CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - COMPENSATION Industrial Relations Act 1988 ss 170DB, 170DC, 170DE, 170EA, 170EE Nicolson v Heaven and Earth Gallery Pty Limited (1994)126 ALR 233 Charlie Vassallo -v- Divisional Holdings Pty Limited No. NI 1280 of 1995 COURT: PATCH JR PLACE: SYDNEY DATE: 30 AUGUST 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. NI 1280 of 1995 BETWEEN: Charlie VASSALLO Applicant AND: DIVISIONAL HOLDINGS PTY LIMITED Respondent BEFORE: PATCH JR PLACE: SYDNEY DATE: 30 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, in his application, sought reinstatement and compensation. But in his evidence today he abandoned his claim for reinstatement, saying that he would be uncomfortable if he were reinstated, that it would not be an harmonious work place and that he did not want to go back to working with the company that had dismissed him. I gather also, though he did not say this directly, that the fact that he has got a secure job, at least for the next three months, is a factor in his unwillingness to return. Taking into account all of those matters, in my opinion it would be impractical to order the reinstatement of the applicant. The applicant commenced work with the respondent as a security guard at the North Point building in North Sydney on 26 June 1994. His employment was terminated on 19 January 1995 by Mr Pahl, a senior manager of the respondent company. The bulk of the evidence as to the circumstances of the termination of that employment is to be found in the statement of Mr Vassallo, the applicant. It is clear from the evidence that, in the period leading up to the termination of his employment, the respondent company was pressuring him to sign a contract, the effect of which would have been, at least on the face of it, to make him an independent contractor and not an employee. It certainly would have eliminated his entitlement to overtime if the contract were to be enforceable against him. In any case, whatever the effect of the contract, the applicant refused to sign it, and a period of pressure followed that culminated in a telephone call from Mr Pahl on Thursday 19 January 1995, during which the employment of the applicant was terminated. There was also evidence from Mr John McShane, an organiser for the Australian Liquor Hospitality and Miscellaneous Workers Union, whose duties included responsibilities for the security industry in the North Sydney area. He was the relevant union official in respect of the matter. He attempted to consult with Mr Pahl for the purpose of obtaining the reinstatement of the applicant but those negotiations were rather brusquely rejected. The applicant's employment was terminated in breach of section 170DE(1) of the Act, because there is no evidence before me as to a valid reason for the termination of his employment. I should say, at this point, that the lack of evidence on that point is a direct result of the fact that the respondent did not appear in the matter. Earlier this morning, when the matter was listed for hearing, there was no appearance. I asked my associate to telephone the respondent corporation and information was received from the respondent to the effect that Mr Pahl no longer worked there and that they knew nothing about the matter being listed today and tomorrow. I gave the respondent company sufficient time to, with reasonable speed, get here and a solicitor did appear at about a quarter past eleven this morning. An application was made for the adjournment of the case, which application was refused. The application was refused because the respondent company, through Mr Pahl, was fully aware of the date, Mr Pahl having been present when that date was set. Furthermore, there was evidence from Mr McShane, called during the application, to the effect that he had delivered witnesses' statements more than two weeks ago to another manager of the company, not Mr Pahl, and that there had been a discussion with that other manager. His name was Lew Raskovic. If Mr Raskovic had acted with reasonable diligence, he would have responded to the receipt of witnesses' statements, which were clearly in relation to a pending court matter, by making some inquiries about when the matter was coming on for hearing. He did not, as I understand it, do so, neither to Mr McShane, nor later. There is no evidence that he did so. So, the respondent company being aware of the hearing and Mr Raskovic not reacting at all, to the receipt of the statements, at least not reacting in a way so as to inform himself and his company about the hearing date, I was of the view that the application should be refused, and it was. At the end of that, the solicitors who had appeared for the adjournment application quite properly sought my leave to withdraw, because they only had instructions to appear on the adjournment application. That leave was granted, and they accordingly withdrew. The case was conducted from that point on in the absence of anybody from the respondent corporation. I return to the substance of the matter. If the applicant's employment was terminated because of something to do with his conduct or performance, the termination of his employment was a breach of section 170DC of the Act. The applicant's employment was summarily terminated by Mr Pahl in a telephone conversation. He was given no warnings, he was not told that his job was in jeopardy, and the reasons for the termination of his employment were never put to him. In those circumstances, it cannot be said that he had an opportunity to respond to the allegations concerning his conduct or performance. He was not given "a fair go" (see Nicolson -v- Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233. The termination of his employment was therefore (assuming it was to do with conduct or performance) in breach of section 170DC, and unlawful. No matter what the reason for the termination of the applicant's employment, the summary nature of the termination of his employment and the failure of the respondent employer to give him the opportunity to have a say about what was going to happen to him - to give him "a fair go - the termination of his employment was "unjust" within the meaning of section 170DE(2). It would therefore, even if there were to be an otherwise valid reason for the termination of his employment, be deemed to be not for a valid reason because of the operation of that section. REMEDIES For the reasons I have traversed above, it would, in my opinion, be impractical to order the reinstatement of the applicant. I therefore move to consideration of what compensation should be awarded to the applicant for the unlawful termination of his employment. Firstly, the evidence establishes that the applicant has diligently sought to obtain alternative employment and has not been a slacker, hoping for a windfall from the Court. Dismissed employees have a duty to mitigate or minimise their loss by actively seeking employment. If they do not actively seek employment, they cannot expect to get much of an order for compensation. But the applicant is not in that position. He diligently sought employment and indeed has found some employment on a casual basis for reasonably lengthy periods of time since the termination of his employment. He was employed as a grade 2 officer under the Security Industry (New South Wales) Award 1994. On 29 March 1995 the rates of pay under that award were increased by two per cent as the second safety net adjustment. I do not have before me the rates for the period from 19 January 1995, (the date of the termination of the applicant's employment), until 29 March 1995, but I will use the current rates (which are before me as exhibit 5), reduced by two per cent, in order to calculate what the applicant would have earned during that period. It would have been desirable if the applicant's union had come to Court fully prepared with sufficient information to enable the Court to be precise about the applicant's entitlements. Nevertheless, as it turns out, it is possible to be reasonably accurate. During at least the last eight weeks of his employment, the applicant had a regular pattern of work. This was as follows: He worked Mondays to Fridays from 4 pm to 12 midnight. Of the last eight weekends, he worked seven Saturdays, from 12 noon to 12 midnight, and of the last eight weekends he worked seven Sundays, from 12 noon to 12 midnight. At the rates of pay as they were from 29 March 1995, he would have earned, at that pattern, an average of $934.07 per week. That is calculated as follows: Ordinary time: 38 hours at $11.9752 per hour, $455.06. Overtime for the Friday: two hours at $15.6198, $31.24. (He is entitled to overtime for that two hour period because the regular working week was only 38 hours.) Overtime for Saturday: the first two hours at $15.6198 and the last 10 hours at $20.8264 per hour, times seven, divided by eight, (in order to allow for the fact that the applicant only worked seven of the eight Saturdays), comes to an average of $209.57 per week. Overtime for Sunday: 12 hours at $20.8264 per hour, times seven, divided by eight, (for the same reason as above), comes to an average of $218.68 per week. In addition to that regular pattern, during the last eight weeks he worked one double shift. Account should be taken of that, on the basis that it is more likely than not that he would work one such double shift every eight weeks. The earnings for one double shift would be calculated as follows: Two hours at $15.6198 per hour and a further six hours at $20.8264 per hour, comes to $156.20. Dividing that by eight (because that would only be earnt one week in eight) gives a resulting average weekly figure of $19.52. The average total, therefore, earned by the applicant per week over the last eight weeks of his employment was $934.07 calculated, as I have already stated, at the rate of pay effective from 29 March 1995. The applicant was paid, according to his evidence, up to and including 21 January 1995. Therefore, the first day upon which he was unemployed was 22 January 1995. He now has a job at the Prince of Wales Hospital, for the next three months. That job commenced on Saturday, 19 August 1995. In my opinion, for practical purposes, the effect of the unlawful termination of the applicant's employment should stop at Saturday, 19 August 1995, when he got that relatively long-term three months contract, and that is the way I will approach the case. So, if the applicant had not obtained some other casual work during the period since the termination of his employment up until the commencement of his current job at the Prince of Wales Hospital, he would have been unemployed for a total of 209 days. $934.07 divided by seven (to give the daily rate), times 209, (to allow for the total period from the termination of the applicant's employment until the commencement of his new job at the Prince of Wales Hospital), comes to $27,888.66. However, the applicant has earned in his two casual jobs as follows: He was employed on a temporary basis with an organisation called H and H Security for approximately two months at 30 hours per week. His evidence is that, give or take a few dollars, he earned about $380.00 per week during that period. Eight weeks pay at $380.00 per week, comes to $3,040.00. But two months is slightly more than eight weeks, so it would be fair to say that, during that two month period, the applicant earned about $3,100.00. The applicant also worked for an organisation called ADT for about four weeks, at 15 hours per week, at $10.85 per hour. That comes to a total of $651.00. So, the applicant has earned about $3,750.00 during the period from the last day that he was paid for after the termination of his employment until he commenced his new job at the Prince of Wales Hospital. The applicant is also entitled to compensation, not only in respect of his lost weekly wages, but in respect of his lost annual leave entitlements. The award provides that he was entitled to four weeks annual leave per year - without any loading, because he had not worked a full 12 months. If he had continued to work for the respondent company, in the 209 days from the date in respect of which he was last paid until today he would have been entitled to accrued holiday leave calculated as follows: $395.70, (being his base rate of pay, which is the basis upon which holiday pay is calculated), times four, (which would give the rate for a whole year), times 209 (for the number of days), divided by 365, (to give the true amount for that proportion of the year), comes to $906.31 - calculated once more on the basis of the rate of pay effective from 29 March 1995. The total, therefore, of the remuneration that the applicant would have received, if he had continued in employment on the same basis as that immediately prior to the termination of his employment, and calculated at the rate effective 29 March 1995, is $27,888.66 plus $906.31, which comes to $28,794.97. That sum has to be reduced, because it includes in it the 2% "safety net" increase, which was not applicable at the time of the termination of the applicant's employment. I therefore multiply it by 100, and divide it by 102. The resulting figure is $28,230.36. From that, I deduct the sum of $3,750.00, which is the amount that the applicant has earned by way of casual employment during the period following the termination of his employment. The resulting figure is $24,480.36. That represents the actual sum lost by the applicant as a result of the unlawful termination of his employment. Section 170EE(3) of the Act limits the amount of compensation that the Court can order. That section is as follows: "In working out the amount of the compensation for the purposes of subsection (2), the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation: (a) must not exceed, in respect of any employee, the amount of the remuneration that would have been received by the employee in respect of the period of 6 months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect." The maximum amount of compensation I can award is calculated as follows: $934.07 for a week, divided by seven, (to give the daily rate), times 365, (to give the figure for a whole year), divided by two, (to give the figure for six months). That comes to $24,352.53, calculated at the rate applicable on 29 March 1995. In addition to that, the remuneration that the applicant was receiving included an allowance for annual leave. For six months, that annual leave entitlement (calculated once more at the rate applicable on 29 March 1995) is $395.70 times two, (to allow for six months), comes to $731.40. The total of those two figures is $25,083.93, which I discount to allow for the 2% "safety net" increase effective 29 March 1995, by multiplying by 100 and dividing by 102. I reach the figure, on that basis, of $24,592.08 - that being the maximum amount that the applicant would be entitled to under section 170EE(3). As his actual loss is slightly less than the maximum, I intend to award the applicant his actual loss. The fact that he is out-of-pocket for that sum is a direct result of the unlawful termination of his employment. He has diligently sought work in the meantime, and it cannot be said that he is in any way to blame for the fact that he has lost that large amount of money. The purpose of the legislation is to give employees rights. The applicant's rights have been flouted by the arbitrary and summary nature of his dismissal and he is entitled to have things put right. That is what I intend to do. The applicant would normally be entitled to damages, in addition to compensation, for pay in lieu of notice. However, as his actual loss covers the period of one week in respect of which he would have been entitled to pay in lieu of notice, I do not intend to make an award of damages under section 170DB of the Act. The order that the Court makes, therefore, is that the respondent is to pay the applicant the sum of $24,480.36 (gross) within 21 days of today, as compensation for the unlawful termination of the applicant's employment. I certify that the preceding eleven (11) pages are a true copy of the Reasons for Judgment of Judicial Registrar Patch. Associate: Caroline Sternberg Date: 15 September 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES REGISTRY No. NI 1280 of 1995 BETWEEN: Charlie VASSALLO Applicant AND: Divisional Holdings Pty Limited Respondent BEFORE: PATCH JR PLACE: SYDNEY DATE: 30 AUGUST 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The respondent is to pay the applicant the sum of $24,480.36 within 21 days of today as compensation for the unlawful termination of the applicant's employment