Angel Garcia v Pilkington (Australia) Ltd [1995] IRCA 659

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3670 of 1995 B E T W E E N : ANGEL GARCIA Applicant AND PILKINGTON (AUSTRALIA) LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 18 December 1995 REASONS FOR JUDGMENT In this case the applicant alleges the unlawful termination of his employment arguing that a purported redundancy on 26 June 1995 was in breach of both s.170DE(1) and (2) of the Industrial Relations Act 1998 (the Act). The applicant was engaged by the respondent for a lengthy period of service from 4 May 1981, starting as a packer and performing various jobs including forklift driving. The last mentioned position led to a back injury (disc prolapse) in October 1988 with some five weeks off work and a return to light forklift duties thereafter. By 1990 the applicant took up a day shift position as a despatch co-ordinator working 7.00am to 3.15pm five days per week. Broadly speaking, this position required him to co-ordinate forklift drivers, storemen and loads as well as perform clerical duties. The job was not one which involved heavy lifting; although it was not classified as a light duties job. Notwithstanding this the applicant did suffer an aggravation of his back injury in 1990 requiring six weeks off work however, he returned to his duties as a despatch co-ordinator remaining in that position until the respondent terminated his employment on 26 June 1995. As a preliminary matter the parties consented to an order amending the description of the respondent to Pilkington (Australia) Ltd ACN 006904052. The respondent contention is that the termination of the applicant's employment was a redundancy brought about by the operational requirements of the company: in no way being due to any performance or conduct related matters. It further denies that there was any breach of s.170DE(2) of the Act on the facts of this case. In this case the applicant contends that the respondent failed to discharge the evidentiary burden it carries of proving that there was a sound, defensible or well founded reason for terminating the applicant's employment (see Selvachandran v Peteron Plastics Pty Ltd (unreported), Northrop J., No. VI 1322R of 1994, 7 July 1995). The respondent called one witness only, Bradley Edward Gething, (Gething). He is the Employee Relations Leader at the respondent's Geelong site, the applicant's former place of employment. Gething was involved in two meetings with the applicant on 26 June 1995 following which the applicant's employment was terminated as a result of the alleged redundancy. Whilst he was able to give first hand evidence of the two meetings on the last day of the applicant's employment Gething conceded that he was not the person to whom the applicant reported and did not have first hand knowledge of the process involved in determining that the applicant's position was in fact redundant because of the operational requirements of the company. Indeed, the evidence supports the conclusion (see Exhibit A1) that the process for determining whether or not the applicant's position was redundant and the decision to make him redundant both took place prior to the termination on 26 June 1995. The process for determining whether the applicant's position was redundant was carried out by Jenny McCarthy (McCarthy), the person in charge of the applicant on a day to day basis. McCarthy was not called to give evidence. It was the applicant's uncontested evidence that McCarthy and a Human Resources employee had discussions with him at least in the week preceding 26 June 1995 about alternate positions and his application for another position in the company as a storeman. Gething was unable to enlighten the Court on all these matters and seemed to act on the assumption that all the matters relevant to proving the alleged redundancy and the lawfulness of the termination occurred on the one date on 26 June 1995. THE FACTS The applicant was employed pursuant to an award. In approximately May this year an enterprise bargaining agreement (see Exhibit R1) was entered into applicable to the applicant's work site. That agreement, amongst other things, provided for trialling procedures at the site to determine appropriate manning levels. When an employee was affected by reduced manning levels under the enterprise bargaining agreement alternate employment was to be offered and, if this was not acceptable, redundancy provisions would apply. It was conceded by the applicant that in about April 1995 at a meeting of his work group McCarthy notified the team that there would be a three month trial whereby the team was to share the applicant's despatch co-ordinator duties. The applicant's uncontested evidence was that he was reassured by McCarthy that there were plenty of duties for him to perform and he was then placed on occupational health and safety project duties. There was a meeting some weeks into the trial at which the applicant alleges that only one person agreed that the trial was a successful one; in other words only one member of the team agreed that the applicant's position was not needed. Gething relied on what McCarthy told him concerning the success of the alleged trial as well as some documentation she had prepared, but not produced to the Court to substantiate any findings contrary to the applicant's assertion that the trial was not an acknowledged success. In determining whether there was in fact a redundancy the burden is on the respondent to prove this was so on the balance of probability. This does not mean, however, that the respondent is required to justify its operational decision to reduce its manning levels. In her decisions in Quality Bakers of Australia Ltd v John Goulding & Anor (1995) 60 IR 327 and Bob Wickham & Anor v Quality Bakers of Australia Ltd (1995) 60 IR 327 at page 332 Justice Beazley explained the requirements of the Act pursuant to s.170DE(1) as follows: "There was no dispute that "the operational requirements" of a business may include redundancy. A redundancy will arise where an employer has labour in excess of the requirements of the business; where the employer no longer wishes to have a particular job performed; or where the employer wishes to amalgamate jobs: R v Industrial Commission of South Australia; Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 44 SAIR 1202 per Bray CJ at 1205; Gromark Packaging v FMWU (1992) 46 IR 98, per Franklyn J. at 105. It is not necessary for the work to have disappeared altogether. As was said in Bunnetts' case (1989) AILR 356: "Organisational restructuring may result in a position being abolished and the functions or some of them being given to another or split amongst others"." In this case what was necessary to prove of the existence of a valid reason was evidence establishing the existence of a redundancy based upon the operational requirements of the respondent and its desire to achieve, through the trialling process, manning levels to efficiently operate its business. It is the applicant's case that because of his concerns he met with McCarthy and the human resources leader and was offered shift work as a packer/examiner. There is no suggestion that this position was financially disadvantageous, its principal defect being the requirement to move to rotating shift work when he had for some years only worked on day shift. The applicant alleges that he gave three reasons for refusing this position prior to 26 June 1995. The first was that his wife had recently lost her mother and was undergoing psychological treatment. The second was that one of his three young children suffered from attention deficit defect. The child was under the care of a paediatrician and required speech therapy and swimming lessons in the afternoon making it impossible for the applicant to do rotating shift work on a production line. The last reason was the applicant's back condition because the applicant would be required to stand for an eight hour shift and pack glass. Gething's only professed knowledge of these matters was that McCarthy verbally reported to him that the applicant had refused the alternate position because he did not want shift work. In itself this omission indicates that when implementing the final decision to terminate the applicant's employment Gething did not have information before him relevant to his decision not to allow the applicant to try and perform the storeman's job. The applicant also contended that at his earlier meetings he asked McCarthy about the possibility of giving voluntary redundancy packages to a number of other employees who had expressed interest in taking these packages to allow him to perform their duties. There may be many reasons for pursuing or ignoring any expressions of interest in voluntary redundancy. Indeed, this Court has already indicated that it may not be unreasonable for an employer where there is a genuine redundancy to consider its own needs in preference to accepting all employees who volunteer for redundancy (see Kenefick & Ors v Australian Submarine Corporation Pty Ltd 131 ALR 197). However, in the context of any well intentioned compulsory redundancy there should be some proper explanation offered for not considering this option in preference to making redundant a permanent employee who wanted to remain. Because of his concerns the applicant gave evidence that he saw the manufacturing manager, Bill Weeks, and was told by him that he should not worry because there were plenty of people who wanted voluntary redundancy and anyone who wanted to stay with the respondent could. Gething was again unable to assist the Court on this matter from his own knowledge and was not in a position to contest the reassurance offered to the applicant by the manufacturing manager. The applicant claims to have also applied to the respondent for a day shift job as a storeman. He even went so far as to offer to try out the position for 3 months to establish his capacity to perform the job. At the time of his offer the position was still available. This application was, against the protests of the applicant, refused by McCarthy in the week preceding the termination apparently on the basis of the applicant's back condition, without reference to any current medical diagnosis or assessment of the applicant's capacity to perform the duties of a storeman. Gething was not able to contest what occurred in the week preceding the termination however he did tell the Court that on 26 June 1995 at a meeting attended by McCarthy, the Human Resources representative, Gething, a shop steward and the applicant Gething told the applicant that the storeman's position would not suit the applicant because of his pre-existing back condition. Again, this refusal of the applicant's request to be considered for the alternate position was made without any reference to any current medical opinion. There was no evidence called to suggest that the applicant did not fulfil any job selection criteria for that alternate position apart from the reliance on his pre-existing back injury. FINDINGS On the evidence I am satisfied that there was a genuine redundancy in the sense required by the Act. The enterprise bargaining agreement requires the respondent to offer alternate employment in these circumstances. I interpret that to mean suitable employment where it is available. The applicant's view was that the storeman's position, which was not filled until after he was made redundant, was more suited to his physical needs and his domestic requirements. It seems to me that in order to behave reasonably in the circumstances present in this case, the employer should have offered the applicant the opportunity to demonstrate his ability to perform the day shift job or at the very least satisfied itself by reference to current objective evidence; that is to say medical evidence, that the applicant did not have the capacity to perform the duties of the storeman. These duties included some forklift driving and some lifting. In view of the foregoing I find that there was a valid reason for termination; namely redundancy based on the operational requirements of the respondent. However, I further find that the termination contravened s.170DE(2) of the Act; in that it was harsh, unjust and unreasonable. REMEDY The applicant seeks reinstatement, or in the alternative, compensation. Because of my finding that this was a genuine redundancy reinstatement is impracticable. The applicant is 34 years of age having spent most of his adult working life with the respondent. Since the date of termination the applicant has been unsuccessful in obtaining gainful employment. However, he has taken the opportunity to undertake a training course to set up his own business and during this course he was paid the equivalent of social security payments. Recently the applicant commenced a slot car party hire business using his redundancy payment as investment capital. He is yet to enjoy the fruits, if any, of this venture. At termination the applicant was paid a net sum of $38,229.15 (see Exhibit R3) which it was agreed included all his outstanding entitlements as well as the sum of $34,459.40 for severance pay. Of this last amount $3,401.00 represents 5 weeks' pay in lieu of notice. The respondent argues that on the question of compensation the applicant should not receive any further sums because the amounts paid to him on termination are in excess of the jurisdictional limit applicable to this Court. The correct approach to determining the amount of compensation payable is to determine the appropriate amount of compensation, which amount is not confined entirely to remuneration, and to apply the legislative cap to the amounts so determined (see Perrin v Des Taylor Pty Ltd (1995) 58 IR 254). The applicant's gross salary at termination was $36,000 per annum. In this case the applicant at least had an expectation of trialling the storeman's position for some 3 months. His loss of remuneration for this period is $9,000. However, at termination he also received the payment in lieu of notice for 5 weeks. As an award employee the cap applicable to the amount of compensation this Court can award to the applicant is $18,000. In determining the appropriate amount to order for the payment of compensation I have taken into account the amount paid by way of notice and, broadly speaking, I have not discounted the other sums paid as the entitlements to sick leave pay, annual leave pay and pro rata long service leave pay are all accrued entitlements. Likewise, the severance pay payment is geared to the applicant's years of service (see Exhibit R2) and represents a sum the respondent acknowledges the applicant would be entitled to on retrenchment or redundancy and, therefore, it too should not be discounted. Taking all the abovementioned matters into account I have assessed compensation for the loss of the opportunity of alternate employment at $5,250.00, which represents some 7 weeks' gross pay.