Home - Employer may terminate staff to maximise profit says WAIRC commissioner

UpdatesJun 03, 2019

Employer may terminate staff to maximise profit says WAIRC commissioner

The Western Australian Industrial Relations Commission (WAIRC) has told a Subway franchisee that he was entitled to dismiss a long-serving employee so he could employ cheaper junior staff to “maximise his profit”.

The Western Australian Industrial Relations Commission (WAIRC) has told a Subway franchisee that he was entitled to dismiss a long-serving employee so he could employ cheaper junior staff to “maximise his profit”.

The employer had dismissed the award-winning ‘sandwich artist’ after she turned down an offer of a supervisory position at the fast-food outlet.

Without any discussion, the franchisee gave the employee a termination letter informing her of two weeks’ notice at the end of her shift. In part of his letter he wrote:

[A]s per current business requirement, rising employment and food cost and financial affordability, we reviewed our business and staffing structure, your position is no longer needed. This decision is not a reflection on your performance.

In the hearing, the employer told WAIRC Commissioner Damian Matthews that the employee – who was earning $21.18 per hour – was let go so he could employ cheaper staff and save $500 per week.

“I do not think this was a genuine redundancy situation,” Commissioner Matthews said.

He also noted that the employer couldn’t explain “exactly what kind of difference $500 made to him and to the business he operated”.

“I am certainly not able to conclude that it was the difference between being in business and going out of business,” he said.

Commissioner Matthews also found that the employee, who had worked for the employer for a long period of time, was “very good” and “faithful”.

But despite this, he said that the employer was “entitled to maximise his profit in that business and may seek to maximise that profit with the reorganisation of staff” and that “he may let staff go to achieve this”.

Commissioner Matthews did however criticise how the franchisee went about the dismissal and said that he “had to handle that change fairly”.

“In my view, he should have sat down with [the employee] and said ‘look, I know I’m only paying you $21.18 an hour, but I can get the work done for cheaper, and I wish to go down that path, and for that reason I’m going to end your employment’.

“[The employer] was entitled to make the decision he did and was entitled to take the action that he did, but that he had to do it in a certain way and he had to do it in a way that was a lot fairer than the way in which he pursued it.

“He couldn’t simply give [the employee], at the end of a shift, a letter which, on her evidence, she then read in the car, sacking her. [The employee] deserved much better from her employer given her work performance.

“What [the employer] did was lawful, just badly handled,” Commissioner Matthews said.

“I do not as a concept say that [the employer] did the wrong thing, although I find that he did it in the wrong way.

“There was a period of 6 weeks where [the employee] was out of work.

“The question for me is how long would it have taken [the employer] to fairly bring [the employee’s] employment to an end?

“I think that if on the date when [the employer] gave [the employee] notice he had sat down with her and said, ‘you know this is what the future looks like as far as I’m concerned. This is what I want to achieve’, and if he had given her 4 weeks’ work on top of the 2 weeks he gave her that would have been more than sufficient.”

Commissioner Matthews awarded the employee $2880 for four weeks’ pay, plus an additional $500 for “emotional upset”.

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