Reece Andrew Heddle v Perenjori Sports Club Incorporated Jacqua Aroha Simpson v Perenjori Sports Club Incorporated [1995] IRCA 423

CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - PROCEDURAL FAIRNESS - WARNING -The opportunity for an employee to defend himself or herself against allegations concerning his or her capacity or conduct must be given before the decision to terminate the employee's employment is made. INDUSTRIAL LAW - Associated jurisdiction - Powers and jurisdiction of Judicial Registrars - Judicial Registrars have the power to deal with common law claims for breach of the CONTRACT OF EMPLOYMENT where the amount claimed is not more than that prescribed in the regulations or rules of Court. Industrial Relations Act 1988 ss 170DB, 170DC, 170DE, 170EA, 170EE, 379, 430 Industrial Relations Court Rules, Order 74 Rule 2 Nicolson v Heaven and Earth Gallery Pty Limited (1994)126 ALR 233 Byrne & Frew -v- Australian Airlines Limited (1994) 52 IR 10 Browne -v- Dunne (1894) 6 The Reports 67 Hadley -v- Baxendale (1854) 9 Ex 341 [156ER 145] Reece Andrew HEDDLE -v- PERENJORI SPORTS CLUB INCORPORATED No. WI 1451 of 1995 Jacqua Aroha SIMPSON -v- PERENJORI SPORTS CLUB INCORPORATED No. WI 1450 of 1995 COURT: PATCH JR PLACE: PERTH DATE: 4 AUGUST 1995

INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. WI 1451 of 1995 BETWEEN: Reece Andrew HEDDLE Applicant AND: PERENJORI SPORTS CLUB INCORPORATED Respondent No. WI 1450 of 1995 BETWEEN: Jacqua Aroha SIMPSON Applicant AND: PERENJORI SPORTS CLUB INCORPORATED Respondent BEFORE: PATCH JR PLACE: PERTH DATE: 4 AUGUST 1995 REASONS FOR JUDGMENT (Delivered extempore, revised from transcript) These two matters are applications under section 170EA of the Industrial Relations Act ("the Act"). They were heard together, as the facts and circumstances were virtually identical. Mr Heddle and Ms Simpson were, in September last year, employed as a managing couple to manage the Perenjori Sports Club, which is the respondent organisation. They had various duties, which included the general management of the club in terms of keeping it going, the bar work, the gardening work, keeping it clean and so on. Due to the way the case has unfolded it is not necessary to go into the details of their duties I will first deal with the case of Mr Heddle. In my opinion, it would be impractical to order the reinstatement of the applicant. This is because he has a new job and he gave evidence, which was not contested, that he has a poor relationship with Mr Stephen King, the president of the respondent Club; so poor that they could not work together. In these circumstances it would be impractical to order his reinstatement. He claims compensation for the alleged unlawful termination of his employment. Section 170DC of the Act is as follows: "An employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless: (a) the employee has been given the opportunity to defend himself or herself against the allegations made; or (b) the employer could not reasonably be expected to give the employee that opportunity." In Nicolson v Heaven and Earth Gallery Pty Limited (1994) 126 ALR 233, at page 233, Wilcox CJ of this Court said, in respect of section 170DC of the Act, at page 243: "The paragraph does not require any particular formality. But this does not mean that it is unimportant or capable of profunctory satisfaction. Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as "natural justice" or, more recently, "procedural fairness". The relevant principle is that a person should not exercise legal power over another, to that person's disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. The principle is well-established in public administrative law. It was accepted as international labour law when Article 7 was inserted in the Termination of Employment Convention. Section 170DC is directly modelled on Article 7. The principle is, I believe, well understood in the community. It represents part of what Australians call "a fair go". In the context of section 170DC it is not to be treated lightly. The employee is to be given an opportunity to defend himself or herself "against the allegations made", that is, the particular allegations of misconduct or poor performance that are putting the employee's job at risk. Section 170DC(a) is not satisfied by a mere exhortation to improve." In this case there were no warnings given to the applicant. No criticisms were made of his work. Nothing was said to him to the effect that his continued employment was in jeopardy. The applicant and Ms Simpson were away from their work on Sunday, 9 April 1995, and Tuesday, 11 April 1995, and returned to Perenjori on 12 April 1995. In fact on 11 April they were engaged in their duties because they were in Perth visiting an architect's office in connection with the renovation of the ladies toilet block of the club. I find that they were away from their employment on the Sunday with the permission of their employer, given by Mr King. They asserted that in their evidence and it was not challenged in cross-examination. I therefore accept it. When one examines the evidence of Mr King, the President of the respondent club, as to what occurred at the time of the termination of the applicant's employment, it becomes unnecessary to further explore the differences between what the applicant said and what Mr King said. This is because Mr King's evidence alone establishes that the termination of the applicant's employment on that day (12 April 1995) was a breach of section 170DC of the Act. On Mr King's evidence, he initially had decided to merely reprimand the applicant and Ms Simpson for not being at work. He changed his mind. His evidence about this was as follows: "Initially I wanted to reprimand them, but they weren't at work that day and were supposed to be. I decided that as they were treating their job with contempt so I'd do the same to them." He therefore changed his mind about reprimanding them and gave them "7 days notice". The circumstances of the giving of that notice were, according to Mr King's evidence, that he spoke to them in the Club premises, there was some short discussion about where the keys to the premises were, Mr Heddle said that he was relieved that Mr King had the keys and Mr King said words to the effect of: "You've got something more to worry about than the keys." He then, according to his evidence, terminated their employment in the way in which I have just stated. The use of the words "7 days notice" was an unequivocal expression of the intention of Mr King to, then and there, terminate their employment. To terminate anybody's employment in this way without giving them any opportunity to discuss the particular grievances that Mr King had was hardly "a fair go". Indeed, to use Mr King's words, he treated them with "contempt". Section 170DC of the Act gives employees in this country positive rights. It is not a startling or radical change to the way in which we operate. To paraphrase what the Chief Justice said in Nicolson -v- Heaven and Earth Gallery Pty Limited supra, to give someone the opportunity to have a say about their future, before any decision is made about their future, is something that is well understood in the community. It is certainly well understood in country communities such as Perenjori. The applicant did not get "a fair go" at all. The opportunity to defend oneself against allegations concerning conduct or performance must be a real one. It must, therefore, be given before the termination of employment. To terminate someone's employment and then have a discussion about what has already happened is not a procedure which in any way could ever satisfy the requirements of section 170DC of the Act. This was according to Mr King, his intention. Even if he'd put it into effect, the termination of the applicant's employment would have been unlawful. Was there a valid reason for the termination of the applicant's employment? There was simply no evidence before the Court upon which I could conclude that there was a valid reason for the termination of the applicant's employment. I understand that it was the respondent's case that there could have been such valid reasons but the respondent's representative did not cross-examine either of the applicants about their assertions that they had performed their duties in accordance with their contract of employment competently. Furthermore, their assertion in their evidence that they were entitled to take the time off that they did and did so with permission on all occasions was not contradicted by way of cross-examination. I therefore accept what they say. See Browne -v- Dunne (1894) 6 The Reports 67. Therefore, the burden of proof being on the respondent to prove that there was a valid reason, it is a simple matter to determine that the termination of the applicant's employment was unlawful because there was no valid reason for it. Section 170DE(2) of the Act is as follows: "A reason is not valid if, having regard to the employer's capacity and conduct and those operational requirements the termination is harsh, unjust or unreasonable. This sub-section does not limit the cases where a reason may be taken not to be valid." The phrase "those operational requirements" is a reference to the use of that phrase in section 170DE(1) which refers to the "operational requirements of the undertaking, establishment or service". In Byrne and Frew v Australian Airlines Limited (1994), 52 IR 10, Gray J, in considering the use of the term "harsh, unjust or unreasonable" in an industrial award, said at page 63: "So far, the procedural aspects of a clause such as clause 11(a) have been seen as confined to the need for the employer to make a proper investigation of the facts and to consult with the employee about those facts and their possible consequences. In my view, that analysis has been inadequate. The use of the word "unjust" in the clause is intended to import requirements of natural justice or procedural fairness into the process of terminating employment." His Honour went on to say at page 64: "I am of the view that a clause such as clause 11(a) requires that an employer contemplating terminating the employment of an employee is obliged to afford procedural fairness to that employee. Not to do so would be "unjust". Here, for the same reasons that the termination of the applicant's employment was a breach of section 170DC, the termination of his employment was "unjust" within the meaning of section 170DE(2). In particular, the summary nature of the dismissal, the fact that he received no warnings and the fact that he was never told that his employment was in jeopardy render the termination of his employment "unjust". Therefore, even if there were otherwise a valid reason for the termination of his employment, (which there is not), his employment would be deemed to be not for a valid reason because of the provisions of section 170DE(2) of the Act. Remedies I therefore move to the consideration of what remedy is appropriate in this case. The applicant was unemployed from 13 April 1995 until he commenced a new job on 24 July 1995. That unemployment was a direct result of the unlawful termination of his employment. That is to say, he was unemployed for a total of 14 weeks and 4 days. He was earning $360.00 per week (gross), as his half-share of the $720.00 per week which he and Ms Simpson were earning in their employment as a management couple. For that period of time, 14 weeks and 4 days, the total amount of lost wages was $5,245.71. In my view that loss is a direct result of the unlawful termination of employment, he is entitled to every penny of that amount, subject to deducting remuneration which he earnt from obtaining short term alternative employment in the meantime. He is also entitled to a small amount for the lost benefit of free electricity and water which was part of his remuneration package up to only but not including 24 July 1995. I calculate that sum to be $120. I give nothing for the possible value of cheap rent, because there is no evidence before me as to the value of rental properties in the area except in so far as the rent which the applicants were paying was the same rent as that charged by the local Shire for equivalent accommodation. I therefore do not allow any sum for the possible lost value of cheap rent when I calculate the compensation to be awarded. The applicant is also entitled to lost holiday pay from the time of the termination of his employment until the commencement of his new job. The contract between the applicant and the respondent allowed for 4 weeks holiday pay per annum, without any holiday pay loading. The number of days that the applicant was unemployed for was 102. 102 days times $360 per week, multiplied by 4 for the 4 weeks, divided by 365 in order to arrive at the correct proportion, comes to $402.41. The applicant was successful in obtaining some work in the period from the termination of his employment until the commencement of his new full-time job. He earned $1,100.00 (gross) as a result of that employment, and I deduct that sum from the sum which would otherwise be awarded to him for compensation under section 170EE(2). In my opinion, therefore, the applicant is entitled to the sum of $4,668.12 by way of compensation under section 170EE(2) of the Act, and I will so order at the end of my remarks. Common law damages - the associated jurisdiction of the Court The applicant, by leave granted yesterday, with the consent of the respondent, pleaded instanter a small claim in the associated jurisdiction of the Court. Section 430 (1) of the Act reads as follows: "So far as the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked." The purpose of the legislation is to resolve all related matters of controversy between the parties, in so far as is constitutionally possible, in order to reduce the possibility of the duplication of proceedings. Section 376(1) of the Act is as follows: "The Rules of Court may delegate to the Judicial Registrars, either generally or as otherwise provided in the Rules, all or any of the Court's powers in relation to proceedings in the Court, in so far as the proceedings relate to: (a) a claim for an amount of not more than the amount specified in the rules; or (b) a claim that the termination of an employee's employment was unlawful, or that the proposed termination of an employee's employment would be unlawful, whether because of this Act or any other law (including an unwritten law) of the Commonwealth or of a State or Territory. Section 376(2) of the Act is as follows: "For the purposes of paragraph (1)(a), the Rules may specify an amount of not more than: (a) $10,000.00; or (b) such greater amount as the regulations prescribe. Section 376(6) of the Act is as follows: "The provisions of this Act, the regulations and the Rules of Court, and of other laws of the Commonwealth, that relate to the exercise of a power by the court apply, in relation to an exercise of the power by a Judicial Registrar under a delegation under subsection (1), as if a reference to the Court or a Judge, or to a court exercising jurisdiction under this Act, were a reference to a Judicial Registrar. Order 74, Rule 2 of the Rules of Court is as follows: "In relation to any proceeding in the Court, in so far as that proceeding relates to: (a) a claim for an amount of not more than $10,000.00 or such greater amount as the regulations may from time to time prescribe; or (b) a claim that the termination of an employee's employment was unlawful, or that the proposed termination of an employee's employment would be unlawful, whether because of the Act or any other law (including an unwritten law) of the Commonwealth or of a State or Territory; all the powers of the Court are delegated to each Judicial Registrar. In my view, a proceeding in which the associated jurisdiction of the Court is invoked is, in the terms of s. 376(1) of the Act, "a proceeding in the Court". The applicant's claim for common law damages is such a "proceeding", and is one which "relates to a claim for an amount of not more than the amount specified in the Rules". Section 376 (1) (a) of the Act, together with Order 74, Rule 2, gives Judicial Registrars the power to determine claims, other than claims in relation to unlawful termination of employment, provided that the proceeding involved is a "claim for an amount", and provided that the amount claimed in the proceeding is not more than the amount specified in the regulations or Rules. The applicant claims common law damages for the breach of his contract of employment for removal expenses. The damages are calculated on the following basis: $75.00 for the hire of a removal van and $120 for petrol for the return trip from Perenjori to Perth. The applicants moved from Perth to Perenjori to take up the job. Perenjori is a small country town. In my opinion the necessity for the applicant's to have to move back to Perth, and the cost of that, was damage which might "reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it." Hadley -v- Baxendale (1854) 9 Ex 341 at 354 [156 ER 145 at 151]. Their moving back to Perth and the resulting expenses are a direct consequence of the unlawful termination of their employment. Mr Heddle paid those costs from his own pocket. He is therefore, in my opinion, entitled to damages under common law in the sum of $195 for breach of the contract of employment. I should add here that the sum which I am about to order for compensation under section 170EE(2), would overlap with any order that I would make for damages for lack of notice under section 170DB of the Act and I therefore decline to make an order for damages under section 170DB of the Act. The orders that I make are as follows: 1. That the respondent pay the applicant compensation for the unlawful termination of his employment in the sum of $4,668.12 within 21 days of today; 2. That the respondent pay damages to the applicant for breach of the contract of employment in the sum of $195.00. That sum is to be paid within 21 days of today; I now move to Ms Simpson's matter. For the same reasons as set out above in regard to Mr Heddle's, I find that it would be impractical to order the reinstatement of the applicant. For the same reasons as in the other matter, I find that the termination of the applicant's employment was unlawful as it was a breach of section 170DC of the Act. For the same reasons as in the other matter, I find that there was no valid reason for the termination of the applicant's employment. For the same reasons as in the other matter I find that the termination of her employment was "unjust" within the meaning of section 170DE(2) of the Act and therefore that, even if there were a valid reason for the termination of her employment (which there is not), it would have been deemed to be not for a valid reason because of the operation of that section of the Act. I move therefore to the question of what remedy is to be given. Remedies The applicant has been unemployed from the time of the termination of her employment, namely 12 April 1995 to date, and continues to be unemployed. She has attempted to mitigate her loss, in her words she has been "looking for work". That assertion was not challenged in cross-examination and I accept it. Her lost wages to date are as follows: she was earning, at the time of the termination of her employment, $360.00 per week (gross). To date, that is 16 weeks and 2 days later, that comes to the sum of $5,862.86. She is also entitled to lost holiday pay from the time of the termination of her employment to date, that is 114 days; 114 divided by 365 times $360.00 multiplied by 4, (because she was entitled to 4 weeks holiday pay per year at the rate of $360.00 per week) comes to the sum of $449.75. She is also, for the same reasons as the Mr Heddle, entitled to some small sum for the lost benefit of free electricity and water. I calculate that to be, in her case to date, $125.00. Therefore, the total amount of remuneration that she has lost to date as a result of the unlawful termination of her employment is $6,437.61. Unlike Mr Heddle, Ms Simpson continues to be unemployed. She is therefore entitled to some compensation for the continuing loss which she is likely to suffer in the future as a result of the unlawful termination of her employment. However, that continuing loss has, in my opinion, to be discounted somewhat. There is a real possibility that she will find employment. She is a young woman, she is obviously intelligent and obviously motivated. On the other side of the coin, so to speak, we live in times of high unemployment and she has been looking for work unsuccessfully. In all the circumstances I consider that a round figure of $8,500.00 is an appropriate amount to order as compensation under section 170EE(2) of the Act. I order that the respondent is to pay the applicant the sum of $8,500.00 by way of compensation for the unlawful termination of her employment within 21 days of today. I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for Judgment of Judicial Registrar Patch. Associate: Caroline Sternberg Date: 31 August 1995 APPEARANCES: Counsel for the Applicant: Mr A Auguste Counsel for the Respondent: Mr TC Crossly INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. WI 1451 of 1995 BETWEEN: Reece Andrew HEDDLE Applicant AND: PERENJORI SPORTS CLUB INCORPORATED Respondent BEFORE: PATCH JR PLACE: PERTH DATE OF ORDERS: 4 AUGUST 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The respondent pay the applicant compensation for the unlawful termination of his employment in the sum of $4,668.12 within 21 days of today. 2. The respondent pay damages to the applicant for breach of the contract of employment in the sum of $195.00. That sum is to be paid within 21 days of today.