IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VI 1886 of 1994 VICTORIA DISTRICT REGISTRY B E T W E E N: ALAN ALBERT KIFFEN Applicant A N D ARNOLDS CFD PTY LIMITED Respondent Reasons for Judgment 22 May 1995 PARKINSON JR The applicant was employed on 5 April 1993 as a potato packer in the respondent's warehouse at Wodonga in Victoria. He worked alongside another employee and his duties were to sort, wash and pack potatoes of varying sizes and grades for both wholesale and retail sale. Being the holder of a class 3 license, the applicant also performed delivery work for the respondent and on occasions operated a fork lift. The evidence is that the applicant worked generally without incident, and that until approximately June 1994 there was no issue taken with his work performance. The respondent contends that in June 1994 it became apparent to it, as a result of the complaints of another worker, that the applicant was not "pulling his weight", and that the excess was being borne by his co-worker. The respondent's manager Mr Arnold gave evidence that he spoke to the applicant about this matter and that the applicant acknowledged the concerns and indicated he would improve. The respondent characterises this first conversation as a warning and, along with a further conversation which apparently took place some weeks later, although there is a serious discrepancy in the evidence in this regard, says that it raised the issue of the applicant's work performance again and advised him to think about his ongoing future with the respondent. The applicant acknowledged that the first conversation occurred, but says that it was in more general terms than those related by Mr Arnold. The applicant denies that there was a second conversation. Having heard the evidence of Mr Alcones, the applicant's co-worker, as to his complaints to Mr Arnold about the applicant's work performance, I accept that it is likely that these conversations took place. However, I do not accept the time frames which were originally contended for by the respondent in relation to the second conversation. It was said that the second conversation took place in about September 1994, not long prior to the termination of the employment. The respondent's evidence in this regard was contradictory and confused, and the witness Mr Arnold frankly admitted his inability to recall with any accuracy the time frames within which the conversations took place. I am of the view that it is more likely that the conversations took place in or about June 1994. I am satisfied on the evidence that whilst the applicant may well have understood that there was some dissatisfaction with his work performance, he was not clear in what respect, nor was he informed as to the improvements which were required. Further, I am not satisfied that the applicant understood or ought reasonably to have understood that in the absence of an improvement in his performance his employment might be terminated. I am satisfied that no further issues were raised with the applicant as to his work performance between June 1994 and 20 September 1994. On 20 September 1994 the applicant was diagnosed as suffering from pleurisy and was consequently absent from work on 21, 22 and 23 September. He returned to work on Monday 26 September. On Wednesday 28 September he was informed by the manager that his employment was terminated. The evidence is that he was simply advised of the termination and that he would be required to work out his notice period. The respondent's evidence was that during the applicant's absence both on annual leave in May and June 1994, and on sick leave in the week prior to the termination, the work had been completed with greater efficiency; by another employee during the annual leave, and with no assistance to his co-worker during the sick leave absence. The evidence was that this was relied upon by the respondent as establishing that the applicant was not working at full capacity or "pulling his weight". The respondent's evidence was also that it had initially employed a person on less than 38 hours per week to replace the applicant, although recently those hours had been increased to full time. Whilst I accept the evidence of the respondent's witnesses that there were real concerns as to the applicant's work performance as at June 1994 which were ongoing and constituted the reason for the termination of the employment, I am not satisfied that the applicant had any idea of the reality of the situation in relation to either the concerns or his ongoing employment. It is clear that none of the circumstances arising in the applicant's absence were put to the applicant at the time of the termination of his employment or at any time prior to the termination. The applicant had no opportunity to raise anything in his own defence in relation to these matters. The respondent's counsel submitted that the conversations in June which were characterised by the respondent as "warnings" were sufficient compliance with the obligations upon a respondent pursuant to S170DC of the Industrial Relations Act 1988 ("the Act"). I do not accept that this is the case for the following reasons: Firstly, the conversations which were held were inadequate for any procedural fairness purposes, whether arising out of S170DE(2) or S170DC of the Act, because the nature of the concerns of the respondent in relation to the work performance were not identified in any sensible manner. Nor was there any identification of the manner in which the applicant was required to improve his performance, nor was the consequence of a failure to improve identified. These issues have been extensively dealt with by the Chief Justice in Nicolson v Heaven & Earth Gallery Pty Limited (1994) 126 ALR 233 at 243 where his Honour, in considering the fairness requirements of S170DC, said: "The paragraph does not require any particular formality. But this does not mean that it is unimportant or capable of perfunctory satisfaction. Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as "natural justice" or, more recently, "procedural fairness". The relevant principle is that a person should not exercise legal power over another, to that person's disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. The principle is well-established in public administrative law. It was accepted into international labour law when Article 7 was inserted in the Termination of Employment Convention. Section 170DC is directly modelled on Article 7. the principle is, I believe, well understood in the community. It represents part of what Australians call "a fair go". In the context of s. 170DC, it is not to be treated lightly. The employee is to be given an opportunity to defend himself or herself "against allegations made"; that is, the particular allegations of misconduct or poor performance that are putting the employee's job at risk. Section 170DC(a) is not satisfied by a mere exhortation to improve." Secondly, it could not be said that there was an opportunity to respond to allegations in respect of work performance in the context of a threatened termination of employment, when that latter possibility had not even been raised with the applicant. The applicant was never on notice as to the potential seriousness of the situation he was in. This seems to me to be a fundamental requirement of procedural fairness arising out of S170DE(2) of the Act. In Byrne and Frew v Australian Airlines Ltd (1994) 120 ALR 274, his Honour Justice Gray said, at p. 327, in dealing with the requirement of procedural fairness: "So far, the procedural aspects of a clause such as cl 11(a) have been seen as confined to the need for the employer to make a proper investigation of the facts and to consult with the employee about those facts and their possible consequences: see Gregory at 471 and 473; Wheeler at 306 and Bostik (No. 1) at 34 in the judgment of Gray J. In my view, that analysis has been inadequate. The use of the word "unjust" in the clause is intended to import the requirements of natural justice or procedural fairness into the process of terminating employment." And at page 328 his Honour said: "In the circumstances of this case, that obligation translated into a number of specific steps which the respondent was obliged to take. First, it was obliged to conduct a reasonable investigation, to ascertain what view it should take of any circumstance which it might take into account in deciding to dismiss the appellants. Secondly, it was required to formulate what it alleged the appellants had done or failed to do. Thirdly, it was obliged to put the allegations of commission and omission to the appellants, and to give them a fair opportunity to be heard as to those allegations. Finally, it was obliged to give the appellants a fair opportunity to be heard on whether they should be dismissed, if they were to be regarded as guilty." This question has also been dealt with by me in an unreported decision of this Court in AWU-FIME Amalgamated Union & Joseph Patrick Farrell v Conagra Wool Pty Ltd ( VI 162/94, 15 September 1994). Finally, whilst I am inclined to the view that S170DC requires the opportunity to be accorded at the actual interview resulting in termination, at the very least it requires a degree of contemporaneity between the according of the opportunity to be heard and the termination of the employment. In this case the alleged "warnings" took place in June, and the termination of the employment took place in September. There was no realistic relationship between the events. Whilst I am satisfied that the respondent's reason for the termination was a valid one related to the work performance of the applicant, and not arising out of his absence due to illness, I have concluded, having regard to the matters discussed above, that the termination of the applicant's employment by the respondent was harsh, unjust and unreasonable having regard to the failure of the respondent to meet its obligations pursuant to S170DC and to accord procedural fairness pursuant to S170DE(2). Remedy- S170EE The applicant seeks reinstatement. During the course of the proceedings, aside from some frustration on the part of the witnesses in terms of their recollection of events, there was no apparent animosity between the parties. The respondent is a company which has a long and proud history in the district and has employed many people over the years, with few difficulties. It is apparent that it is a company which has regard for its employees, and I perceived its manager, Mr Arnold, as a fair and reasonable person who was not the type of person to bear grudges towards the applicant as a result of these proceedings. The applicant ought now be well aware as a consequence of the action taken by the respondent as to the issues of concern to the respondent as to his work performance, and would be well advised to pay serious attention to that matter. Nothing in the evidence has satisfied me that it would be impracticable to order the reinstatement of the applicant to either the position he previously occupied or to another position on no less favourable terms and conditions. The respondent points to its engaging another employee to replace the applicant, albeit on a casual basis, as a factor which points to reinstatement being impracticable. I am not satisfied that such a step taken by a respondent in the knowledge that an application pursuant to S170EA of the Act had been made is a factor which in isolation would render an order for reinstatement impracticable. In the particular circumstances of this matter there is no evidence before the court in any event as to the nature of the arrangements made by the respondent with the replacement employee as to ongoing employment. It is appropriate to refer to the joint decision of Wilcox CJ and Keely J in Liddell v Lembke (t/as Cheryl's Unisex Salon) (1995) 127 ALR 342 at 359 - 360 where their Honours, in considering the use of the word "may" not "shall" in S170EE (1) in relation to an order for reinstatement, decided as follows: "It is true that S170EE uses the word "may", not "shall", and that "may" connotes the conferral of a discretion, not a duty: see s33(2A) of the Acts Interpretation Act 1901 (Cth). However, as the Industrial Relations Act does not specify any criteria for the exercise of that discretion, they are those emerging from "the subject matter and the scope and purpose" of the legislation: see R v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49; 27 ALR 321. The subject matter of this legislation is unlawful termination of employment. Its scope and purpose is the provision of legally enforceable remedies for people whose employment is terminated in breach of the internationally-accepted standards introduced by the Act into Australian domestic law. Because of these considerations, and the fact that the Commonwealth Act makes a termination in violation of the requirements of s170DC unlawful in itself, whatever the employee's merits or lack of them, it would not be right to withhold a remedy for a breach of s170DC because of considerations listed in s170DE(1). They are factors that permit an employer acting fairly to terminate an employee's employment. Still less would it be correct for the court to exercise its discretion adversely to an applicant because of factors extraneous to the Industrial Relations Act, such as a respondent's financial position or personal likes or dislikes." (Original emphasis). This extract is relevant to the circumstances before the court in this proceeding, both in respect of the nature of the unlawful termination arising as it does out of a failure to comply with S170DC and S170DE(2), and also in relation to the circumstances of the respondent in engaging a replacement employee. I am not satisfied that reinstatement would be impracticable and have decided to make an order in that regard pursuant to S170EE(1)(a). I have decided that in this case the issue of which position in the respondent's organisation the applicant ought be reinstated to is a matter appropriately left to the respondent to determine, having regard to its current employment arrangements in the shed and its staffing requirements elsewhere. This is of course subject to the requirements of S170EE(a) in relation to no less favourable terms and conditions. In so far as the remuneration lost by the applicant as a consequence of the termination of the employment is concerned, it was submitted that the applicant ought be awarded the entire amount of remuneration lost during the period. In this matter there were delays in the course of the matter coming on for hearing as a result of a consent adjournment application. The matter was initially listed for hearing on 15 and 16 March 1995. Having regard to this delay, I have decided that the order I make in respect of payment of remuneration lost will operate in respect of the period between the date of the expiration of the paid notice and the date of the first listed hearing dates of 15 and 16 March 1995. The orders of the court are: 1. That the respondent reinstate the applicant to the position in which he was employed immediately prior to the termination of his employment, or to another position on terms and conditions no less favourable and that the reinstatement take effect on and from the date of this order. 2. That within 21 days the respondent pay to the applicant the amount of remuneration lost by the applicant between the date of the termination and 15 March 1995. 3. That the period between the date of termination and the date of reinstatement be treated as continuous employment of the applicant by the respondent for all purposes. I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 22 May 1995 Solicitors for the applicant: Dick & Williams Counsel appearing for the applicant: Mr S Stuckey Solicitors for the respondent: Gabriel & Co Counsel appearing for the respondent: Mr B Shaw Date of hearing: 18 May 1995 Date of judgment: 22 May 1995