Bernadette Minato v Palmer Corporation Ltd [1995] IRCA 307

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1239 of 1995 B E T W E E N BERNADETTE MINATO Applicant A N D PALMER CORPORATION LTD Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 30 June 1995 REASONS FOR JUDGMENT Introduction This is an application under Subdivision C of Part VIA of the Industrial Relations Act 1988 (the Act). The applicant alleges that, as a result of incidents which took place on 23 and 24 December 1994, her employment was terminated at the initiative of the respondent. The respondent contended that the applicant had resigned from her position as store manager. The applicant sought reinstatement to her previous position. Background The applicant is aged 32 and for two years prior to August 1994 had worked as store manager of a retail clothes store. She was the only full time employee and had the assistance of a casual. The store was closing down and she had a discussion with Charlene Taylor (Taylor), the Area Manager of the respondent. The applicant had previously worked for short periods with the respondent on warehouse sales and was a reasonably close friend of Taylor. Around mid 1994 the two went on a two week holiday together. Taylor told the applicant that a position as manager of the Richmond store was coming up and invited the applicant to apply. The applicant was successful after an interview with Taylor's superior. The applicant commenced work in August 1994 in the store which traded as "Not 100%". For the first few weeks she was second in charge but from September assumed the title and duties as manager. The store had three full time employees, including the manager, and three or four casual employees. The casuals would work as required, covering Saturdays and rostered days off for the full time employees. In addition the casuals would work at lunchtimes to ensure sufficient staff were available for that busy period. The applicant's duties as manager included general responsibility for merchandising within the store, stock control, security and arranging the roster of employees. The store had a monthly sales budget as well as a percentage labour costs target which the applicant had responsibility to achieve. In the performance of her duties the applicant was under the supervision of Taylor. Taylor was responsible for two other stores, one in Moonee Ponds, and another in Sydney. Taylor would spend one day per week, usually Friday, in the Richmond store. In addition there would be regular phone contact between the applicant and Taylor throughout the week. The evidence was that over the period September to December the applicant was successful in her duties. She was able to exceed the sales budget in one month and meet it in other months. She also met or bettered the labour costs target. Her evidence was that she worked long hours in her job and was never the subject of any criticism in the performance of her duties. The one area where there was some difference between the applicant and Taylor was in the area of rosters. In early December Taylor advised the applicant to employ as a casual a friend of hers, Chris Thomas (Thomas). At the time the store needed a casual to cover lunchtimes and Thomas was assigned this time. Taylor asked the applicant to train Thomas in the respondent's procedures as she believed that Thomas had potential to work in other retail "First" stores operated by the respondent. The applicant was unable to offer much training in the operation of the cash register because the store was too busy and having a part time person operate the register creates difficulties in the reconciliation of the till. She gave evidence that she made this clear to Taylor. Rosters for staff were prepared well in advance and on the Tuesday of the preceding week were filed with the pay office at the head office of the respondent. In the week preceding the week prior to Christmas 1994, Taylor raised with the applicant the fact that Thomas had only been allocated one lunchtime period in the forthcoming week. Taylor asked the applicant why she had not given more hours to Thomas. Taylor gave evidence that she told the applicant that Thomas was to be her major casual employee and that he was to be taught the system. The applicant's reply was that in the current week he was working every day and that he would be working extra days in the period after Christmas due to staff having holidays. Days were allocated to other casuals in the week prior to Christmas on the basis that it would be nice for them to have the extra money prior to the holiday period. She also said the store was too busy to allow her to train Thomas. Taylor did not direct the applicant to alter the roster for the forthcoming week. The matter was just left. Over the period November and December the applicant was under significant personal pressure. She discussed these matters with Taylor, who in turn discussed various work matters with her. Taylor gave evidence that she had suggested to the applicant that she should relax more and try to prevent personal matters impacting on her work performance. At one stage the applicant had discussed working part-time. The applicant had arranged to take an extra weeks leave, without pay, in early January to give herself time to resolve these personal pressures. The applicant's evidence was that in the period shortly before Christmas relations between herself and Taylor were strained. She said that she and the other staff were snubbed at a Christmas party. Further she said that Thomas was not suited for the store. Events of 23 December 1994 On Friday 23 December Taylor was working at the store. Around lunchtime she asked the applicant to come to the office at the back of the store to discuss rosters. The rosters are posted on a wall of the back office. In the conversation Taylor raised the fact that in the current week Thomas had been allocated only one day. The applicant then explained why she had not allocated the work to Thomas. Taylor's evidence was that she wished to discuss the roster for the period that the applicant was away. In the course of the discussion Taylor raised the issue of the applicant working at the Moonee Ponds store for a time when she returned from her holidays in January. The applicant said she agreed to this. In the course of the discussion about rosters the applicant, on the evidence of Taylor, "exploded". She became agitated, loud, abusive and unreasonable. According to Taylor the applicant said on a number of occasions that she was the manager of the shop. What happened after this is a matter of some contest. The applicant says that Taylor told her she was taking over the rosters. Taylor denies this and says that all she was trying to do was to organise the rosters for the period that the applicant was to be away. The applicant got upset and told her she could stick her job and walked or stormed out. Taylor's version was that the applicant made reference to the fact that she was manager of the store and that Taylor was taking away her responsibility. The applicant said she was going to resign. Taylor said "Well, perhaps you should consider that you have been nothing but an antagonistic person since you arrived". At that point, according to Taylor, the applicant told Taylor to "shove the f...ing job up her a...." and stormed out of the store. As she did she accused Taylor of "babying" Thomas. The applicant went to a nearby coffee shop where another employee, Mrs Bailie (Bailie) was having lunch. The applicant told Bailie that "she had had enough, couldn't take it anymore, was out of there and had told her (Taylor) to shove the job up her a...." Bailie then tried to calm her down and suggested that she go and see Sue Owen (Owen), the Retail Operations Manager and Taylor's superior. The applicant then travelled a short distance to the respondent's head office and saw Owen. By this time Owen had been advised by Taylor that the applicant had left the store. The applicant told Owen the full story. Owen listened sympathetically and said that she would discuss the matter with Taylor and would contact her the next day. According to Owen the applicant gave the impression that she was not prepared to be questioned by Taylor about the way she dealt with the roster in the store. The applicant maintained in her evidence that she believed that she still had her job when she left the meeting with Owen. Owen maintained that all she said was that she would sort out the matter and get back to the applicant. The applicant had been upset, agitated, angry and not in a sensible state when in Owen's office. Owen admitted that she was very busy that day and was unable to recall precisely what was said during the meeting. Later that day Taylor and Owen discussed the matter. Owen took the view that as the applicant had walked out of the store and wasn't going to accept direction from her manager she didn't want her job. She told Taylor to contact the applicant and inform her that she would be paid a week's pay on the basis that she had resigned. Taylor made a phone call to the applicant to that effect the next day. On 4 January the applicant attended at the Richmond headquarters of the respondent and had a conversation with Owen. She told Owen she did want her job. Owen had replied that it was Taylor's decision. The applicant then became very abusive towards Owen and left the premises. Later in the month, before issuing these proceedings, the applicant had a conversation with the General Manager of the respondent. He was not familiar with the matter but discussed various options for positions within the respondent with her. He was to get back to her but did not. Findings on the Evidence Most of the evidence in this matter is not in contention. The crucial disputed matters are what happened on 23 December. Where there was a conflict in the evidence I prefer the version of the respondent. The applicant freely admitted that she was unable to precisely recall what she said in the various conversations on that day. I accept that each of the witnesses were attempting to recall matters as best they could. I find the management structure of the respondent was that, although the applicant was store manager, she was at all times subject to significant supervision by Taylor. Taylor was therefore in a position where the applicant was required to give effect to her preferences in relation to the roster and indeed to any other matters relating to the operation of the store or the performance of her duties. I find that Taylor had indicated to the applicant that Thomas was to be rostered on and trained by the applicant. I find that this had been raised by Taylor with the applicant on at least one occasion prior to 23 December. I find that the applicant resented this interference by Taylor because she preferred to have the autonomy to arrange the rosters to suit her own views as to the best operation of the store. I accept her evidence, however, that at no time prior to 23 December had Taylor actually directed her in relation to rostering Thomas. On 23 December Taylor sought to discuss the roster with the applicant. The applicant saw this as an infringement of her managerial autonomy. This is consistent with her comments to Bailie to the effect that Taylor was not to "come into her store and change it". I find that Taylor did not purport to take over rostering but rather to discuss the rosters with the applicant. At this point the applicant refused to continue the discussion and stated that she would resign. She then used the colourful language referred to above and stormed out. She then went next door and confirmed her action to a fellow employee, Bailie. It was only at Bailie's suggestion that she decided to attend at head office and discuss the matter with Owen. Owen advised the applicant that she would consider the matter and get in touch with her. I find that Owen did not indicate to the applicant that the respondent condoned or accepted what she had done. Later that day Owen and Taylor considered the matter and Owen advised Taylor to treat the applicant as having resigned. The next day, the applicant was advised that the respondent was treating her as having resigned. The respondent then paid a week's pay on the basis that employees who resigned were required to give a week's notice which the employer was entitled to pay out. Termination or Resignation The central issue here, as far as the respondent is concerned, is whether the applicant had resigned. Counsel for the respondent argued that the words and actions of the applicant on 23 December were a resignation which was accepted by the respondent by phone the next day. Counsel for the applicant, on the other hand, argued that the applicant's actions on the 23rd were equivocal, and that she was acting irrationally and not in a state to make decisions. He argued that the applicant did not intend to resign and that Owen was wrong in her evidence when she said that she had assumed that she had resigned. The context of the events of 23 December is important in determining how to characterise those events. It is clear that the applicant had a view of her autonomy as manager which was inconsistent with the approach of Taylor. Taylor gave evidence, which I accept, that her style was not to dictate, but she did believe she was entitled to discuss the rosters with the applicant. She was also in a position to ask the applicant to train Thomas. The applicant, I find, made a number of references to "my store", my "job as manager" in the course of the discussion on 23 December. The parties had a choice as to how to resolve the potential conflict in the approach to the issue of rosters and Thomas. The applicant chose to approach the matter on 23 December by abuse of her superior and walking out of the store. She did this after the question of her resignation was raised. There was no suggestion that Taylor coerced or tricked the applicant into resigning or taking the action she did. On the other hand, Taylor conceded that raising again the issue of rostering of Thomas during that Christmas week was going over old ground. There had, however, never been any sort of formal direction given by Taylor to the applicant in relation to any matters to do with Thomas. Although on one view the applicant's words and actions, given this background, could be said to indicate a resignation, when the whole matter is looked at objectively within the context of the applicant's emotional state, I am not satisfied that the applicant did intend to terminate her employment that day. Although she said as much to Bailie immediately after she left the store, by the time she got to Owen she wanted her job back. Relevant cases on the extent of the duty to clarify an unambiguous resignation It is now necessary to consider the legal effect, in the light of the Act, of the words and actions of the parties. The respondent contended that where there were unambiguous words or actions of resignation then that was the end of the matter. The applicant had resigned. It was contended by counsel for the respondent that no case supported the proposition that where there were unambiguous words of resignation combined with acts then there was a duty to clarify the matter. In particular, he maintained that there was no obligation on an employer to clarify a resignation tendered in "the heat of the moment". In the light of the analysis by Moore J in Grout v Gunnedah Shire Council (1994) 125 ALR 355 and other cases this is not a proper approach. The legal position is set out in the case of Sovereign House Security Services Ltd v Savage [1989] IRLR 115 where at 116 May LJ said: "In my opinion, generally speaking, where unambiguous words of resignation are used by an employee to the employer direct or by an intermediary, and are so understood by the employer, the proper conclusion of fact is that the employee has in truth resigned. In my view tribunals should not be astute to find otherwise .... However, in some cases there may be something in the context of the exchange between the employer and the employee or, in the circumstances of the employee him or herself, to entitle the tribunal of fact to conclude that notwithstanding the appearances there was no real resignation despite what it might appear to be at first sight." Those comments were considered in another case: Kwik-Fit (G.B.) Ltd v Lineham [1992] ICR 183 where at 188 Wood J said that he saw no difference in principle between words or actions of resignation. At 191 he set out the position as follows: "If words of resignation are unambiguous then prima facie an employer is entitled to treat them as such, but in the field of employment personalities constitute an important consideration. Words may be spoken or actions expressed in temper or in the heat of the moment or under extreme pressure ("being jostled into a decision") and indeed the intellectual make-up of an employee may be relevant: see Barclay v. City of Glasgow District Council [1983] I.R.L.R. 313. These we refer to as "special circumstances". Where "special circumstances" arise it may be unreasonable for an employer to assume a resignation and to accept it forthwith. A reasonable period of time should be allowed to lapse and if circumstances arise during that period which put the employer on notice that further inquiry is desirable to see whether the resignation was really intended and can properly be assumed, then such inquiry is ignored at the employer's risk. He runs the risk that ultimately evidence may be forthcoming which indicates that in the "special circumstances" the intention to resign was not the correct interpretation when the facts are judged objectively." UK authorities to similar effect were followed in a recent decision in Queensland: Achal v Electrolux Pty Ltd [1993] 50 IR 236. (Cf. Connally v Malifind Pty Ltd (Industrial Relations Court of Australia, Murphy JR, 1 March 1995) for a discussion of the position in relation to an "ambiguous" resignation). Applying the above cases the issue is whether the circumstances of the applicant are such as to come within the term "special circumstances" such as to require clarification of her intention to resign, or of her actions at the store on 23 December. In my opinion the respondent was under that duty because it knew, through Taylor, that the applicant was under personal pressure at the time. It knew that she was tense and highly strung. Arrangements had been put in place for her to have an extra week's leave. Taylor admitted in her evidence that during the conversation the applicant was in no position to make a decision. She described it as a "frenzied conversation". She was not "in a sensible state" ...... "her personal pressures were coming down on her" ...... "it was out of control". Having regard to this evidence I am satisfied that, in line with the authorities above, there were "special circumstances" here which required clarification before the purported resignation was accepted. The respondent knew from the time of the meeting with Owen on 23 December 1994 that the applicant had not intended to resign. The respondent "accepted" the resignation on 24 December by telephone. It did so when objectively the applicant was making it clear that she had not intended to terminate her employment. It follows from that that the respondent terminated her employment on 24 December. There has thus been a termination of her employment at the initiative of the employer. This is because it was the act of the respondent on 24 December which was the operative act which ended the employment relationship, not the earlier purported resignation (Grout (above) at page 372). It is now necessary to consider whether the Act has been breached. Has there been a breach of s170 DC of the Act? The respondent argued that if the Court found that there was a termination at the initiative of the employer then there had been no breach of the Act. It was argued that s.170 DC had been complied with in the meeting between Owen and the applicant in the afternoon of 23 December. The Court is unable to accept that the meeting on that day met the requirements of s.170 DC. This provision is flexible but substantive. It requires that before a decision is taken to terminate the employment the employee has an opportunity to make a case. Here the applicant was in an emotionally distressed state as a result of her differences with Taylor. There was no real opportunity for her to make a case because it was Owen's evidence that the applicant had abandoned her job by walking out. At no time did Owen indicate to the applicant that her actions on 23 December and/or her differences as to the rosters and Thomas were such that her employment was at risk. Owen was going to sort the matter out. There was no suggestion by Owen that she was interviewing the applicant to get her version of events before deciding whether to terminate her employment. On the contrary, after Owen had discussed the matter with Taylor, Owen instructed Taylor to advise the applicant that she was being treated as if she had resigned. Even though the applicant had acted irresponsibly at the store on that day, by a short time later she was seeking to retrieve the situation. Owen was entitled to take an adverse view as to what had ensued but, before she did that, she had to give the applicant an appropriate opportunity to put her side of the story. It is unfair to the applicant to treat the discussion, in the distressed state she was in, as meeting the requirements of s170 DC. On this basis I find that the respondent has terminated the applicant's employment in breach of s170 DC of the Act. Was the termination for a valid reason? The respondent carries the onus of proof that it had a valid reason pursuant to s170DE(1) of the Act for the termination of the applicant's employment. The reason advanced by Owen for the termination was that the applicant had, in effect, abandoned her job by walking out of the store on a busy pre-Christmas shopping day and failing to accept direction from her manager. Prior to 23 December the applicant's performance was satisfactory. On that day in circumstances of personal pressure she purported to resign. Soon after she made it clear that that was not her intention. Having regard to my conclusion above that the respondent was under a duty to clarify the words and actions of the applicant before it treated her as having resigned, I am of the view that the respondent has not discharged its onus of proof that it had a valid reason to terminate the applicant's employment. (Cf. the position where there had been a prior warning as discussed in Drury v BHP Refractories Pty Ltd (Industrial Relations Court of Australia, Wilcox CJ, 16 June 1995).