Veronica Susan Dockrell v Mayfield Education Centre Inc [1995] IRCA 677

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3836 of 1995 B E T W E E N: Veronica Susan DOCKRELL Applicant A N D MAYFIELD EDUCATION CENTRE INC Respondent REASONS FOR DECISION 21 December 1995 PARKINSON JR This is an application made pursuant to s170EA of the Industrial Relations Act 1988. The applicant was employed by the respondent on 10 April 1995 as an education unit manager. The respondent provides educational services to the health industry. The applicant was employed between 10 April 1995 and 5 July 1995 when her position was made redundant and her employment was terminated. In this proceeding the applicant concedes that the respondent had valid reason for the termination of the employment. It is accepted that the redundancy arose as a result of the operational requirements of the business. I turn therefore to consider the application of s170DE(2) to the circumstances of the termination. It is appropriate to set out some of the background to this matter and my findings of fact on the evidence. Background and findings of fact The applicant had been previously employed by the Preston and Northcote Community Hospital ("PANCH") as a senior nurse educator, and had been so employed for 12 years. Her evidence was that as a result of some uncertainty about her long term employment future with PANCH as a result of funding and program reductions, she sought to obtain alternative employment. The evidence of the applicant was that there had been a process of consultation at her previous place of employment, where the possibility of reductions was raised in advance, although it subsequently transpired that the position she had held as senior nurse educator was not affected. The respondent advertised for a position of Education Unit Manager on a salary of $47,300 per annum and for a period of three years, although terminable on six weeks notice. The applicant applied for that position and in doing so took various steps to ascertain the financial status of the respondent. Her evidence was that at the interview she queried the executive director, Mr Leigh Brown, as to the financial viability of the respondent and its prospects for the future. The applicant says she was reassured by him as to the respondent's viability and her security of tenure. It was accepted by Mr Brown that the applicant had familiarised herself with the contents of the respondent's annual report before interview, and I am satisfied that, whilst Mr Brown was unable to recall, this makes it more probable that the applicant did raise the respondent's financial situation with him. The applicant's evidence was that she also viewed the position with the respondent as a career move and a challenge. Consequent upon obtaining the position with the respondent, the applicant resigned from her employment with PANCH. During the course of the employment there were discussions as to the appropriate organisation of the administration, the applicant taking part in and initiating some aspects of these discussions with management (Exhibit R1 and R2). However, at no time prior to the date of the termination of the employment was it foreshadowed with the applicant that there was a possibility of her being made redundant. I am satisfied that there was in fact no such intention on the part of Mr Brown, and this is apparent from the contents of his memorandum to staff dated 18 June 1995 (Exhibit R2). The evidence reveals that the decision to restructure the respondent and return to core business functions, consequently creating redundancies, was made at a Board meeting after there had been significant reworking of the proposed budget originally presented by Mr Brown. The original budget presented was not approved by the Board and Mr Brown was instructed to significantly reduce costs by whatever means necessary. Mr Brown's evidence was that this instruction had the consequence that a number of positions would have to be made redundant. He was instructed to proceed. These discussions took place in the week commencing 22 June 1995 and a decision to create redundancies was made upon the adoption of the revised budget plan on 5 July 1995. The decision to make the applicant redundant was implemented immediately upon the decision of the Board to adopt the budget plan. The process adopted in my view constituted the termination of employment as harsh. This is because at no time was there any discussion with the applicant as to the possibility of redundancy or any alternatives to redundancy. The evidence was that there was consideration of alternative positions with, and in respect of, other employees of the respondent. The evidence was also that the respondent did not turn its mind to a consideration of alternative positions for the applicant. No satisfactory explanation was given the court as to why the applicant was excluded from this process and why alternatives to her redundancy were not considered. The manner of implementing the termination of the applicant may also be characterised as harsh. This is because the applicant was given no warning of the termination and was called into a meeting with the executive director and Board members where a prepared statement was read to her informing her of the decision. I am satisfied that the respondent, at the point of employment of the applicant, knew that she was leaving long standing employment to take the position with the respondent for the very reason that she was seeking some at least short term certainty and security, and I am further satisfied that the position with the respondent was represented as being secure. The very reason that the applicant was interested in employment with the respondent was because of the apparent insecurity of the position she occupied at the time, and I am satisfied that this was known to the respondent. I am further satisfied that the applicant was cautious to enquire as to the trading position of the respondent, and that the respondent represented to the applicant that the position she was applying for was one of a minimum duration of three years. On the evidence before me, there was no consideration given to these matters when the decision was made to select or make the applicant redundant. The respondent paid to the applicant on termination an amount which it says arose from the contractual arrangements between them as to notice for termination. However in my view, having regard to the initial negotiations between the parties and the specific questions and reassurances as to future and security made, there was never any contemplation in the provisions for termination of the agreement that the termination would be for reason of redundancy within the initial three year period of the agreement. This is to some extent recognised by the payments made by the respondent to the applicant upon termination which went beyond the six weeks provided for in the agreement and included an additional amount identified as a redundancy payment (Exhibit A7). Further in my view, the amount of the termination payment made to the applicant was inadequate, disregarding as it does any factors such as the likely period the applicant would require to obtain alternative employment or expenses the applicant might incur in searching for alternative work. This characterises the termination as harsh, particularly in view of there having been such a small amount of time expire between the entering into the employment and the decision by the respondent to radically alter its direction and hiring, together with a hasty implementation of the alterations. Further, this was in the context that the respondent well knew of its funding and budget limitations at the point of employment of the applicant. Regard ought also to have been had to the known circumstances in the health industry, and the difficulties evidenced by both sides in the proceedings with funding and limited alternative employment opportunities, particularly at such a senior level. Counsel for the respondent in cross-examination put to the applicant the proposition that as she had only been employed by the respondent for 12 weeks she could not reasonably have expected a greater termination payment. In my view, in the circumstances of this case and what I regard as a reasonable expectation on the part of the applicant as to the future length of the employment, there is no relationship between the actual length of the employment and the appropriate payment to be made on redundancy. Further, in any assessment of compensation pursuant to s170EE(3), such criteria is only one of many possible factors which may be taken into account in determining an appropriate amount. I deal with this aspect later in this decision when considering remedy. It follows from what I have said above, that I am satisfied that the termination of the applicant's employment by the respondent was harsh. I am satisfied that the respondent contravened s170DE(2) of the Act. I turn now to consider the question of remedy. S170EE - Remedy Both parties submitted that an order for reinstatement would be impracticable having regard to the decision taken by the respondent to restructure, and the fact of the redundancy of the applicant's position. The applicant's evidence was that she would not wish to return to work in a situation where ongoing employment was so uncertain. I am satisfied that an order for reinstatement would be impracticable. I turn now to consider the question of compensation. The applicant claims that an aspect of the termination for which she seeks compensation is the humiliating manner in which she was escorted from the premises of the respondent on the day of the termination. In normal circumstances this claim would appear to have some merit, however in this case, in view of the applicant's conduct in deliberately removing data from her computer, it would appear that the concern held by the respondent as to the security of its information systems upon termination of the employment had at least an element of reality. I refuse that aspect of the claim for compensation. In my view the reality of the circumstances of the respondent was that the applicant's employment was not likely to continue for a significant period of time beyond the date of the termination of employment. However, the applicant was entitled to greater consideration by the respondent and more time in which to find alternative employment. An appropriate period for such notice including any payment in lieu of such notice or redundancy payment would have been three months, that is a gross amount of $10,915.38. By reference to Exhibit A6 the applicant earned the sum of $1,819.23 gross per fortnight, including allocation for superannuation contributions. The respondent has paid to the applicant an amount equivalent to seven weeks pay with deductions having been made for PAYE taxation, being a gross amount of $6,367.30. I have taken into account that payment and made a deduction for it in the calculation of the amount of compensation to be awarded pursuant to s170EE(3). Having regard to the above matters, I have decided that the applicant is entitled to an amount of $4,548.08 in compensation. No deduction will be made in respect of earnings of the applicant in the period. Such a deduction is not in my opinion appropriate in circumstances of compensation pursuant to s170EE(3), and in particular is not appropriate to the circumstances of this termination of employment. The orders of the court shall be: 1. That the respondent pay to the applicant compensation in the amount of $4,548.00. 2. That the time for payment is twenty one days from the date of this order. I certify that this and the preceding six (6) pages are a true copy of the reasons for decision of Judicial Registrar Parkinson. Associate: Dated: 21 December 1995 APPEARANCES Solicitors for the applicant: Ryan Carlisle Thomas Counsel appearing for the applicant: Ms J Patrick Solicitors for the respondent: Dunhill Madden Butler Solicitor appearing for the respondent: Mr J Sandler Date of hearing: 24 November 1995