Cindy-Jane Mercer v Thomas P Clarke (Aust) Pty Ltd [1995] IRCA 226

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2874 of 1994 B E T W E E N MERCER Applicant AND THOMAS P CLARKE (AUST) PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 23 May 1995 REASONS FOR JUDGMENT The Applicant makes application to this Court for compensation alleging contravention of Division 3 Part VIA of the Industrial Relations Act 1988 (the Act); in that her employment was unlawfully terminated by the Respondent on or about 19 December 1994. At the outset I am compelled to say that it is regrettable that the 18 year old Applicant, who embarked on her first job as an office clerk with the Respondent in December 1993 and, on all accounts acquitted herself very well in that job, should be required to spend 2 days in Court pursuing the resolution of this application. It was clear from the opening submissions of the Respondent that during the period when the Applicant was ill and hospitalised, the Respondent terminated her employment and at least one of the reasons for doing so was her temporary absence from employment since 23 November 1994 because of a kidney infection. In its opening, through its solicitor and representative in Court Mrs Cirkovic, the Respondent informed the Court that it had conveyed an offer to the Applicant to reinstate her employment and, despite her application for compensation, it was still prepared to reinstate her. Even so it denied that it was liable to pay her for the remuneration lost as a consequence of the termination to date. On the strength of these opening remarks, the parties were invited to take the opportunity to resolve the dispute by negotiation. These negotiations were not fruitful. After hearing all the evidence and the submissions, I have concluded that the Respondent's approach to this litigation and the obligations imposed on it by the Act, is best described as misguided. Background Facts The Applicant was interviewed for her position with the Respondent before December 1993. The first interview was conducted by Julie Ann Capon (Capon), the Respondent's Payroll Officer and Office Supervisor for some 6 1/2 years. A second interview was conducted between the Applicant, Capon and Michael John Daglish (Daglish) who has worked for 5 years as the General Manager of the Respondent's Dandenong operation. At no stage prior to offering the young Applicant employment and training as an office clerk did the Respondent ask her any questions about her health. She was employed full-time on a gross fortnightly wage of $595.08, until termination of her employment on or about 19 December 1994, which termination was subsequently confirmed by letter dated 23 December 1994. The Applicant gave evidence that she was diagnosed with a condition called urinary reflux at the age of 4 years. In 1985 her right kidney was removed. In 1986 she had an implant placed in her remaining kidney. Following the last procedure, the Applicant was free of any kidney infection until 22 November 1994. In the intervening period she was supervised and under the care of the doctors at the Monash Medical Centre. This required her to attend the Children's Renal Clinic until she was 18 years of age, and thereafter the Adult Renal Clinic at the Monash Medical Centre every 8 to 12 weeks to have her condition monitored. The monitoring involves urinary tests, blood tests and general enquiries as to the Applicant's well-being. The time taken is a half day; that is to say, between 2pm and 4.30pm. Duty to inform the Employer of a medical condition The Respondent complains that the Applicant had a duty to inform it of her condition before accepting the position offered. Further it alleged in its opening that at interview she "held herself out as of ordinary health and fitness", this being somehow relevant to the issue of whether the termination on 19 December 1994 was harsh, unjust or unreasonable. It was also argued that, apart from any other obligation the Applicant had to inform the employer that she had a medical history, the Applicant had a moral obligation to impart this information. When asked by the Court how the Respondent would have been assisted in its decision to employ the Applicant as an office clerk by the knowledge that the Applicant had only one kidney, Mrs Cirkovic made some reference to this enabling the Respondent to use the information to make arrangements for temporary staff to cover the Applicant's absences. This explanation is, in all the circumstances, facile. The evidence of the Respondent's witnesses was that by at least April 1994 the Respondent was aware of the Applicant's physical condition, and had agreed to an arrangement whereby the Applicant took a half day every 8 to 12 weeks to attend the Monash Medical Clinic, and made up the time lost to her employer. The Applicant suffered a bout of gastroenteritis in about April 1994 and in June 1994 took holiday leave and the balance of her sick leave (3 days) to have treatment to her knee. It was not until 22 November 1994 that the Applicant contracted an infection in her remaining kidney, leading to her hospitalisation until 28 November 1994. She attempted to resume work unsuccessfully as the infection persisted, resulting in her further hospitalisation from 8 December until 20 December 1994. There was no evidence that any physical impairment suffered by the Applicant had any detrimental effect on her capacity to perform the job she was offered and accepted, nor was there any suggestion that the Applicant held herself out at interview in any way that could be interpreted as misleading. If the employer had sought specific responses from the Applicant as to any disability she suffered from, to deny her employment because of that disability would be blatantly discriminatory, in much the same way as it would be a breach of the Act to terminate her employment because of this physical disability (see s170DF(1) (f) ). Accordingly, I see no basis for finding, and no authority was provided to the Court by the Respondent for saying, that the Applicant had any obligation, legal or otherwise, to notify the Respondent of her physical impairment. The Termination Daglish told the Court that he discussed the Applicant's work situation with Capon in December 1994. The Respondent was concerned to cover a work station manned by the Applicant and Joanna Michael, the latter of whom was leaving to have a baby. According to Daglish it was a busy time for the company in the lead up to the Christmas break "and coming back into January we had to fire-up". He alleged that the option to terminate the Applicant was discussed with the option of offering her another form of employment "whether it be part-time or hours to suit her condition". At that stage he alleges there was no decision to terminate but only to discuss the options with the Applicant. Capon agreed to do this because she had developed a friendship with the Applicant and in Daglish's view it was better for Capon to approach the Applicant on a more casual basis. It was decided when Capon visited the Applicant for the first time on 19 December 1994 that she would "run it past" the Applicant. The only sensible conclusion to be drawn from this evidence is that the Respondent clearly understood that it was preferable to have the Applicant's so-called friend break the news to her in a casual manner because the news was that she was to be terminated. Subsequently, Capon reported to Daglish that the Applicant had agreed to terminating her employment and returning to the Respondent in "another form of employment". But for the Applicant's agreement, Daglish alleges that he would not have taken the step he took, which was to draft the following letter (Exhibit A2): "Dear Cindy, It is with much regret that we find ourselves in the unenviable position where we are forced to terminate your employment with the company effective immediately on this date 23rd of December 1994. You will agree we have been supportive with regard to the amount of time off you have needed in relation to your illness. The uncertainty of your return to full time employment as well as the compounding problem of other office personell leaving at Xmas has necessitated the hiring of staff to cover these positions. Cindy, we wish you all the best health for the future and at a time which you are fully recovered, please feel free to contact us with regards to suitable positions available." At the time the Respondent terminated her employment, Daglish contends that he was not sure, nor had the Respondent been told, how long the Applicant would be away from work. However, he did contradict this claim by saying that he was told by the Applicant's mother that the Applicant's return could be some time in January or February, therefore requiring the Respondent to cover itself for this period. This is a curious comment as it was also agreed that when employees take holidays or sick leave the Respondent has to "cover" their positions, and one would expect that temporary staff could have been engaged whilst the Applicant was then on unpaid sick leave. The Applicant's second stay in hospital ended on 20 December 1994, and by 31 December 1994 she commenced looking for full-time employment. Daglish told the Court that when Capon visited the Applicant on 19 December 1994 he then believed she was at home and "was able to move around and was in day clothes". This suggests that by that time the Respondent understood that the Applicant was at least getting ready to leave hospital and was ambulant. The Applicant presented in Court as a straightforward and credible young witness. She told the Court that on Monday 19 December 1994 Capon visited her in hospital and "said she had good news and bad news. The bad news was that I was terminated from my position completely - and I was offered part-time work 2 to 3 hours per day maybe 2 to 3 days per week. That was the good news". The Applicant accepted what was said to her, however she contends that she was "shocked and stunned and couldn't believe they'd do it" and thought it was "low". After Capon left the Applicant went and saw her doctor and, in her words, "bawled her eyes out" because she was "scared and felt betrayed". Capon's evidence was that she and the Applicant "chatted for a while, and I said I had something to put to her and it could be good or bad news; that is termination and an offer of casual or part-time employment". According to Capon the Applicant said "Okay, that's fine". Capon then "told her what duties we were thinking of offering her". She understood the Applicant's reaction to be one of acceptance of the offer of part-time or casual employment and told the Applicant the Respondent would notify her "officially" in a letter. One stance pursued by the Respondent was that, putting to one side the impact of s170DF(1)(a), the Respondent had only approached the Applicant on 19 December 1994 on the basis that it was "thinking" of terminating her employment, and offering her alternative part-time employment. If she had not accepted the proposal put by Capon the Respondent would not have proceeded to write the letter of termination. Capon, who conducts the first interviews for the employment of staff by the Respondent, sought to qualify herself as having the requisite experience to say that she expected a potential employee to tell her if the employee had a condition such as that suffered by the Applicant. No sensible reason was offered for this gratuitous opinion. Having sought to rely on her expertise in matters pertaining to the employment of staff, Capon was remarkably coy in responding to a question as to whether she would recommend to the Respondent a prospective employee with no reference from her former employer and who had taken that employer to Court on an unfair dismissal claim. This was a particularly pertinent question because the Respondent, despite numerous requests, has not provided the Applicant with any written reference. In dealing with enquiries from prospective employers it has seen fit to inform them of the Applicant's application to this Court. Capon's response was "I would have to ring first ... I couldn't definitely say yes or no... It depends on the circumstances that went with the story ... I wouldn't like to say yes or no". In all the circumstances the Applicant's evidence is to be preferred. The letter of 23 December 1994 makes no mention of any agreement, nor is it in any way confirmatory of an offer of and acceptance of alternative employment. At best it gives the Applicant the opportunity to contact the Respondent to apply for a "suitable position available". Accordingly, on the evidence, I accept entirely the Applicant's recollection of her discussion with Capon and her denial that such discussions were prefaced by any comment that the Respondent was only "thinking" of implementing the proposal to terminate. On the evidence the Applicant was offered no option. Essentially the action of the employer was one of termination of her full-time position with an offer to consider the Applicant for some other employment other than full-time if it was available. That was not a job offer, nor can it be said on these facts that the Applicant in some way consented to or agreed to the termination. S170DF(1)(a) During her illness and hospitalisation either the Applicant or her mother made daily contact with the employer to let the employer know that the Applicant was still unfit for work. There was no evidence adduced to suggest that the infection and its consequences, if any, were long-term. The employer made no enquiry of the Applicant's treating doctors, or a doctor of its own choosing, to ascertain the prognosis and the period over which the Applicant would be treated and would convalesce. Moreover, there was no evidence that the Applicant was not on authorised leave during the period of her illness until the date of termination. In her submissions to the Court Mrs Cirkovic qualified the concessions originally made by the Respondent, inasmuch as she told the Court that the Respondent had terminated the Applicant's employment by reason of her absence from work because of illness, however, such absence was not temporary. Moreover, at the time of the termination the Respondent had been led to believe that the illness was not a temporary one. Although no grounds whatsoever were established in the evidence for the alleged belief, the Respondent argued that, in determining whether there was a valid reason for terminating the Applicant's employment the Court should apply a subjective test; that is to say it should only look at why the employer says it terminated the employment. This submission appears to confuse the requirements under s170DE(1) of the Act requiring proof of the existence of a valid reason at the date of termination, and the requirements of s170DF(1)(a) of the Act. The authority relied upon for the submission made is a decision of the Court; namely, Judicial Registrar Parkinson's unreported decision in AWU-FIME Amalgamated Union and Joseph Patrick Farrell v Conagra Wool Pty Ltd (VI 62/94). The Respondent was unable to direct the Court to the appropriate passage it relied upon in the abovementioned decision, however, it appears that the following passage is the source of the submission made:- "Section 170DE(2) places upon the Respondent the onus of proving, on the balance of probabilities, that the termination of the employment was not for the reason of temporary absence from work because of illness or injury or for reasons including that reason. The reason which is required to be ascertained is the reason which motivated the employer to terminate the employment and not merely the stated reason. The test is a subjective one. The fact that an employee may have been ill on the day under question does not of itself establish that the termination was as a result of temporary absence because of illness or injury. This question is to be determined having regard to all of the circumstances for termination." The reference to s170DE(2) in the abovementioned passage at page 8 of the decision is a typographical error and should read s170DF(1)(a). My comments are based on this correction having been made. The combination of s170DF(1)(a) and s170EDA(2) creates a rebuttable presumption that once the Applicant's application alleges that the Applicant was terminated in contravention of s170DF(1)(a) the termination is taken to have contravened that subsection. The employer is able to rebut that presumption by proving that the employment was not terminated for the prohibited reason or reasons that include the prohibited reason or reasons. I interpret the prohibition to mean that the Respondent must prove on the balance of probabilities that the reason or reasons for terminating the Applicant's employment did not include the reason that she was temporarily absent from work because of her illness between 23 November 1994 and 19 December 1994. Section 334 of the Act affords protection to workers against "victimisation" by their employers for participation in union activities. It prohibits dismissal on certain grounds and places the burden on the employer to show that the proscribed reason was not a reason for termination. Section 334 of the Act has its origins in Section 5 of the Conciliation and Arbitration Act of 1904 and these sections are the source of numerous decisions of assistance in understanding how 170DF(1) should operate. Insofar as any test of the section is said to be a subjective one, it is subjective in the sense that the employer must be found to have been motivated by the reason or circumstance prohibited by the Act. This means that the employer gives evidence of the reason or reasons it says were stated or motivated the person making the decision to terminate. Matters within the knowledge of the employer in making that decision are relevant to any enquiry as to what the reason or reasons were for termination. In Bowling v General Motors Holden Pty Ltd 8 ALR 197 it was said that an action of the employer may be construed as having been actuated by a particular reason if it was a substantial and operative factor in influencing the employer to take that action (see page 200 of the decision). It is not enough, however, for an employer, as was suggested by Mrs Cirkovic, to only give evidence of what its reasons were. The burden of proof carried by the employer requires it to adduce evidence to prove on the balance of probabilities that the circumstance that the Applicant was temporarily absent from her work due to illness was not a substantial and operative motivating factor in terminating her employment. It must also prove on the balance of probabilities that the relevant absence was not "temporary". The absence referred to can be one which occurs prior to termination or one which is prospective. In other words, the absence up to the date of termination and/or any absence anticipated thereafter. In interpreting the provisions of the Act, this Court must be guided by the knowledge that this is beneficial legislation. As Moore J. said in Grout v Gunnedeh Shire Council 125 ALR 355 at p.372: "Division 3 is intended to provide employees with a statutory remedy in the event of termination. It constitutes, in this respect, beneficial legislation that should be construed liberally much in the same way as Workers' Compensation Legislation has been construed ..." Article 6 of the Termination of Employment Convention (see Schedule 10 of the Act) states - "1. Temporary absence from work because of illness or injury shall not constitute a valid reason for termination. 2. The definition of what constitutes temporary absence from work, the extent to which medical certification shall be required and possible limitations to the application of paragraph 1 of this Article shall be determined in accordance with the methods of implementation referred to in Article 1 of this Convention." Article 6 finds its expression in Regulation 30D of the Industrial Relations Regulations. Regulation 30D(1) states - "This regulation applies for the purpose of clarifying, consistently with paragraph 2 of Article 6 of the Termination of Employment Convention and s170CB of the Act, circumstances which are, or are not, intended to be included within paragraph 170DF(1)(a) of the Act." Regulation 30D is made up of 9 sub-regulations. In the present case, the relevant sub-regulation is Regulation 30D(2) which provides - "For the purposes of paragraph 170DF(1)(a) of the Act, an employee's absence from work because of illness or injury is taken to be a temporary absence, if, due to the illness or injury, the employee is on authorised leave." In its submissions to the Court, the Respondent completely ignored the existence and the effect of Regulation 30D(1) and (2). The application of Regulation 30D(2) to the employee's absence because of illness is not dependent on any subjective test. If anything, in the context of s170DF(1)(a) and s170EDA(2) it requires the Respondent to lead evidence to show that the absence was not authorised leave. Otherwise, the absence is taken to have been temporary. This is not a subjective test and the employer's ignorance of the period over which the employee may remain ill or absent is irrelevant. The concession made by the Respondent that one of the reasons for terminating the Applicant's employment was due to her absence because of illness, the clarification of what circumstances are taken to be a temporary absence and the failure to lead evidence to prove that the absence was not "temporary", lead to the conclusion that this Respondent has failed to discharge its burden of proof. In her submissions, Mrs Cirkovic argued that the Applicant carried the burden of proof in this case because there was no written application alleging the contravention of s170DF(1)(a). Section 170EDA(2) which shifts the burden of proof to the employer refers to "an application under s170EA". It makes no reference to a written application. This is not a court of pleading as the pro forma application forms show. There is presently no provision in the forms for the parties to plead or for any details of the defence to be raised. The application to the court at hearing clearly alleged the breach of, inter alia, s170DF(1)(a) of the Act. Accordingly, I find that there is no merit in the Respondent's belated submission to the Court. My findings in respect to s170 DF(1)(a) make it unnecessary to pursue at length the question of any breaches of s170 DC and s170 DE (1) and (2). Suffice to say that there was no warning given to the Applicant that her employment may be terminated if she did not return to work as soon as possible, nor was she given a chance to prove that she would be fit to resume full-time employment in the short-term. Indeed, the evidence establishes that she was able to make a return as early as 31 December 1994. These matters and the evidence already canvassed in this judgment clearly point to matters of both substantive and procedural unfairness in the termination process. The Remedy At the hearing the Respondent repeated its offer to reinstate the Applicant if it was unsuccessful in its case. Unfortunately, the Respondent persisted in using the word "reinstate" interchangeably with the word "re-employ". There was no evidence that the Respondent had any full time employment to offer the Applicant on similar terms and conditions to those previously enjoyed by her and any offer made was at best to re-employ her. Despite the Respondent's professed willingness to re-employ her, the Applicant maintained her application for compensation only. The Applicant contends that reinstatement is impracticable. She gave evidence that the office in which she was employed comprised some 12 administrative staff. She was reluctant to return to the Respondent's employ because, after the hearing of this claim, she felt uncomfortable with the idea of returning to this employer. Further, she gave evidence that, during her employment and from about February 1994, she had worked for the Respondent's administration manager, Anthony Scerri (Scerri). He had been verbally abusive towards her from time to time when he was "stressed". For instance, when she transferred to him customer complaint calls to him he either abused her or hung up on her. She was also left by Scerri to take calls from irate customers because he had failed to deliver goods as promised. To exercise its discretion not to implement the primary remedy, the Court needs before it more than an application for compensation in preference to reinstatement. Having said this, however, it would be perverse for the Court not to give some weight to the Applicant's evidence of the comparatively small work environment where she believes she may not be well received. The foundation for that belief lies in the matters already mentioned as well as in the conduct of the Respondent since the termination. Some weeks prior to the hearing, Daglish visited the Applicant's home and offered, on behalf of the Respondent, $1,500 and a "good" reference in settlement of her claim. The Applicant asked Daglish if he would still give her a good reference if she said no to the monetary offer. Her recollection is that he then said, "Ah, no ... yeh, but it won't be a good one, it will have all this stuff in it ...". She understood "this stuff" to be referring to the court proceedings. Daglish conceded that these events had taken place. He then went on to say that he had already received calls from prospective employers and, apart from telling them that the Applicant was a good worker, he "made no bones about" telling them also that she had taken this action against her former employer. Daglish conceded that telling prospective employers that the Applicant had an unfair dismissal claim against the Respondent stigmatised her in the eyes of future employers. No satisfactory explanation was offered for the gratuitous advice given to these employers; such as a direct enquiry from these employers may have required. In the circumstances, I find reinstatement impracticable. Because of the so called offer made on 19 December 1994 for employment and the Respondent's continuing willingness to re-employ the Applicant, not necessarily reinstate her, the Respondent argued that the Applicant had no loss of remuneration to the date of hearing as she had failed to mitigate her loss by accepting the continuing offer of re-employment. This appears to be the source of the Respondent's comments in its opening to the Court to the effect that, even if the Court reinstates the Applicant's employment, it should not also give her remuneration since the date of termination. As I have already found that reinstatement is impracticable, it is not necessary to pursue this last point in any great detail. Suffice to say that my understanding of the relevant section, s170EE(1), is that, once an order for reinstatement is made, the use of the conjunctive "and" between paragraphs (a) and (b) of that section requires the Court to, amongst other things, order payment of the remuneration lost by the employee because of the termination. Furthermore, I am not satisfied that an employee has any duty to mitigate in circumstances where reinstatement is ordered (see the decision of Staindl JR in Roger William Mark v. G. & K. O'Connor Pty Ltd unreported No VI 1097/94 at pp. 11 and 12). No offer of full time employment was made to the Applicant on or since 19 December 1994. She gave evidence that she has made numerous applications for jobs. The fact that the Respondent has fielded enquiries from interested employers confirms that she has not been idle. The Respondent contends that the Applicant has a duty to mitigate and, in support of that contention, relies on a decision of Linkenbagh JR in Alfredo Romeo v The Distribution Group Ltd trading as Check Point Undercar Parts (unreported No WI 149/94). This was a redundancy case in which the Respondent arranged for the Applicant to be interviewed for employment by two other employers and the Applicant failed to make any appointment to attend to be interviewed In considering the appropriate amount of compensation to be paid and any duty to mitigate, it is the Respondent who has the burden of showing that the Applicant ought reasonably have taken the step of first enquiring of her former employer as to whether there was employment available and, secondly, accepting something other than the full time employment she once had and was still seeking (see Marks case at p.12). The present case is easily distinguishable on its facts from the decision in the Alfredo Romeo case. It would be remarkable for this Court to make any finding which suggests that it is unreasonable for an employee not to approach a former employer and wrongdoer, insofar as it was the Respondent who breached the contract of employment, and accept something other than the pre-termination employment conditions and her lost remuneration. In considering the amount of compensation payable, I have taken into account, amongst other things, the following matters: (a) it is now nearly 6 months since the unlawful termination occurred; (b) the Applicant is unlikely to gain full time employment before the expiration of the 6 months period from the date of the unlawful termination; and (c) the action of the Respondent in gratuitously informing interested employers of the bringing of this proceeding, which action has, on balance, been prejudicial to the Applicant's early return to full-time employment. The Respondent further relies on the Applicant's recent bout of glandular fever, which precluded her from working for at least one week, for saying she should not receive the full amount of compensation payable. However, whilst the Court is limited to the maximum of 6 months remuneration payable to the award employee, it is not limited in the matters it should take into account when deciding the appropriate amount of compensation. It is only required to have regard to the remuneration that the employee would have received or would have been likely to have received. Accordingly, the order for compensation is for the sum of $7,500. THE COURT ORDERS THAT: 1. The Respondent pay the Applicant the sum of $7,500 by way of compensation.