INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1189 of 1995 B E T W E E N : KERRY LEA JOHNSTONE Applicant AND STEGGLES LIMITED Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 9 May 1995 REASONS FOR JUDGMENT (Ex Tempore, revised from draft transcript) Introduction This is an application under Part VIA of the Industrial Relations Act which raises important issues relating to the selection of employees in circumstances of redundancy. The Court heard evidence from the applicant and another employee, Mr Grant. For the respondent, evidence was led from two staff employees, Mr Jackson and Mr McAuliffe and the farm manager, Mr Bell, as well as another former employee, Ms Ginnane. Findings on the evidence At Bannockburn, the respondent is the proprietor of a number of poultry farms. Some farms are leased by the respondent while one particular farm, farm 4, was, from early 1994, conducted directly by the respondent. The evidence was that the farms are run as hatcheries for the production of fertile eggs to be used elsewhere in the respondent's operation. Birds are brought on to the farms in batches of about 4000. They remain on the farm for a period of approximately 40 weeks. In the first few weeks of this period they commence to lay and after about 4 weeks, egg production reaches a peak. Production then slowly declines over the balance of the 40 week period, falling sharply in the last few weeks. Over the period of egg laying, eggs must be collected from nesting boxes four times a day, and other duties undertaken to maintain egg production and prevent flock losses. After the production cycle, the birds are removed from the sheds on the farm and the sheds are then cleaned for a new flock, and the cycle begins again. On farm 4, some of this work was done by the existing employees while the balance was performed by contractors. Employment in the industry The uncontradicted evidence in the proceeding was that employment in the industry consisting of these farms was casual. Employees would be engaged on a casual basis on an hourly rate and the employer would engage employees to meet the production peak and then reduce numbers and hours as production declined. In the period when production ceased, employees would take holidays, work on other farms or obtain other employment. They were then recommenced with the new production cycle. The system as it operates gives flexibility to both the operators of the farms and to employees, who usually come from the surrounding area. During 1993/94, the applicant had worked as an on-call casual egg collector at another farm within the group. She heard that farm 4 was recruiting staff and had an interview, along with one or two other employees, for a position as a farmhand/egg collector. She commenced employment along with Mr Grant. At the time she was employed I find that she was informed by Mr McAuliffe, the hatchery manager of the respondent, of the casual arrangements for employment on the farm. That she was fully aware of these arrangements is confirmed by evidence from Ms Ginnane, which I accept, that the applicant had discussed with her ensuring that she, the applicant, was least affected by the inevitable downturn in the hours of work at the end of the production cycle. At its peak production farm 4 had eight farmhands/egg collectors. The termination of the applicant's employment The production of eggs at farm 4 commenced a dramatic decline in mid-December 1994. Bell gave evidence that he had made it clear to employees that hours would be reduced as production fell. I accept his evidence. Bell was able to accommodate the reduced labour requirements by arrangements with individual staff whereby over the production cycle, employees who left were not replaced. Bell's wife was no longer employed and other employees for their own reasons chose to take holidays or reduce their hours. By early January 1995, Bell was told by his superiors to further cut hours. In the same week that this order was given, Bell had been seeking an expression of interest from employees to work the following week. On the same day that he terminated the applicant's employment, he advised other staff that if they wanted to work the following Monday, they could. Around the same time he took the applicant aside and advised that he had been told to reduce hours and that, "she had drawn the short straw." The applicant protested but to no avail. She was told that she would be called when needed in the future. Bell's reason for selecting the applicant was that he worked on the basis that those employees who had worked the most hours/days during the production cycle should be the first to have their hours reduced. As the applicant had been working up to six days per week, she was in that category. Bell denied that the applicant was singled out. I accept his evidence on that point. There was a deal of evidence about the applicant's performance in her duties and her relations with other staff. I find that on one occasion, Bell did raise with the applicant the way that she related to other staff. This was not, however, in the nature of formal counselling. The applicant gave evidence that after she returned from a period on WorkCare, she had been shunned by other staff members. Bell gave evidence that if the applicant returned to work, two staff members would leave. I find that there was friction among employees, but I am unable to find that this was the reason that Bell singled the applicant out for termination. Events subsequent to termination The respondent's case was that the decision to cease the applicant's employment was consequent upon a need to reduce hours at the farm. In the following week, the hours worked did drop from 130 to 108. In the next two weeks, however, they returned to the same level as the last week of the applicant's employment before dropping dramatically. The hours worked by individual employees who remained rose quite significantly from their levels prior to the applicant ceasing work. No explanation for this was provided by the respondent. About 6 weeks later, hours increased as a new flock of birds re-entered the farm and the production cycle commenced once again. Employment records show that two employees who were working at the farm when the applicant ceased remained employed. Was there a valid reason for the termination? The respondent carries the onus of proof that it had a valid reason for the termination of the applicant's employment under section 170DE(1) of the Act. I am satisfied that the respondent did have a valid reason to terminate the applicant's employment. The reason related to its operational requirements, namely the downturn in labour requirements at that stage of the production cycle. The evidence that this was indeed how the industry operated was not contested by the applicant. I accept Bell's evidence that it was his responsibility to adjust his labour needs to meet the overall profit requirements of the respondent. I find that therefore the respondent has discharged its onus of proof under section 170DE(1) of the Act. Was the termination in breach of section 170DE(2) of the act? The applicant carries the onus of proof that the termination breached section 170DE(2) of the Act. The solicitor for the applicant relied strongly on the lack of any consultation with the applicant before the decision to dispense with her services was made. The failure to consult her meant that she and other employees were denied the opportunity to organise amongst themselves how the inevitable reduction in hours would be managed. It was further submitted that in circumstances where other employees were being offered work it was unfair to say to the applicant that she had "drawn the short straw". This placed the termination in breach of the requirements of procedural and substantive fairness contained in the Act. He suggested that the reason for her dismissal was that she was a troublemaker. The solicitor for the respondent, on the other hand, sought to argue that there was no breach of the Act because the employment was always casual and the applicant knew this. The respondent, it was argued, had discharged its duty to consult by advising the applicant at the time her employment commenced that the employment was casual. Bell did not say why he had not chosen to consult the applicant about the decision to terminate her employment. He indicated that he had reduced overall hours as a result of ceasing his own wife's employment and two other staff had gone on holidays. In the few days before the termination he had, however, requested volunteers for further work and on the evidence on the same day had invited all available staff members to work the following Monday. On this same day he advised the applicant that she had "drawn the short straw." The respondent's solicitor submitted that given the small size of the employment and the nature of the employment, it was difficult to come up with any objective criterion for the redundancies which were necessitated by the production cycle. Bell's evidence was that he applied the criteria that those with the most hours or days should be the first to go. There was no evidence that this criteria was ever conveyed to the applicant. The respondent's difficulties are that there was a deal of evidence of inter‑personal difficulties within the staff at the workplace. Choosing to select the applicant to crease duties without spelling out the criteria on which the decision was made, invites the applicant to speculate that the decision was made on a basis personal to her. This conclusion is reinforced by the simultaneous offer to other employees of work while terminating the applicant. While it is easy to be wise after the event, records produced by the respondent show that in the 4 weeks after the termination, a number of other employees increased their hours substantially and indeed, the total hours worked and the average per employee, except in the week immediately after the termination, rose substantially. Consultation in this case with the applicant and the other employees may have revealed that the applicant's own witness, Grant, had an injury which may have precluded his undertaking further work and thus made this work available to the applicant. These matters all indicate that discussions with all employees affected by the production downturn would have at least allowed the employees to make their respective cases and possibly minimise the impact on individual employees, including the applicant, of the necessity to reduce hours. Discussions would also have avoided engendering in the applicant the belief that she had been singled out for "the short straw." The position regarding consultation may have been different had the respondent spelt out in unequivocal terms its selection criteria for reduction in staff during the production downturn. The solicitor for the respondent relied on the case of Barber v The Construction, Forestry, Mining and Energy Union (Industrial Relations Court of Australia, Farrell JR, 16 February 1995) where the Court held that a redundancy was not in breach of section 170DE(2) where the respondent had a credible reason for making the selection that it did. Here the respondent has not satisfied me that it had credible reasons for choosing the applicant in circumstances where on the evidence there was little to choose between the other employees and the applicant, and where the actual hours worked by other employees rose substantially after the termination. In a recent decision (Karambelis v Compack Packaging Pty Limited, (Industrial Relations Court of Australia, Murphy JR, 4 May 1995)) I reviewed the cases where redundancy had been discussed and said at 7: "These cases represent strong authority for the proposition that in the usual course, even in the case of a genuine redundancy based on the operational requirements of an employer, an employer must consult the employee and in appropriate cases, with the relevant union in order to avoid the termination breaching section 170DE(2) of the Act. Here, the respondent's evidence was that the reason why it failed to engage in the consultation was a desire to minimise the impact of the redundancy on the applicant. While this motivation may have been laudable it denied the applicant and his professional association the opportunity to make any contribution as to the need for, alternatives to, timing of, and manner of the proposed redundancy of the applicant. Whether that consultation would have ultimately made any difference to the ultimate outcome is not to the point. Both Schedules 10 and 11 to the Act set out norms relating to terminations which could have been followed here by the respondent and were not. Part III of both the Convention, (Schedule 10) and the Recommendation, (Schedule 11) provide for consultation by an employer with unions in the event of planned redundancies. An expressed aim of those provisions is that to avert or minimise any terminations and to mitigate the effects of such actions on the employees concerned. Section 170 CA(1) of the Act states that the object of Division 3 of Part VIA of the Act is to "give effect to, or further effect to" the Convention and Recommendation. In my view it is consistent with the recent decision of the High Court in Minister of State for Immigration and Ethnic Affairs v Teoh... to have regard to the provisions of the Convention, (Schedule 10) and the Recommendation, (Schedule 11) in determining whether a particular termination was harsh, unjust or unreasonable as these "ordinary non-technical words"... are to be applied to the modern day employment relationship." Applying these decisions, I am of the view that the termination of the applicant's employment on the basis of previously unarticulated criteria, without any consultation and in circumstances where it may have been open to make arrangements to minimise the impact of the reduction in hours, is such that the termination should be characterised as in breach of section 170DE(2) of the Act. Other matters The respondent relied on two matters of after acquired information in order to seek to defend the decision to terminate. They related to an alleged false WorkCare claim by the applicant and to alleged pilfering of eggs by the applicant. I am not satisfied on the requisite standard that either of those grounds, established after the actual termination, are sufficient to now provide grounds for the respondent to resist a finding that this termination was harsh, unjust or unreasonable. Such findings would need to be made on the basis of the appropriate standard of proof having regard to the allegations made and on the evidence that I could not be satisfied that that is made out. Remedy The applicant did not seek reinstatement. She gave evidence of her difficulties with other staff members. The respondent resisted reinstatement on the basis of these same matters. Having regard to these matters, and in particular the expressed views of the applicant, I am satisfied that reinstatement would be impracticable. The applicant sought compensation based on the wages that she had lost to date. The respondent's solicitor submitted that at the least, the applicant's employment would only have continued until the end of the farm clean-up, and that this is confirmed by the very low hours worked 3 weeks after the actual termination. I accept the respondent's submission on this point. In determining an amount of compensation I must have regard to events which would have occurred had the unlawful termination not occurred (Nicholson v Heaven & Earth Gallery Pty Limited, (1994) 126 ALR 233). I find that had there been consultation, it is most likely that the applicant's hours would have reduced to nil after 3 weeks. I find it is unlikely that the applicant would have been re-employed by the respondent in the upturn in the production cycle. Having regard to these matters, and based on the actual hours worked over the 3 weeks following her termination, I have calculated that the applicant would have worked an addition 75 hours over those 3 weeks, payable at the rate of $10.33 per hour. That makes a total sum of $775. In all the circumstances, I propose to award compensation in that amount. The Order of the Court That the respondent pay to the applicant the sum of $775 within 21 days. MINUTES OF ORDERS THE COURT ORDERS: 1. That the respondent pay to the applicant the sum of $775 within 21 days. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: Solicitor for Applicant: Mr Fisher Messrs Harwood Andrews Counsel for the Respondent: Mr J Douglas Representative for the Respondent: MTIA Date of hearing: 8 May 1995 Date of judgment: 9 May 1995 C A T C H W O R D S INDUSTRIAL LAW - Redundancy - Operational Requirements - After acquired knowledge - Termination of Employment Convention - Casual employment - Casual employee terminated during production downturn - no consultation - whether harsh etc - later information sought to defend termination. Industrial Relations Act 1988 ss.170 CA & 170 DE. CASES: Barber v The Construction, Forestry, Mining and Energy Union, (Industrial Relations Court of Australia, Farrell JR, 16 February 1995); Karambelis v Compack Packaging Pty Limited, (Industrial Relations Court of Australia, Murphy JR, 4 May 1995); Nicholson v Heaven & Earth Gallery Pty Limited, (1994) 126 ALR 233. KERRY LEA JOHNSTONE -v- STEGGLES LIMITED No. VI 1189 of 1995 Before: Judicial Registrar Murphy Place: Melbourne Date: 9 May 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1189 of 1995 B E T W E E N : KERRY LEA JOHNSTONE Applicant AND STEGGLES LIMITED Respondent MINUTES OF ORDERS Judicial Registrar Murphy 9 May 1995 THE COURT ORDERS AND DECLARES: 1. That the respondent pay to the applicant the sum of $775 within 21 days. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.