Keith Richard Knight and Yorke Motors Mitsubishi [1994] IRCA 146

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY NO. SI 157 OF 1994 BETWEEN: KEITH RICHARD KNIGHT Applicant AND: YORKE MOTORS MITSUBISHI Respondent REASONS FOR JUDGMENT BOULTON J.R. Mr. Knight (the applicant) is a car salesman who appears to be in his thirties. The respondent operates car yards. During the course of the trial, the parties agreed that the name of the respondent ought to be amended to Yorke Motors (City) Pty. Ltd. ACN 007 912 414, and I so ordered. The parties agreed also that the Award under which the applicant was employed was the Federal Vehicle Industry Repair Services and Retail Award 1983, as amended. -2- The applicant took up employment with the respondent as its business manager on 28 February, 1994. His employment was terminated on 12 May 1994. The applicant had a good work history having been employed in the car industry since 1978, principally in the finance and insurance side of that business. Essentially, this involves him speaking to new and used car customers once cars have been purchased at which time the purchasers discuss with him the financing and insuring of their buys. This generally was the nature of his duties with the respondent. By the application filed on his behalf, the applicant sought, inter alia, an order declaring the termination of his employment to have contravened Division 3 of Part VIA of the Industrial Relations Act 1988 ("the Act"). While the application was filed out of time, there was no -3- contest at trial that the time for filing it should be extended. The only witnesses called to give evidence were the applicant and a Mr. Lawler who, at the time of the commencement of the applicant's employment, was the respondent's dealer principal. In evidence, the applicant insisted that Mr. Lawler on behalf of the respondent engaged him as business manager on a long-term basis. Mr. Lawler denied this. This was the only significant area of conflict in the evidence. Mr. Aujard on behalf of the applicant contended that his client had been denied procedural fairness. This was put on the basis that long-term employment should not have been promised to him at the outset in view of the fact that it must then have been known to the respondent that a proposed restructuring of its business meant that the applicant's long-term future would be placed in jeopardy. -4- On the other hand, the respondent pointed to evidence that a decision to restructure the respondent's business had only occurred within a very short period before the applicant's employment was terminated. The restructuring of which I have spoken involved a change in ownership and management of the respondent's business such that a Mr. Perry was going to take over some of the duties, at least, of Mr. Lawler which meant that Mr. Lawler would be freed up to take over the duties of the applicant's position, thus rendering the latter redundant. It is common ground that Mr. Lawler spoke with the applicant on 12 May 1994, and the applicant finished up his employment that evening. I find it unnecessary to resolve the conflict between the applicant and Mr. Lawler as to what Mr. Lawler said to -5- the applicant during his interview for the job. Even if Mr. Lawler when interviewing the applicant used the words long-term employment, I doubt that he should be taken as having promised on behalf of the respondent that no matter what occurred, the applicant's employment was "safe" long-term. The applicant agreed in evidence with the proposition that in the ordinary course, the security of his employment depended on performance. This to my mind seemed a sensible concession, given the nature of the duties of that employment. There was no contest at trial that the applicant was given appropriate compensation instead of the notice required by s. 170 DB of the Act. The respondent contended that it terminated the applicant's employment for a valid reason based on the operational requirements of the business within the meaning of ss. 170 DE(1). The applicant queried whether -6- or not the respondent had satisfied the onus of proof on it in this regard but in any event, submitted that the termination contravened ss. 170 DE(1) because the applicant had proved that, because of ss. 170 DE(2), the reason proved by the respondent was not valid, the termination being harsh, unjust or unreasonable. There is an obligation to afford procedural fairness during the process of terminating an employee's employment. Not to do so would be "unjust" - Byrne v Australian Airlines Limited 52 IR 10, especially at 63-4. I have qualms about the sufficiency of the evidence offered by the respondent concerning its operational requirements. It seems unlikely that it was only just days before the applicant's termination that the decision to alter those requirements had been made. However, even assuming for present purposes that the respondent has proved, apart from ss. 170 DE(2) a valid reason of the -7- kind referred to in ss. 170 DE(1), I am satisfied that the applicant has proved his termination was harsh, unjust or unreasonable (and therefore a contravention of ss. 170 DE(1)) because of the lack of procedural fairness accorded to him. Without any warning, he was simply called in and thereupon sacked. It was common ground between the parties that his termination had nothing to do with his performance as an employee. Reinstatement as a remedy was not pressed. The focus rather was on compensation. Fortunately, the applicant had managed to secure fresh employment on about 11 August 1994, which employment he still held at trial. It was put to the applicant in cross-examination that during the course of his employment with the respondent, his average gross weekly pay was $872.81. He agreed that this figure could well be correct. After termination, the applicant was unemployed for a day short of 13 weeks, -8- apart from one day's work for which he received $250.00 gross. In my view, procedural fairness required at least consultation with, and warning to, the applicant of his proposed termination so that he might be active seeking other employment before that termination occurred. I take the view that he ought to have been given such an opportunity, and his employment not terminated, until mid-June 1994. In other words, I consider that the respondent ought to have phased in the restructuring of its business to allow the applicant this period within which to seek other employment. I proceed to fix compensation by reference to this period, noting the week's pay the applicant received in lieu of notice and the one day's earnings previously referred to. I assess compensation in the rounded off sum of $3,240.00. -9- I order that: 1. The time for filing the application be extended to 17 June 1994. 2. The application be allowed. 3. The respondent pay to the applicant the sum of $3,240.00 compensation, such payment to be made within 21 days of the date of this order. I certify that this and the EIGHT (8) preceding pages are a true copy of the reasons for judgment of Judicial Registrar Boulton. -10- Dated this day of October, 1994 Solicitors for the Applicant: Lempriere Abbott McLeod Solicitor appearing for the Applicant:Mr. E. Aujard Solicitors for the Respondent: Solicitor appearing for the Respondent: Mr. T. Forrest Date of hearing: 6 October, 1994 Date of judgment: 14 October, 1994