Industrial Law - Conciliation and Arbitration - summary dismissal of senior table hands - whether breach of award - onus of proof - "inefficiency" or "neglect of duty" - application of common law \ principles Conciliation and Arbitration Act 1904 s.119 Graphic Arts Award 1977 JEFFREY WILLIAMS v. PRINTERS TRADE SERVICES No. WA 16 of 1983 TOOHEY J. PERTH 30 MARCH 1984 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY INDUSTRIAL DIVISION No. WA 16 of 1983 wee BETWEEN: JEFFREY WILLIAMS Applicant and PRINTERS TRADE SERVICES Respondent QO R D E R JUDGE MAKING ORDER Toohey J. DATE OF ORDER 30 March 1984 WHERE MADE 3 Perth 1. THE couURT declares that in summarily dismissing Margaret Farrell on 23 September 1982 and in summarily dismissing Melanie Clifford on 24 September 1982 the respondent committed a breach of clause 9(c) of the Graphic Arts Award 1977. 2. THE COURT orders that - (i) The respondent pay to the applicant on behalf of the employees Margaret Farrell and Melanie Clifford the sum of $422.02. (ii) There be no order as to the costs of the application. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY INDUSTRIAL DIVISION No. WA 16 of 1983 BETWEEN: JEFFREY WILLIAMS Applicant and PRINTERS TRADE SERVICES Respondent CORAM: TOOHEY J. 30 March 1984 REASONS FOR JUDGMENT: This is an application under s.119 of the Conciliation and Arbitration Act 1904, seeking the imposition of a penalty for breaches of a term of the Graphic Arts Award, 1977 ("the Award"). The application also seeks the amount of an alleged underpayment of wages due to two former employees of the respondent. Printers Trade Services, the respondent, is referred to in the printing industry as a trade house. It carries out finishing services such as binding, collating and page numbering for smaller businessess. Printers Trade Services 1s a named respondent to the Award. Clause 9(c)(i) of the Award permits termination of employment by a week's notice on either side with provision for payment by the employer or forfeiture by the employee of one week's wages in lieu of notice. Clause 9(c)(ii), which is at the heart of this application, reads: "The provisions of paragraph (c)(i) shall not affect the right of the employer to dismiss any employee without notice for malingering, inefficiency, neglect of duty or misconduct, and in such case wages shall be paid up to the time of dismissal only". The application is brought by reason of the summary dismissal by the respondent of two employees without payment in lieu of notice. Margaret Farrell was dismissed on 23 September 1982 and Melanie Clifford was dismissed the following day. Both women were employed as senior table hands, a category not referred to expressly in the award but which is covered by item A40D in clause 16. The term "senior table hand" 1s merely descriptive of the fact that an employee is no longer a junior; it does not denote a supervisory position. Mrs. Farrell has worked in the printing industry some 30 years. Her work has been that of a table hand which 1s concerned with collating, stapling, round cornering, drilling, hand numbering and other duties associated with putting a book or other publication into its final form. She began work with the respondent in January 1979 and worked there continuously until her dismissal. Miss Clifford started work with the respondent in 1975 when she was 15. She began as a junior table hand. Miss Clifford worked for the respondent for 7 years, left for a change of employment over a period of 3 months, and then returned to work for the respondent. She had been re-employed for about 4 months at the time of her dismissal. The work she did was comparable to that done by Mrs. Farrell. Although the two women were dismissed within a short time of each other, they were engaged on different duties and 1t is necessary to relate the circumstances surrounding each dismissal. The respondent relies in each case upon inefficiency and neglect of duty to justify summary dismissal and relies in part upon earlier warnings given to its employees. Some reference to that earlier history is therefore required. Mr. Milburn, a partner in Printers Trade Services and referred to as 1ts managing director, gave evidence that in 1982 there had been a fall in the firm's earnings. This caused the firm to look more closely at spoilt work which represented a substantial cost item, amounting to $20,000 in the year ended June 1982. As a result the respondent began to keep a spoilage record book. On 1 September 1982 Mr. Milburn called a meeting of the staff at which he pointed out the financial position of the firm, ' aad stressed the problems caused by spoilt work and said that he "could not guarantee employment to anyone who made foolish mistakes and careless mistakes". Mrs. Farrell and Miss Clifford were present at that meeting. Shortly afterwards the respondent received an order from Lamb Printers Pty. Ltd. to do some work on a book called "In Search of Elizabeth". There were 1,000 copies which had been supplied collated. The work to be done was to staple the book, glue on covers and trim to size as a finished book. Mr. Milburn gave evidence that the job was delivered to Lamb Printers on 8 September but was returned on the following day because the company was "absolutely disgusted with it and would not accept it". The position of the stapling varied so that some books would not open. The glueing had been done badly so that some books had covers hanging off. The work had been done by Mrs. Farrell, Miss Clifford and two other employees. Mr. Milburn gave evidence that he spoke to the four employees, told them that the work would have to be rebound, that he could only go on issuing warnings for so long and that "if anyone on our staff was involved with this sort of work they would lose their job". Mrs. Farrell and Miss Clifford said they had no recollection of being spoken to by Mr. Milburn on that occasion but I accept his evidence that there was such a conversation. wn Mrs. Parrell was dismissed in the following circumstances. At about 9.55 am on 23 September she was asked to go to Mr. Milburn's office. There he told her that he was sorry that he had to put her off but that she had made a mistake in her work. The mistake related to a calendar for Mt. Newman Mining Co. Ltd. There were about 10,000 calendars, the pages to be collated in book form and then bound with spiral binding. The work was to be completed in sections. When the first section was sent out the customer complained that pages were duplicated. There were then 6,000 copies which had been collated but not bound. A check of these revealed pages in the wrong position and double collations. It became necessary to unbind some 4,000 calendars and go through them page by page to check and rectify errors. Other employees had worked on that job as well but Mrs. Farrell worked virtually full time on it. The cost of rectifying the errors was $2809. According to Mr. Milburn, Mrs. Farrell admitted that she had not been paying attention. He then decided to terminate her employment forthwith. Mrs. Farrell did not challenge the extent of the defects as described by Mr. Milburn nor did she deny responsibility for her part in the errors. Apart from mentioning that the pages were "a slippery cardboard" and that she was working in crowded conditions, she was not able to offer any explanation for the errors except that she had been on that job too long. She said: "I was getting tired, as the saying is". oO Miss Clifford was dismissed by Mr. Deniston, the respondent's assistant manager. Her dismissal related to errors made by her in machine numbering pages in the book "Search for Elizabeth", a work of about 300 pages. She had numbered 12 books and when they were sent to the customer they were returned as unacceptable. In Mr. Deniston's words "there was smudging, numbers on incorrect pages, some pages unnumbered ..."". When he asked for an explanation, none was forthcoming. The cost of making good the defective work was about $2000. Miss Clifford did not deny the extent of the defective work nor did she offer any explanation. She said: "Really there is no explanation. If you make a mistake, you make a mistake. No excuse is really good enough". I accept that at the time of their dismissal Mrs. Farrell and Miss Clifford had been responsible for quite serious mistakes in the work that they were doing and that this caused the cespondent expense that care would have avoided. Clause 9(c)(i1) of the Award is not itself the source of any right in the employer to dismiss an employee summarily. Printing Industry Employees Union of Australia v. Jackson and O'Sullivan Pty. Ltd. (1957) 1 FLR 175. What it does is to assume that such a right exists at law and, by its terms, preserve that right. As a consequence it 1s not enough to ask whether, in the ordinary way in which such terms are used, there was "inefficiency" or "neglect of duty" on the part of the two employees. It is necessary to appreciate the sense in which the employer's right to dismiss summarily has been construed at law and then apply that construction to the facts of this case. Indeed that view has been taken even where the award itself authorises dismissal for misconduct. North v. Television Corporation Ltd. (1976) 11 ALR 599. First however 1t 1S necessary to say something about the onus of proof. An application under s.119 is an application for the 1mposition of a penalty. But it is a penalty for breach of an award and such proceedings have been regarded as civil rather than criminal. Gapes v. Commercial Bank of Australia Ltd. (1979) 27 ALR 87. While the legal burden is on the applicant to establish a breach of the award, that burden 1s to he satisfied according to the balance of probabilities and not proof beyond reasonable doubt. Where an employer relies on clause 9(c)(ii) of the Award to justify summary dismissal the evidential burden of establishing malingering, inefficiency, neglect of duty or misconduct lies on the employer. That, I think, arises from the construction of clause 9(c), in particular the recognition of a common law right which remains unaffected by the Award. It is for the employer, on the balance of probabilities, to bring his conduct within that common law entitlement. See North v. Television Corporation Ltd. supra. iB 9) It was not suggested by the respondent that there had been malingering or misconduct on the part either of Mrs. Farrell or Miss Clifford; the question 1s whether in each case there was such inefficiency or neglect of duty as to justify summary dismissal. Some early decisions approached the matter of summary dismissal on the basis that the term "misconduct" subsumed all relevant grounds. The prevailing view is that there are a number of independent grounds. But in either case the underlying principle is the same. The courts have drawn on the analogy of conditions and warranties in commercial contracts and have required that conduct justifying summary dismissal be such as to strike at the basis of the relationship between employer and employee, to be conduct "so seriously in breach of the contract that by standards of fairness and justice the employer shall not be bound to continue the employment" (North v. Television Corporation Ltd. supra. at pp.608-609). The test has been expressed in various ways and I shall refer only to dicta in two other decisions: ... the question must be - if summary dismissal is claimed to be justifiable - whether the conduct complained of 1s such as to show the servant to have disregarded the essential conditions of the contract of service" (Laws v. London Chronicle (Indicator Newspapers) Ltd. (1959) IL WLR 698 p.700). "Tt 1s incontestable that any conduct of an employee which is not merely inconsistent with some particular obligation involved, and possibly not striking at the root of the matter, but which is inconsistent with the relation established, is a just cause for the employer's termination of that relation. Habitual neglect or a definite refusal of a general kind to pursue the employer's lawful policy of business would afford such justification" (Adami v. Maison De Luxe Ltd. (1924) 35 CLR 143 at p.153). How then does one apply these principles to the facts of the present application? The respondent points to the effect of the employees' conduct on the profitability of its operation. It points out that 1n neither case was there simply a slip or momentary inattention on the part of the employee. Mrs. Farrell was working on the job in question over a period of two weeks. Miss Clifford had been working on her job only for a short time and only 12 books were involved, but there were many errors in those books. The respondent also points to the general warning given on 1 September 1982 and the warning addressed more directly to the two employees and to two others not long before the dismissals. The applicant points to Mrs. Farrell''s long history of employment in the printing industry and to her employment by the respondent for some 3 1/2 years. He also points to Miss Clifford's employment by the respondent from 1975 until her dismissal in 1982. There was also evidence, unchallenged, by Mr. 10. Plummer who, until his retirement, was an organiser with the Pranting and Kindred Industries Union. Mr. Plummer gave evidence that, in connection with a Board of Reference hearing, Mr. Milburn told him that "he had a lot of respect for Melanie Clifford and he said that 1f she had come and asked him for her job back the following day he would have re-employed her but he made no mention whatsoever of Mrs. Farrell - not in respect of employment". I have considerable sympathy for the respondent in the situation in which it was placed. Clearly, in respect of the book "In Search of Elizabeth" and the calendar for Mt. Newman Mining Co. Pty. Ltd., it was not getting the standard of work it was entitled to expect. But, in such a_ situation, the alternatives available to the employer were not confined to retaining the employee or dismissing her summarily. Under the Award the service of either employee could be terminated on a week's notice. The question 1s whether the employer was justified in taking the drastic step of summary dismissal, a step that not only has financial implications for the employee but carries with ita certain obloquy. In my view the respondent has not justified the course 1t took. I donot think that the situation was such that the respondent could not be expected to allow the relationship of employer and employee to continue any longer. And, however much the conduct of the two employees was open to criticism, I do not think it went sa far as to indicate an inability or unwillingness to perform the duties for wnich they were engaged. It follows then that there was a breach of the Award in the case of each dismissal. At the hearing counsel asked to defer any submissions concerning penalty until TI had dealt with the substantive issue, I acceded to that request and, in the ciecumstances, Ido no more at this stage than find that in summarily dismissing Margaret Farrell on 23 September 1982 and in summarily dismissing Melanie Clifford on 24 September 1982 the respondent committed a breach of clause 9(c) of the Graphic Arts Award, 1977. I certify that this and the ten preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr, Justice Toohey Meueen Kesey — Associate Dated: 30 March 1984