IN THE INDUSTRIAL RELATIONS ) No. WI 352 of 1994 COURT OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) BETWEEN: Audrey Ann Day Applicant AND: Meadowbank Enterprises Pty Ltd as trustee for the Ashby Trust trading as The Curtain Lady Respondent BEFORE: Boon JR PLACE: Perth HEARING DATES: 7 and 16 February 1995 JUDGMENT DATE: 12 April 1995 REASONS FOR JUDGMENT By an application filed 1 September 1994, Audrey Ann Day has applied to the court against her former employer, The Curtain Lady, seeking: 1. (a) an order declaring the termination of the employer's employment of the employee to have contravened Division 3 of Part VIA of the Industrial Relations Act 1988; (b) an order that the respondent pay compensation to the employee; 2. Such other order or orders as will put the employee in the same position (as nearly as can be done) as if the employment of the employee by the respondent had not been terminated: see Section 170 EE of the Act. The respondent's primary answer to the applicant's claim is that the applicant is excluded from the operation of S170 EA of the Act because, at the time of her dismissal, she was serving a period of probation. If it is found that the applicant was not serving a period of probation the respondent alleges a breach of contract and some misconduct by the applicant and states that implied warnings were given to the applicant prior to termination. Further, it was submitted that if it is found by this court that the termination infringed the provisions of the Industrial Relations Act, this court should consider whether the applicant would have continued in employment with the respondent for much longer if she had not been terminated. The Background The respondent's directors, Lorraine and Michael Ashby, operate a soft furnishing business which makes and sells curtains. Lorraine Ashby started the business on her own but now employs a number of people. The premises of the respondent are divided into two parts: the workroom and the shop. The shop has three rooms. Mrs Ashby gave evidence that she does "a bit of everything" in the business. She does all the supervising and "floats around and makes things happen". Before the applicant was employed, the respondent did not have a co-ordinator. Mr Ashby gave evidence that he and Mrs Ashby were keen to get someone extremely good so that Mrs Ashby could get some rest. They wanted someone to relieve the stress of a business which was "surprisingly full of stress". Mrs Ashby stated that there was a shortage of labour in the curtain-making industry and that there were no people with training to be found. The applicant's usual occupation is that of home decor co-ordinator. From 1964 until 1968 she worked as an apprentice soft furnishing upholsterer in England and has qualifications in the field of soft furnishings. She has worked in that industry throughout her career. From July 1988 until August 1994, the applicant was employed by Aherns Department Store, originally as a soft furnishing sales person and decor consultant. In November 1989, she was promoted to the position of home decor co-ordinator in the Aherns city store. In that role, she controlled the home decor consultants and fitters for the Perth, Karrinyup, Garden City and Rockingham stores and was required to use organisational and planning skills whilst maintaining close customer contact. Towards the end of her period of employment with Aherns, there had been a number of changes in the organisation of that store and the applicant was no longer as happy working there as she had been previously. In her verbal evidence the applicant stated that she experienced some exasperation because of the changes and she considered looking for alternative employment. There was also a clash of personalities between the applicant and another Aherns staff member. During this period she spoke to Patricia Giblett who is a business proprietor engaged in the soft furnishing industry and who regularly performs work for Aherns stores. In her affidavit, Mrs Giblett states that the applicant told her she was very unhappy working at Aherns and goes on to say "through our meetings at this time I believed that the applicant was distressed and she asked me to look out for any other jobs in the soft furnishing industry and to let her know if any opportunities arose". In her verbal evidence, however, Mrs Giblett stated that "disturbed" would have been a more appropriate description of the applicant's state of mind than "distressed". In early July 1994 Mrs Giblett telephoned Lorraine Ashby, one of the proprietors of the respondent, and told of her of her discussions with the applicant. Mrs Giblett gave the applicant Mrs Ashby's telephone number. The Contract of Employment According to the applicant's affidavit, she telephoned Mrs Ashby who offered her a job over the telephone. The applicant did not then accept it because she wanted to meet the owners of the business and to see the business itself. An interview was arranged for Saturday, 16 July 1994, at the respondent's premises at which the applicant, Mrs Ashby and Mrs Ashby's husband, Michael Ashby, were present. The interview lasted for about one and a half hours. The applicant's evidence is that at the interview the details of the job were discussed. The applicant advised what work she would be happy to do and found out what duties were expected of her. The position that was required to be filled entailed serving customers in the shop, quoting from house plans and co-ordinating the fitters' work and the supply of fabrics. Once a quote was given to a customer and accepted, she was to organise for the fabric to get to the work room, curtains made, tracks ordered and a fitter organised. In an emergency, the applicant would assist with measures and quotes and go out on the road; although the applicant said that in the main she didn't want to consult with customers. She made it clear that she would only go on the road in an emergency from time to time. According to the applicant, Mrs Ashby explained to her that she (Mrs Ashby) wanted to be relieved of the burden of running the business. The main purpose of employing the applicant would be to co-ordinate the functions of the business and help in the shop. The applicant's evidence is that she was asked to specify the salary and hours which she would work at and, at the applicant's request, those details were written down on the back of a business card by Mr Ashby, as follows: "Monday to Friday, 9.00am to 3.00pm Alternate Saturdays, 9.00am to 12.30pm Weekly pay of $460 (gross) ($2,000 per month) Additional hours at $14.50 per hour." The applicant said in her evidence that the reasons she wanted to leave Aherns to work with the respondent were that she had not been as happy at Aherns as she had been previously, the money at the Curtain Lady was better and the stipulated hours suited her. She specified the hours stated on the business card so that she could be with her children after school hours. The applicant's evidence is that during the interview, she was given a verbal offer of employment and she accepted the position. The applicant was adamant that it was not a part of the employment contract that she serve a period of probation. Mrs Ashby's affidavit states: "4. The Applicant called me on or about 12 July 1994 and arranged to meet with me and my husband (Mr Mike Ashby) on Saturday, 16 July 1994. 5. At that meeting the Applicant told us of her background in the industry emphasising her training in England and her work as Manager of the soft furnishing department at Aherns stores. The applicant convinced us that she had the necessary skills and experience to do the job which we wanted to have done by an employee. 6. I explained to the Applicant that it was necessary for her to be able to: (i) consult with customers in their homes and advise them about the range of window treatments provided by the company with the object of obtaining orders for work; (ii) accurately measure and quote on site; (iii) drive the company van in which sample materials were kept; (iv) order materials relevant to any contract for work; (v) co-ordinate the progress of work in the workshop by arranging for the orders to be made up by our curtain makers and to be installed by our fitters and generally liaise with the customer; (vi) assist with retail sales in the shop when time permitted. It was emphasised by me that I wanted a full-time employee because the co-ordinating role demanded the employee attend to customer needs when they were available - often in late afternoons. In addition, I stressed that I wanted an employee who was willing to work on alternate Saturday mornings. 7. The Applicant explained that with her experience she could handle the job on a part-time basis working 9.00am to 3.00pm Monday to Friday inclusive and 9.00am to 12.30pm on each alternate Saturday. My husband and I were very sceptical about her assessment of her capacity to do the work satisfactorily on a part-time basis but we eventually agreed that we would employ her on a one month trial basis to see if she could do the job. 8. The agreed terms of the contract of employment included: (i) the hours of work stated in (7) above with an understanding that the Applicant would work additional hours if the job required; (ii) a rate of pay of $460.00 per week for the part-time hours and $14.50 per hour for each additional hour worked after 3.00pm; (iii) a trial (probationary) period of one month. At the Applicant's request the agreement relating to the hours of work and the wage rate was written on the back of a business card (Annexure "C" attached to the Applicant's affidavit). It was agreed that the Applicant commence work on 8 August 1994. 9. The interview on 16 July 1994 was very extensive and took at least one and a half hours and I took the time to explain fully what was expected of an employee in the job emphasising the time demands usually experienced in the co-ordinating tasks which were a most important part of the job." In her verbal evidence, Mrs Ashby said that at the interview the applicant showed a card from Aherns saying "co-ordinator", "so that's what we called her". She assumed beforehand that the applicant would "take work off our hands so that we could take time off". She had envisaged that the applicant would co-ordinate all the separate parts of the job of curtain making so that everything would be ready at the appropriate time for each order. She said that the co-ordinating part of the applicant's position would take perhaps 3 or 4 hours each day and that for the rest of the time the applicant would do other work and relieve Mrs Ashby if she was unavailable to go out on the road, e.g. when Mrs Ashby had to attend a meeting. Mrs Ashby said in her evidence that the hours written on the back of the business card were the applicant's preferred hours, but that it was agreed that the applicant would work outside these hours if she had to. What was on the card was "just a money thing". Both Mr and Mrs Ashby said that they were sceptical about the applicant's ability to do the job in the part time hours, but that with a one month's trial it would be clear whether or not it would work out. The Question of Probation Regulation 30B(1) of the Industrial Relations Regulations excludes employees from the operation of the relevant provisions of the Industrial Relations Act who are "serving a period of probation or a qualifying period of employment, if the duration of the period or the maximum duration of the period, as the case requires: (i) is determined in advance; and (ii) it is reasonable, having regard to the nature and circumstances of the employment". Thus, if this court finds that a one month probationary period was determined in advance and that the period was reasonable, that would be the end of the matter. The applicant was unshaken in her evidence that no probationary period was determined in advance. Mr and Mrs Ashby were unshaken in their evidence that a one month probationary period was determined in advance. It is difficult to decide the question of whether there was a one month probationary period, as there was nothing in the demeanour of any of the witnesses which caused me to reject his or her evidence, and none of the witnesses was shaken from their evidence as to the existence of a probationary period during cross-examination. There are several reasons, however, why I prefer the evidence of the applicant over the evidence of Mr and Mrs Ashby. I have to say at the outset however that I accept that it was the normal business practice of the respondent to offer employment to their employees on a one month trial period. There was one other possible exception to this however and that was Amy Jennings, who was apparently taken on under a traineeship whereby the respondent received a subsidy and in return agreed to employ Ms Jennings for a year. One reason why I prefer the evidence of the applicant is that to some extent the terms of the employment contract were written down on the back of a business card. The respondents allege that there were three main terms to the contract of employment: the hours of work; the level of remuneration; and the one month probationary period. The written terms do not include any mention of probation. Whilst I would not decide the question solely on the basis of what was written on the business card, it is relevant. Secondly, the respondents allege that the applicant was so desperate to leave Aherns that she accepted the job on the terms alleged by the respondent. Whilst I accept that the applicant was unhappy at Aherns and was keen to find alternative employment, I do not consider that she was "desperate" and would have accepted the position at all costs. In fact, since her termination, she has gone back to work at Aherns on a part time basis. The respondents (especially Mrs Ashby) were, however, very keen to employ a person with such a lot of experience and this places the applicant in a special category of employee. Mrs Ashby's evidence was that there was an extreme shortage of skilled labour in the industry. The applicant's evidence was that Mrs Ashby offered her a job during their first telephone conversation and this was uncontradicted. Thirdly, the letter of termination written by Mr Ashby makes no mention at all of a probationary period. Mr Ashby's evidence was that he was aware of the requirements of Industrial Relations laws and would not have dismissed an employee who was not on probation in the way in which he dismissed the applicant. I find it difficult to accept that if he had such a good knowledge of Industrial Relations laws that there was nothing in either the written conditions of employment or the letter of terms which mentioned a period of probation. Fourthly, Mr and Mrs Ashby both gave evidence as to what happened at the interview; neither witness however was able to specify any discussion of the subject of probation or the applicant's reaction. Finally, there are several inconsistencies in the evidence of the respondents which lead me to prefer the evidence of the applicant. On the one hand, Mr and Mrs Ashby claim that it was always agreed that the applicant would work outside the hours of 9.00am and 3.00pm. On the other hand, they say that they were sceptical that the applicant could do the work they required her to do in the part time hours she wanted to work and that this was why there was a period of probation. In his termination letter, Mr Ashby refers to "any adjustment to your pay due to you having worked beyond the agreed hours". In Mrs Ashby's affidavit, she emphasised the "on road duties" above the co-ordination tasks which the applicant was to perform. Earlier on in her cross-examination Mrs Ashby said that the only reason they called the applicant a "co-ordinator" was that that was on the applicant's business card. This and the applicant's evidence is somewhat inconsistent with Mrs Ashby's further evidence under cross-examination in which she said that she had envisaged that the applicant would be ordering fabric and making sure that everything was ready for each job. She would be the co-ordinator and would also help run the shop and relieve Mrs Ashby on the road sometimes. Also, under cross-examination Mrs Ashby said that at the interview they talked about the applicant doing the costings for the respondent, for the applicant knew all about it and it was something "we had always neglected to do". The thrust of the affidavit evidence was to emphasise the "on road" duties, whereas it was clear from the verbal evidence under cross-examination that the coordinating function was agreed to be the prime function of the applicant. For all these reasons I consider that on the balance of probabilities it is more likely than not that no probationary period was determined in advance. The period of the Applicant's employment with the Respondent The applicant started work with the respondent on 8 August 1994. According to her affidavit, when she arrived for work she was advised that there had been a change of plan and she was to work as the workroom co-ordinator of the curtain fitter from Monday to Wednesday and in the shop on Thursday and Friday. Her major task was to set up an office from which co-ordination would occur. She offered, but was not required, to assist with ordering materials or quotes as much of the work which she had expected to perform was being done by Mrs Norma Campbell, another employee of the respondent who had recently returned from an extended period of leave. On Saturday, 13 August, the applicant worked in the shop without supervision. The applicant's evidence is that she received no training other than having one quote to look at. She found that there was not enough work for her to do at the shop. Mrs Ashby contended that if the applicant was as experienced as she said she was, she would need no training. Mrs Ashby acknowledged that in the time that the applicant was employed by the respondent, Mrs Ashby herself only spent perhaps a total of 40 minutes with the applicant. The applicant stated that although she considered herself very skilled, every company works differently as far as their paperwork and other systems go, and she did not receive the training she required. For example, the applicant was used to quoting wholesale and the respondent's business was retail. The paperwork is different. The respondent called two of its employees, Rina Honisett and Norma Campbell, who gave evidence that the applicant did not do enough work, that she spent too much time drinking coffee and took too many private telephone calls. One matter complained of is that the applicant "watched the clock", was keen to leave at 3.00pm and would not embark on a new job if it was close to that time. The applicant's evidence, however, is that she was not given enough work to do, that she did not drink many cups of coffee, that she made five or six personal calls over the two week period and that she needed to leave at 3.00pm because of her family. I consider that these complaints are fairly petty and do not amount to misconduct on the part of the applicant. Further, it was acknowledged by all parties that neither Mrs Campbell nor the applicant ever took a lunch break. The main complaint of the respondent is that the applicant was not ready to work after 3.00pm on a regular basis. The applicant contends that it was agreed that she would work outside the hours of 9.00am and 3.00pm only in an emergency, when it was very busy and when the employers required it. The applicant did work after 3.00pm on three occasions during the two weeks she was employed by the respondent. On one occasion Mr Ashby asked the applicant to call customers from her home. She did so once but the next morning the applicant told Mr Ashby that she was not prepared to ring customers from home as it was her private time. The respondent's representative said it was clearly envisaged that it would be almost inevitable that the work would involve hours after 3.00pm. He submitted that the applicant "consulted with a customer after 3.00pm and found it distasteful to work after 3.00pm. Any refusal of the employee to work after 3.00pm would be to renege on the contract and would be a valid reason to terminate the contract". It was implied that it was at some whim of the applicant that she decided not to work after 3.00pm on a regular basis. I am unable to accept these propositions. I consider that the evidence supports the applicant's contention that it was agreed that she would work between the hours of 9.00am and 3.00pm except in unusual circumstances. The reason the applicant did not want to regularly work after 3.00pm was because of her family responsibilities and not because she found it "distasteful". This is supported by the terms written on the business card at the time of the interview and Mr Ashby's reference to "the agreed hours" in his termination letter. I do not consider that the applicant's employment was terminated for a valid reason, or valid reasons, connected with the employee's capacity or conduct within the meaning of S1790 DE (i) of the Industrial Relations Act. The respondents also argued that the business's operational requirements meant that it was necessary for the applicant to work after the agreed hours. The evidence of the respondent's witnesses however is that once the applicant's employment was terminated the existing staff carried out the applicant's former duties between them by working longer hours. If this is so, I am not satisfied on the balance of probabilities that the operational requirements necessitated the applicant to consistently work after 3.00pm. The termination On Monday, 22 August 1994, on arrival at the car park of the respondent's workroom, the applicant was met by Mr Ashby who handed her an envelope. He explained that he was terminating the applicant's employment and offered a week's pay in lieu of notice. The termination letter gave as the reason for termination that the duties for which the applicant was hired could not be done on a part time basis. In passing, I should say that I consider it unfortunate that the respondent's termination of the applicant's employment was handled in the way it was. Although I accept that the ideal situation for the respondent would have been to have a highly skilled co-ordinator present in the shop from early in the morning until 5.30pm at night, this is an unrealistic expectation and was not envisaged when the applicant was employed. Because the respondent's other employees have now between them taken over the applicant's former duties, I consider that this situation could have been resolved by some creative management. A full and frank discussion between the parties and an open-minded approach could have resulted in a resolution beneficial to all the parties. Having said that, I must now look at whether the termination complied with the provisions of the Act. Mrs Ashby's affidavit states at paragraph 18: "18. At or about the end of the first week of employment it was quite apparent to me that the working arrangement would not work to my satisfaction. The following Monday, 15 August 1994, I met with the Applicant and told her the arrangement was not working out and that I needed her to put in the extra hours when the business required. She told me that her husband would not agree to her working beyond 3.00pm. She told me that her husband earned a good income and she did not need to work, nor did he want her to take any work home. I informed her that if that was the case then a big problem existed as it had been previously agreed on 12 July 1994 that she would be available to work after 3.00pm." The respondent's representative argued that this was an implied warning which could be held to be sufficient to satisfy the requirements of S 170 DC of the Industrial Relations Act, which states: "Section 170DC Employee to have opportunity to respond to allegations: 170DC An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless: (a) the employee has been given the opportunity to defend himself or herself against the allegations made; or (b) the employer could not reasonably be expected to give the employee that opportunity." In the case of Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233 Wilcox CJ said that "the employee is to be given the opportunity to defend himself or herself against the allegations made; that is, the particular allegations of misconduct or poor performance that are putting the employee's job at risk. Section 170 DC (a) is not satisfied by a mere exhortation to improve". In the present case several allegations of misconduct were presented to this court. It is argued that the applicant's refusal to work after 3.00pm was the most serious. I find that Mrs Ashby's statement to the applicant that there were "big problems" if she did not work after 3.00pm cannot be said to comply with the requirements of S170 DC and the applicant must succeed with her application. Compensation Under S 170 EE the court, when considering relief, must first consider whether or not reinstatement is practicable. I consider that because of the obvious ill-feeling towards the applicant by some of the respondent's employees and the fact that the applicant has found alternative part time employment with Aherns, it would not be practicable to order reinstatement. The applicant was able to obtain some casual work at Aherns after her termination and is now working on a part time basis. The figures provided to me and which are uncontradicted show that the difference between what the applicant has earned and what she should have earned is $7,655 gross or $6,100 net. It was also submitted that as the applicant was due for long service leave at Aherns in some 2 years time, it would be appropriate to make an order for payment of $2,900 to take that into account. However, I consider that that is too remote to take into account. On behalf of the respondent it was argued that one should consider the statement by Wilcox CJ in Nicolson v Heaven and Earth Pty Ltd that "it would be unrealistic for a court automatically to assume that if this employer had complied with S 170DC, the employee's employment would have continued indefinitely". I consider that because of the dissatisfaction of the applicant and the respondents with the situation it is likely that the employment would not have continued for a substantial period in any event. In the circumstances, I consider that an award of $3,000 is appropriate compensation in this matter. The order of the court will be that the application be allowed and the respondent pay to the applicant the sum of $3,000 compensation within 21 days of the order. I certify that this and the preceding fifteen (15) pages are a true copy of the reasons for judgment of Judicial Registrar Boon. Associate: Date: APPEARANCES: Counsel for the Applicant: Mr D Alexander Solicitor for the Applicant: Birman and Ride Representative for the Respondent: Mr D.M. Jones Chamber of Commerce and Industry Date of Hearing: 7 and 16 February 1995 Date of Judgment: 12 April 1995 IN THE INDUSTRIAL RELATIONS ) No. WI 352 of 1994 COURT OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) BETWEEN: Audrey Ann Day Applicant AND: Meadowbank Enterprises Pty Ltd as trustee for the Ashby Trust trading as The Curtain Lady Respondent BEFORE: Boon JR PLACE: Perth HEARING DATES: 7 and 16 February 1995 JUDGMENT DATE: 12 April 1995 MINUTES OF ORDER THE COURT DECLARES THAT: 1) The termination of the employer's employment of the employee contravenes Division 3 of Part VIA of the Industrial Relations Act 1988. THE COURT ORDERS THAT: 2) The Applicant be paid by the Respondent the sum of $3,000 compensation within 21 days of the date of this order. Note: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. CATCHWORDS INDUSTRIAL LAW - Termination of employment - claim of unlawful behaviour - whether employee on probation - whether valid reason for termination of employment - compensation. INDUSTRIAL RELATIONS ACT 1988, Ss 170DC, 170DE(1), 170EA, 170EE INDUSTRIAL RELATIONS REGULATIONS, Reg 30B(1) Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233 AUDREY ANN DAY v MEADOWBANK ENTERPRISES PTY LTD as trustee for the ASHBY TRUST trading as THE CURTAIN LADY No. WI 352 of 1994 BEFORE: Boon JR PLACE: Perth HEARING DATES: 7 and 16 February 1995 JUDGMENT DATE: 12 April 1995