If you are a franchise owner and employ casual staff, you should understand how unfair dismissal laws apply to your business. Under the Fair Work Act 2009 (Cth) (“Act”), an employer can be liable for ‘unfair dismissal’ if he or she let an employee go in an unreasonable, harsh or unjust way.

In Robert Goodwin v Shanaya Pty Ltd t/a Domino’s Pizza [2016] FWC 4161, the Fair Work Commission (“the Commission”) ordered the owner of a Domino’s Pizza franchise to pay compensation to a casual staff member who had been unfairly dismissed. In this case, Mr Goodwin claimed that the conduct of his employer, Shanaya Pty Ltd trading as Domino’s Pizza (“Domino’s Pizza” or “the Employer”), forced him to resign from his job as a casual delivery driver. We explain the Commission’s decision below as well as lessons for franchise owners about lawfully dismissing their employees.  

Unfair Dismissal Rules For Casual Employees

The Commission had to consider first whether the employee had the right to bring an unfair dismissal application. Special rules apply to casual employees under sections 383 and 384 of the Fair Work Act. A casual employee to be eligible to make an unfair dismissal claim must satisfy the following criteria: 

  • Must have worked for a minimum period on a regular basis and in a systematic way; and 
  • Must have a reasonable expectation of continuing to do similar work. 

The Commission held that Mr Goodwin, although a casual employee, fulfilled the criteria to make a claim. In reaching their decision, the Commission looked closely at the days and hours Mr Goodwin worked for Domino’s Pizza. It found that Mr Goodwin worked every week for the 27 weeks he was employed. Of the 27 week period, Mr Goodwin worked regular days and hours for 22 weeks up until he made a complaint. The Commission noted that if Mr Goodwin had worked irregular hours, he would not have satisfied the requirement for a minimum employment period.

Unfair Dismissal Rules for Small Businesses

The Commission also considered whether Mr Goodwin was excluded from making an unfair dismissal claim because Domino’s Pizza was a small business with less than 15 employees.

Under the Small Business Fair Dismissal Code (“Code”), an employee of a small business can make an application for unfair dismissal if he or she:

  • Worked for less than 12 months; or
  • Were dismissed because of a genuine redundancy/downturn in the business.

The Commission found that the Code did not apply to prevent Mr Goodwin from making the unfair dismissal application (“the Application”). Under section 23 of the Act, associated entities of a company are taken to be one entity. Domino’s Pizza and its associated entities had a combined number of employees higher than 15.

What Does it Mean to be “Dismissed”?

Under the Act, an employee will be seen as dismissed although they resigned if an employer’s conduct (both positive actions and a failure to act) forced him or her to do so.

Mr Goodwin left after the Employer reduced his hours and cut the number of shifts. Mr Goodwin claimed that the Employer began to do so after he asked to finish a Friday night shift early so he could attend to a personal issue. The Employer allegedly threatened to fire Mr Goodwin for not providing sufficient notice of the change of shift. Mr Goodwin also complained to the head office of Domino’s Pizza about breaches of various rules, such as workplace safety and pay. After making this complaint, he felt as though he was pressured to quit.

The Commission found that contemporaneous emails sent by Mr Goodwin to the Domino’s Pizza head office, as well as the pattern of hours that Mr Goodwin worked, supported Mr Goodwin’s arguments. The Commission noted that by the time Mr Goodwin resigned, he was first completely removed from the roster, and then when re-instated, only given hours which were significantly below the average hours he worked during the first 22 weeks of his employment. Moreover, Mr Goodwin had tried to resolve the issues, such as by contacting the Domino’s Pizza head office for assistance. As such, it was the Employer’s conduct that led to Mr Goodwin’s resignation, rather than any particular desire to leave the job on the part of Mr Goodwin.

Was Mr Goodwin’s Dismissal Unreasonable, Harsh or Unjust?

The Commission then turned its focus as to whether the dismissal was harsh, unjust or unreasonable within the meaning of section 387 of the Act. Relevantly, the Employer did not have proper HR processes in place (which lent support to the position that the dismissal was not harsh, unjust or unreasonable). The Commission took into account the fact that the business was part of the Domino’s Pizza Franchise network and that the Employer could, therefore, seek specialist assistance from HR staff at head office. Consequently, a lack of HR support neither supported nor detracted from the Commission’s finding that Mr Goodwin’s dismissal was unreasonable.

What Remedy Did Mr Goodwin Receive?

Where the Commission finds that an employer has unfairly dismissed the employee, it has the power to order the employee’s reinstatement or order the employer to pay compensation to the ex-employee. In this case, the Commission awarded compensation to Mr Goodwin.

There is no automatic right to a remedy. Rather, the Commission has discretion and will only award compensation if the payment of money is appropriate and if asking the employer to rehire the employee is unsuitable.

In making its award, the Commission took into account what Mr Goodwin would have earned if he had continued working as a casual driver for Domino’s Pizza. It also noted that as Mr Goodwin had found another job after resigning, the Commission did not need to reduce the compensation award due to any failure to mitigate loss.

Key Takeaways

This case is one example of a situation where a franchisee employer will be liable to pay compensation for forcing a casual worker to resign in an unreasonable manner. If you and your associated entities have more than 15 employees, and your casual staff have regular hours for the applicable minimum periods, your employee may be able to enforce unfair dismissal laws.

The Commission can order you to pay your ex-employee for what they would have earned if they had continued working or order you to reinstate the employee. Moreover, although it didn’t significantly impact the outcome of this matter, the Commission can also take into account the level of HR support you provided your employee.

How unfair dismissal laws apply to your franchise will vary according to your particular circumstances. If you have any questions about your obligations as an employer and owner of a franchise, get in touch with our experienced franchise law team.

Amritha Thiyagarajan

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