Legal, People & Human Resources

Fair Work docks compensation for unfairly dismissed employee by $10,000 because business was making a loss

Dominic Powell /

An Indian restaurant in Sydney that was found to have unfairly dismissed one of its chefs will have to pay back a discounted amount of compensation after the Fair Work Commission decided the business’ financial position was in jeopardy.

In a decision passed down by the Fair Work Commission in august, a former employee of Doonside-based restaurant Amritsari Dhaba was found to be unfairly summarily dismissed after an discussion with his employer over his working hours and rates of pay got out of hand.

The worker was employed by the restaurant on a salary of $56,000, plus superannuation, in a role that saw him working seven days a week preparing and cooking food for the restaurant. However, he was the restaurant’s only chef, and due to the significant amount of food preparation required, the employee was regularly working over 60 hours per week for the business.

The commission heard that, due to being the only chef employed, the worker had also not had a day off nor any sick leave in the almost two years he’d been working at the restaurant, nor would he receive breaks. In February this year, the employer issued the employee with an updated work contract, specifying the employee would work 38 hours per week along with any “reasonable additional hours”.

This sparked a conversation between the employee and the restaurant owner, where the chef asked why he was working significant extra hours with no compensation, and if he could have a day off. The restaurant owner said he would be able to have a day off after the restaurant found another chef/kitchen hand to work with the employee.

Further down the line, the employee asked again to be paid for the extra hours he was working, to which the owner replied he had offered to pay the worker an additional $200 to do the store’s grocery shopping each week, which the store stopped after finding suppliers.

Despite the worker doing over 20 hours more work a week unpaid, the owner said in an email he couldn’t “find any reason why you are expecting/demanding $200 when you are not doing the shopping for the restaurant”. He also contended he was paying the worker legally, however, the Commission found this was not the case.

The owner also claimed the chef had been drinking alcohol while working, and asked him to stop. The chef outright denied this and said he would occasionally have one beer with his dinner after his shift, which the Commission accepted.

Through more email correspondence, provided to the Commission, the worker pleaded with his boss to be able take a day off, saying he’d been feeling sick and tired due to the constant work. The owner responded by doubling down on the drinking claims and claiming the only reason the worker was working extra hours was because he was keeping the business open for his friends.

However, the employer did agree to revisit his employment contract “if the company afford your requirements”.

Employee accused of “holding the business to ransom”

In response, the worker set out his requirements, which outlined a six-day working week with regular breaks and no excess hours, and told the owner: “I want to work with you and not against you”.

After asking the owner for a response to his requirements numerous times, the employee confronted him at work, and was told the owner had not had sufficient time to think. The employee then said he would need a few days to “consider if I can continue to work like this” and took a few days off.

The worker then followed up with another email outlining his proposed working conditions. He also asked the owner to retract any claims about him having a drinking problem, saying they were “a slur against my character”.

However, in response, the business owner dismissed the employee via email, saying he had exhibited “unprofessional demand and behaviour” and was “holding the business to ransom” due to taking some days off

“I consider this action of yours to as a way to sabotage the reputation and working of the restaurant and consider it as your resignation and I would like to let you know that your contract is TERMINATED effective today,” the owner wrote.

In his decision, Fair Work Commission senior deputy president Jonathan Hamberger found the employee was unfairly dismissed, saying despite the owner claiming the employee had engaged in various misconducts such as drinking at work and providing free food to friends and family, it was not a basis for a summary dismissal.

“I am not satisfied that the respondent genuinely believed that this conduct was sufficiently serious to justify immediate dismissal. Rather, I think that all this alleged misconduct has been put together retrospectively to try to justify a dismissal that actually occurred for other reasons,” Hamberger said.

Hamberger also disputed the employee’s rate of pay while working as a chef, saying the owner was “blissfully unaware of the [his] obligations…under the [industry] award”.

“Amongst other things, he consistently failed to give the applicant a minimum of eight full days off per four-week period. Even making relatively conservative assumptions about the applicant’s proper classification under the award and the breaks he received within shifts, I also estimate the applicant was being underpaid by several hundred dollars a week for the hours he was putting in,” he said.

Compo docked as business on the rocks

Although he found the employee was unfairly dismissed, Hamberger asked both parties for further evidence before determining what the compensation should be. In a decision published one month later on September 14, Hamberger deduced the employee should be compensated $28,000 for the dismissal.

This amount was docked by $10,000 however, after to the business appealed on the grounds that a significant compensation amount would affect the business’ viability. According to documents referred to by the Commission, the business had been operating at a loss for two years, since the original owner purchased it from his brother.

“[The documents] suggest that the business has been trading at a loss since [the owner] took over the business. [The owner] said he was keeping the business open because he has a six-year lease on the property occupied by the restaurant. His representative also suggested that he was hopeful that the business would pick up, especially over the upcoming December period,” the senior deputy president found.

“I consider, therefore, that it would be appropriate to reduce somewhat the amount I would otherwise order, because of the risk to the viability of the respondent’s enterprise. I will also order that the amount be paid in instalments.”

Speaking to SmartCompany, workplace lawyer Peter Vitale says this situation is “very rare”, and while the Fair Work Act enables the Commission to consider such things, it doesn’t do so very often.

“It’s pretty rare for employers to make the claim an order would have an effect on the viability of the business,” he says.

“There wouldn’t be a large number of businesses affected by this as often small businesses in trouble are self-represented, and aren’t familiar with the availability of this argument.”

In relation to the legal issues in this case, Vitale says many business owners don’t know what exactly constitutes the grounds for a summary dismissal, which is a backed up by the numerous cases ruled in favour of employees due to unreasonable summary dismissals.

SmartCompany has contacted Amritsari Dhaba for comment.

NOW READ: Melbourne business ordered to pay worker $20,000 for firing her after she resigned

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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