Kerry Lee McLeish v Macs Food Centre Pty Ltd [1995] IRCA 54

C A T C H W O R D S INDUSTRIAL LAW - Termination of employment - whether termination of employment for valid reason - reasons connected with employee's capacity or conduct - procedural fairness - whether employee given an opportunity to respond to allegations made. Industrial Relations Act 1988, S170DB, S170DC, S170DE,. Brian Wong v John Edward Hodes & Lawrence Kok-Long t/a Hodes Lau & Co (No. NI 193 of 1994) 26 September 1994 Byrne v Frew Vol 52 IR 10 at page 63 KERRY LEE MCLEISH v MACS FOOD CENTRE PTY LTD - WI 305 of 1995 Before: Judicial Registrar TOMLINSON Place: Perth Hearing Date: 21 February 1995 Judgement Date: 06 March 1995

INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY N0. WI 305 of 1995

Between: KERRY LEE MCLEISH Applicant And: MACS FOOD CENTRE PTY LTD Respondent Before: Judicial Registrar TOMLINSON Place: Perth Hearing Date: 21 February 1995 Judgement Date: 06 March 1995 MINUTES OF ORDER THE COURT DECLARES 1. The termination of the employment of the Applicant did contravene Division 3 of Part VIA of the Industrial Relations Act, (The Act) 1988. AND THE COURT ORDERS THAT: 1. The respondent pay to the applicant the sum of seven thousand dollars ($7,000.00). 2. Such payment to be within 21 days. NOTE: Settlement and entry of orders is to be dealt with in accordance with Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY N0. WI 305 of 1995

Between: KERRY LEE MCLEISH Applicant And: MACS FOOD CENTRE PTY LTD Respondent REASONS FOR JUDGMENT By application dated 5 August 1994 the applicant sought an order declaring the termination of her employment contravened Division 3 of Part VIA of the Industrial Relations Act ("the Act"). The applicant further claimed reinstatement, compensation and other such orders as would put her in the same position as if the employment had not been terminated. By affidavit dated 10 August 1994 the applicant deposed that she was employed as a shop assistant and the date of her termination was 16 May 1994. In her examination in chief the applicant stated she had commenced employment in May 1993 and that she had been trained in the use of a cash register. It seems that when not operating the cash register the applicant was required to perform a variety of other tasks including stacking shelves with grocery items and answering customer enquires. Ms Paula Hookham gave evidence on behalf of the respondent and stated that she had trained the applicant in the use of the cash register and this training took the form of Ms Hookham standing beside the applicant at the register providing hands on advice and verbal guidance. The applicant was shown the affidavit of Ms Hookham as to the nature of the training provided and the applicant stated that certain procedures relating to company policy and till operations were not explained to her. The applicant stated that she never used the "no sale" button. The use of this button allows access to the cash drawer of the till. The applicant stated that the use and importance of this button was not explained to her during the initial training sessions. The evidence of Ms Hookham was to the contrary. The applicant advised the Court that shortly before her termination she received a written warning dated 11 May 1994 from Ms Shirley Wishart an assistant manageress as to the performance of her duties but that none of the issues raised in that letter formed part of the reasons for her termination. That position appeared to be common ground between the parties. The applicant further told the Court that approximately 3 weeks before her termination upon the counting of her cash tray it became apparent that her till was short some $100.00. In accordance with management practice when a till was missing such a large amount of money, Head Office sent a special representative to conduct an inquiry into the shortfall of money. The Court did not hear evidence from the woman named "Margaret" who allegedly conducted that investigation and so I am of the view that as so much of the evidence placed before the Court in the unlawful termination proceedings involved allegations of theft that nothing of substance was found by "Margaret" upon the completion of that investigation. The applicant told the Court that on the morning of Monday 16 May 1994 she was at her register and a woman customer went through the checkout with a large number of groceries paying with approximately $120.00. A man came through next and he had, according to the applicant, a carton of cigarettes in his hand and two $20.00 notes. The man was moving around and appeared to be in a hurry so the applicant opened the drawer of her cash register and gave to him the sum of $5.15 change as the carton of cigarettes was priced at $34.85. It seems the woman customer with the groceries was helped by the applicant to pack her large grocery order and so the applicant stated that she omitted to record the cash sale of the carton of cigarettes. At 10.00am the applicant left her position at her cash register and went for her morning tea break. Shortly afterwards the applicant stated she was advised by Ms Naomi Brown, the store manageress, that her till did not balance and that it was $29.00 over. The applicant stated that she apologised to Ms Brown and explained that she had not recorded the sale of the cigarettes. At that point the applicant was taken to a back room of the store and searched and the matter of the missing money was discussed. No evidence was given to the Court that the applicant was advised of the current position concerning either the jeopardy of her employment or perhaps more importantly the criminal implications. The applicant stated that the police arrived and she went with them to the local police station. While she was at the police station the applicant stated that Ms Naomi Brown telephoned the police station and advised that the balance of the till was different from the amount that had been previously advised. The applicant stated that she was searched in the presence of a female police officer and that no money was found. Accordingly she was allowed to leave the police station and she stated that at no time did she admit to the theft of money from the respondent employer. The applicant stated she returned to the store and asked Ms Naomi Brown to telephone the manager Mr McGillvray and that this request was denied. The applicant asked if she could use the telephone to call management herself and this request was also denied. The applicant stated categorically at this point that at no time did she say that she resigned. The applicant left the store and went to a tavern a short distance away and as a result of a conversation there she instructed a solicitor Mr Kevin Prunty of Messrs Preuss Mohen to act. The applicant stated that as a result of a telephone conversation Mr Prunty had with Mr Alan McGillvray Mr Prunty advised her that she had been sacked for failing to follow company policy. Shortly after the incident on the morning of Monday 16 May 1994 after the discrepancy in her till had been discovered as a result of the cigarettes sale, the applicant was shown the paper cash register roll allegedly taken from her till recording the sales of that morning. The various imprints were explained to the Court. The applicant categorically denied that the roll shown to her either was or could have been the roll from cash register number one - the machine she was operating at the time. The next day the applicant visited Mr Alan McGillvray at Head Office and was asked to sign a letter purportedly prepared by her. That letter stated: "May 17 1994 Mac's Food Centres 10 Station Street Cottesloe 6011 This is written confirmation of my immediate verbal resignation from Mac's supermarket Broadway Fair Nedlands as at 16th May, 1994. I confirm my acceptance of the sum of $839.39 less tax $262.30 --------- Net $577.09 in full and final settlement of all moneys owing from my employment at Mac's. Kerry McLeish Date:" The applicant declined to sign the letter and has received no money. On behalf of the applicant the Court heard evidence from her solicitor Mr Kevin Prunty who told the Court Mr Alan McGillvray had advised him during a telephone conversation on the day in question that the applicant had resigned and in monetary terms that meant the applicant would get nothing. On behalf of the respondent the Court heard evidence from a fellow employee of the applicant's, Ms Michelle Pittick. The witness advised the Court she had commenced employment with the respondent on 18 February 1994 and had become friendly with the applicant as they worked near each other. In an affidavit dated 16 February 1995 the witness deposed: "1. I commenced working for the respondent at its Nedlands (Broadway) store on 18 February 1994 in the capacity of shop assistant. 2. I struck up a friendship with the applicant (Kerry McLeish) and approximately two weeks after starting work, when the applicant moved to the suburb of Lathlain to live, I began receiving lifts to and from work, in the applicant's car. 3. During this time the applicant would buy me food and drinks but would not accept any money as contribution towards their cost nor would she accept from me, any contribution towards the cost of petrol consumed by her car. 4. I became concerned at the amount of money she was spending on me and I suggested that she should not spend so much money. At that point she asked me to keep a secret and she then went on to explain to me that she took up to $200.00 per day from the cash register which she operated at the employer's store where we both worked. 5. She told me particularly how she took money from the employer. She explained to me in some detail how she did not ring up as a sale any purchase of cigarettes and other items that customers purchased. She told me that she would write the purchase price of items on her wrist or memorise these amounts so that she could take the money out of the cash register so it would balance. 6. She often bragged about how much she took and told me that the longer she operated the cash register the more money she would take. 7. I became very uneasy knowing of the applicant's dishonesty towards her employer and on or about 13 May, 1994 I reported my concerns to Shirley Wishart, the Assistant Manager, of the Broadway (Nedlands) store. The witness stated in Court that she told the assistant manageress Ms Shirley Wishart of the alleged thefts of the applicant some three weeks after the applicant allegedly had told her of the thefts. The reason the witness gave for not advising management as soon as she was able was that she was friendly with the applicant. The witness further told the Court that after the incident when the cash register of the applicant was short some $100.00 she had been transferred to work on that cash register. The witness told the Court that the applicant had requested that she also steal money from that register to prove to management that it was the machine that was faulty. Further, the witness stated to the Court that the applicant had from time to time come and shown to her the twenty and fifty dollar notes that she had stolen from the respondent while operating the cash register. The only reason the witness gave for coming forward and advising management of the statements of the applicant was the fact that she had confided in her mother as to the position and her mother had stated that if the witness, her daughter, did not immediately inform management as to the allegations involving Kerry McLeish then she the mother would do so herself. If this occurred the witness stated she thought she may lose her job. In light of the reasons given by the witness Ms Michelle Pittick for reporting the position to the respondent and in light of the unsubstantiated claims made to the Court by this witness I find that I am unable to place much weight on her evidence and am of the view that her evidence should largely be discounted. On behalf of the respondent the Court heard evidence from Wayne John Rowlands who stated the he was the defacto partner of Ms Naomi Kaye Brown whom he knows to be employed as Manager at the respondent's Nedlands supermarket. Mr Rowlands is a Roof Carpenter and there was no information presented to the Court that he had ever been employed to operate a cash register, was aware of the rules of natural justice applicable to investigations involving breach of employment regulations or had any experience involving the unlawful termination proceedings before the Court. The witness stated that on the morning of Monday 16 May 1994, he went with his workmate, Dwayne Bourne, to the respondent's Nedlands store. Apart from that fact I am of the view that all other evidence provided by this witness is not in any way germaine to the proceedings and I am unable to place any weight on it at all. The Court heard evidence from Dwayne John Bourne, also a Roof Carpenter, on behalf of the respondent. The witness had earlier provided an affidavit and additionally in evidence stated that he worked with Wayne John Rolands and that he knew the defacto partner of Wayne John Rolands, Ms Naomi Kaye Brown. Previously the witness stated he had been employed as a supervisor in a retail store and that he was familiar with the operations of the cash register. The witness stated on the morning if 16 May 1994 he and Wayne John Rowlands were working not far from the Nedlands store and that at the usual "smoko" break the two left the job and travelled to the store. The witness was aware that the defacto partner of his workmate wanted a security check performed at the store which involved his purchasing a carton of cigarettes to the value of $39.14 and having that sale transaction performed by the applicant. The witness stated that he had never met the applicant before. Mr Bourne advised the Court that he was aware that the applicant rang the "no sale" button on the cash register to gain access to the cash draw and that further the applicant screwed up the two $20.00 notes in her right hand and that she reached into the drawer with her left hand to get some change. The witness under cross examination stated he could not be sure what ultimately happened to the two $20.00 notes as he left the store. There was no evidence given to the Court that the witness had ever actually operated a cash register himself or that he was aware of what was the policy of the company concerning the use of the "no sale" button. I am unable to place much weight on the evidence of this witness but it is noted the witness stated clearly that the applicant used the "no sale" button to gain access to the cash drawer on her register. The Court heard evidence from Ms Naomi Kaye Brown on behalf of the respondent who by affidavit dated 16 February 1994 stated, inte alia, as follows: "6. On or about Friday evening, 13 May 1994, Shirley Wishart (Assistant Manager) visited my home. I recall that visit because I was on annual leave and was not due to return to work until the following Monday, 16 May 1994. 7. Shirley Wishart told me that another employee had reported Kerry McLeish to her because it appeared to that employee that the applicant was not following the company rules relating to the cash transactions with customers and the operation of cash registers. I became concerned about the tenor of this report and, as the applicant did not work on Saturdays and as I was not due back at work until Monday following, I decided to conduct a security test with the applicant at her work on the morning of that following Monday. 8. Over the weekend I arranged for a friend of my defacto partner (Wayne John Rowlands) to purchase a carton of cigarettes and to have the cash transaction performed by Kerry McLeish. This friend (Dwayne Bourne) was unknown to staff. 9. On the Monday morning of 16 May, 1994 I gave two $20.00 notes to my defacto partner to give to the "customer" (Dwayne Bourne) with the instruction that he was to purchase a carton of cigarettes to the value of $39.14 and to have the transaction conducted by the applicant, who was to be identified to him by Wayne Rowlands - my defacto partner. 10. The shop opened at the usual time (8.30am) on that Monday and Kerry McLeish attended work and took up her usual duties at a cash register. 11. At approximately 9.40am that morning Dwayne Bourne (the customer) entered the store. The assistant manager and I took up a position some ten metres distant from the cash registers and we had an uninterrupted view of the area in which the applicant was performing her work. 12. After a short while I noticed Dwayne Bourne approach the cash register operated by the applicant and request a carton of cigarettes and then tender the two $20.00 notes which I had given to my defacto partner specifically for the security test. 13. Dwayne Bourne completed his purchase and left the shop premises. During this transaction the cash register area was quiet and there were no other customers queuing at any of the check-out stations. 14. I had previously arranged that Dwayne Bourne, upon completion of the transaction would report to my defacto partner outside the shop and he was to immediately report back to me. 15. Before 10.00am on that Monday morning, my defacto partner (Wayne John Rowlands) entered the store and reported to me that Dwayne Bourne (the customer) had told him that he had purchased the cigarettes valued at $39.14 as instructed and had tendered the $20.00 notes to the applicant to pay for the purchase. Dwayne Bourne had reported that he had observed particularly that the applicant pressed the "no sale" button on the cash register to gain access to the cash drawer. The applicant was reported to have taken out a $5.00 in change and he noticed particularly that she screwed up the two $20.00 notes in her right hand and did not put them in the cash drawer before closing it. No receipt had been given to the customer (Dwayne Bourne) for this transaction. 16. Upon receiving this report I telephoned the company's Head Office in Station Street, Cottesloe and spoke to the accounts manager (Cheryl Long) informing her that I believed that the applicant had been involved in the theft of money during a customer transaction. Cheryl Long advised me to report it to the police which I subsequently did. 17. As the time was then approaching 10.00am, the time when staff stated taking their usual morning tea break, I decided to discuss the matter with the applicant prior to the arrival of the police. 18. During her discussions, I told the applicant that I believed she had been incorrectly using the "no sale" transaction button on the cash register and I asked her for an explanation. I gave her sufficient time to explain her actions but received no adequate explanation other that "I forgot the correct procedure because I was under pressure with other customers to attend to". This statement I know to be false. 19. Prior to the police arriving, I, accompanied by the assistant manager, decided to do a check of the applicant's cash register. At the first attempt we found the cash to be $20.00 over. 20. Shortly after this, the Police arrived and left the shop with the applicant. 21. During the applicant's absence from the shop, the assistant manager and I again checked the applicant's cash register and found it to be $17.40 short. I telephoned the police station and informed them of my findings. 22. I examined the cash roll on the register and found that the applicant had used the "no sale" transaction button eight times between the 8.30am commencement of work and the 10.00am stop for a morning tea break. Annexed hereto and marked with the letter 'A' is a copy of the cash register roll of the machine operated by the applicant on the morning of 16 May 1994. 23. later that morning, Police returned with the applicant and informed me that the applicant had not admitted to any theft of money and they (the police) could do not more to investigate the matter. 24. Kerry McLeish, the applicant, had also returned. She appeared to be upset and she approached me and the assistant manger and said words to the effect that "... I can't work here anymore". I took this to mean that she was terminating her employment. She left the shop premises immediately after our discussion and has not returned since. The date of her termination of employment was 16 May 1994. 25. I advised the company head office that the applicant had terminated her employment and had left the premises." There was no evidence presented to the Court that the witness as manager of the respondent store had ever carried out checks of cash register rolls to determine if the applicant ever incorrectly used the "no sale" button. There was no evidence presented to the Court that Ms Brown as the supervising manager of the applicant ever counselled, guided or warned the applicant that her job would be jeopardised if the "no sale" button was incorrectly used. The allegations of theft were most serious and in my view should have taken immediate priority of the incorrect use of the "no sale" button. Further, the security test that was put in place could in no way be regarded as alone by itself the correct way of testing the applicant's use of the "no sale" button. The use of Messrs Bourne and Robinson by themselves without corroborative evidence is insufficient to prove the applicant failed to use the "no sale" button. On behalf of the respondent the Court heard evidence from Ms Shirley Ann Wishart who at the time of the incident was an assistant manageress with the respondent at the Nedlands store. Ms Wishart advised the Court: "2. I was assistant manageress of Mac's Nedlands on the day of 13th May 1994, when I visited the manageress (N. Brown) at her home to inform her that a report had been received of Kerry McLeish not following procedures with cash transactions. 3. On the morning of 16th May 1994 I was present when the "customer" (Dwayne Bourne) entered the store to test Kerry McLeish with a cash transaction 4. At approximately 9.40am, I watched the "customer" buy the cigarettes and pay to Kerry McLeish the 2 (two) $20.00 notes and then leave the store. Trade was quiet and there were no customers queuing at the check outs. 5. I was with N. Brown (manageress) when Wayne Rowlands reported that Kerry McLeish had pressed the "no sale" button and that she had screwed up the two $20.00 notes in her hand and that no receipt was given. 6. I was present when the cash register was checked at approximately 10.00am and the "no sale" item was noted at 9.46am on the cash register roll. 7. I was present when the police were called and the cash register was balanced to establish a $17.40 shortage. 8. I was present when the police returned and said that she would not admit to any theft. 9. I was with the manageress when Kerry McLeish returned from the police station and resigned by saying "I cannot work here anymore" and she left the store, after asking for her pay and her jumper." It is noted that the affidavit made no direct mention of the allegations of Ms Pittick of theft of money. The Court heard evidence that other staff members were aware of the allegations against the applicant but those staff members did not give evidence. The witness said that when she visited Ms Brown the allegations of theft were discussed. I am of the view that this witness to the best of her ability carried out what she thought was company policy but it is clear that what in fact was done by store management was far short of correct procedure in the circumstances. In this regard the employer must bear full responsibility. On behalf of the respondent the Court heard evidence from Mr Alan McGillvray who deposed he was employed to manage the business of the respondent. Paragraph 5 of the affidavit of the witness dated 14 September 1994 stated: "5. On 11 May 1994 the applicant was given a written 'Letter of Warning' pointing out the areas of her substandard performance of her work. Matters which had been raised for her attention on several previous occasions. Annexed to this affidavit and marked 'A' is a copy of that 'Letter of Warning'." That annexure, headed as "Conditions of Employment which are not being met" - 'Letter of Warning' is a standard form letter and stated, inter alia, as follows: "You have been warned with respect to the following matters:- 1. not arriving to work on time. 2. till results very poor. 3. attitude towards senior staff. 4. not enough work done when off checkout (sitting on crates)." From the information before the Court none of these matters were raised with the applicant nor formed the reason for her dismissal and so the reference to the letter of warning by Mr McGillvray is of little value. At paragraph 2 Mr McGillvray states: "2. I have read the affidavit filed by the applicant in this matter and have personal knowledge of the facts of this case". Mr McGillvray was not present at the time of the security check and so is unable to give the Court a first hand account of what happened. As stated earlier, the allegations of theft should have been treated much more seriously and indeed Mr McGillvray advised the Court he would have acted differently had been advised of the allegations of Ms Michelle Pittick in the first instance. Mr McGillvray stated he did not advise Mr Kevin Prunty that the applicant had been sacked but that she had resigned. CONCLUSION I am of the view that it was improper of the witness Mr McGillvray to request the applicant to sign a memorandum which was prepared at his direction stating that the applicant had resigned her employment. Even if that memorandum had been signed it would in my opinion not have amounted to proof that the applicant resigned as the signature could have been found to have been obtained under duress and that would most certainly have supported a finding of constructive dismissal. I cannot be satisfied that the cash register roll presented to the Court was in fact the one which was the actual roll taken from the applicant's register. The standard of proof required to prove that fact was simply not met. The Court heard evidence that the respondent had ceased using professional security specialists in such matters in order to contain costs. To my mind the roll should have been removed from the register only in the presence of the accused and signed by her, by a senior management representative and also by an independent witness all at the same time in the presence of each other. I have to say at this point that most of the gathering of so-called evidence by the respondent falls into the category of amateurish sleuthing and could even be considered to amount to entrapment to the extent that on several occasions the applicant was denied natural justice. The respondent purportedly carried out a sale transaction in order to see if the applicant was breaching company policy in relation to the use of the "no sale" button. That purported sale transaction was called a "security check" and to my mind was something much more than that. In reality the "security check" was designed mainly to test allegations of theft and the use or non-use of the "no sale" button was only a secondary purpose of the "security check". The applicant categorically denied ever having used the "no sale " button on the day in question and a roll produced to the Court showed that button having been used eight different times. There was no evidence in the form of other cash register rolls presented to the Court as to how many times other cash register operators in fact accessed the no sale button. The Court heard that it was strictly against company policy to access this button and to gain entry to the cash register drawer except in a limited number of strictly supervised circumstances. It would have been a simple matter to put beyond doubt the practice and procedures of the company in relation to this point bearing in mind that the crucial piece of evidence produced by the respondent showed the "no sale" button had been accessed eight times in the one day. I have no doubt that the company had a policy as to how and when cash register operators were to use the "no sale" button but it is clear that a difference exists as to what the company policy of the respondent is and what actually occurs in daily practice. There was no evidence produced as to the previous practice of the applicant in her particular use of the "no sale" button. On behalf of the respondent it was submitted that the applicant simply resigned when she returned to the store after leaving the police station and to that end the respondent relied on the (unreported) case of Brian Wong v. John Edward Hodes & Lawrence Kok-Long t/a Hodes Lau & Co (No. NI 193 of 1994) 26 September 1994. Further, the respondent, in justification of the steps taken concerning the security check, relied upon the case of Byrne v Frew Vol 52 IR 10 at page 63 which states the employer has a positive duty to make a thorough investigation in circumstances such as occurred here. I am of the view that the investigation was far from thorough and that the respondent failed in its obligations and responsibilities in this regard. On behalf of the applicant it was argued that termination of the employment occurred at the point it time when the applicant returned to the store and requested that senior management be contacted and involved in what was going on. The request should have been complied with promptly in light of the seriousness of the allegations. It was not. I am of the view that the applicant was constructively dismissed and there have been breaches of Division 3 of Part VIA of the Act. Section 170DB was breached in that the employee was not given notice. Section 170DC was breached in that the employee was not given opportunity to respond to the allegations. Section 170DE was breached in that the termination was harsh, unjust and unreasonable. Accordingly I order that the respondent pay to the applicant the sum of $7,000.00 within twenty-one days of the date of this Judgment. _____________________________________________