Ewen Gordon-Walker v Dependable Security Services Pty Ltd [1995] IRCA 496

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2586 of 1995 B E T W E E N : EWEN GORDON-WALKER Applicant AND DEPENDABLE SECURITY SERVICES PTY LTD Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 21 September 1995 REASONS FOR JUDGMENT Preliminary Issue These proceedings were issued on 21 April 1995. The application revealed that the Applicant last worked on 30 December 1994. The Respondent took a preliminary point that the application was out of time in that it had not been issued pursuant to s.170EA(3) of the Industrial Relations Act (the Act) within 14 days after written notice of termination of employment. The Applicant said, and it was agreed for the purposes of preliminary argument, that he had been advised that his employment was terminated in a conversation on 6 January 1995. Subsequently on 23 January 1995 this was confirmed in writing. The Respondent argued that the letter of 23 January 1995 constituted a written notice of termination for the purposes of s.170EA(3). During the hearing I ruled against the Respondent on this point and my reasons follow. The letter of 23 January 1995, addressed to the Applicant, reads: "Further to the termination of employment with us on 30 December 1994, our records show that you have still not returned [certain items of property]". I am satisfied that that letter does not constitute compliance with s.170EA(3) of the Act. In coming to my conclusion on this matter I have considered first that the Act is remedial legislation as confirmed in a number of decisions of the Court. Further, the object of Division 3 of Part VIA of the Act is to give effect or further effect to the Termination of Employment Convention and the Termination of Employment Recommendation (s.170CA(1)). The Convention (Schedule 10 of the Act) refers to the giving of notice of termination of employment and in particular at Article 11 reads: "A worker whose employment is to be terminated shall be entitled to a reasonable period of notice or compensation in lieu thereof, unless he is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue his employment during the notice period." The Convention also goes on to refer to various requirements of consultation with the worker's representatives in the event of terminations for reasons of economic, technological, structural or similar reasons. In the Recommendation (Schedule 11 of the Act) Article 12 provides: "The employer should notify a worker in writing of a decision to terminate his employment." The Concise Oxford Dictionary defines "notice" as meaning: "an intimation or warning, esp. a formal one, to allow preparations to be made, give notice; at a moment's notice. a formal announcement or declaration of intention to end an agreement or leave employment at a specific time, hand in one's notice; notice to quit." In the decision of Denavi v John Stephens Catering Pty Ltd, (Industrial Relations Court of Australia, Judicial Registrar Parkinson, 6 June 1995) the Court said: "The use of the word "written" and "notice" in my view require that the fact of the decision made by the employer to terminate the employment, together with the basis upon which the termination is made, ie., with or without notice and the date of its effect be clearly spelt out in any document which purports to be a written notice of termination for the purposes of section 170EA(3) of the Act." While I reserve my position as to whether s.170EA(3) requires that the reasons for the termination be included in any written notice, I agree with Judicial Registrar Parkinson's view that notice must in effect be prospective. This is consistent with the nature of notice which is to signify an intention to end the employment agreement. The requirement that the notice be unambiguous and unequivocal is consistent with the structure of the Act which does not prohibit applications to be made to the Court before the actual cessation of employment. Section 170DD of the Act, which refers to notification to the CES of proposed terminations, refers to a written notice of intended termination. All this is consistent with the view that the written notice must be given at the time of the decision to terminate if the employer is not relying on its right to terminate without any period of notice. This is also consistent with comments of Gray J. in Association of Professional Engineers Scientists & Managers Australia v Skilled Engineering Pty Ltd (1994) 1 IRCR 106, 118 where he said: "Thus, in general, notice given by an employer will inevitably bring the contract of employment to an end at the expiry of the notice. There is nothing more the employer can or needs to do to produce this result. It is therefore appropriate to view the getting of notice as the "termination" for the purposes of sections 170EA and 170EE of the Industrial Relations Act." Here I am satisfied that no written notice of intention to end the employment was given and that the letter of 23 January does not meet the requirements of s.170EA of the Act. It follows from this that the matter is properly before the Court. Background evidence The Applicant is aged 55, has eight dependant children, and since 1989 has been licensed to work as a security guard. For three years until 30 December 1994 he worked at the Greensborough Shopping Centre (the centre). Prior to April 1993 he was employed by a company known as Austral Security. From April 1993 security services at the centre have been provided by the Respondent. The Respondent employed the bulk of the personnel, including the Applicant, previously employed by Austral on that job. The managing director of the Respondent, Mr Cardilini (Cardilini), previously worked for Austral. The Respondent supplies the services pursuant to a contract which is the subject of performance criteria and which is renewed in April each year. The vast bulk of the business of the Respondent is to supply security services to the centre. It has about 17 employees. The Applicant and all other employees of the Respondent are employed pursuant to a written contract of employment. This contract provides that they are described as casual employees and paid an hourly rate of pay. They are not paid, or entitled to, any shift or any other penalty rates or any paid holidays. The contract also provides that the Respondent is not under any obligation to provide the employees with any number of hours of work. In practice the Respondent rosters its employees for regular shifts which are settled about two weeks in advance. Since April 1993 the Applicant has worked permanent night shift, 4-6 nights per week, commencing at midnight and ceasing at 6.00am. The Applicant's duties were to patrol on foot the outside and inside of the centre, check security, and allow access to the centre to people such as cleaners and tenants. At the time of the incident which is central to this proceeding, the centre was being redeveloped and it was accepted by Cardilini that persons familiar with the site may have been able to breach security and obtain access to the inside of the centre. For about six months prior to December 1994 the Applicant's wife, who also held a security guards license, had been working casually for the Respondent. On 30 December the Applicant commenced duties at midnight. Exceptionally, his wife was also working at the centre that evening. Her position was as a static guard at a bookshop/Lotto agency on the second level which at the time was being renovated. The Applicant went about his duties and at one stage, at the request of his wife, attended at the bookshop to allow her to go to the toilet. While she was away the doorbell on the first floor of the centre rang. The Applicant's wife, who had chosen to attend a toilet on that floor, radioed the Applicant and offered to check who was at the door. The Applicant agreed and she attended the door and found a meat lumper seeking to deliver meat to two butchers at the centre. She again radioed the Applicant who advised her to allow the meat lumper into the centre at the appropriate loading bay. The Applicant advised her that he would attend to supervise the delivery. The two then passed each other in a corridor near the butcher shop as the Applicant's wife returned to her static position on the second floor and he attended to supervise the meat lumpers' delivery to the butcher shop. The meat lumper had a delivery of a large number of lamb carcasses to a tenant of the food court, Gourmet Meats. The Gourmet Meats shop has a short passage at the rear of the shop. This contains a meat rail which leads into the freezer located in the shop. It was the Applicant's evidence that the meat lumper loaded the carcasses onto the rail and then as he pushed them towards the back door of the shop the door flew open and the carcasses slid along the rail into the shop. The Applicant said that he told the lumper not to enter the shop. The Applicant did not record, or take any action in relation to, the fact that the rear door of the shop was open. After the lumper had completed the delivery the Applicant secured the door at the loading bay and then opened another door to allow the lumper to deliver to a nearby butcher shop. The Applicant held keys to the second butcher shop and supervised a small delivery to that shop. He then secured that shop and the loading bay of the centre and continued his duties. The Applicant's log for the evening records a delivery from "Prom Meats" at 2.30am. The Applicant gave evidence that the delivery took approximately 30 minutes. His log also records a later delivery at 4.30am at both shops. The Applicant ceased duties at about 6.00am and went home to bed. He was awoken at 8.30am by a call from Mr Ross Schwab (Schwab) his supervisor with the Respondent. Schwab asked him whether he knew anything about something being missing at Gourmet Meats. The Applicant replied that no one went into the shop until the butchers arrived for work at the usual time of around 5.00-5.30am. Schwab rang the Applicant back later and told the Applicant that he need not come to work that evening. The Applicant claimed that Schwab gave him no reason. Later that day the Applicant contacted Cardilini. He claimed that Cardilini had confirmed that he had been stood down. The Applicant said that he accepted that and that he should contact Cardilini next week. The Applicant raised with Cardilini the fact that he was owed outstanding wages which he would like immediately. Cardilini arranged to draw a cheque and deliver it to the Applicant's home. Cardilini attended at the Applicant's house that day and paid him $790.00 in outstanding wages. The Applicant gave evidence that he raised what was going on about his position. Cardilini said to contact him next week. The following week the Applicant met Cardilini again and asked for his job back. He said that he needed to work because of his family responsibilities. Cardilini said he was not going to reinstate the Applicant at that stage. In his evidence the Applicant maintained that he was not told why he was being stood down. The only reason given was that there has been a breach of security. This was the reason the Respondent provided to the CES when the Applicant sought unemployment benefits. The Respondent's version of events differed from that of the Applicant. Schwab gave evidence that he attended at the centre at 8.45am. He was confronted by an angry proprietor of Gourmet Meats who informed him that $2,500 cash had been stolen from the freezer the previous night. The proprietor said that he told the centre management and the Applicant some time previously that meat lumpers were not permitted into his shop. Schwab gave evidence that he contacted the Applicant who told him that the lumper had told him "the door opened when he pushed the carcasses down the railing". Schwab then inspected the shop with the proprietor. The proprietor advised him that the door had been left unlocked the previous evening by his staff. The proprietor had also ascertained that carcasses would not, by themselves, push open the door because it had a closer on it. Schwab then again called the Applicant and put to him that the Applicant's story that the carcasses had opened the door was "bullshit". Schwab maintained that he did not discuss standing down the Applicant with him at any time. Schwab, a former police officer, referred the matter to police. Cardilini's evidence was that the incident was a major issue for the Respondent in its relations with centre management. Some six months previously there had been a number of security incidents which had made relations with centre management difficult. Relations were getting back on an even keel when this incident occurred. The proprietor was upset because of the loss of money and was threatening to sue to recover the money from the Respondent and/or centre management. Further, the Respondent's contract with centre management was due to be renewed in a couple of months. Cardilini said that he "was on tender hooks" and "didn't need this" (incident). Cardilini decided to approach the matter by showing centre management as quickly as possible that action had been taken to rectify the issue. Cardilini said that he was satisfied that the Applicant was not implicated in the theft but he had given access to the centre and he had failed to comply with his terms of employment. This was because of the previous request by the proprietor of Gourmet Meats that deliveries were not to be made to the shop prior to butchers being on site. Cardilini, on 30 December, had a phone conversation with the Applicant. Because of the anger of the proprietor Cardilini had decided that he would have to put the Applicant on "the back burner" to cool things down. He told the Applicant that he would have to have a break "for up to two weeks" to let things cool down. The Applicant had responded aggressively to this. The Applicant had said that he needed to work due to family commitments. Cardilini had responded by saying that he understood this but that he had to cool the situation. Cardilini had told the Applicant that he hadn't been stood down, sacked or terminated. Rather he would not be rostered for a couple of weeks and then be slotted back in. He told the Applicant that he would give him extra hours when they were available. Cardilini attended at the Applicant's premises to pay him the outstanding wages and again told him that his employment had not been terminated. He told the Applicant to contact him the following week. The Applicant raised the threat of union and legal action. Cardilini responded that this would get nowhere and noted that the two had previously had a good relationship. A further conversation along the same lines occurred early the following week. At that stage Cardilini told the Applicant to leave the matter until the end of the week so that the Respondent could see about fitting him back into the roster. Again Cardilini advised the Applicant that he had not been terminated. He told the Applicant that by the end of the week the matter would eventually be under control and cooled down. He told the Applicant to see him the following week. The final conversation between Cardilini and the Applicant occurred on 6 January. Cardilini was performing guard duties at the centre and was approached by the Applicant. The Applicant repeated his request for reinstatement to his position. He flourished a copy of an industrial award and repeated that he would take legal and union action against the Respondent unless he was given work again. At that stage Cardilini had not made a decision as to what action he would take in relation to the Applicant. He candidly gave evidence that the Applicant got the better of him. He said that faced with the aggravation the Applicant had shown he made a decision to terminate the Applicant. He had formed a view that the Applicant would not be accepted back into his previous role. He said that he was of the view that he would not be able to work with the Applicant again and that the Applicant would not be happy in any position that he was given. He was further of the view that he did not believe that the Applicant would carry out his lawful instructions. Cardilini told the Applicant that it was obvious that the Applicant had made up his mind that he was terminated and that the Applicant could proceed with his legal and other actions on that basis. At the time the Applicant had raised his voice slightly and was aggressive. The whole incident was taking place outside the centre management's office. Cardilini said that he had had no real contact with the Applicant since that time. On 23 January he wrote the letter referred to earlier in these reasons. One matter which emerged in the evidence was that a day or two after 30 December a newsagent in the centre approached Cardilini and Schwab about the Applicant. The newsagent had an arrangement whereby the Applicant would deliver newspapers from outside the centre, where they were left in the early hours of the morning, into his shop. The Respondent was unaware of this arrangement. The Applicant admitted the arrangement and that he had received $30.00 per week for doing it. The Applicant claimed that Schwab was aware of the arrangement but this was not put to Schwab in cross-examination. Cardilini gave evidence that had he known of the arrangement he may have sanctioned it but he would need to consider the implications of it. Findings The Applicant was unimpressive witness in his presentation, demeanour and version of events. Where there is a conflict between him and the Respondent's witnesses I accept their versions of events. Both Cardilini and Schwab were impressive witnesses. Not surprisingly, given his background, Schwab produced a contemporaneous report supporting his version. My findings, at this stage, are confined to the issue of breaches of the Applicant's duties under his contract of employment with the Respondent. I find that the Applicant did allow his wife to answer the bell and admit the meat lumper, in breach of his obligation to perform those duties. I further find that in breach of his obligation he allowed the lumper into the Gourmet Meats shop and, in general, failed to properly supervise the delivery. He also failed to log the fact that he had taken over from his wife on the static duties outside the bookshop and the fact that the back door of the butchers shop was left open by the lumper. He also failed to contact the proprietor of the butchers shop in relation to the back door. Further the Applicant failed to advise the Respondent of his arrangement with the newsagent. In addition, when asked about the Gourmet Meats incident, the Applicant failed to be candid with his superior Schwab. In relation to events after the incident I accept the Respondent's versions of the conversations. In particular I find that the Applicant was told by Cardilini that he was not to be rostered for a period of up to a couple of weeks to allow the situation to cool down. I find that the Applicant responded belligerently and maintained the false position that he had been terminated. He threatened union and legal action against the Respondent. Finally I find that Cardilini had lost patience with him and decided to terminate his employment on 6 January. Prior to that time I find that Cardilini was within his rights under the employment agreement to stand aside the Applicant until he felt that the centre management would accept a resumption of the Applicant's performance of his duties. Did the Respondent have a valid reason to terminate the Applicant's employment? Counsel for the Respondent relied on numerous alleged breaches of the Applicant's duties as an employee to argue that the Respondent had a valid reason to terminate the Applicant's employment. The Respondent essentially sought to rely on the incident itself, the Applicant's response to that incident in his interaction with Cardilini, and newspaper arrangement, as all amounting to serious misconduct and a valid reason. In my view, however, none of the matters argued by the Respondent, or any of my findings above, either alone or in combination constitute serious misconduct or a valid reason under the Act. The decisions of the Court in Selvachandran v Peteron Plastics Pty Ltd (Industrial Relations Court of Australia, Northrop J., 7 July 1995) and Drury v BHP Refractories Pty Ltd (Industrial Relations Court of Australia, Wilcox, CJ., 16 June 1995) make it clear that whether the particular conduct constitutes either serious misconduct or a valid reason must be considered within the context of the actual employment relationship. It is in this regard that how the employer has actually viewed the impugned conduct becomes important. Here, on Cardilini's own evidence, he had no intention of terminating the Applicant's employment for what happened on 30 December. His response was to stand him aside and not roster him. This response is not surprising given the evidence of Cardilini that he was satisfied with the Applicant's discharge of his duties up until that time. He had been associated with him for some years and had had no problems with him. There was no evidence that the revelations about the newsagency altered that position or impacted on his actions. What prompted the termination by Cardilini on 6 January was the Applicant's belligerent attitude to Cardilini's decision to stand him aside while the Respondent's relationship with centre management stabilised. The Court does not accept that the Applicant's conduct after the incident provided a valid reason for Cardilini to terminate his employment on 6 January. Cardilini accepted that the Applicant was frustrated and upset by the situation. Given the Applicant's personal situation and his previous good relationship with Cardilini it is not surprising that he felt a grievance that he was not to be rostered or paid for the next two weeks while Cardilini calmed down centre management. I find it unlikely that the Applicant was aware that Cardilini had the power to do what he was doing under the employment contract. The Respondent is in a difficult position when it seeks to rely, for its valid reason, on the actions of the Applicant. Prior to 6 January the Respondent had not characterised the conduct as serious enough to put the employment of the Applicant at risk. Had Cardilini given the Applicant any warning or ultimatum about his actions in pressing for reinstatement, and had the Applicant persisted in aggressive and belligerent behaviour subsequently, then the Respondent's position would have been different (see Drury (above)). Here, notwithstanding the way the matter had been approached prior to 6 January, Cardilini, in the face of the Applicant's actions on 6 January, decided to terminate his employment. I am satisfied that when the matter is considered in this light the Respondent did not have a valid reason to terminate the Applicant's employment when it did so on 6 January. The Respondent has therefore breached s.170DE(1) of the Act. It is appropriate that I should indicate that, if I am wrong in my conclusion that the Respondent had no valid reason here, the termination would in any event have been in breach of s.170DE(2). My reason for this conclusion is related to the way the Respondent characterised the incident at the time. The Respondent did not characterise it as one requiring the termination of employment. Even though the employment was subsequently terminated by the Respondent for reasons that included the Applicant's response to his standing down, I am satisfied that given the whole history of the employment relationship, such a termination must be characterised as harsh and unreasonable and thus contrary to s.170DE(2) of the Act. Has the Respondent breached s.170DC of the Act? It follows from my findings in relation to the Applicant's behaviour and the termination itself that at no stage did the Respondent give the Applicant any opportunity to respond to the matters upon which it was relying to terminate his employment. Essentially Cardilini admitted that the Applicant got the better of him. He then proceeded to terminate the Applicant's employment. Before this occurred the applicant was not accorded a fair go. The Respondent breached s.170DC of the Act. Remedy The applicant sought reinstatement to his position with the respondent. Reinstatement was strongly resisted by the Respondent. The basis for its resistance was a breakdown in trust in the applicant by Cardilini as a result of matters which emerged during the hearing, as well as the matters that led to the termination on 6 January. In addition the Respondent led evidence from centre management as to its attitude to the Applicant in the light of the events surrounding the incident and the termination. Its attitude was that it would be concerned as to whether the Respondent could perform its agreement with it if the Applicant was reinstated. The reason for this was the unsatisfactory performance by the Applicant of his duties on 30 December. The test for determining whether reinstatement is impracticable has been set out by Wilcox CJ in Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199, 210 as follows: "The word 'impracticable' requires and permits the court to take into account all the circumstances of the case, relating to both employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer's business, it may be "unpracticable" to order reinstatement, notwithstanding that the job remains available." Here I have given serious consideration to a reinstatement order but I am satisfied that such an order is impractible. I have had regard to the small size of the Respondent's business (17 employees), the breakdown in mutual trust between the principal of the Respondent, Cardilini, and the Applicant, and the evidence of centre management as to its attitude to the Applicant. I have also had regard to the period between January and April where the Respondent, on the basis that it had nothing further to do with the Applicant, proceeded to rearrange its employment rosters on that basis. Having regard to all these matters I am satisfied that, despite the breaches of the Act I have found, reinstatement would cause the Respondent unacceptable disharmony and problems with its major client and is thus, impracticable. The Applicant, in the alternative, sought compensation for the breaches of the Act. The Applicant has been unable to secure alternative employment since his termination. He has also received certain amounts in unemployment benefits. Nicolson (above, at 212) is authority for the view that the Court, in assessing compensation, should take into account what would have happened had the breaches of the Act as found not occurred. Here, after the incident the applicant was stood down by Cardilini. I am satisfied that had he not been terminated by Cardilini on 6 January, it is likely that within another two weeks he would have been returned to the roster. I accept that it is likely however that the rostering arrangements would have been revised by Cardilini and therefore the applicant would not have remained on permanent nightshift as he had been. I am satisfied, however, that the Applicant would have remained employed by the Respondent. Having regard to these matters the remuneration that the Applicant "would have received, or would have been likely to have received, had the (Respondent) had not terminated the employment" (s.170EE(3)) in the period from 20 January 1995 for a period of six months is the proper measure of compensation for the losses sustained by the applicant. The actual amount can only be ascertained by reference to the wage records of comparable employees over that period. When the amount of earnings of a comparable employee over that period is ascertained the Court will order that that amount be paid to the Applicant by way of compensation. I will therefore order that the matter be adjourned for Mention at 9.30am on Wednesday 27 September 1995 to enable the parties to calculate, in accordance with these reasons, the amount of remuneration lost by the Applicant. MINUTES OF ORDERS THE COURT ORDERS: 1. The Court declares that the Respondent has breached ss.170DC and 170DE(1) of the Act. 2. That the matter be adjourned for Mention at 9.30am on Wednesday 27 September 1995 to enable the parties to calculate, in accordance with these reasons, the amount of remuneration lost by the Applicant. Note: If agreement is reached, a consent order can be made pursuant to O35 R10. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding nineteen (19) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: 21 September 1995 Solicitors for the Applicant: Mr Brian Weyman Weyman Jamieson Counsel for the Applicant: A.J. Parnell Solicitors for the Respondent: Mr David McLaughlin Phillips Fox Counsel for the Respondent: A. Lindeman Date of hearing: 7 & 8 August 1995 Date of judgment: 21 September 1995