CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - No VALID REASON - HARSH - UNJUST - COMPENSATION - An applicant has a duty to mitigate his or her loss, but that is a duty to act reasonably, not a duty to do everything possible. Industrial Relations Act 1988 ss 170DC, 170DE, 170EA Nicolson v Heaven and Earth Gallery Pty Limited (1994)126 ALR 233 Byrne & Frew -v- Australian Airlines (1994) 52 IR 10 DAVID TENNANT CRAIG -v- STAFF MODE PTY LIMITED t/as LYMOSS LADIES CLOTHING MANUFACTURER No. NI 1899 of 1995 COURT: PATCH JR PLACE: SYDNEY DATE: 29 AUGUST 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. NI 1899 of 1995 BETWEEN: David Tennant CRAIG Applicant AND: STAFF MODE Pty Limited t/as Lymoss Ladies Clothing Manufacturer Respondent BEFORE: PATCH JR PLACE: SYDNEY DATE: 29 AUGUST 1995 REASONS FOR JUDGMENT (Delivered ex tempore - revised from transcript) This is an application under section 170EA of the Industrial Relations Act 1988 ("The Act"). The applicant claims that his employment was unlawfully terminated and seeks compensation. The applicant gave evidence that in his view the relationship between himself and the principals of the respondent company had deteriorated to such an extent that he does not believe that he could work harmoniously with them in the future. Mr Markou, who might correctly be described as the principal or the moving force behind the respondent company, gave evidence that he was happy to re-employ the applicant. However, an harmonious relationship requires two people to be in harmony. In my view it would not be an harmonious working place if the applicant were to go back to work with the respondent, and I therefore find that to order his reinstatement would be impractical. A further consideration in respect of this is that the applicant does not want to go back to work for the respondent. As a matter of policy the Court will not order people to be reinstated against their wishes. The Court cannot force people to go to work where they do not want to go. An order for reinstatement is an order made to a respondent employer, not to an employee. To make an order requiring an employer to re-employ an employee who does not want to be re-employed would be a waste of time. Background facts The applicant had worked for the respondent for a period of nearly 4 years, up until the termination of his employment on 12 April 1995. For the majority of that period of employment, except for the last few months, there had been an harmonious working relationship between the applicant and the respondent's principals. Even up until the day before the termination of the applicant's employment there had been a reasonably harmonious working relationship. However, the applicant had been having some personal problems at home and I accept that to a limited extent his work performance had deteriorated. To a limited extent he was not concentrating as much as he had been before. He had forgotten to deliver a few packages of goods which were meant to be delivered, relatively minor things like that. However, the deterioration in his work performance was a relatively minor matter, one that could and should have been resolved by a structured counselling session, sitting down and working out what the problems were. That did not happen. This is not to be critical of the respondent employer, because up until the day of the termination of the applicant's employment, the respondent employer had no intention to terminate the applicant's employment at all. Nevertheless, it may have been better business practice to sit down in a formal environment and discuss problems rather than letting them slide in the hope that things would improve. A short time before the termination of the applicant's employment, a conversation occurred between the applicant and Mr Zeki Celik. Mr Celik gave evidence of this conversation. He said that he and the applicant had been working together on a farm owned by Mr Gregory Markou. They had been, in effect, chatting, and the applicant had said to him something like this: "I have been looking for a job. I have applied for two jobs, one of them is full time and one of them is casual. I have collected $150 cash. I have already done one job". A week later, according to Mr Celik's evidence, he had a conversation with Mr Markou. Mr Markou said to him something like this: "David's sick again". Mr Celik, in his evidence, said that he wished to be helpful to both the applicant and Mr Markou and so, and I now quote his evidence, he said this: "I told Mr Markou that David looking for a job when he used sick days and he's already worked one day". Mr Markou believed that what Mr Celik had told him was that the applicant had used a sick day to work at another job. I accept that Mr Markou genuinely believed that. Unfortunately for the respondent's case, Mr Celik's evidence did not go so far. I saw Mr Celik in the witness box and he struck me as a truthful witness. I accept him as a witness of truth. However, it is clear that English is not his mother tongue and that his English is imperfect. That is not a criticism of him, it is an explanation as to how a misunderstanding could have arisen. There are several points at which a misunderstanding could have arisen. The first point is when Mr Celik and the applicant were talking at the farm. Another point is where Mr Celik and Mr Markou were speaking and another point is when Mr Markou was thinking about what Mr Celik had said to him. In any case, there is no evidence before the Court that the applicant said to Mr Celik anything to the effect that he had worked on a sick day as a driver for another company. Mr Markou believed, at the time that he terminated the applicant's employment, that that is exactly what the applicant had done. On Wednesday, 11 April 1995, the day before the termination of the applicant's employment, Mrs Sharon Markou, the wife of Mr Gregory Markou, came to work at the factory and saw the applicant there. She was surprised to see him there because of a conversation she had had the day before with the applicant's girlfriend, during which conversation that lady had told her that the applicant was "very sick with the flu". As it turned out, the applicant had a medical certificate for that previous day, 11 April. That medical certificate is in evidence before the court and is exhibit 3. He was, in fact, too sick to have attended on the 11 April. On 12 April, Mrs Markou, having been requested to do this by her husband, who was the principal of the respondent company, asked the applicant to return the keys that the applicant had to the factory and to the truck, to go home that day, and to return at 5 o'clock the following afternoon because, as she said to the applicant, "Greg wants to speak to you". She also told the applicant that her husband was coming into the factory that day at 11 o'clock or thereabouts, and that he could come in and speak to him then if he wished to, though that last piece of information was not conveyed to the applicant at the request of Mr Markou. The applicant believed, having been asked to give his keys back and to go home, that he had been dismissed. He was, understandably, aggrieved and annoyed. That belief was not unreasonable. However, the fact of the matter is, in my opinion, that he had not been dismissed by those actions of Mrs Markou. I accept the evidence of Mr Markou that he had asked his wife to get the keys back and send the applicant home that day because, in Mr Markou's view, a real question had arisen as to the continued employment of the applicant. In Mr Markou's view, there was a real question of whether or not the applicant could be trusted in the future. This question had arisen in Mr Markou's mind because he had understood Mr Celik to be saying to him that the applicant had worked on a sick day, for another company. As I have said, there is no evidence before the Court that the applicant had ever said that to Mr Celik. Nor is there any evidence that the applicant did work on a sick day. If Mr Celik said that to Mr Markou, then that information had no basis in fact. Nonetheless, Mr Markou believed that that is what had happened and he wished to speak to the applicant about it. The applicant was therefore to be sent home and to come back the next day when Mr Markou could speak to him. The Termination of the Applicant's Employment Unfortunately for all parties involved, the chance to have a reasoned conversation about Mr Markou's concerns never arose. At about 11 o'clock on 12 April, acting on the information supplied by Mrs Markou, the applicant, having left and believing that his employment had been terminated by the actions of Mrs Markou, telephoned Mr Markou and spoke to him at the factory. The applicant asked Mr Markou what was happening, and recounted that Mrs Markou had told him to give in his keys and go home. On Mr Markou's version of the evidence he replied by saying to the applicant: "You have gone too far this time, I want to talk to you tomorrow". Mr Markou, on his version of the evidence, then repeated to the applicant that Mr Celik had told him that the applicant had worked for another company making deliveries on a day that the applicant had been on sick leave from the respondent company. Mr Markou's evidence went on to be - and this is set out in exhibit 4 which is his statement: "The applicant replied in words to the effect "Celik is a liar. I did mention that I have applied for a job but it never worked anywhere. I have got to go, I've already rung the Industrial Relations Court. I am entitled to three weeks notice and public holidays for Easter and references. I am going to fucking sue you for not giving me a pay slip, I am going to fucking sue you for everything you have got". Mr Markou replied, according to his evidence: "That's it, you will get nothing from me, you are sacked". Mr Markou then angrily hung up the phone. In my opinion, even on Mr Markon's evidence, the applicant's employment was terminated by the respondent when Mr Markou said the words "you are sacked" at the end of that telephone conversation. In my opinion, that that was said at the end of a heated telephone conversation in which both the applicant and Mr Markou, for different reasons, and partly in response to each other, became very angry. I accept that each of them exchanged unpleasantries to the other and accept that each of them swore to the other. It is difficult for me to decide who swore first but I do not think it really matters. The real point is that it was an angry and heated telephone conversation in which each of them behaved badly to the other. Each of them behaved badly to each other in a way that, in a long and relatively harmonious working history, they had not behaved to each other ever before. At the end of it, angry at having been sworn at and angry at what he perceived, probably correctly, to be a threat by his employee to sue him, Mr Markou summarily terminated the applicant's employment. Subsequent events The next day, 13 April 1995, the applicant, together with his girlfriend, came into the factory to pick up his pay and his separation certificate. That separation certificate is exhibit 2. The reasons given by Mr Markou on that certificate for the termination of the applicant's employment are stated to be unsatisfactory work performance and misconduct. The unsatisfactory work performance was said to be "ignoring his work; no effort to improve his performance; work performance still declining; after a few mistakes at work that caused the company a lot of money, he has left me with no option but to dismiss him." In reference to misconduct, the separation certificate simply said "for misconduct details please ring G. Markou on 8203999." The evidence established that that misconduct was the allegation that the applicant had worked for another company making deliveries on a day when he was on sick leave from the respondent company. As I have said, there is no evidence before the Court upon which that allegation can soundly be based and I do not accept that that was the fact of the matter. During the meeting of 13 April there was a discussion between the applicant and, principally, Mr Markou. Also present for the entirety of that conversation was Mr Markou's daughter, Ms Alexia Vatis. I accept her version of the conversation. She impressed me as a young woman who had a good recall of what occurred, whose impressions can be relied upon and who was endeavouring to tell the truth. She struck me as being not unsympathetic to the position that the applicant was in and I do not believe that she went out of her way to give a version of the evidence that would favour the case for her father's company, or to be accurate, her company, because she is a director of it as well. She said that the applicant was swearing at her father and that he was carrying on and angry and that the applicant had said that Mrs Markou had sacked him the previous day. She said that she had asked the applicant, after he had said that Mrs Markou had sacked him the previous day, if it really was the case that the fact that Mrs Markou had asked him for the keys back, that that meant that she had sacked him and that the applicant replied "No". That was a question directed at the logicality of his position. She said that the applicant said that he had a job lined up for the Tuesday following, just before he left the office which he did so at the end of the conversation. I find that the applicant did say that he had a job lined up for the following Tuesday - but I do not accept that that was true. In my opinion, that was said by the applicant as an act of bravado at the end of another heated conversation, and it was nothing more and nothing less than that. Ms Vatis also gave evidence that her father had repeatedly said to the applicant that his job was still there if he wanted it. She gave evidence that that offer of re-employment was, however, conditional on the applicant giving Mr Markou an apology for swearing to him the day before and undertaking, in effect, to change his attitude so that he was back to the "old David," the one who had worked more diligently than he had been except the last previous few months. In my opinion, the applicant's refusal to apologise was reasonable in the circumstances. It therefore follows that it was reasonable for him to refuse to accept the conditional offer of re-employment. It is important to remember that he had, for no reason, been accused, in an angry telephone conversation, of dishonestly working on a day in which he had told his employer that he had been too sick to work. In effect, he had been accused of betraying the trust of a long and previously harmonious working relationship. It was understandable that, having been falsely accused of such an action, he was very angry. It was also understandable that Mr Markou, believing that the applicant had done that, was angry as well. It is unfortunate that it reached the stage where that mutual anger led to a confrontation in which the applicant's employment was terminated, but that is what happened. When an employee's employment is unlawfully terminated an employee has a duty to act reasonably to mitigate the amount of compensation or lost remuneration that might be ordered by the Court, but that is a duty to act reasonably. It is not a duty to do everything possible. It was not reasonable to require, in the circumstances of this case, an apology and an undertaking of a change of attitude as a pre-condition of re-employment. The evidence establishes that over the ensuing months a series of offers have been made to the applicant to re-employ him. There is no evidence before the Court that those offers were conditional. The applicant has on each occasion refused those offers of re-employment. The question of whether I should regard that continual refusal to accept offers of re-employment as unreasonable or reasonable is one which has given me considerable pause, but it really boils down to this. The applicant is of the view that the behaviour of Mr Markou, in falsely accusing him of working on a sick day, has irrevocably poisoned their relationship. In my opinion that attitude is a reasonable one. The applicant should not be required, because of a duty to mitigate his loss, to go back to a working environment that he would not be able to work harmoniously in. I therefore find that the continued refusal of the applicant to go back to the respondent company to work is reasonable. It cannot therefore be said that he has failed, for that reason, to act reasonably to mitigate his loss. In respect of mitigation, the evidence establishes that the applicant has registered promptly with the Commonwealth Employment Service, that he has gone in on a regular basis to look for jobs there, that he stays there for sometimes hours at a time in the morning, looking through the boards, waiting for the possibility of an interview. He has, in addition to that, looked through the newspapers for ads for employment and has, on some occasions, telephoned in response to those ads but, despite those efforts, he has not been able to get another job. I am satisfied, therefore, that the applicant has taken reasonable steps to find another job and that, in that respect, he has attempted to mitigate his loss as he is required to do. The applicant was dismissed on 12 April 1995. It is now about three and a half months since the termination of his employment. The maximum amount of compensation that I can award is limited to the sum equal to six months remuneration at the rate the applicant was receiving remuneration at the time of the termination of this employment. That comes to, approximately, $11,300.00 The applicant is a young man. There is a chance that he would get employment in the future. Because the applicant has only been unemployed for three and a half months, there is an element of speculation into the future as to his loss. There is a reasonable possibility, despite the unemployment situation, (and I am aware that, in the south western suburbs of Sydney, where the applicant works, the unemployment situation is particularly bad) there is still a possibility that the applicant will get a job within the reasonable future, and to a certain extent therefore I discount the amount of compensation that I would otherwise order. Nonetheless, an amount equal to six months remuneration is not the top of the scale reserved for the worst cases, it is simply a cut-off point beyond which the Court cannot go. If I were to find that the applicant was otherwise entitled to twelve months pay, I would be limited by the legislation to reducing that to six months. If I were of the view that the applicant was entitled to six and a half months pay, the result would be the same - six months. However, although the applicant is entitled to a substantial amount, because he has already lost an amount equal to three and a half months pay, in my view the appropriate amount to order by way of compensation for the unlawful termination of his employment will be $7,500.00. I will return to that and make a formal order in a moment. Why the termination of the applicant's employment was unlawful. The reasons why the termination of the applicants employment was unlawful are as follows: Firstly, the summary nature of his dismissal was a breach of section 170DC of the Act. In the case of Nicolson v Heaven and Earth Gallery Proprietary Limited (1994) 126 ALR 233, Wilcox CJ of this Court said, at page 243, when discussing section 170DC (a) of the Act: "The paragraph does not require any particular formality. But this does not mean that it is unimportant or capable of profunctory (sic), 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 into international labour law when article 7 was inserted into 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 170 DC, it is not to be treated lightly. The employee is to be given the opportunity to defend himself or herself "against the allegations made"; that is, the particular allegations of misconduct or poor performance that are putting the employees job at risk. Section 170DC(a) is not satisfied by a mere exhortation to improve. " Here, although there were some attempts by Mr Markou to find out what the problem was with the applicant, there was not even an "exhortation to improve". Even if there had been, Mr Markou had a duty under the Act to directly put to the applicant what he saw the problems to be. Even though Mr Markou may have been motivated, (and, in fact, I accept that he was so motivated), by a desire to avoid a confrontation with the applicant, because the applicant was a valued employee, nonetheless if the applicant's employment was in jeopardy because of the concerns of Mr Markou about his apparently declining performance, Mr Markou should have spelt those concerns out to him specifically. That was not done. That should have been done before the decision to terminate his employment was made. The applicant should have been given the opportunity to reply to those concerns before the decision was made and carried into effect. The termination of the applicants employment was therefore a breach of section 170DC of the Act. In my view, the termination of the applicants employment was also "harsh" and "unjust" within the meaning of section 170DE(2) of the Act. The applicant was a valued employee who had had an harmonious working relationship with the respondent corporation and the people most involved with that corporation for a period of approaching four years. To dismiss the applicant at the end of a bad tempered conversation upon the basis of allegations of misconduct that had no basis was, particularly in view of his long period of service, "harsh". The dismissal of the applicant at the end of that conversation without a proper investigation of the facts of the matter to establish whether or not the applicant had, in fact, been working on a day that he had taken sick leave, was "unjust". See Byrne and Frew v Australian Airlines (1994) 52 IR 10. Furthermore, the failure to spell out, prior to the termination of his employment, the reasons for the termination, was not only a breach of section 170DC of the Act, but also "unjust" within the meaning of section 170DE(2) of the Act. Furthermore, in my view there was no "valid reason" within the meaning of section 170DE(1) of the Act. Upon the evidence before the Court there was no basis for the allegation that the applicant had worked on a sick day making deliveries for another company. That was a significant factor in the termination of the applicant's employment. Nor were the relatively minor problems with the applicant's performance sufficient to terminate his employment. Another significant factor in the termination of the applicant's employment was the fact that the applicant had used swear words when speaking to Mr Markou in the fateful conversation on 12 April. In my view, that was a mutually unpleasant conversation, in which both parties became heated. Mr Markou was the person in a position of responsibility. It was his power over the applicant, the power to terminate his employment, that should have caused him to restrain himself. He, (although understandably), did not do so. But he was the one with the power, he was the one with the greater degree of responsibility, and in my view, in those circumstances, the applicant having been falsely accused of serious misconduct, it was understandable that he (the applicant) was upset. So, for those reasons, there was no valid reason for the termination of his employment. The order that the Court makes, therefore, is that the respondent is to pay the applicant the sum of $7,500.00 (gross) as compensation for the unlawful termination of the applicant's employment within 21 days of today. I certify that this and the preceding fifteen (15) pages are a true copy of the Reasons for Judgment of Judicial Registrar Patch. Associate: Caroline Sternberg Date: 14 September 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. NI 1899 of 1995 BETWEEN: David Tennant CRAIG Applicant AND: STAFF MODE Pty Limited t/as Lymoss Ladies Clothing Manufacturer Respondent BEFORE: PATCH JR PLACE: SYDNEY DATE: 29 AUGUST 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The respondent is to pay the applicant the sum of $7,500.00 (gross) as compensation for the unlawful termination of the applicant's employment within 21 days of today.