Roy Baines v Interroll Pty Ltd Glynn Cook v Interroll Pty Ltd [1995] IRCA 284

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1730 of 1995 B E T W E E N ROY BAINES Applicant A N D INTERROLL PTY LTD Respondent VI 1739 of 1995 B E T W E E N GLYNN COOK Applicant A N D INTERROLL PTY LTD Respondent VI 1730 of 1995 Before: Judicial Registrar Chancellor Place: Melbourne Date: 8 June 1995 REASONS FOR JUDGMENT (EX TEMPORE) Revised from Draft Transcript These are applications by Roy Baines and Glynn Cook pursuant to section 170EA of the Industrial Relations Act in relation to the termination of their employment by Interroll Pty Limited on 10 February 1995. The respondent is the Victorian subsidiary of a Swiss based company which has world wide operations. The Victorian operation was primarily involved in the production of rollers and conveyers for use in quarries, mines, factories and elsewhere. There were three divisions within the Victorian operation: Joki, Bulk Products and Meca, each division making different types of rollers and conveyors and servicing different markets. The former managing director of the respondent, Mr Robert Connell, gave evidence that from late 1993 the Swiss parent company wished to reduce its Victorian involvement and from mid-1994, KPMG Marwick was engaged to find potential purchasers or equity partners. An in principle agreement was entered between the respondent and ABC Components Pty Limited, in approximately mid-November 1994 for the purchase of the business. By mid-January 1995 it became apparent that the purchaser did not wish to purchase the whole of the business and in particular, it did not wish to purchase the bulk products division. At a meeting held in New Zealand on 19 January 1995 the Swiss parent company decided that as the bulk products division would not be included in the sale, that the division would be physically transferred to Singapore and that it would continue operating in Singapore. The balance of the business was to be transferred to ABC Components Pty Limited, although there were quite volatile negotiations continuing in relation to the future of the existing staff of the respondent. When Mr Connell returned to Victoria on Monday 23 January 1995 he knew that the bulk products division was to be closed and shipped to Singapore. Two Singaporean gentlemen attended at the factory during that week to be trained on the machinery used in that division. On Friday 10 February 1995 the staff of the bulk products division were instructed to strip down, dismantle and clean the machines used in that division in preparation for their loading into containers and shipment to Singapore. The machinery was packed on that day and shipped to Singapore shortly thereafter. On 23 February a sale of business agreement was executed between Interroll Pty Limited and ABC Components Pty Limited, and this involved the transfer of the remaining two divisions of the business and the existing employees of those two divisions. Mr Cook had commenced employment in the bulk products division of the respondent on 8 August 1994, and Mr Baines had commenced in the same division in October 1994. Mr Cook gave evidence that he worked on a double-headed welding machine and earned approximately $600 gross per week, including overtime and weekend work. Mr Baines gave evidence that he worked on a cutting machine and earned approximately $450 gross per week with overtime. Both men were employed by Mr John Smith, the former production manager of the respondent, who gave evidence that when he employed the men he advised each of them that they were being employed specifically because of an expected cyclical pre-Christmas increase in business, and that the need for their continuing employment would have to be regularly reviewed after the Christmas break. Both Mr Baines and Mr Cook denied that they had received any such indication during their respective employment interviews. Mr Smith gave evidence that both Mr Baines and Mr Cook were satisfactory employees. In December 1994 Mr Smith called a meeting of all factory employees to advise them of the winning of a major contract which involved the Meca division, and Mr Smith expressed confidence in the amount of work that would be generated. Although Mr Baines and Mr Cook worked in the bulk products division they were buoyed by the general enthusiasm shown by Mr Smith. However, by January 1995 rumours were spreading in the factory about a potential sale of the business, and the 20 or so employees were naturally concerned about their future. Mr Connell addressed the factory employees following his return from New Zealand in the week beginning 23 January 1995, probably on the Tuesday or Wednesday. He confirmed that Interroll was trying to sell the business, and that Interroll was trying to ensure that its employees would be treated in the best possible way, and that as many as possible would be kept on. He recalled advising that the bulk handling division would be shipped to Singapore in mid-February. Both Mr Baines and Mr Cook denied that they attended the meeting, but they agreed in cross-examination that they had discussed with other workers what was said. There was no specific indication given to any of the employees in the bulk products division that their jobs were in jeopardy. It appears that in late January Mr Connell received instructions from the Swiss head office that the employees in the bulk products division were to be terminated. Mr Connell said that he instructed Mr Smith to handle the terminations. As at 10 February there were five full time employees in the bulk products division: Baines, Cook, Meyer, Lombardo and Duran, and two casual employees, Piros and Cahill. Apart from a weekend stocktake in late February the casual employees were no longer rostered and effectively ceased employment. Mr Lombardo had already given notice in order to go on an extended overseas trip. In consultation with ABC Components Pty Limited it was decided in the first week of February that Mr Duran would be transferred into the Meca division to assist with the new contract work. Mr Smith gave evidence that Mr Duran had more experience in the Meca division, and although Mr Baines and Mr Cook in particular contested that assertion I accept Mr Smith's evidence on that point, and that the transfer of Mr Duran was handled in a fair and proper manner. At the end of work on Friday 10 February Mr Smith advised each of Mr Baines, Mr Meyer and Mr Cook that they had been terminated, and handed them cheques for their accrued entitlements, together with one week's pay in lieu of notice. Because of their short periods of employment they had no award entitlements to retrenchment moneys. The respondent argued that there was a valid reason for the terminations due to the operational requirements of the business, in that the bulk products division of the business had been closed down and was being transferred to Singapore. The existence of a valid reason was effectively conceded by both of the applicants during cross-examination, and I find that such a reason existed. The applicants who appeared in person argued that the termination was harsh, unjust or unreasonable because they were given no warning of the termination, no opportunity to negotiate with the prospective purchaser of the business, and they were terminated in a most sudden and unexpected manner. They also queried the selection criteria adopted, which involved Mr Duran being transferred into the Meca division and therefore kept in employment. The respondent argued that due to confidentiality requirements and the sensitive nature of on-going negotiations for the sale of the business and also the uncertainty as to the future of its employees that it was not possible to give any warning or notice. It also argued that any consultation would have been meaningless, as once the bulk products division closed its Victorian operation there was simply no work to be done. There was some question as to the risk of sabotage if disgruntled employees knew of their likely impending termination, but I reject that view as being unreasonable. It seems to me that if employees are properly consulted that they will continue to act in the best interests of the employer. Even though a genuine redundancy may be established both the State Industrial Commissions and this Court have shown a willingness to intervene in circumstances where the redundancy can be shown to be harsh, unjust or unreasonable. In Budget Couriers Equity Management v Beshara (1993) 5 VIR at page 173 the Commission stated: The obligations to consult, to provide adequate notice and to apply objective selection criteria in determining which employee is to be made redundant are factors in determining whether a dismissal is harsh, unjust or unreasonable.