IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. NI 1152 OF 1994 BETWEEN: JORGE CARLOS SANIGA Applicant AND: AMBERLOR COMMERCIAL CLEANERS Respondent CORAM: LINKENBAGH JR PLACE: SYDNEY HEARING DATE: 20 March 1995 JUDGMENT DATE: 5 April 1995 REASONS FOR JUDGMENT 1. This is an application under Section 170 EA of the Industrial Relations Act, 1988. The applicant seeks reinstatement and compensation and damages pursuant to Section 170 EE (1) (2) and (5) of the Act for breaches of Sections 170 DB 170 DC and 170 DE of the Act. 2. I find the facts as follows: - The employment commenced on 20 April, 1994 - The starting salary was $35,000 per annum - The applicant was a salaried employee and was initially not entitled to overtime - The Applicant's duties were to supervise the performance of cleaning contracts by other employees at various locations in the Sydney Metropolitan area - In July 1994 the applicants duties were extended to include supervision of the performance of cleaning contracts in the Wollongong area - The salary was increased to $50,000 per annum - On 12 September, 1994 the Respondent rearranged its business operations and came to be administered by Berkeley Challenge. - The applicant's duties thereafter included attendance at the office of Berkeley Challenge on Monday and Thursday mornings where he assisted in processing time sheets and pay documents for the staff supervised by him - After 12 September, 1994 the format of payslips received by the applicant changed - The first payslip received referred to "38 hours" and payment was at the rate of $35,000 per annum - The applicant continued to be supervised by his former supervisor, Mr. Gitzel - The applicant had a conversation with Mr. Gitzel and the applicant understood that thereafter he was to claim for actual hours worked and would be paid at the rate of $35,000 per annum plus overtime - The applicant so claimed for the fortnights ended 23 October and 6 November and was paid for all time claimed - The claims were prepared by the applicant and processed by other staff - The applicant continued to supervise the Sydney and Wollongong cleaners - The clients in Wollongong were not informed of any change in the supervisory arrangements for the cleaners - On 10 November 1994 Mr. Gitzel met the applicant and summarily dismissed him. The reason given was that the applicant had defrauded the Company by claiming excessive overtime 3. Where the evidence of the applicant is in conflict of that of Mr. Gitzel I prefer that of the applicant. That is not because of any lack of honesty in Mr. Gitzel, but because he demonstrated to the Court that he has a very poor memory for detail, and particularly for the content of conversations. The applicant has reason to have better recall of matters in which he was directly involved and which affected his remuneration, and his evidence as to his continuing role in the Wollongong area after September is supported by that of the independent witnesses Mr. Cochrane and Mr. Woodhouse. The employer initiated the changes which the advent of Berkeley Challenge brought about, which included the change in the payroll procedures, and but for those changes, the applicant's remuneration would not have been changed. There was a failure by Mr. Gitzel to think through the consequences of changing the applicant from being a salaried employee and to communicate the Company's decisions, if it had made any, to the applicant, both as to his duties in the Wollongong area and as to the manner in which his remuneration was to be calculated . The actual amount of wages paid pursuant to the second claim for overtime payments came as a surprise to Mr. Gitzel, evidenced by the applicant's evidence that at the meeting on 10 November Mr. Gitzel said the applicant that his pay was "more than I earn". 4. The respondent's case was that the applicant inflated his claim for overtime and that he was not required to supervise the Wollongong contracts after September 1994. There were suggestions by the respondent that Mr. Parr from Berkeley Challenge's Wollongong office took over the supervision of the Wollongong contracts. Those suggestions are not supported by the evidence of Mr. Cochrane and Mr. Woodhouse. They could have been confirmed by putting in evidence the records of the respondent, or by the calling of Mr. Parr to give evidence. Neither of those courses was adopted. The rule confirmed by the High Court of Australia in Jones v. Dunkel 101 CLR 298 that unless such a failure to give evidence is explained, an inference can be drawn that that evidence would not have assisted the case of the party within whose control the evidence was, applies here. 5. The respondent attempted to justify its failure to give notice or payment in lieu of notice as it is required to do under Section 170 DB of the Act by asserting that the applicant was guilty of gross misconduct in perpetrating the fraud that the respondent perceived in the making of the claims for overtime. The Court finds that there was no misconduct on the part of the applicant and that the respondent's perception was brought about by its own failure to clarify the extent of the changes to the applicant's duties and mode of remuneration. The respondent should therefore remedy its breach of Section 170 DB and the appropriate amount would be one week's salary at the rate of $35,000 per annum. 6. The Court finds that the respondent failed to comply with the requirements of Section 170DC of the Act. The applicant was a hard-working and trusted employee before 10 November, 1994. There was no urgency created by the fact of the claims for overtime, other than that they came to the notice of Mr. Gitzel after the second claim had been paid and his interest was generated by the amount actually earned by the applicant. If the Company perceived that the applicant was claiming and accepting payments to which he was not entitled , or performing duties outside the scope of his authority, it should have investigated the claims and put its views to the applicant in a timely and structured manner. Mr. Gitzel's manner of dealing with the matter orally in a single meeting between himself and the applicant was inappropriate, particularly given that the changes to the pay structure were initiated by the Company and that the claims had been processed and paid by employees of Berkeley Challenge on behalf of the Company. It is not the case that the applicant had appropriated the Company's monies to his own use. The statements in the respondent's submissions that the applicant "awarded himself" overtime payments, and "took" a sum from his employer are not supported by the facts. Nor is the submission that "the anomaly was discovered by computer". The criticisms made of the applicant's failure to keep records, and allegations that his Petrol Card Records and Tollway receipts do not support his claims that he worked the overtime claimed have a hollow ring when compared with the inability of Mr. Gitzel to recall events, and the apparent lack of any system put in place by the employer to enable records to be kept by the applicant. The applicant had enjoyed the freedom to structure the performance of his duties as he saw fit, and if the employer wished to revoke that freedom then it was up to the employer to do so expressly and to communicate the changes to the applicant. 7. The Court also finds that the Respondent is in breach of Section 170DE, as its reason for terminating this employment relationship was not a valid reason. The Court's findings set out above in paragraphs 5 and 6 are relevant also in considering the validity of the reason for termination. 8 The applicant has not found other employment, and he seeks reinstatement. The respondent argues that reinstatement is impracticable, but has not adduced any evidence to satisfy this Court that that is so. It is the opinion of this Court that all the difficulties experienced by the applicant in this employment relationship arose since, and because of, the changes in the administration of the Company's business consequent upon the involvement of Berkeley Challenge in the administration of the Company's cleaning contract operations. The Company failed to organise and deal with the necessary adjustments as far as the applicant was concerned, and failed to communicate adequately with him about matters which were fundamental to performance of his contract of employment. The manner and demeanour of the applicant do not raise any cause for concern that he will not return to his employment motivated to give the kind of service he gave to his employer prior to 10 November, 1994. 9. The applicant has been receiving Unemployment Benefits from the Department of Social Security. It is the intention of the Court that he should have the benefit of effective continuity of employment and I propose making Orders to that effect. An obligation will arise in the applicant to reimburse the Department in an appropriate sum. 10. The Court orders: 1. That the respondent reinstate the applicant by appointing him to a position on terms and conditions no less favourable than those on which he was employed immediately before the termination on 10 November, 1994 at a salary of at least $35,000 per annum plus overtime. 2. That the respondent pay to the applicant all remuneration lost by the applicant by reason of the termination on 10 November, 1994 and that no damages be paid pursuant to Section 170EE (5) 3. That the respondent do all things as are necessary to maintain the continuity of the employment of the applicant, and that in all respects the respondent perform its obligations under the contract of employment . REPRESENTATION Solicitors for the Applicant: Smith Monti Costa & Carbone Counsel for the Applicant: Mr John Atkin Solcitors for the Respondent: Ebsworth & Ebsworth Counsel for the Respondent: Mr Geoffrey Watson I certify that this and the preceeding three (3) pages are a true copy of the Reasons for Judgment of Judicial Registrar Linkenbagh. Associate: Caroline Sternberg Date: 5 April 1995