Kemal Memedoski v Korima Pty Ltd t/as Trendwest Painting [1995] IRCA 417

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WI 1465 of 1995 B E T W E E N: Kemal MEMEDOSKI Applicant A N D KORIMA PTY LTD trading as TRENDWEST PAINTING Respondent REASONS FOR DECISION 29 August 1995 PARKINSON JR This is an application made pursuant to S170EA of the Industrial Relations Act 1988. The applicant appeared upon his own behalf in the proceedings and the respondent was represented by an employee, Mr Moon. The applicant is aged 19 years. The applicant was employed by the respondent as a trainee painter on an agreement made pursuant to the Western Australian Industrial Relations Act ("the workplace agreement"). No submissions were put otherwise in relation to the operation of that Act. The applicant was employed on 4 December 1994and the employment terminated on or about 2 April 1995. Pursuant to the workplace agreement (Exhibit R1) the applicant was employed on an hourly rate of $ 6.78 per hour, being a total wage including allowances of $303.45 per week. This wage was to increase pursuant to the agreement on an annual basis, apparently in a manner consistent with apprenticeship wages. The applicant commenced work and there was initially commendation for the way in which he performed his duties. On 1 February 1995, the respondent increased the applicant's pay to $9.06 per hour, taking the total wage with allowances to an amount of $ 392.55 per week. The increase was equal to the rate applicable at the second year of the workplace agreement. The increase was described by the respondent as a performance-based incentive. The applicant described it as a wage increase to which he then had an ongoing entitlement. There was no alteration made to the original workplace agreement between the parties, nor were the terms of the increased rate of pay ever reduced to writing. There was simply no documentation as to the terms of the increase. In the course of the weeks following the increased hourly rate of pay, the respondent's managing director Mr Lucarelli gave evidence that he had received complaints about the applicant's work performance and had observed a deterioration in the standard of work performed by the applicant. Consequently, Mr Lucarelli decided to remove the bonus and require the applicant to continue to work at the rate of pay set out in the workplace agreement. The respondent submits that the applicant refused to continue working for the respondent at the rate of payment set out in the agreement. As such, it submits that it was the applicant who terminated the employment, and not the respondent. The applicant says that his wage was reduced as a consequence of his approaching Mr Lucarelli on about 20 March 1995 and requesting a further pay increase. The applicant says that he was then told his pay was to be reduced as a penalty for seeking a wage increase. The manner in which the applicant puts his case can reasonably be understood as a submission that his employment was terminated at the initiative of the employer, in circumstances where the employer reduced his wage from $9.06 per hour to $6.78 per hour. Further, the applicant says that the respondent did actually terminate the employment in that "he sacked me for the workers not wanting to work with me". This conversation took place on Sunday 2 April 1995. The evidence was that the applicant was paid one weeks pay in lieu of notice by the respondent. In the summary of facts filed by the respondent in the proceedings (Exhibit R2) and adopted by Mr Lucarelli, he says at paragraph 10: " I advised him that as I could not justify paying him $9.06 per hour I was left with no alternative but to accede to his request to terminate his services." In my view this evidence suggests action or conduct on the part of the employer the result of which was the termination of the employment. During the evidence of the respondent there was an acknowledgment by Mr Lucarelli that, whilst he had sacked the applicant, this was at the applicant's request, and later his evidence was that "he informed the applicant that he left him no choice but to sack him". There is sufficient basis to establish that there was a termination by the employer on this evidence alone. However, it is appropriate in this matter to decide the constructive dismissal argument also, and I do. This case is a difficult one because in the discussions between the parties, both before and after the employment terminated, there was an ongoing offer from the respondent to continue to employ or to re-employ the applicant. However, it was employment upon the terms of the workplace agreement, and not pursuant to the increased hourly rate. On one view of these circumstances, there was no conduct on the part of the employer which suggested that it was not continuing the employment or was acting with the intention of terminating the employment or bringing such a situation into effect. The alternative view of the circumstances is that the conduct of the respondent in reducing the hourly rate of pay manifested an intention in the respondent not to continue to pay wages due and on that basis was conduct which amounted to a termination of the employment at the initiative of the employer, constituted by a constructive dismissal. In most circumstances where employment terminates because of the conduct of the employer in reducing the wages of the employee without his or her consent, there would be a termination of the employment of the employee at the initiative of the employer, but this may not be the case in a situation where the payment removed could truly be described as an incentive or performance-based payment payable subject to the maintenance of a level of performance or standard of work. However, for an increase in an hourly rate of pay to be characterised as such it would be necessary for that to be explicitly spelt out either in writing or in a manner evidence of which would contradict the impression of there merely being an ongoing and permanent wage increase. I am not satisfied that the pay increase was a temporary arrangement, or one which was able to be withdrawn at will. There is nothing in the evidence to suggest that this was the case, and in my view the respondent was contractually bound to pay the increased hourly rate and to continue to so pay, in the absence of the agreement of the applicant to the contrary. The rate of pay reduction was a substantial reduction, constituting a reduction in the hourly rate by approximately 33 per cent. This is a significant alteration in the terms of the agreement between the parties and is one which goes fundamentally to the content of the wages/work bargain between them. I am satisfied on balance that there was a termination of the employment at the initiative of the employer, and I turn now to consider the merits of the application. S170DE(1) - VALID REASON The evidence in the proceedings was scant and it was difficult to come to any definite conclusions because of the standard of the material before me. This is particularly so because, whilst the respondent relied upon complaints from tradesmen as to the applicant's work performance and attitude, with Mr Lucarelli giving evidence as to these complaints and his own observations as to poor performance, it failed to call evidence from the persons who allegedly made such complaints. It did however call evidence from Mr Ron Kinney, an official of the Western Australian Builders Labourers, Painters and Plasterers Union of Workers (BLPPU) ("the union") who intervened in the situation on behalf of the applicant and investigated and negotiated on his behalf in relation to the employment. His evidence impressed me, and whilst he was measured in his evidence and tended to down play such matters, it was consistent with there having been some complaints as to the conduct and work performance of the applicant during the course of the employment. I am satisfied that there were some concerns as to the applicant's work performance during the course of the employment, and it appears that these concerns arose from a tendency in the applicant to fail to listen or heed advice as to the manner in which he did his work. The respondent submits that there were warnings given and ongoing issues raised with the applicant as to his performance. However, as far as I can establish on the evidence before me, the only "warning" given was the penalty of reduction of the applicant's wage by 33 per cent on 20 March 1995. The catalyst for the events bringing about the termination of employment was the reduction of the wage rate. The employment terminated in this context and very soon afterwards on 2 April 1995. The employee's status as a trainee is relevant to the operation of S170DE(1) of the Act for the purposes of determining whether there was conduct or work performance of a type or nature which would provide a valid reason for the termination of a trainee's employment. Whilst apparently headstrong, he was nevertheless an employee being paid at a wage rate which recognised a possibility of and propensity towards mistakes, together with an implicit requirement that he be taught on the job. He had only been employed for a relatively short period of time and yet in this context had been awarded a wage increase within weeks of commencement, and a wage reduction some weeks later. There was an apparent lack of consistency in the respondent's dealings with the applicant and a degree of arbitrariness in its decision to reduce his wages in the manner it did. It is implicit that there will be mistakes made by an employee who is a trainee. That is the reason why the wage rate is significantly below that of a qualified or fully trained employee. The mistakes raised as to his work performance, such as splashing paint and not spreading drop sheets sufficiently, are not examples of conduct outside the range of expectation for a trainee painter. Clearly also, they were a recent occurrence having regard to the earlier pay rise awarded as a result of his fine work performance. In these circumstances I am not satisfied that the evidence shows that the applicant's conduct or work performance was such as to warrant the termination of his employment. I am not satisfied that the respondent had valid reason for the termination of the employment, despite the evidence from the respondent that it was motivated by the complaints of the tradesmen and Mr Lucarelli's own observations and concerns, to reduce the wage and ultimately and consequently to terminate the employment. REMEDY - S170EE The evidence is clear that there were frequent discussions and negotiations as to the circumstances of a return to work by the applicant, and that the applicant refused to accept any reinstatement or negotiated return to work. This was on the basis that he refused to return to work upon the rate of pay below that of $9.06 per hour. Despite the best efforts of the union to broker a settlement between the parties, the situation was unable to be resolved. The respondent had held open an offer of re-employment until some two weeks prior to this hearing, when it had engaged a further apprentice or trainee in place of the applicant. It then withdrew the offer. My observation of the applicant in the course of the proceedings was that he is headstrong and clearly failed to appreciate that there was any basis for complaints as to his work performance or attitude. It appears that there has been a breakdown of the relations between the parties to such an extent that I am not satisfied any useful purpose would be served by an order for reinstatement. I am satisfied that both parties are responsible for this state of affairs. I am satisfied that it would be impracticable to make an order for reinstatement in this case. I am of the view that compensation ought be made to the applicant and that an appropriate amount is the sum of $1,376.00 representing a further period of employment of one month. This amount is calculated upon the hourly rate paid at the time of the termination of the employment, being $9.06 per hour and is the gross base rate of pay of $344.66 per week (Exhibit A1). I think it unlikely having regard to the mutual dissatisfaction between the parties that the employment was likely to have continued beyond that period. The orders of the court shall be: 1. That the respondent pay to the applicant the sum of $ 1,376.00 in compensation. 2. The time for payment is twenty one days from the date of this order. I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 29 August 1995 Applicant in person Representative appearing for the respondent: Mr O Moon Date of hearing: 11 August 1995 Date of judgment: 29 August 1995