C A T C H W O R D S INDUSTRIAL LAW - Termination of employment - complaint of unlawful termination - union amalgamation - change of employer without notice to employee - redundancy - redundancy payments during the course of employment - cross-action for return of motor vehicle - Industrial Relations Act 1988, S107DC, S 170DB, S170DE, S170EA Maclean v David Jones (Australia) (No. 640 of 1994) D'Angelis v David Jones (Australia) (No. 641 of 1994) JAMES LEWIS AITKEN v CONSTRUCTION MINING ENERGY TIMBERYARDS SAWMILLS UNION No. WI 328 of 1994 Before: Judicial Registrar Tomlinson Place: Perth Hearing Date: 23 February 1995 Judgement Date: 9 March 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY NO. WI 328 of 1994 Between: JAMES LEWIS AITKEN Applicant And: CONSTRUCTION MINING ENERGY TIMBERYARDS SAWMILLS UNION Respondent Before: Judicial Registrar TOMLINSON Place: Perth Hearing Date: 23 February 1995 Judgement Date: 9 March 1995 MINUTES OF ORDER THE COURT DECLARES 1. That the termination of the Applicant's employment by the Respondent contravened Division 3 of Part VI A of the Industrial Relations Act 1988. THE COURT ORDERS THAT: 1. The Respondent is to pay to the Applicant the sum of Seven Thousand Dollars ($7,000.00). 2. Stay of 21 days. NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY NO. WI 328 of 1994 Between: JAMES LEWIS AITKEN Applicant And: CONSTRUCTION MINING ENERGY TIMBERYARDS SAWMILLS UNION Respondent Before: Judicial Registrar TOMLINSON Place: Perth Hearing Date: 23 February 1995 Judgement Date: 9 March 1995 REASONS FOR DECISION By application dated 22 August 1994 the applicant sought an order that the termination of his employment by the respondent contravened Division 3 of Part VIA of the Industrial Relations Act 1988 ("the Act"). Further the applicant sought reinstatement, compensation and such other orders as would put him in the same position as if the employment had not been terminated. By an affidavit also dated 22 August 1994 the applicant deposed: "I believe that my dismissal from the C.F.M.E.U. or the C.M.E.T.U. was harsh and unfair on the grounds that I have done nothing out of order to warrant being let go. The Union has a policy of first on last off which they did not adhere to. There were two people employed after I was employed who should have been put off before me, on these grounds I'm seeking to be reinstated, and union policy should prevail". By Notice of Appearance dated 29 September 1994, the respondent was noted as being Construction, Mining, Energy, Timberyards Sawmills and Woodworkers Union of Australia (WA Branch) (C.M.E.T.U.) (Now C.F.M.E.U.). The Court was advised Mr Schapper appeared conditionally on behalf of the first respondent and that at the time the employment of the applicant ceased he was employed by the Construction, Forestry, Mining and Energy Union, a Federal Union. Mrs Buckley on behalf of the applicant advised the Court that the day before the hearing of the Application (22 February 1994), the respondent gave notice of a cross-claim seeking return of a Holden motor vehicle. Mr Schapper advised the Court that if it was found that a breach of the Act had occurred and that breach was by the first respondent, then the return of the Holden motor vehicle would be pressed. By affidavit dated 11 November 1994 the applicant stated he was 52 years of age and that he commenced employment with the respondent in 1989 as a Union Organiser and that at that time he was made aware of the Union Policy regarding the retrenchment of workers in that a "first on last off" policy applied. The applicant deposed that this was the policy he had always used when dealing with employers. At no time was the applicant made aware that a different policy would apply to him. The applicant stated that at no stage was he given any warning that his employment was in jeopardy or that his work performance was not satisfactory. As a result of his termination the applicant received 4 weeks pay in lieu of notice. At the time of termination the applicant stated that Mr Neil Flynn advised him that the respondent would arrange a job for him at a building site in the capacity of a carpenter and the applicant stated that no effort had been made in that regard. The applicant in his affidavit sought leave to extend the time of filing his application. By affidavit dated 31 January 1995, Mr Neil Flynn as Secretary of the Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch ("the State Union") advised the Court that the Construction, Forestry, Mining, Energy Union ("the Federal Union") is divided into Divisions and that one of those Divisions is the ATAIU Division which incorporated all those members of the Federal Union who were employed in the timber industry. Further, the affidavit stated that in 1993 an agreement was reached between the State Union and a branch of the Federal Union whereby the State Union was to subordinate itself to the decision making processes of the ATAIU Division of the Federal Union. From July 1993 onwards the WA Branch of the ATAIU Division of the Federal Union and its officers was effectively the union for timber workers in the metropolitan area of Perth in lieu of the State Union. The affidavit of Mr Flynn further stated inter alia, that prior to the events of July 1993, the State Union employed Messrs Todd, Cooke and the applicant to organise the timber industry and to run the Forest and Forest Products Division of the State Union. Mr Flynn went on to depose that as the events of amalgamation occurred Messrs Todd, Cooke and the applicant acted for all purposes as officers and employees of the ATAIU Division of the Federal Union but continued to be paid by the State Union. Subsequently the WA Branch of the ATAIU Division went into decline and losses were incurred. On 23 July 1994 at a meeting held at the offices of the State Union attended by representatives of the bodies involved, the decision was made that the applicant would be terminated. Further, according to Mr Flynn, it was agreed by all those present at the meeting that Mr Todd would resign and be replaced by someone else. Mr Rick Todd was present at that meeting. In response to the affidavit of the applicant Mr Flynn deposed the policy of "last on first off" was not applicable to the employees of the State Union and that "performance" was irrelevant to the termination. Further, the applicant was offered personal use of a State Union motor vehicle for an unspecified period and Mr Flynn deposed the applicant retained this vehicle. Mr Flynn was of the view that the State Union had since 1 July 1993 acted as agent for the Federal Union and that the State Union was entitled to be indemnified in respect of any liability the Court may find. Mr Flynn deposed that the applicant, like all Union Organisers, accrued redundancy or severance pay at the rate of $20.00 per week and from 4 April 1994 at the rate of $40.00 per week. Whilst that money is referred to as "redundancy pay" the Court heard evidence that Union Organisers were entitled to be paid their accrued entitlement at any time during the employment. In his further affidavit of 22 February 1995 the applicant stated that he commenced employment with the State Union in 1989 and that he was employed first in the Construction Division of the Respondent which was then known as the CMEU. After a period of some 3 years the applicant was asked to be responsible for a variety of workers who did not easily fall into any existing divisions of the CMEU but who fell into the General Division. The applicant deposed that the General Division was part of the Construction Division and that during the time that the applicant worked in the General Division to his knowledge his wages were always costed to the Construction Division. The applicant apparently was never advised that his wages would be costed to the Forestry Division. The applicant denied that he was personally offered use of a vehicle by the respondent and stated that when the ATAIU Forestry Division moved out of the respondent's premises it retained the vehicle that he had been previously using. THE EVIDENCE Under cross-examination the applicant advised the Court that in his affidavit he had alleged the respondent had failed to obtain another position for him on a building site as the respondent had not contacted him at home with any job situations after the employment had ceased. I am of the view that although the offer to search for alternate employment was made at the point of termination the fact that the respondent failed to actively contact the applicant does not amount to a failure to fulfil an undertaking on the part of the respondent. As events unfolded, the applicant found alternate employment for himself elsewhere and so I am of the view that that allegation lacks substance. The applicant advised the Court that Mr Flynn gave him the sack and that he was called into Mr flynn's office and told: "We are going to have to let you go". At that point the job on the building site was discussed. The applicant was handed a letter dated 2 August 1994 which stated as follows: "CONSTRUCTION, MINING, ENERGY, TIMBERYARDS, SAWMILLS AND WOODWORKERS' UNION OF AUSTRALIA (WA Branch) CMETUnion 2/08/94 Jim You are aware that for some time now the Forestry Division has been subject to a decrease in membership and therefore income. The division has gone from a membership of 1400 in 1992 to a figure of some 800 to-day. The Division has been subsidised by the resources of the Construction Division for a number of years now and that position can no longer be sustained due to the downturn in the construction industry which has seen the Construction Division make a painful readjustment to it's altered circumstances which included, amongst other things, letting people go. Whilst the Forestry Division maintains it's current level of membership it is essentially a one person division with the necessary administrative support. The A.T.A.I.U. have decided that they will determine who that person will be and I understand that person to be Paul Martinello. Regretfully I've got to inform you that under these circumstances I am obliged to terminate your employment. You are able to receive four weeks notice (sic) in lieu of notice. I would like to thank you for the work you have done, under difficult circumstances, for the Union and only wish that it could have been otherwise. Regards, NEIL FLYNN State Secretary". Additionally the applicant was handed a second piece of paper which stated: "CFMEU WESTERN AUSTRALIAN BRANCH Our Ref: KW:NF 12 August 1994 Mr J Aitken 5 Chenard Street CARINE WA 6020 Dear Jimmy, Itemised below are details of your termination payment. REDUNDANCY 800.00 Tax Free LSL PRE 8/93 2905.79 Taxed at 31.4% LSL POST 8/93 1687.37 Taxed at marginal rate ANNUAL LEAVE 2317.33 Taxed at marginal rate 4 WEEKS IN LIEU 2955.84 Free ________ $ 10666.33 LESS TAX 27114.24 ________ 7952.11" The document then itemised various payments made on behalf of the applicant and so the amount of the cheque handed to the applicant was stated as being $5676.90. The applicant stated he was never cautioned that his work was unsatisfactory and further that he was not included in discussions involving his redundancy. The applicant stated he was, during his period of employment, able to access his redundancy fund and therefore the accrued amount of some $5,500.00 should not be taken into account as redundancy payment because he had already had it and that the true amount of his redundancy payment was merely $800 being the amount of redundancy money he actually received by way of payment at the time of being made redundant. The applicant advised the Court that some three weeks after his termination he in fact gained employment with the Federal Union doing very much the same sort of thing he had done previously. That job was at a lesser rate of pay and lacked the security of his previous position. Mr Neil Fynn gave evidence on behalf of the respondent and advised the Court that as events unfolded there was simply nothing for the applicant to do on behalf of the State Union, the former employer. Mr Flynn agreed the applicant was "a bit stunned" when he was terminated and stated that he was allowed to retain the use of a Holden motor vehicle for his own use and purposes and that no particular time was given for the return of the vehicle. The Court was provided with documentation showing the vehicle was purchased in 1992 by the State union. Mr Flynn agreed with the suggestion that the applicant received no warning about what was to happen with his employment, nor was he included in the discussions concerning his future with the respondent. There was no suggestion that the respondent was unhappy with the manner in which the applicant performed his duties. Mr Flynn agreed that the applicant was employed by the State Union, and that there are still some union organisers technically employed by the State Union but due to the reorganisation those people had been employed after the amalgamation. The Court was told that the State Union now merely performs administrative functions for the Federal Union. On behalf of the respondent it was argued that the case before the Court was a bona fide redundancy and that the decision was made to terminate the applicant as the State Union could not afford financially to wait for further resignations as a method of minimising expenditure. The respondent relied on the case of MacLean v. David Jones (Australia) (No. 640 of 1992) and of D'Angelis v. David Jones (Australia) (No 641 of 1992), a decision of the Full Commission of the Industrial Relations Commission of South Australia where it was held that even though the dismissals were unlawful, in that consultation had not taken place with the employees before dismissal, the dismissals, in the peculiar circumstances which occurred here, did not fall within the statutory criteria and that the appeals of Messrs MacLean and D'Angelis were dismissed. Further it was argued that under Section 170 DE (2) the termination was not harsh and unjust similarly as this was a case of bona fide redundancy and that there was a valid reason for the termination based on the operational requirements of the respondent. Further it was argued that accordingly the application should be dismissed On behalf of the applicant it was argued that the "last on first off" policy should have applied and that the respondent State union should have terminated other employees before the applicant was terminated. Further, the applicant stated that the respondent the State Union cannot say that it simply did the administrative work of another union - the Federal Union and evade responsibility. On behalf of the applicant it was contended that he was denied procedural fairness. CONCLUSION In light of the circumstances the application of James Aitken is allowed to be filed out of time. A conditional appearance was entered on behalf of the State Union. Affidavit evidence and oral evidence was placed before the Court as to the various amalgamations of the State Union and mingling with the Federal Union. I am of the view that any Order made should be made against the employer of the applicant at the time employment commenced. It is clear the applicant was never properly advised of the exact position as to the payment of his wages or as to the future of his job. Accordingly, I am of the view that the State Union is the responsible union and being the employer of the applicant and any recovery that may be undertaken by that union from other bodies is a matter for that union. At the time of termination the applicant was allowed to retain a Holden motor vehicle made available to him by the respondent, the State Union. No time was affixed for the return of that vehicle at the time of termination. I am of the view that in light of the lack of certainty of the arrangement that such a cross-action should not be entertained by this Court and accordingly I make no Order in relation to the return of that vehicle. The Court heard evidence that the applicant was allowed to access his redundancy payments during the course of his employment. I find that at the time of access those monies ceased to be redundancy monies on the basis that at that time the applicant - (at that time he was "the employed ") was not redundant and so those monies so paid to him must fall into the category of weekly remuneration or wages. It was common ground that the applicant received no warning, no counselling and no opportunity to deal with the situation of his forthcoming termination. Mr Todd on the other was afforded the opportunity to deal with his forthcoming termination. Within the meaning of the Act I find the applicant has been denied procedural fairness and it is well established that procedural fairness does apply to redundancy situations. Accordingly I find Section 170 was breached. The "last on first off" rule has been largely discarded by industry today but in the circumstances of this application I am of the view that the respondent union should have been aware of the principles under which the applicant was operating in his day-to-day activities in recruiting members and further should have consulted with him so as to avoid the exact circumstances which did in fact occur. Section 170 DB requires the employee to be given notice of the termination of his employment. That section has been complied with. Section 170 DE requires the employment must not be terminated unless there is a valid reason connected with the employee's capacity or based on the operational requirements of the undertaking. In the case before the Court, the termination did arise out of the operational requirements of the respondent employer. However Section 170 DE (2) provides that a termination can be for an invalid reason if the termination was harsh and unjust. Here I am of the view that the termination was harsh and unjust and accordingly I am of the view that the termination breached that section of the Act. I award compensation to the applicant in the sum of seven thousand dollars ($7,000.00) payable within 21 days of the date of this judgment. _______________________________________ I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Decision of Judicial Registrar Tomlinson Associate: Jeynelle Moffat ______________ Date signed: 9 March 1995 Appearances Solicitors for the Applicant: Fiocco Hopkins Rattigan Counsel: Mrs W Buckley Solicitor for the Respondent: DH Schapper Barrister & Solicitor Counsel: Mr Schapper Date of Hearing: 23 February 1995 Date of Judgment: 9 March 1995