APESMA & Carl Sparre and David Graphics [1995] IRCA 206

CATCHWORDS INDUSTRIAL LAW - Compensation, Constructive Dismissal, Breach of Contract, Discrimination, Family Responsibilities, Procedural Fairness, Resignation, Notice of Termination, Unlawful Termination, Valid Reason. Industrical Relations Act 1988, ss 170E, 170ED Ian Samuel McGregor Nicolson -v- Heaven and Earth Gallery Pty Ltd 126 ALR 1994 233 Between APESMA 1st applicant and CARL SPARRE 2nd applicant and DAVID GRAPHICS respondent No NI 0174 of 1994

BEFORE: MCILWAINE JR PLACE: SYDNEY DATE: 31 March 1995

INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH DISTRICT REGISTRY No NI 0174 of 1994 BETWEEN: THE ASSOCIATION OF PROFESSIONAL ENGINEERS, SCIENTISTS AND MANGERS, AUSTRALIA 1st Applicant CARL SPARRE 2nd Applicant AND: DAVID GRAPHICS Respondent BEFORE: MCILWAINE JR PLACE: SYDNEY HEARING DATE: 31 March 1995 DATE ORDERS MADE: 31 March 1995 REASONS FOR JUDGEMENT This is an application under section 170E of the Industrial Relations Act 1988 made by the Association of Professional Scientists and Managers of Australia acting on behalf of Carl Sparre, and subsequently, pursuant to orders of the court made on 2 August 1990, by the second applicant, Carl Raymond Sparre. The second applicant was added to the proceedings following an interlocutory hearing before His Honour Mr Justice Moore. I also understand that there were preliminary proceedings before Her Honour Justice Beazley. During the hearing of this case there has been no submission made to me by either party that it was necessary that I refer further to the decisions of either Moore or Beazley JJ. The court has received a certificate dated 14 June 1994 issued by Commissioner Peterson in accordance with Section 170ED(2) of the Industrial Relations Act 1988. The commission has certified: "that it had been unable to settle this matter by conciliation." Therefore, I find that this application is properly before this Court for hearing. There have been three applications, an original application, an amended application and the current amended application with which I am dealing at the moment. The amended application was filed in the court on 29 March 1995, following the hearing by me of a notice of motion moved by the applicant to include a claim for reinstatement. There were no other substantial changes to the application. That notice of motion was granted by me on the basis that I could not see any prejudice to the company apart from the question of reinstatement of the applicant in employment, as the whole of the case against the respondent had been conducted by the applicants on the basis that compensation was only required and not reinstatement. However, to avoid any prejudice either to the applicant or to the respondent, I granted leave to file affidavits on either side limited to the issue of reinstatement, and I have today admitted those affidavits as exhibits "8" and "M" in these proceedings. The applicant seeks the following relief: 1. Declaration that the termination of Carl Sparre's employment contravenes Division 3 of Part VIA of the Industrial Relations Act 1988; 2. Order that the respondent pay Carl Sparre compensation in the sum of $19,246.24; 3. Such further or other relief as this honourable court deems fit and proper. The applicants provide the following information: (A) Computer Graphics/Computer Technician [The nature of the person's employment with the employer (respondent)] (B) Unknown [The name of the award or enterprise agreement if any under which the person was employed, and whether that award or enterprise agreement was made under the law of the Commonwealth or state or territory] (C) February 1993 to 8 April 1994 [The dates of commencement of termination or proposed termination, of the person's employment with the employer (respondent)] (D) Refusal to work overtime [The reasons, if any, given by or on behalf of the employer for the employer's decision to terminate the person's employment.] (E) Reinstatement with employment deemed continuous and back-pay for all remuneration lost by Mr Sparre because of the termination: or in the alternative appropriate compensation. [The remedy sought by the applicant in this proceedings. In a case where a money sum is sought by or on behalf of a person, the application must state the amount claimed and specify how this amount was calculated.] The second applicant gave evidence that he was married with two children aged 10 months and 28 months; that his highest qualification was that of Mechanical Engineer, having completed the degree course at the University of Technology Sydney in 1990. In January 1993 he responded to an advertisement placed by the respondent seeking a McIntosh technician to work 3.30 pm to 11 pm Monday to Friday. He gave evidence that: "After a practical examination and two interviews with Michael Priest, the McIntosh technician on day shift, I was offered employment by the respondent starting mid-February." The respondent also put in evidence a letter dated 29th January 1993 signed by Ian Morrison, exhibit "B" which confirmed his employment as a MacIntosh Operator/Technical Support. The reason the second applicant gave for seeking an evening position was to avoid placing his children in long day care. His wife worked long full-time hours, and he had done the same and there was concern expressed about the fact that the children would be in day care from 6.30 am till 6 pm. It was considered by the parents to be far from the ideal situation for the children as well as the expense and difficulty in finding that type of care. There was no question raised that the applicant was not in a full-time position, or that he was on probation. On the question of overtime, the applicant gave this evidence: initially overtime was of no concern; on the rare occasion overtime was required he worked the extra hours. He was able to catch up on much needed sleep when his then only child took a mid-day nap. There was also a period when his wife having had their second child was not in full-time employment, and it was easier to work overtime at that time. This evidence has not been contested by the respondent. His wife returned to part-time employment in August 1993, and to full-time employment in October 1993. It was at this point it became difficult for him to work overtime past 11 pm of an evening. I accept his evidence in this regard, that he found it quite exhausting to have to mind the two children during the day, then to go to work in the evening. He gave evidence that he attempted an overtime shift on one occasion and then the next day minded the children. When he returned to work that day his productivity declined. Having observed both Mr Mayo and Mr Sparre in the witness box, it seems to me that the working of overtime became what it should not have been and that was a personality clash between Mr Sparre and Mr Mayo. Mr Sparre gives evidence, and at least two aspects of that evidence is not contested, or it is in fact conceded by Mr Moroney, that he was asked if he was refusing to work overtime on all occasions and the evidence given in his affidavit is as follows: "After considerable thought I told John Mayo that in the interests of David Graphics I would work overtime under the following conditions: (a) when the tasks required my specialist technical knowledge and thus could not be completed by another operator; (b) in an emergency; (c) on a Sunday. I did not include Saturday as I have a social commitment." I recall the evidence of Mr Sparre who quite vividly described the work that went in to producing the bread bags on his computer for the daily loaf of bread It was apparent that he was quite proud of his skill and expertise. However, it appears that the overtime being offered to him was not of that high or demanding standard, but more of the everyday drudgery that is required in any working environment. It may well have been that he had a reluctance to engage in that type of work on overtime, albeit I accept that he did have a genuine concern about having the responsibility of caring for his children during the day. However it is conceded by Mr Moroney quite fairly, I think, in his evidence, page 138 of the transcript: "Did Carl ever suggest any alternatives to you?---Carl never suggested any alternatives at all." And that was in response to a question from his counsel. And then Mr Taylor put to him: "Mr Moroney do you recall Carl Sparre telling you that he was willing to do overtime in an emergency?" "Yes." "Do you recall him telling you that he was willing to work overtime where his technical skills were required to do the work?" "Yes" It was denied that he had agreed to work overtime on a Sunday. I find that there has never been any refusal by Mr Sparre to work overtime in the sense in which it was being put forward by the company that it was impossible for them to arrange for him to do any overtime at all. Now, there were a series of events which commenced on 18 March and continued on 23 March and then 8 April 1994. Basically I have two versions of these: Mr Sparre and Mr Moroney in one case, and Mr Mayo and Mr Sparre on the other. I had the opportunity of observing both Mr Sparre and Mr Mayo in the witness-box and it seemed to me that there was, as I have indicated, some personality clash or perhaps even a cultural difference between the two men. At one stage in his evidence Mr Mayo answered a question from me: "When you say you looked after children, have you got children of your own?" "I've got two girls, sir. For five years I - well, you don't want to know what I did with my children, but I looked after them when my wife worked, but I still worked at my present employment." Mr Mayo, in his affidavit, exhibit "H" at paragraph 4 claims that: "I asked him to work overtime on 30 or 40 occasions and almost always he would refuse to work the overtime." Further in his evidence, Mr Mayo described his requests as being "flatly refused with a grin." It seems to me that it is probable that where a person has been asked at least 30 or 40 times, that is almost at least once a week, to do overtime and has refused, that the matter might have become something of a standing joke in the workplace. It was obviously a difficulty that Mr Mayo believed was affecting his control of the day to day work allocation. He sought advise but unfortunately he was let down by his management. Apart from a discussion with Mr Moroney, there is no evidence of any guidance being given to him, particularly as it subsequently appears, that as early as the 18th March Mr Moroney is referring to the rights of the company under an award. It is also now submitted by counsel for the respondent that an award is applicable in this case. If that submission is correct then management ought to have been able to instruct Mr Mayo to use the provisions of either, the New South Wales or the Federal award, both of which indicate a proper way of resolving the differences between Mr Sparre and Mr Mayo over the overtime requirement. Mr Mayo should have been instructed to refer the issue either to the State Conciliation Commission or to a Federal Board of Reference. In relation to the operation of the award, I have considered the evidence of Mr Moroney at page 136 of the transcript, where he gave evidence: "But on the afternoon of the 18th I suggested to Carl that we would have to look at some other solution, and I suggested to him that as part of the award that we were respondents to that I could change his shift to day shift but knowing in my mind that that wasn't going to suit him. I suggested to him that day shift might be an option. Carl said no, he had the children to mind during the day. I then suggested to him would it be possible for him to change his hours of his shift and he said again, no, because he had to drop the children off at day care on his way to work and he couldn't work overtime because he didn't get his sleep at night. I then suggested that we did really have a problem and that I would have to go away and evaluate it, and from what I remember that was the end of the conversation." In their submissions to me counsel on behalf of the respondent and the advocate for the applicant couldn't agree as to whether the Graphics Arts Award 1977 covered the employment of Mr Sparre. In the case of a dispute it is difficult to make a decision about the award coverage when the parties to the award are not present to argue the matter fully. I understand that there was present during the hearing a representative of the employing organisation who is a party to the award. However there was no request made to intervene in these proceedings. Nevertheless, I find that the respondent company and Mr Sparre were bound by the provisions of the Graphic Arts Award 1977. Although it is quite clear that at 18 March the respondent is referring to the possibility there is an award that enables them to alter his shift or make other changes in relation to the terms of employment of Mr Sparre. I reiterate as part of their submission the respondent puts to me that there was an applicable award and that award provided for a method of determining this issue in dispute between the parties and the company failed from as early as 18 March to take up that opportunity, and if it had taken up that opportunity the matter might have been resolved in a much more appropriate way than has been the case. If it were not for evidence that is now before me, I would have considered reinstating Mr Sparre to the former position and ordering that this matter be referred to the Board of Reference to have it properly determined, where it ought to have been dealt with in the first place. However that is not the decision that I have come to, based on the evidence that is before me. This situation, to my mind, was further complicated by the fact that, on Friday 18th March, Mr Mayo asked Mr Sparre to do overtime that night. The allegation is that Mr Sparre gave as his reason for not doing the overtime that he was playing tennis the next day. This was denied by Mr Sparre. Mr Mayo maintains he said it. I am unable to determine exactly what happened between these two gentlemen, as I have indicated earlier, Mr Mayo had allowed 30 or 40 requests to do overtime to pass without taking the appropriate action under the award, namely to refer the dispute to a Board of Reference and have the matter determined with both parties being represented. If Mr Mayo received a facetious answer, then it was certainly only to be expected in those circumstances. However, Mr Sparre does say that it was not said by himn and that his wife was working the next day. I accept the evidence of Mr Sparre that his wife was working and I therefore do not have to resolve the issue in the sense as which person was wrong or mistaken or otherwise, about their recollection of the particular conversation. I accept Mrs Sparre' evidence that she had to work the next day and it was necessary for her husband to be home to mind the children. It may well have been that Mr Sparre intended to play tennis on that day. The evidence was he played tennis on Saturday afternoon. Nevertheless as I have already indicated the company created the problem when it did not refer the matter to the appropriate tribunal, given the fact that there was an applicable federal award. I accept Mr Sparre's evidence that he was not aware of any award prior to, and it appears to be clear from Mr Moroney's evidence that on 18 March he referred to there being an award coverage so that he could change the shifts. However, Mr Moroney's evidence in that regard also subsequently made it plain that he had no real intention of making the offer of the change to the day shift for Mr Sparre. I conclude that this may well have been obvious to Mr Sparre during the course of the conversation. I will now turn to the letter of 23 March 1994, which is suggested by the respondent is a letter of notice. Again, this matter was complicated more than it needed to be by the fact that when the letter dated 23 March was given to the applicant - and I note that it is headed "to Carl Sparre re overtime," it is not headed re termination of employment or anything of that nature, it is re overtime - it was deficient in the sense that it did not provide Mr Sparre with any reference to the fact that he had the opportunity of referring the matter to a Board of Reference as it set out in Clause 21 (M) of the Graphics Arts Award 1977. There is absolutely no mention of that right in the letter. Further, I mean no disrespect to Mr Moroney, but it seems to me that if he is going to embark on an exercise which would ultimately lead to the termination of an employee, then it ought not to be done whilst he is conducting a telephone conversation, even if it is only for a minute or two. The conversation which is basically agreed between the parties is, in any event, a very short one, and I can imagine that it may well be that there may not have been an actual conversation being conducted on the telephone by Mr Moroney at the time; however, his failure to put down the telephone and give Mr Sparre his full attention would certainly create the wrong impression. It is hardly commensurate with the submission made by counsel for the respondent that I find this was a formal termination, or notice of termination, of employment. It is convenient to set the letter out in the judgment: "23rd March 1994 To: Carl Sparre RE: Overtime "It is a requirement of employment of any employee to work reasonable overtime at overtime rates. Your supervisor has repeatedly asked you to work overtime and repeatedly is told no. I have spoken to you on two occasions the need for overtime to meet our customers requirements. If you cannot avail yourself for reasonable overtime, as your working companions, I have no option but to ask you to find another position so as we can replace you with somebody to accommodate the above. Signed John Moroney General Manager" Mr Moroney, in his own evidence, conceded that on at least two aspects of overtime Mr Sparre had agreed to meet the company's requirements. There is no mention in this letter of an intention by the company to terminate his services, instead Mr Sparre "is asked to find another position so as they can replace him with somebody to accommodate the above." There is certainly no mention of the amount of notice that one would expect to be given in such a letter, or some direction as "if you don't find another job, you finish in 10 days" or what the reasonable overtime is to consist of in number of hours. I find that the letter of 23 March 1994 is deficient and does not form a proper written notice of termination. On the exhibit "F", which is produced to me, there is a notation, and it is not questioned that this was in Mr Moroney's handwriting: "Carl finishes on 9 April 1994." I accept that the date was subsequently changed to "8" because the 9th was a Saturday, but nothing, in my view, depends on the difference of one day. It seems to me, arising out of the discussion that occurred on 23 March 1995 and I was not present and I am not able to determine the actual situation. However, I am able to rely on the documentary evidence that is an exhibit in these proceedings and not disputed by the company, and I note that the word "finish" is used rather than the word "resign" or "resignation." Now, to my mind, that leaves a number of alternatives open. It leaves the alternative open that Mr Sparre had 10 days to look around for a job, and then on the 9th (the 9th as written, but in effect on the 8th, being the Friday), something would then be done about giving him a formal notice. Now, as the award applied then, at least one weeks notice would be required in that instance, and it will of course be open to the company at that time to either resolve to give a weeks notice and allow Mr Sparre to work it out or to pay him the weeks notice, not being in contravention of the award, and allow him to finish up on that day. In my view it was necessary to issue a further notice incorporating the correct situation, and in this regard it is timely to refer the company to some remarks of the Chief Justice in Ian Samuel McGregor Nicolson v Heaven and Earth Gallery Pty Ltd, 126 ALR 1994 233 in which there was some discussion about whether a probationary agreement, existed and I quote from the observations made by the Chief Justice: "It would have been easy for Mr Holt to send Mr Nicholson a short letter confirming the terms of his appointment, including the fact it was subject to a two month probationary period. Where such an easy step is omitted, it is tempting for a judge to say that if the employers do not bother to put the terms of the agreement in writing, they ought not to expect a court to accept that there was an oral agreement for a probationary period. However, lawyers have been lamenting that commercial people often fail to put agreements in writing since time immemorial, to little effect. Notwithstanding the failure of the parties to take this obvious effect, the courts have to take the evidence as they find it and endeavour to divine the truth. I must resist Mr Christie's invitation to treat the absence of writing as a reason for preferring his case on the issue. However, the submission provokes me to emphasise the desirability of employers confirming by contemporaneous letter the terms of engagement of the employees. It is particularly desirable that they do this in cases " The Chief Justice's remarks relate to the specific instance he was considering. In this case it would have been much more preferable if Mr Moroney had recorded his version of the result of the conversation that took place while he was on the telephone. However, I am left with the situation of two alternative views. I prefer to rely on the written evidence which does not record, in Mr Moroney's writing, that there was any resignation by Mr Sparre, and I find accordingly. In any event, if I am wrong on that finding, and it is accepted that there is a contract of employment, I was referred in quite strong terms by counsel for the respondent to the case of Association of Professional Engineers, Scientists, and Managers Australia and Others v Skilled Engineering Pty Ltd and Others, 122 ALR 471 and in particular to the judgment of Gray J where he dealt with a series of cases which he defined into a number of categories. I think it is suggested by the respondent that this case falls within that case, within one of the classes of cases which his Honour dealt with and which is described at page 475 as follows: "The second is a case in which notice was given prior to 30 March 1994 and expired after that date." In this case I find that no proper notice was given and therefore it is not applicable in terms of the factual situation. However, I have also carefully considered his Honour's remarks in another aspect of this case, and in that respect I refer to his observations at the bottom of page 482 through to page 483 and his suggestion at the top of page 483 that: "Such a remedy might involve declaring that the act of the employer was ineffective to determine the contract and the making of consequential orders requiring the employer to treat the contract as still on foot." Even were there to be any suggestion that the letter of 23 December is a proper notice, it seems to me that the relationship between Mr Sparre and the employer continued after 23 March, and up until the events of 8 April 1994. It may well be that this was done on the basis that Mr Sparre had been given 10 days to make up his mind whether he would accept the repudiation, if that be the case, of the contract by the employer. In the facts, as I have found them, it seems to me that the contract was still on foot on and after 30 March 1994 and certainly as at 8 April 1994. The events of 8 April 1994 are described in Mr Moroney's affidavit and there is no need to set them out in detail. The particular paragraph I refer to is paragraph 8. I simply refer to two aspects of that evidence. There was a further overtime request by Mr Moroney. Again, this was another instance when the company should have made the offer to refer the matter to the appropriate Board of Reference for conciliation or determination in terms of the requirement to work overtime. It is simply appropriate to refer again to the affidavit of the respondent, Mr Moroney: "There is no letter. I have had enough. I do not wish to speak about it any more. Get out of my face." I find that at that time, there was a termination of the employment by those words by Mr Moroney . It was, then that Mr Sparre's employment was terminated. As I have indicated earlier, it would seem to me that the more appropriate solution to this matter would have been to reinstate Mr Sparre to his position, to refer the matter to the Board of Reference to enable the issue of overtime and Mr Sparre's child-care responsibilities to be determined in a manner in which the threat of loss of employment was not held over his head. It would seem to me that it may be that at such a hearing, and the award allows for a hearing, there would be a possibility of Mr Sparre reconsidering his position in conjunction with his spouse. There would be a number of options available to him including for him to find or make alternative child-care arrangements. I would concede that there may be financial or family responsibilities or other implications to that issue. However, it could have been resolved between the parties in a much more amicable way than the course embarked upon by the company. I regard the failure to afford a proper opportunity to discuss alternates or to refer it to the Board of Reference, particularly when the company now seeks to rely on the award provisions imposing an obligation on Mr Sparre to do reasonable overtime, as a serious breach of the obligation of management to its employee under the legislation. I find that the termination was not valid. I declare that the termination of Carl Sparre contravenes Division 3 Part VIA of the Industrial Relations Act 1988. I have no doubt that if Mr Sparre was not able to come to terms with the fact that a Board of Reference may make a decision that would not assist his case then he may have been placed in a position of determining his position in the company. I accept that on any view the company is entitled to run its operations as it sees fit, and in that case he may well have been, after there had been a proper inquiry and a proper opportunity for him to be heard on this issue, then his period of employment may have been quite lengthy or it may have been of extremely short duration. I am unable to determine that issue. I now turn to the affidavits of the respondent regarding reinstatement. As I have earlier pointed out, the respondent was in some difficulty in conducting this case in the sense that it was conducted simply on the matter of compensation rather than dealing with the reinstatement issue. Mr Moroney has provided further evidence that action was taken immediately following termination of the applicant's employment to employ another person in place of Mr Sparre. Obviously that person has been there for almost 12 months. There are other difficulties outlined in the affidavit. On the other hand, I accept the evidence of the applicant that he is unable to work with Mr Mayo. This may not be sufficient reason to provide evidence to the Court that it is impracticable to reinstate a person because it seems to me that in this matter both parties could have found a way if the will had been there. On the basis of evidence of the company I find it is impracticable to order the reinstatement of Mr Sparre. I turn now to the question of compensation. The amended application claims some $19,246.24 and there is a claim, or a suggestion by the applicant that I am entitled to look at the fact that there was a prospect of unemployment in this particular situation for Mr Sparre for a period of, say, some 12 months and that is a factor that I can take account of. There is also another matter which I may take account of, namely that had he been reinstated he would have received the remuneration which had not been paid to him during the period of the termination, that is, from 8 April 1994 to date. That amount of remuneration because of the period that has elapsed between the filing of the claim and the hearing would exceed the maximum amount of compensation I can award. On the evidence before me reinstatement is impracticable and therefore I am not able to make that order. I have carefully considered the situation. I note that Mr Sparre was able to obtain employment, albeit as I understand it, not to the amount and the same extent as the employment which he had previously. In considering this matter under section 170E(e)(3), I am obliged to have regard to the remuneration that the employee would have received, would have been likely to have received, if the employer had not terminated the employment. Then, of course, there is the limitation on that amount of six months. In all the circumstances I am not satisfied that Mr Sparre's employment would have been, if the Board of Reference had not been able to resolve the dispute between the parties, for any lengthy period, certainly not the period of 12 months. Having taken account of the fact that he has received some earnings in relation to those matters I consider the amount of compensation that is appropriate is $4000, I order that the amount of $4000 be paid within 14 days to the applicant. The orders I make are: 1. I declare that the termination of Carl Sparre's employment by the respondent contravenes Division 3 of part VIA of the Industrial Relations Act 1989. 2. I find that reinstatement is impracticable. 3. I order the respondent to pay to the second applicant, Carl Raymond Sparre, the amount of $4000 within 14 days of today. I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgement of Judicial Registrar McIlwaine delivered orally on 31 March 1995 and revised from transcript and issued on Associate: Dated: May 1995 APPEARANCES For the 1st and 2nd Applicant: Mr I Taylor of APESMA For the Respondent Mr G Hatcher of counsel Mr S McDougall solicitor