communicating dismissal. To learn more about the pitfalls of dismissing an employee via text message, please see the article by my colleague Brian Powles.

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