FEDERAL COURT OF AUSTRALIA Vickery v Assetta [2004] FCA 555 INDUSTRIAL LAW – unlawful termination – prohibited reason – compensation – whether unpaid pages can be included under s 170CH(7)(e) – payment in lieu of notice – "ordinary hours" – penalty – whether payable to employee Workplace Relations Act 1996 (Cth) ss 170CE(1)(a), 170CF(2), 170CFA(4), 170CH(7), 170CH(8), 170CK(2)(f), 170CM(2), 170CM(4), 170CM(5), 170CQ(a), 170CR(1), 170CR(2), 356(b) Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1 referred to Andrew James Fox v St Barbara Mines Ltd [1998] FCA 621 followed Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (1999) 89 IR 360 cited Browning v Crumlin Valley Collieries, Limited [1926] 1 KB 522 cited Cox v South Australian Meat Corporation (1995) 60 IR 293 cited D.A. Moore v Highpace Pty Ltd (18 May 1998, AIRC, Boulton J, Watson SDP and Whelan C, Print Q0871) referred to GH Operations Pty Ltd t/as The Grant Hyatt Melbourne v V Smith (14 May 2001, AIRC, Giudice P, O'Callaghan SDP and Smith C, Print PR904136) followed Leemon v Treasure Books Aust Pty Ltd t/a Merchant Sampler Advertising (1997) 75 IR 138 referred to Stewart v Nickels [1999] FCA 888 cited GEOFFREY VICKERY v ANDREW ASSETTA trading as VEHICLE ENVIRO WASH V985 of 2003 FINKELSTEIN J 4 MAY 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 985 of 2003 BETWEEN: GEOFFREY VICKERY Applicant AND: ANDREW ASSETTA trading as VEHICLE ENVIRO WASH Respondent JUDGE: FINKELSTEIN J DATE OF ORDER: 4 MAY 2004 WHERE MADE: MELBOURNE THE COURT DECLARES THAT: On 28 July 2003 the respondent, Andrew Assetta contravened ss170CK and 170CM of the Workplace Relations Act 1996 (Cth)in relation to the termination of the employment of the applicant, Geoffrey Vickery. THE COURT ORDERS THAT: 1. A penalty of $3000 be imposed on the respondent. 2. The $3000 penalty be paid to the applicant. 3. The respondent pay the applicant compensation in the sum of $2863.65. 4. The respondent pay the applicant compensation in lieu of notice in the sum of $593.76. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 985 of 2003 BETWEEN: GEOFFREY VICKERY Applicant AND: ANDREW ASSETTA trading as VEHICLE ENVIRO WASH Respondent JUDGE: FINKELSTEIN J DATE: 4 MAY 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The applicant, Mr Vickery, is profoundly deaf, intellectually disabled and dyslexic. He can read and write very basic printed words. Mr Vickery's disabilities have not prevented him from working. By all accounts he is both a hard worker and keen to work. Since completing school he has held numerous labouring jobs. This case is concerned with the termination of his last job. Mr Vickery had been employed by the respondent in a car wash business. The employment came to an end when he was dismissed without notice. Mr Vickery says that he was dismissed due to his physical or mental disabilities. Accordingly, he seeks compensation from the respondent under s 170CR(1) of the Workplace Relations Act 1996 (Cth). 2 The application, supporting affidavits and the orders listing the matter for trial were served on the respondent. The action, however, is undefended. I should also add, in case it becomes relevant at a later stage, that the respondent did not attend the conciliation conference before the Australian Industrial Relations Commission late last year. 3 Before outlining the facts I wish to make two preliminary observations. First, Mr Vickery is represented by the Disability Employment Action Centre (DEAC), a federally funded not-for-profit organisation. DEAC assists people with disabilities with, among other things, finding suitable employment and the provision of legal advice. The second observation concerns the nature of the evidence tendered in support of Mr Vickery's claim. Much of the evidence is hearsay. The respondent was not in court to object to evidence given in this form. Nevertheless I required some of the evidence to be verified. A perusal of the transcript will indicate the areas. 4 On 20 September 2002 Mr Vickery commenced employment with Sparkles Express Hand Wash Pty Ltd as a hand car washer and car detailer. He worked under the supervision of the owner of the company, Mr Taylor. Mr Vickery's tasks included washing, waxing, vacuuming and drying cars. Mr Vickery's employment had been arranged through DEAC. It was a part time job, under Award conditions. Mr Vickery was paid $12.37 per hour. He worked for eight hours every Friday for which he received $98.96 (gross). Sometimes Mr Taylor required Mr Vickery to work additional hours. He would send Mr Vickery a fax giving him advance notice of the times. I do not have the details of the extra hours worked. Mr Vickery was happy working for Mr Taylor. In turn Mr Taylor (apart from a few minor issues) was satisfied with Mr Vickery's performance, so much so that DEAC even considered making Mr Vickery an independent worker (which I assume means that DEAC would not monitor Mr Vickery's employment). 5 In late June 2003 Mr Taylor sold the car wash business to the respondent. At first it appeared that Mr Vickery would benefit from the change in ownership. The respondent agreed to employ Mr Vickery on a full time permanent basis beginning 26 June 2003. Mr Vickery's duties were reflected in a job description which was prepared by DEAC following a meeting between one of its representatives and the respondent. The job description records that Mr Vickery would be working a five day 45 hour week, from 7.30am until 5.00pm with a 30 minute lunch break. His pay was $12.37 per hour. 6 Mr Vickery's problems commenced soon after the respondent took over the business. First he was not paid for the actual hours he worked. In the week 26 June 2003 to 2 July 2003 Mr Vickery worked 54.5 hours. He should have been paid $674.16 (gross). Yet, Mr Vickery's pay slip indicates that he only received $473.00 (gross). For the period 3 July to 7 July 2003, Mr Vickery worked 27.5 hours. He was asked to work on 8 July 2003 but when he arrived he was told to go home. Mr Vickery should have been paid $439.13 for the period 3 to 8 July 2003 ($12.37 per hour for 27.5 hours and a further 8 hours for 8 July 2003). However his pay slip records that he was paid only $344.86 (gross). There is evidence that Mr Vickery worked 45.5 hours between 9 July and 13 July 2003 but no evidence as to the amount he was paid. Mr Vickery also worked between 14 July and 28 July 2003 but the evidence is silent on the hours worked. On 1 August 2003 the respondent gave Mr Vickery a cheque for $160; it is not clear to which period that this cheque related. In any event, the cheque was dishonoured. Mr Vickery was also required to purchase a uniform for which he has not been reimbursed. 7 Shortly after Mr Vickery began working for the respondent his mother sought to clarify Mr Vickery's terms of employment, in particular his working hours and rate of pay. She did this because Mr Vickery was in receipt of a disability pension and any income that he received would effect his entitlements. The respondent informed her that Mr Vickery's wage was $431.00 (gross) per week. No further information was provided. 8 Mrs Vickery became concerned about the low wage being paid to her son given the long hours that he was working. She advised DEAC of her concerns. On 18 July 2003 DEAC wrote to the respondent suggesting that Mr Vickery was being overworked and underpaid. The respondent contacted the author of the DEAC letter and spoke to her in an angry and threatening tone. He also tore up the DEAC letter in front of Mr Vickery. 9 Following DEAC's approach, the respondent's attitude towards Mr Vickery became intolerable. He was often angry with Mr Vickery, laughing at him and ridiculing him. This encouraged other employees to behave in a similar manner. Not surprisingly, Mr Vickery became very distressed by this behaviour. Things came to a head on 28 July 2003 when the respondent terminated Mr Vickery's employment. 10 Mr Vickery contends that the termination was in breach of s 170CK of the Workplace Relations Act. That section prohibits an employer from terminating an employee's employment on account of, among other categories, the employee's "physical or mental disability": s 170CK(2)(f). Mr Vickery applied to the Australian Industrial Relations Commission for relief. Attempts at conciliation were unsuccessful. On 14 October 2003 the Commission issued a certificate to that effect under s 170CF(2). The certificate also states that "on the information put on behalf of the Applicant at [the conciliation] conference, the application appears to have merit in so far as it concerns the grounds in ss 170CE(1)(a) and 170CK of the Act". 11 Following the issue of the certificate Mr Vickery gave notice to the respondent that he had elected to begin court proceedings: s 170CFA(4). On 27 October 2003 Mr Vickery commenced this proceeding seeking orders under s 170CR of the Act. 12 I am in no doubt that the respondent terminated Mr Vickery's employment because of his physical or mental disability. He did this when he discovered that he could no longer exploit Mr Vickery on account of his disabilities. At first the respondent exploited Mr Vickery's work ethic and keenness to work by making him work long hours without appropriate pay. He probably thought that he could get away with this because of Mr Vickery's disabilities. Perhaps he thought that no one would know that he was exploiting Mr Vickery or that no one would believe Mr Vickery's account of the long hours that he worked. When Mr Vickery's mother and DEAC became involved things moved quickly. Within ten days, Mr Vickery's employment came to an end. There is no suggestion that his employment was terminated because he could not perform his work. These are the circumstances which lead me to conclude that Mr Vickery's employment was terminated on account of his disabilities. 13 This is not a finding that I am required to make. Section 170CQ(a) provides that in a proceeding of this type the employee need not prove that the termination of his employment was for a proscribed reason. The onus is on the employer to prove that the termination was for a reason which did not include a proscribed reason. The respondent did not attempt to discharge this onus. 14 The factors that I must consider in calculating the amount of compensation payable to a person whose employment is terminated in breach of s 170CK(2) are set out in ss 170CH (7) and (8): see 170CR(2). Relevantly those sub-sections provide: "170CH(7) Subject to subsection (8), in determining an amount … the [Court] must have regard to all the circumstances of the case including: (a) the effect of the order on the viability of the employer's undertaking, establishment or service; and (b) the length of the employee's service with the employer; and (c) the remuneration that the employee would have received, or would have been likely to receive, if the employee's employment had not been terminated; and (d) the efforts of the employee (if any) to mitigate the loss suffered by the employee as a result of the termination; and (e) any other matter that the [Court] considers relevant. 170CH(8) In fixing an amount … for an employee who was employed under award conditions immediately before the termination, the Commission must not fix an amount that exceeds the total of the following amounts: (a) the total amount of remuneration: (i) received by the employee; or (ii) to which the employee was entitled; (whichever is higher) for any period of employment with the employer during the period of 6 months immediately before the termination (other than any period of leave without full pay)… (b) ……." 15 I am required to consider and give effect to each of the factors listed in s 170CH(7): GH Operations Pty Ltd t/as The Grant Hyatt Melbourne v V Smith (14 May 2001, AIRC, Giudice P, O'Callaghan SDP and Smith C, Print PR904136) at 10. After assessing the appropriate compensation independently of the statutory limit, I must then determine whether the assessment is over that limit. If it is the statutory limit is applied: Cox v South Australian Meat Corporation (1995) 60 IR 293, 302. 16 I will deal with the factors in the same order as they appear in the sub-section: (a) Section 170CH(7)(a): I will assume that the respondent's business will be unaffected by the payment of compensation. The onus is on the employer to bring in evidence to the contrary: D.A. Moore v Highpace Pty Ltd (18 May 1998, AIRC, Boulton J, Watson SDP and Whelan C, Print Q0871). (b) Section 170CH(7)(b): Mr Vickery was employed in the car wash business for ten months. During the first nine months he worked at least an eight hour week. He also worked additional hours, but the details are not given. It is, however, reasonable to infer that he worked an additional two hours per week, that is an additional 20 per cent. (c) Section 170CH(7)(c): The nine continuous months that Mr Vickery worked for Mr Taylor suggests that he was well suited to the car washing business. This is partly confirmed by the fact that the respondent employed Mr Vickery on a full time basis. I estimate that Mr Vickery would have continued working for the respondent on a full time basis for a further 26 weeks. Looking beyond that period involves too much speculation. On this estimate Mr Vickery lost $12,864.80 in pay. It is appropriate to reduce this loss by $2,864.80 to account for contingencies. (d) Section 170CH(7)(d): Mr Vickery remains a client of DEAC's employment service. He is trying to get another job but has been unable to do so. Mr Vickery's willingness and efforts to seek further employment means that it is inappropriate to make any deduction on the basis that Mr Vickery is not attempting to mitigate his loss. (e) Section 170CH(7)(e): The cases say that I can include in the measure of compensation "a sum sufficient to compensate an employee for mental distress or injured feelings caused by harsh, unjust or unreasonable termination of employment": Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia – Western Australian Branch (1995) 63 IR 1, 9 per Lee J. I am able to award compensation under this head provided the evidence discloses that the employee has suffered such injury: Leemon v Treasure Books Aust Pty Ltd t/a Merchant Sampler Advertising (1997) 75 IR 138, 147 per Ross VP, Watson DP and Gay C). Mr Vickery's mother said that "[the respondent's] behaviour towards [Mr Vickery] has caused a great deal of distress to him including the humiliation that he has suffered in being made fun of, the lies that [the respondent] has told about him and being sacked ". (Emphasis added). I propose to award Mr Vickery $5,000 for mental distress. 17 Mr Vickery's case also raises the question whether it is permissible to include in his compensation an amount for unpaid wages. Such an amount is of course recoverable in separate proceedings. It seems to me that it can also be claimed in an unlawful dismissal claim under s 170CH(7)(e). There is no reason to give this broad provision a narrow operation. 18 Mr Vickery should be paid the wages that are still owing to him in relation to his unpaid hours of work. It is trite law that an employee must be paid for his services: Browning v Crumlin Valley Collieries, Limited [1926] 1 KB 522, 528 per Greer J: ("The consideration for work is wages, and the consideration for wages is work"). I will only require the respondent to pay Mr Vickery for the unpaid wages identified in the evidence. The evidence discloses that Mr Vickery was underpaid $201.16 (gross) between 26 June 2003-2 July 2003 and $94.27 (gross) between 3-8 July 2003. 19 Accordingly, Mr Vickery's compensation in lieu of reinstatement comes to $15,295.43. The figure consists of $10,000 for lost wages that Mr Vickery would have received if his employment had not been unlawfully terminated, $5,000 for mental distress and $295.43 for unpaid wages. 20 It is necessary to examine whether this amount exceeds the statutory limit. First I must calculate the total amount of remuneration that Mr Vickery was entitled "for any period of employment with the employer during the period of 6 months immediately before the termination": s 170CH(8)(a). The word "employer" here must mean the respondent. There is evidence that between 26 June 2003 and 13 July 2003, Mr Vickery worked 135.5 hours for the respondent. There is no direct evidence of the hours he worked between 14 July 2003 and 28 July 2003. As a full time employee, Mr Vickery is entitled to be paid a 45 hour week during this period (90 hours). For reasons which appear below, I will infer that Mr Vickery would have worked an additional six hours overtime during this period. Accordingly Mr Vickery worked, and would have worked, for 231.5 hours. On these figures the statutory limit comes to $2863.65 (gross) being 231.5 hours at $12.37 per hour. 21 In his letter of election given under s 170CFA(4) Mr Vickery notified the respondent that as well as seeking compensation for unlawful dismissal he would also seek payment in lieu of notice of termination of employment. Mr Vickery did not formally seek leave to amend his application to bring in this claim but led evidence in support of it. If it be necessary I would grant Mr Vickery leave to amend his application to claim compensation under s 170CM. I will now deal with the merits of this claim. 22 First I will examine whether Mr Vickery was given the requisite period of notice of termination required by s 170CM of the Workplace Relations Act. Mr Vickery was employed at the relevant car washing business, first by Mr Taylor and then the respondent, for ten months. He was therefore entitled to one week's notice: s 170CM(2). Sub-sections 170CM(4) and 170CM(5) provide the formula for calculating compensation in lieu of notice. They state: "170CM(4) The required amount of compensation instead of notice must equal or exceed the total of all amounts that, if the employee's employment had continued until the end of the required period of notice, the employer would have became liable to pay to the employee because of the employment continuing during that period. 170CM(5) The total must be worked out on the basis of: (a) the employee's ordinary hours of work (even if they are not standard hours); and (b) the amount ordinarily payable to the employee in respect of those hours, including (for example) allowances, loading and penalties; and (c) any other amounts payable under the employee's contract of employment." 23 The required period of notice should have been a week from 28 July 2003. A more difficult question, however, is calculating the amount that Mr Vickery would have been paid in relation to the "ordinary hours" that he worked for the respondent. In the first week Mr Vickery worked 54.5 hours over a seven day period, which is some nine hours more than his standard hours of work. In the second and possibly the third week Mr Vickery worked more than his standard hours, however the exact hours cannot be ascertained. In Andrew James Fox v St Barbara Mines Ltd [1998] FCA 621 French J (at 12) said: "[I]t is appropriate … that when an employee is regularly working in excess of the standard hours for which the award or agreement provides the obligation to pay compensation in lieu of notice has regard to the reality of the employment and not to the artificial distinction between the base and actual hours worked". 24 It is likely that Mr Vickery would have worked additional hours had his employment continued until the expiry of the required period of notice. I base this conclusion on the fact that Mr Vickery worked additional hours during at least the three of the four weeks that he was employed by the respondent. The amount of additional hours he would have worked in his last week is a little speculative. A reasonable estimate is that he would have worked an additional three hours. The figure is not as high as the nine hours Mr Vickery worked in the first week because, given the deteriorating relationship between the parties, it is unlikely that he would have been required to work such overtime. Accordingly, Mr Vickery is entitled to $593.76 (gross) in lieu of notice. This figure consists of his standard 45 hours plus three additional hours at a rate of $12.37 per hour. 25 There is one final matter to deal with. Section 170CR(1)(a) provides that where an employer has contravened s 170CK the court can impose "a penalty of not more than $10,000". I think the appropriate penalty here is $3,000. The respondent is a first offender so the penalty should not be of the highest order. On the other hand it is necessary to deter both the respondent and others from engaging in the despicable conduct which occurred here. 26 Section 356(b) provides that a penalty can be paid "to a particular … person": In Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v DMG Industries Pty Ltd (1999) 89 IR 360 Marshall J held the penalty can be paid to the applicant. See also Stewart v Nickels [1999] FCA 888 at [78] per Ryan J. I will make such an order in this case. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. Associate: Dated: 4 May 2004 Counsel appearing for the Applicant: Ms K Wilson Solicitor for the Applicant: Disability Employment Action Centre No Appearance for the Respondent. Date of Hearing: 16 April 2004 Date of Judgment: 4 May 2004