David John Henderson v Strapp Motors Pty Ltd [1995] IRCA 413

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1813 of 1995 B E T W E E N: David John HENDERSON Applicant A N D STRAPP MOTORS PTY LTD Respondent REASONS FOR DECISION 23 August 1995 PARKINSON JR This application is made pursuant to S170EA of the Industrial Relations Act 1988. The applicant seeks an order for compensation. The applicant was employed by the respondent in its car sales business operating and trading as Strapp Motors Pty Ltd. He was initially employed in March 1989 as a car salesman by the respondent's predecessor in the business, Ted Strapp Motors Pty Ltd, leaving that employment in July 1992 to travel overseas. As the result of an invitation by the then employer, the applicant returned from overseas to take up a new position. This occurred on 22 March 1993. From 1993 the applicant says he was employed by the respondent and its predecessor to the business as the valuer to the dealership. His evidence was that this was the position for which he was invited to return from overseas and which he accepted, and to which he was appointed. The evidence in the proceedings reveals quite clearly that the applicant was described by the respondent as its valuer. The applicant's business cards issued by the respondent confirm this fact (ExhibitA2). I do not accept the evidence of the respondent, through Mr Birrell, that the applicant was not really the valuer of the business but rather was employed in a lesser skilled role as an assessor. I am satisfied on the evidence that the applicant performed the duties of a valuer and, whilst he was initially in training and was probably employed in a trainee capacity, this period of training, save for the usual ongoing learning and experience, had long been completed. The supervision of the decisions made by the applicant occurred as a result of the operational procedures of the business at the time and were not due in any way to a lack of capacity in the applicant to perform his duties. Sometime in December 1994 a part of the business was sold and the respondent became the employer of the applicant. At the time of the part sale, the applicant was informed in writing by the principal of the business, who remains the principal interest holder of the respondent, that there would be no effect upon his employment as a consequence of the sale (Exhibit A4). This advice was confirmed by other employees more senior than the applicant. I formed a favourable view of Mr Strapp in the course of his evidence. He was frank and informative and in my view concerned to ensure that his evidence was precise and fair. This was to the extent of making concessions which were not always in his interest. Unfortunately Mr Strapp played no role in the decisions made as to the employment of the applicant. These decisions, together with the day to day management of the respondent, were left to the new dealer principal Mr Birrell to make and implement. In fact the applicant continued in the employment as a valuer until 17 February 1995. As a result of the recruitment by Mr Birrell of employees from another dealer, the applicant was replaced by another person engaged to be a valuer for the respondent. The applicant was informed of this fact as a fait accompli on 17 February 1995 when he was told he was no longer employed as the valuer and that he had the options of staying in the employ of the respondent as a salesman, or leaving the employment. On 27 February 1995 the applicant, by hand delivered letter from his solicitors, informed the respondent that he declined the offer of alternative employment (Exhibit A5). I am satisfied that the employment was terminated by the respondent on 17 February 1995 when it informed the applicant that he was no longer to be employed by it as the valuer. There was not a mere alteration to the duties of the applicant in those circumstances, but rather a fundamental change to the nature of the employment in respect of which the applicant had no alternative but to either accept or reject. In this sense on contractual terms alone it is clear that there was a termination of the contract of employment. See in this regard the decision of Ashley J in Quinn v Jack Chia (Australia) Ltd (1992) 1 VR 567 and in particular the extract contained at pages 575 to 576 of that decision. In any event, and irrespective of how one might describe the consequences upon the employment of the variation, it is apparent that the applicant rejected the change to his duties and the alternative position, and that as a consequence of this rejection the employer terminated the employment. I am satisfied that the employment was terminated at the initiative of the employer. S170DE(1) Further, I am satisfied that the termination occurred without valid reason, and on the whim of the new dealer principal and his desire to obtain the services of persons whom he had previously known and/or employed. There was, as a result of this desire, a decision to engage a number of employees to work in what may be described as a 'new team', with whom Mr Birrell preferred to work. This resulted in the termination of the applicant's employment. It was nothing to do with the conduct or capacity of the applicant, nor in my view was it due to an operational requirement of the respondent. It would be taking an extremely broad view of that term if it were interpreted to contemplate a circumstance where a respondent decides to simply replace an employee with a new one because of past experiences with, or greater confidence in, that new employee. In this matter I do not accept that there was, in the context of the applicant's employment, an operational requirement that led to the termination of his employment. Having so decided, it is unnecessary to consider the issue of the application of S170DE(2) in this matter and I do not. I turn now to consider the question of the appropriate remedy in the circumstances. Remedy - S170EE The applicant's evidence was that he had obtained alternative employment in the motor vehicle trade with a vehicle wholesaler and auctioneer. This employment was commenced approximately one month after the termination of the employment by the respondent. His evidence was that he was earning a significantly less amount of money per week than he had been whilst in the employ of the respondent, although it is clear that in part this is because he has not yet commenced to earn significant amounts in commission in his new employment. It is clear on the evidence that, but for the termination of the employment, the applicant was likely to have continued in the employ of the respondent for some considerable time. Not only is this apparent from his previous employment with the respondent, but it is also apparent from his returning from overseas to take up an offer of employment with the respondent, or more accurately its predecessor. Having regard to the losses sustained by the applicant in ongoing income, and at least during the period of time leading up to this hearing, it is appropriate that the applicant be compensated in that regard. Had he remained in the respondent's employ he would have continued to earn commission at the level he had earned prior to the termination of employment. Thus there has been a loss sustained in this regard, although I am not satisfied that the loss would continue for a significant period of time having regard to the potential for the applicant to earn commission at his new employment. Further, it is appropriate to compensate the applicant for the length of time between termination and commencement of the new employment, together with a consideration in the compensation for the disruption and loss caused by the interruption to the continuity of employment and length of service credit the applicant had obtained. In the circumstances I am of the view that the amount of compensation ought to take into account all of the above matters. I am satisfied that the loss in actual financial terms to the applicant is $700.00 per month since obtaining alternative employment. The compensation is appropriate to be awarded in respect of the entirety of the period to date of hearing. That is the sum of $ 4,200.00. In addition I propose to include an amount for lost income in the period from the termination of the employment, effective 27 February 1995, to the date of commencing employment on 27 March 1995. That is amount in the sum of $1600.00, being the equivalent of four weeks base pay. The total amount of compensation is the amount of $ 5,800.00. The orders of the court shall be: 1. That the respondent pay to the applicant compensation in the sum of $5,800.00. 2. That payment be made within 21 days of the date of this order. I certify that this and the preceding six (6) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 23 August 1995 Solicitors for the applicant: Clements Hutchins & Co Counsel appearing for the applicant: Mr N J Young Solicitors for the respondent: Romer & Co Counsel appearing for the respondent: Mr R Lombardi Date of hearing: 14 August 1995 Date of judgment: 23 August 1995