A fair go all round: the importance of procedural fairness

In the recent decision of Tao v Lu & Tao Pty Ltd [2025] FWC 990, the Fair Work Commission (FWC) found that casual employees, who both separately owned a 20% share in the business, were unfairly dismissed without ‘a fair go all round’.

Facts

The Applicants, Mr Weichen Tao (Weichen) and Mr Weihong Tao (Weihong), were employees of Lu & Tao Pty Ltd (L&T) which operates a chicken shop in Yarrawonga, Darwin. Notably, each of the Applicant had a 20% ownership of L&T. In addition, Weichen and Weihong had been working between 30 to 60 hours per week for the business.

However, L&T closed the chicken shop on 12 July 2024 without notifying the Applicants, and they only became aware of the store closure through a public announcement. As such, the Applicants submitted that they were dismissed on 12 July 2024.

L&T claimed that it had sent a termination letter on 12 July 2024 to the Applicants, but they denied receipt of this letter. Furthermore, the Applicants attempted to contact L&T on 11 and 13 July 2024, but their messages were not answered.

Following this incident, L&T re-opened the store on 19 July 2024, and created a new WeChat group for staff scheduling, intentionally excluding Weichen and Weihong.

Importantly, the Applicants were unaware of that the reason for their dismissal was ‘serious misconduct’ until the proceedings commenced. The alleged serious misconduct by the Applicants was:

• unauthorised closure of the business during trading hours on 11 July 2024, causing financial losses and operational disruption; and
• failure to remit cash sales from the business, resulting in financial discrepancies.

In response, Weichen and Weihong filed applications for an unfair dismissal remedy pursuant to section 394 of the Fair Work Act 2009 (Cth) (FW Act) on 29 July 2024, alleging that their dismissal did not comply with the Small Business Fair Dismissal Code (Code).

Decision

For Weichen and Weihong to succeed in their unfair dismissal claim against L&T, they had to show that they were first protected from unfair dismissal and secondly had been unfairly dismissed under the Code.

Entitlement to protection

L&T submitted that Weichen and Weihong were casual employees who did not work ‘regular and systematic hours’ and did not have a reasonable expectation of ongoing employment, and that therefore, they were not protected against unfair dismissal.

While the FWC accepted that the tenure of casual employees starts and finishes on the day of engagement, Weichen and Weihong clearly believed their jobs would continue, based on how things had been run since the takeaway shop opened. Both employees were effectively in charge of running the shop, thus their sudden termination would have been completely unexpected.

For those reasons, the FWC held that Weichen and Weihong were casual employees who worked ‘regular and systematic hours’ with reasonable expectation of ongoing employment, thus entitled to protection against unfair dismissal under the FW Act.

Unfairly dismissed

Weichen and Weihong alleged that their dismissals were harsh, unjust or unreasonable, as they were not consistent with the Code.

The Code relevantly provides that ‘it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal’. Otherwise, the small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, in consideration of the employee’s response.

In relation to the question of compliance with the Code, L&T asserted that:

• there was a reasonable belief that serious misconduct occurred, thus justifying the dismissals of Weichen and Weihong;
• L&T had complied with its internal procedures; and
• a company meeting prior to dismissal implied that the cessation of work by Weichen and Weihong was a ‘voluntary disengagement from the employment relationship’.

Weichen and Weihong maintained that:

• there was no formal warning prior to the dismissals;
• they were not given any opportunity to respond to any allegations;
• there was no investigation conducted; and
• there was no evidence of the alleged serious misconduct.

Weichen and Weihong provided undisputed evidence that L&T failed to provide them with any stock to sell, despite numerous requests for stock to be provided which resulted in the shop being closed on the afternoon of 11 July 2024. This would appear to contradict at least one of the alleged instances of serious misconduct.

The FWC also noted that L&T had not provided any evidence to demonstrate that the termination letter was actually sent, meaning Weichen and Weihong were not provided with any opportunity to respond to the reasons for their dismissals.

Ultimately, the FWC favoured the submissions by Weichen and Weihong and found that L&T did not follow a transparent and procedurally fair process in effecting dismissals under the Code. There was no valid reason for ending Weichen and Weihong’s employment.

In light of the findings, the FWC held that Weichen and Weihong were unfairly dismissed and they were awarded 4 weeks’ compensation each.

Take Home Messages

This case demonstrates the need for employers to undertake procedural fairness when opting to undertake disciplinary action against an employee. This is true even of casual employees in some cases, as well as instances where the employee owns a share of the business.

Small business owners should also be aware that the Code is not a ‘get out of jail free’ card when it comes to dismissal. There are still important procedural issues to take into consideration. Small business employers may wish to consider taking legal advice before dismissing an employee to ensure they have a defensible position in the event of an unfair dismissal claim.

For more specific information or advice on any of the material contained in this article, please contact Sathish Dasan on +61 8 8210 1253 or sdasan@normans.com.au, or Annabelle Narayan on +61 8 8210 1292 or at anarayan@normans.com.au, or Adarsh Jacob on +61 8 8217 1372 or ajacob@normans.com.au.