C A T C H W O R D S INDUSTRIAL LAW - Termination of employment - Complaint of unlawful termination - capacity or conduct of employee - procedural fairness in relation to mental illness Industrial Relations Act 1988, S170DC, S170DE, S170EA No. NI 1022 of 1994 PIO RACELIS -v - CORINTHIAN INDUSTRIES (ST MARYS) PTY LIMITED Robin Beadon Liddell v Cheryl Lembke t/as Cheryl's Unisex Salon No. NI 200 of 1994 Before : Tomlinson JR Place: Sydney Hearing Date: 14 February 1995 Judgment Date:27 February 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NI 1022 of 1994 Between: PIO RACELIS Applicant And: CORINTHIAN INDUSTRIES (ST MARYS) PTY LIMITED Respondent Before: Judicial Registrar TOMLINSON Place: Sydney Date of Hearing: 14 February 1994 MINUTES OF ORDER THE COURT DECLARES: That the termination of the Applicant's employment by the Respondent contravened Division 23 of Part VIA of the Industrial Relations Act 1988 THE COURT ORDERS THAT: 1. The Respondent is to pay to the Applicant the sum of Three Thousand Dollars. 2. Stay of 21 days. Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NI 1022 of 1994 Between: PIO RACELIS Applicant And: CORINTHIAN INDUSTRIES (ST MARYS) PTY LIMITED Respondent REASONS FOR JUDGMENT By application dated 26 September 1994 the applicant Mr Pio Racelis sought compensation for losses suffered by him arising out of the alleged unlawful termination which occurred on 20 October 1994. The applicant did not seek re-instatement. The Court heard evidence from The applicant Mr Pio Racelis The Production Manager Mr John Hedges on behalf of the respondent. Prior to commencing the examination in chief of the applicant Mr Icao tendered as exhibit '1' a medical report from Dr Leslie H See dated 13 February 1995 which stated: "Medical Report Pio Racelis Dear Sir This gentleman has been my patient since 5.4.1990 On 21/9/94 I was contacted by Dr David Allen - occupational medical therapist for Mr Racelis's employer who said he was being aggressive towards his fellow workers. I saw him and referred him to the Psychiatrist at the Penrith District Health Centre at Henry Street Penrith. He was treated there by a Psychiatrist who wrote to me on 14/10/94 and who said that he was then fit to go back to work (see letter to Psychiatrist). I sent him back to work when he saw me on 18/10/94. But he was sacked then. He was admitted to Cumberland Hospital from 25/6/90 to 13/7/90 for acute psychotic illness and delusional disorders. He was well and followed up at the Penrith Health Centre by the Psychiatrist. He started work in 1991 and he saw me on 29/8/91, 22/10/93 and 29/3/94 for common illnesses (common cold). He appeared well and happy at his work. I think he should be given a chance to work and if he has any symptoms he is to be treated Yours sincerely Leslie Smee". The paragraph dealing with an opinion expressed by another doctor at this stage was objected to and so not admitted to the record. The applicant's solicitor also tendered a medical certificate from the Penrith District Health Service dated 14/10/94 signed by Dr Crawford which stated: "Dear Sir I saw Pio Racelis on 10.10.94. His symptoms appeared to have resolved, he had ceased his medication four days prior to seeing me. I suggested he continue the 2.5. mgms fluphenazine (he has been on 7.5.mgms) until he returned to work. He did not wish to continue the fluphenazine after his return to work as he works with machines. He agreed that if he experienced any of the feelings re his workmates on his return to work, or if any symptoms recurred he would contact the mental health team immediately I see no reason why he cannot return to work at this stage. Yours faithfully Dr Crawford ". The Applicant told the Court that he was born on 23 July 1944 and that he commenced employment with the respondent in 1991 after a successful 2 weeks Jobstart initiative and that he had been employed there until his termination on 20 October 1994. The applicant, although he apparently has qualifications in the electrical mechanical field, was employed to operate a paper making machine. It was common ground that the employment scenario of the applicant was unhappy - the applicant told the Court he experienced certain difficulties with a co-worker Mr Gil Belarmino. It appears that the applicant was of the opinion that Mr Belarmino was having a sexual relationship with his daughter. It is likely that this opinion of the applicant's was caused by delusion related to mental disorder. The circumstances which give rise to this application commenced during the middle of September 1994 when the applicant went to the Production Manager Mr Hedges and asked to be transferred to another machine. The Production Manager was alarmed at the continuing behaviour of the applicant and asked the applicant to speak with the company doctor and so Mr Hedges set up a meeting. The applicant spoke with the company doctor Dr Allen who referred him to his treating doctor Dr Leslie See and Dr Allen gave the applicant 4 weeks sick leave from work. The applicant's general practitioner Dr See referred the applicant to a specialist psychiatrist - Dr Crawford at the Penrith Area Health Service. At the end of the sick leave the applicant presented for work and was requested by his foreman to see Mr Hedges. Mr Hedges determined that the state of the applicant's health needed further assessment and so a further interview was arranged with Dr Allen. After that interview the applicant went home and on the next day he was requested to attend the company for a meeting. Present at that meeting was the Union representative Mr Gary Higgins together with Mr Hedges. At that meeting the applicant was terminated and given 3 weeks pay and accrued holiday pay. Subsequently the applicant received a further week's pay in the mail and advised the Court that the further week's pay was because he was aged over 45 years. Under cross examination the applicant was shown his Employment Application - exhibit 'A' and under the heading "Medical" the applicant had left blank the space provided for "give details of any serious injury and "give details of any serious physical defect". The applicant explained that he had left those spaces blank as he did not feel he had been ill. The medical certificates referred to above were drawn to the attention of the applicant and I am satisfied there was no intention by the applicant to deceive his employer and further, there was no evidence brought to the Court that it was the policy of the respondent to take any disciplinary action as a result of failure to disclose a psychiatric condition. Under cross-examination the applicant agreed there had been many discussions between himself and the manager Mr Hedges concerning his attitude to his fellow workers. The applicant displayed no hostility nor resentment to Mr Hedges. On one occasion the applicant agreed that he stated to Mr Hedges in relation to the alleged matter involving his daughter and Mr Belarmino that: "a man could commit a murder over something like this." The applicant told the Court that Dr Crawford prescribed medication for him which he took and that after he had finished the medication he went to visit Dr See who gave him a certificate that he was fit to work upon reading Dr Crawford's report. It appears that Dr See did not ask him questions and in fact may not have carried out a detailed medical assessment of the situation. The applicant told the Court that since January 1995 he had been in permanent employment with another company and in fact was receiving more by way of weekly wage than he had been when employed by the respondent. Mr John William Hedges gave evidence on behalf of the respondent and told the Court he was the Production Manger and had been with the company since 1982. It was Mr Hedges who interviewed the applicant for his job initially and stated that had he been aware of the history of mental disorder he may have considered other applications over that of the applicant's. The witness told the Court that as manager he was involved in situations when the applicant would regularly "go off the rails" and that from 15 April 1994 the witness had kept a file on the number of times he had had to have discussions to "quieten the applicant down". Mr Hedges stated that a Union representative would always be present during these discussions. On 15 September 1994 the applicant came to visit the witness and told him that he was enrolled in a night school and that recently he had attended classes and all the class had risen to its feet and clapped and cheered when he entered the room as Mr Belarmino had told the class that he was having a sexual relationship with the daughter of the applicant. Mr Hedges found this story to be most alarming. It was common ground that the witness then arranged for the applicant to have a visit from Dr Allen and the month's sick leave was given. At the end of that time the witness returned to work and the witness established, having read the medical certificates, that the applicant was taking no medication and that he: "still felt the same way about his co-workers". On 19 October 1994 Mr Hedges determined to dismiss the applicant. He telephoned the applicant at home and asked him to attend a meeting the next day 20 October 1994. Present were the Union representative and another person. The witness was mindful of his obligations to the other employees concerning personal safety and was of the view that the applicant was medically unfit to work. The witness took his responsibilities seriously and considered the position of all parties involved. From the evidence before the Court the respondent had made up its mind to dismiss the applicant on the grounds of medical reports coupled with the fact that the health and attitude of the applicant had not changed. It was conceded that the applicant at that final interview was given no opportunity to answer the allegations nor to discuss the matters. Mr Hedges was of the view that that opportunity had been afforded to the applicant many times during the course of the employment. During the course of the dismissal meeting the applicant stated that he had intended to resign anyway, at Christmas. It appears that on several occasions during the course of the employment the applicant stated to Mr Hedges that he wanted to resign and that Mr Hedges had persuaded him not to do this. A medical report dated 1 December 1994 from Dr David Allen, Occupational Physician, was marked exhibit "D" and had previously been served on the applicant's solicitors.. In that report Dr Allen stated: "I was asked to see Mr Racelis in the workplace on 20/9/94 by Mr John Hedges. The situation has been that Mr Racelis is alleged to have been causing some disruption in the workplace..... At that stage I considered that Mr Racelis was likely to be suffering schizophrenia.... I later saw Mr Racelis on 24/10/94 in our Wetherill Park rooms. He stated he had seen a psychiatrist.....who had given him medication...commonly used in the treatment of schizophrenia and other disorders... Mr Racelis appears to be suffering from schizophrenia. This has caused, according to the described incidents, some disruption in the workplace. he stated that he had ceased his medication.....Whilst he is off medication he would be unsuitable for work...". On behalf of the respondent it was argued that there was a valid reason for the termination of the employment - and to that end the respondent relied on the evidence of the Production Manager Mr Hedges. It was further argued that the applicant lacked the capacity to fulfil his duties as stated in Section 170 DE (1). On behalf of the applicant it was argued that the respondent had breached Section 170 DC that the employee was to have the opportunity to respond to allegations. In a decision of Wilcox CJ, in Robin Beadon Liddell v Cheryl Lembke t/as Cheryls Unisex Salon No. NI 200 of 1994 it is stated: "Subdivision B of Division 3 (of the Industrial Relations Act 1988) specifies the requirements for lawful termination of employment. There are six limitations on an employer's right to terminate an employee's employment. First, notice must be given: See s. 170DB. This section includes a table stating the required period of notice. The basic period depends upon the length of the employee's continuous service with the employer. The table adds a week where the employee is over 45 years old and has completed at least one year's continuous service. Section 170DB (1) (b) excepts from the notice the requirement in the cases of an employee guilty of serious misconduct. But the second requirement of Subdivision B limits resort to that exception. Section 170 DC provides that an employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless the employee has been given the opportunity to defend himself or herself against the allegations made or the employer could not reasonably be expected to give the employee that opportunity. It will been seen that the section introduces the concept of procedural fairness into statutory employment law. Employees, other than excluded employees, now have a legal right to be treated fairly. If an employee denied procedural fairness, it will generally be unlawful to dismiss him or her, even for serious misconduct or significant deficiencies." The judgment of Wilcox CJ does not say that a respondent is relieved from his obligations under the section by reason of the fact that the applicant lacks capacity to perform his duties. Here it was the medical opinion only of the respondent that categorically stated that the applicant lacked capacity to work. The opinion of Dr Crawford it may be argued was ambivalent. It was common ground that at no time was the applicant warned that his conduct or performance could lead to dismissal. To the contrary, he was encouraged to stay with the respondent when he mentioned that he may resign. Having regard to the nature of the disability of the applicant I am of the view that the respondent had a duty to warn the applicant that his employment was in jeopardy and a duty to allow the applicant to deal, if he could, with the issue that his conduct could lead to dismissal. I am of the view that the respondent in failing to give the plaintiff opportunity to answer the allegations, in spite of the medical reports which cast doubt on the capacity of the employee to work, breached its obligations under the Act. At the time of the termination the employee received a statement setting out an analysis of the payments the employer was offering. There was as such, no formal written termination of employment. Until that was received an employee may be entitled to assume there had been no dismissal as s. 170EA (30 of the Act states): An application must be made: (a) within 14 days after the employee receives written notice of the termination. However in this case there was no doubt in the minds of either party and having considered the written statements delivered that the respondent intended to dismiss the applicant summarily. I am of the view that the applicant was unlawfully terminated and that the applicant is entitled to compensation. I award the applicant compensation in the sum of three thousand dollars payable within twenty one days of the date of this judgment. _____________________________________________ I certify that this and the proceeding eight (8) pages are a true copy of the Reasons for Judgment of Judicial Registrar Locke. Associate: Jeynelle Moffat ______________ Date signed: 27 February 1995 Appearances Solicitor for the Applicant: Mr J Icaou Belen Oag Solicitors Solicitor for the Respondent: Mr M Davis Middletons Moore & Bevins Date of Hearing 14 February 1995 Date of Judgment: 27 February 1995