Peter Ward v C T Freight Pty Ltd [1995] IRCA 303

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1491 of 1995 B E T W E E N : PETER WARD Applicant AND C. T. FREIGHT PTY LTD Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 4 July 1995 REASONS FOR JUDGMENT (Delivered Ex Tempore - Revised from Draft Transcript) In this application under Subdivision 3 of Part VIA of the Industrial Relations Act, (the Act) the applicant seeks reinstatement to his position as a warehouse freight clerk with the respondent. Findings on the Evidence The respondent conducts a business of international freight forwarding. It operates a warehouse at which this applicant has been employed since early 1990. The applicant claims he was employed as warehouse manager while the respondent claims that his original position was that of a senior loader/storeman. I accept the evidence of the respondent on this point. The applicant's duties involved attending to loading and receiving of cargo which was either being shipped overseas or being received into Australia. The position was quite pressured due to the need to attend the numerous couriers seeking to collect goods, meeting various airline schedules, as well as ensuring that documentation was in order. Around July 1994 the applicant sustained a work-related injury to his arms and went off work. In September he resumed limited duties as a warehouse freight clerk working 20 hours per week with the balance of his $31,000 per annum salary being made up by the respondents Work Cover insurer. The warehouse operation of the respondent during 1994 was very busy but quite small. On the evidence, it consisted of a warehouse manager and two or three loaders. In October 1994, Mr Bradley Sullivan (Sullivan) commenced employment with the respondent as warehouse manager. Essentially he was to replace the applicant. The applicant denied any resentment at Sullivan's appointment but his real position was evidenced by his evidence that he would work with Sullivan but not show him how to do his previous position. Sullivan gave evidence that in the period up to December he chose not to rock the boat in the way he operated in his position. On one occasion he asked the applicant to perform certain duties but the applicant refused. Sullivan then made his authority clear and the applicant reluctantly performed the duties. In late November the respondent was re-issued with its Customs Department licence. Sullivan had noted an error in some documentation and, concerned that the warehouse performance may be under scrutiny, issued a memorandum to staff reminding them to be vigilant in documentation. The applicant challenged Sullivan on the basis that the memorandum was directed to him and he, with 14 years experience, "did not make mistakes". Sullivan replied that the memo was a reminder to staff to remain on their toes. On 1 December 1994 the applicant received a further memorandum from management of the respondent at Melbourne. That requested him to address two matters within 14 days "at which time if your performance has not improved to a satisfactory level, a formal letter of warning will be given". The matters referred to were first, "attitude to management". The details provided were that he was to courteous and polite to employers and senior management. It also referred to his failure to attend a staff meeting. The second matter referred to the office of an adjacent business, ATSS, which formerly provided contracting services to the respondent. The memo stated that the office was not to be used as a recreation area. Mr George Scheromsky, (Scheromsky) the Operations Manager of the respondent, and Sullivan's supervisor, gave evidence that the "attitude" part of the memo was prompted by the applicant failing to offer him a normal "good morning" on 1 December. It also related to the failure of the applicant to attend a staff meeting which Scheromsky had scheduled at 7.30 am one morning, an hour before the normal 8.30 am start. Scheromsky did not say in his evidence that he specifically discussed either of these matters with the applicant but stated that his normal practice was to hand over a memo and ask staff to raise any matters arising from the memo. The second matter relating to the use of ATSS premises for recreation was in a similar category to the first. Scheromsky gave the other employees at the warehouse a verbal warning to that effect on the same day. In the period between 1 December and 16 December no matter relating to the applicant's performance which justified any action came to the attention of Sullivan or Scheromsky. After the applicant received the memorandum of 1 December he contacted his union, the Transport Workers Union. The union took the view that the applicant was being harassed and wrote to and phoned the respondent. In response Scheromsky arranged a meeting with the TWU organiser to take place on 20 December. The Events of 16 December On Friday 16 December at around lunch time the applicant was asked by Sullivan to perform duties of lining aircraft shipping containers. He had previously performed this work and agreed to do so. Sullivan returned from his lunch about an hour later and the work had not commenced. The applicant's evidence was that in the intervening period he had been diverted by other duties and demands within the warehouse. The last of these duties was a request to do the usual afternoon document run to the airport. He was about to leave on this task when Sullivan returned from his lunch at around 2 pm. When Sullivan saw that the lining duties had not been commenced he asked the applicant to perform the duties. The applicant responded with some colourful language to the effect that he was not going to do those duties but was doing the document run. The exchange was repeated without the matter being advanced. The applicant claims that in this conversation he told Sullivan that he could not do the duties because it was a hot day and he had a headache. Sullivan denies this and I accept his evidence on this point. Sullivan then called in Scheromsky who repeated the direction. The applicant responded that he had a headache and that if he got into the container in the hot conditions he would be sick. The exchange continued with Sullivan then suggesting to the applicant that if he had a headache he should go home and to a doctor and get a medical certificate. The applicant replied that he was staying there to do the document run duties. There was reference by Sullivan that if the applicant produced a medical certificate he would be paid for the day. The applicant was ultimately told my Sullivan to do the work or go home. This direction was confirmed by Scheromsky. The applicant departed suggesting that he would not be providing a medical certificate and making a derogatory reference about Sullivan. The applicant's evidence about his headache was that he woke with a light headache that morning but that it was worse at 2 pm when this exchange occurred. It was a hot day with the temperature around 26 - 30 degrees. There was no real challenge to his evidence that he would have been working in a confined space in fairly hot conditions to do the work requested by Sullivan. After leaving the respondent's premises the applicant went home. He lay down for a short time and then went to a medical practitioner who gave him a certificate to say that he was unfit for work that day due to a "tension headache". The certificate was tendered without objection. On the basis of the certificate and the applicant's evidence, I find that he, in fact, did have a headache that day which he believed made him unfit to perform the particular duties requested by Sullivan. After the applicant left the premises, Scheromsky contacted his Sydney superiors to advise them of events. At around 6.30 pm the applicant received by courier a letter which read: "This is to give you four weeks notice of termination on account of your unreasonable refusal to obey a lawful direction given to you in connection with your work duties as presently prescribed. Furthermore the company regards your refusal to obtain a doctor's certificate as clear evidence that you are unable to obtain substantiation of the condition complained of, and that refusal to work was nothing more than a refusal by you to perform the work reasonably requested under your contract of employment." The letter goes on to provide for payment. Was there a Breach of Section 170DC of the Act? It is now necessary to apply the evidence to provisions of the Act. The applicant's counsel argued that the termination was in clear breach of this provision on the basis that at no time had it been put to the applicant that his employment was at risk as a result of what happened on the afternoon of 16 December. Counsel for the respondent, on the other hand, submitted that the actions of the applicant constituted gross misconduct and thus it was unreasonable to require the allegations to be put. The evidence was that it was never put to the applicant that his headache was a fake. It was never put that unless he produced a doctor's certificate to cover his period of absence he would be terminated. Scheromsky accepted that no time limit for the production of a medical certificate was imposed by him. The respondent took the decision to terminate the applicant without any further discussion with the applicant. It took that decision in circumstances where, on its own evidence, Scheromsky expected him to attend on the Monday with a certificate. The respondent took the decision to terminate the employment where in the past it had issued the applicant with written warnings about his performance. This is evidenced by the memorandum to the applicant on 1 December. Further, Sullivan gave evidence that on one previous occasion he had given to the applicant an ultimatum to perform his duties or leave. No such ultimatum was given here. The requirements of section 170DC of the Act have been discussed in a number of cases. They are flexible but substantive. In the decision, Johns v Gunns Limited, (Industrial Relations Court of Australia, Northrop J, 18 May 1995), it is said: "On general principles, in order for an employer to give an employee the opportunity to defend allegations made where the employee is in danger of having his or her employment terminated, the employer should state that the employee is in danger of having the employment terminated. This was not done in this case." It was not done in this case either. While there clearly will be circumstances where it is unreasonable to put allegations to an employee prior to termination of employment, I am satisfied that there were no circumstances here which prevented the respondent putting the matters in its letter of termination to the applicant before it actually terminated him. Having regard to this finding I am satisfied that the respondent has breached section 170DC of the Act. Was There a Valid Reason to Terminate the Employment Pursuant to Section 170DE of the Act? Counsel for the applicant further argued that the respondent had no valid reason to terminate the applicant's employment. He argued this on the basis that given the provision of a medical certificate the applicant had a lawful excuse to be absent from work. The respondent's counsel, on the other hand, argued that here there was gross misconduct which produced a valid reason for the termination. In determining whether the respondent had a valid reason to terminate the applicant's employment the crucial matter here is the directive of Sullivan to the applicant, on the basis that he had a headache, to go home. This directive was confirmed by Scheromsky. The applicant has produced a medical certificate to the effect that he indeed had a tension headache that day. Further, Scheromsky, on his own evidence, expected him back on the Monday with a medical certificate. It is also clear that the applicant, while refusing to perform a particular duty, was giving an excuse. He could not be characterised as manifesting an intention to repudiate the contract, which is the test set out in the case referred to by counsel for the respondent, North v Television Corporation (1976) 11 ALR 599. At the time he left the workplace that day, I am not satisfied that he was manifesting an intention to no longer be bound by his contract of employment. An employer must maintain some flexibility in dealing with employees where they claim short term incapacity, particularly where there was no suggestion that the applicant had made this type of claim before. The Court is therefore satisfied that the respondent has failed to discharge its onus of proof pursuant to Section 170EDA of the Act that it had a valid reason to terminate the applicant's employment. Remedy Counsel for the applicant submitted that in the event that a breach of the Act was found the applicant was entitled to the primary remedy under Subdivision 3, namely reinstatement. He referred to the decision of Liddell and Lembke (1994) 127 ALR 342. Counsel for the respondent, on the other hand, argued that given the events which had passed between the parties such an order was impracticable. Evidence was led that the applicant, in other proceedings, had made a derogatory reference to the managing director of the respondent. Scheromsky gave evidence that it was possible that a number of employees would resign in the event of a reinstatement order. He also asserted that the applicant's fellow employees would not be able to work with him given his attitude and that the warehouse just would not function. In favour of the applicant on this issue is the fact that he has been employed by the respondent for some five years, albeit with a number of warnings. On the other hand the applicant has displayed an attitude to authority on more than one occasion which would entitle the respondent to lose confidence in him. I have had regard to the applicant's demeanour and presentation in the witness box and also to the demeanour of the witnesses of the respondent. The crucial factor here which persuades me that, as "a matter of industrial commonsense", to use the expression of von Doussa J in the decision of Cox v South Australian Meat Corporation (Industrial Relations Court of Australia, von Doussa J, 13 June 1995), it would be impracticable for the applicant to be reinstated is because of the small size of the workforce. There are only two or three other employees in this work place and I accept the evidence of Scheromsky that reinstatement would cause disharmony and loss of productivity. I therefore apply the comments of Wilcox CJ in Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 where he said: "The word "impracticable" [in section 170EE] requires and permits the Court to take into account all the circumstances of the case relating to both employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer's business, it may be "impracticable" to order reinstatement, notwithstanding that the job remains available." I find, therefore, that it is impracticable to reinstate the applicant to his former position and I decline to do so. Having found the reinstatement is impracticable, it is necessary to consider whether to order compensation pursuant to section 170EE(2). In Nicolson (above), Wilcox CJ said at 212 that: "In assessing compensation for a breach of section 170DC, it is appropriate to consider what would have been likely to occur if that breach had not occurred. It should not be assumed that the employee would have been dismissed anyway." Here it is clear from the evidence that, despite the failure of the respondent to lawfully terminate the applicant's employment on 16 December 1994, there was a real risk that the employment would have terminated at some time subsequently. This then is not a case where the employee's record was exemplary, such that it was likely, but for the unlawful termination, that the employment would have continued indefinitely, as in the case of Bostik (Australia) Pty Ltd v Gorgevski (No. 1) (1992) 36 FCR 20. Here there was evidence that the applicant had been the subject of a number of warnings in the past. The most recent memorandum to him about his performance was on 1 December 1994. Prior to that there had been a warning in May 1993 and other warnings before that. It is also clear from the evidence that Sullivan was only prepared to tolerate so much insubordination and lack of cooperation from the applicant before invoking the respondent's disciplinary procedure. On the other hand, at the time of his termination, the applicant had invoked the assistance and protection of his union and a meeting was scheduled to discuss the applicant's employment on 20 December. Having regard to all these matters and to the applicant's work record and ability to survive past warnings, I am of the view that his employment would not, however, have continued much beyond six months from the date of his actual termination. The applicant was being paid at a rate of $596.15 per week. He has been paid at a rate of $358 per week on Workcover since his termination. I calculate his loss per week at a rate of $238.15. On the basis of him being likely to have been employed for no more than six months from the date of termination and having found that reinstatement is impracticable, an appropriate amount of compensation is calculated at the rate of $238.15 per week for 26 weeks, a sum of $6191.90. I propose to order compensation in that amount. The Order of the Court That the respondent, within 21 days, pay to the applicant the sum of $6191.90. MINUTES OF ORDERS THE COURT ORDERS: 1. That the respondent, within 21 days, pay to the applicant the sum of $6191.90. 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 thirteen (13) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: Solicitors for the Applicant: Ryan Carlisle Thomas Counsel for the Applicant: A Lawrence Representatives for the Respondent: Customs Brokers Council of Australia Inc. Counsel for the Respondent: John Loty Date of hearing: 3 July 1995 Date of judgment: 4 July 1995