C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - whether VALID REASON - HARSH, UNJUST OR UNREASONABLE - REINSTATEMENT INDUSTRIAL RELATIONS ACT 1988 Ss 170DC, 170DE, 170EA, 170EE Liddell v Lembke (1994-5) 127 ALR 342, 56 IR 447 Mitchell-Collins v The Latrobe Council, unreported, IRCA No. 422 of 1995, Spender J, 25 August 1995 Chambers v James Cook University of North Queensland, unreported, IRCA No. 459 of 1995, Spender J, 25 August 1995 Johns v Gunns Ltd(1995) 60 IR 258 Nicholson v Heaven & Earth Gallery Pty Ltd (1994) 126 ALR 233, 57 IR 50 Cox v S.A. Meat Corporation 60 IR 293 Izdes v L.G. Bennett & Co Pty Ltd t/AS Alba Industries, unreported, IRCA No. 465 of 1995, Beazley J, 14 September 1995 Abbott-Ethrington v Houghton Motors, unreported, IRCA No. 528 of 1995, Gray J, 28 Octobr 1995 Patterson v Newcrest Mining Ltd, unreported, WI 0595R of 1994, Marshall J, 21 December 1995 Janicek v ICI Dulux Australia, unreported, IRCA No. 559 of 1995, Wilcox CJ, 4 September 1995 JOHN STEEDMAN -v- JASOL AUSTRALIA - WI 95/1789 BEFORE: R D FARRELL JR PLACE: PERTH DATE: 8 DECEMBER 1995 IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 95/1789 BETWEEN: JOHN STEEDMAN - Applicant AND: JASOL AUSTRALIA - Respondent MINUTE OF ORDERS BEFORE: R D FARRELL JR PLACE: PERTH DATE: 8 DECEMBER 1995 THE COURT DECLARES THAT: 1. The termination of the Applicant by the respondent ("the termination") contravened Section 170DE of the Act. THE COURT ORDERS THAT: 2. The respondent shall appoint the applicant to the position in which he was employed immediately before the termination. 3. The employment of the applicant is deemed to have been continued for all purposes from the date of the termination until the date of his reinstatement in accordance with this order. 4. The parties will attempt to reach agreement on the appropriate figures for the amount of remuneration lost by the applicant because of the termination of his employment. If agreement is reached a consent order may be filed pursuant to Order 36 rule 10 on or before 3.00 p.m. on Friday 15 December 1995. In the absence of agreement, written submissions on the calculation of remuneration lost shall be filed on or before that time. 5. The matter is adjourned sine die. NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WI 95/1789 BETWEEN: JOHN STEEDMAN - Applicant AND: JASOL AUSTRALIA - Respondent BEFORE: R D FARRELL JR PLACE: PERTH DATE: 8 DECEMBER 1995 REASONS FOR JUDGMENT This is an application brought by the Australian Liquor, Hospitality and Miscellaneous Workers' Union ("the Union") under Section 170EA of the Industrial Relations Act 1988 ("the Act"). It arises from the alleged unlawful termination of the employment of John Steedman ("Mr Steedman"), a member and shop steward of the Union, by the respondent, Jasol Australia ("Jasol"). The union seeks an order that Mr Steedman be reinstated, or alternatively that he receive compensation for the alleged unlawful termination. Ms Ellery, who represented the Union, alleges that Jasol breached the provisions of Section 170DE(1) of the Act, and contends that the termination of Mr Steedman's employment did not occur for a valid reason. Further, she contends that the termination of his employment was in any event harsh, unjust or unreasonable within the meaning of Section 170DE(2). In addition, she contends that if the Court were to find that his employment was terminated for reasons related to his conduct, then Mr Steedman was not given the opportunity to defend himself against the allegations made, so that Section 170DC of the Act was breached. Mr Tomlinson, who represented Jasol, contends that there was a valid reason for the termination of employment - specifically, the unauthorised removal by Mr Steedman of company product from site contrary to Jasol's established policy. He further contends that the termination of Mr Steedman's employment was not harsh, unjust or unreasonable within the meaning of Section 170DE(2) of the Act. He contends that Mr Steedman was accorded procedural fairness, and specifically that he was given an adequate opportunity to defend himself against the allegations made against him in relation to his conduct. Jasol's Policy and its Application I am satisfied on the evidence that Jasol had a policy in place regarding the removal of product from its site, of which its employees were broadly aware. This policy was most recently reduced to writing on 29 October 1992 (Exhibit J2), and Mr Steedman accepted that he had received a copy of the written policy at about that time. The policy was in the following terms: "TO: ALL STAFF FROM: J. MELDRUM SUBJECT: OWN USE PRODUCTS DATE: 29 OCTOBER 1992. Staff are reminded of the policy of this Company regarding the removal of any product from this complex. 1. Staff are able to buy any product at concessional rates; obtain an invoice and collect the goods from the store. Staff are not to help themselves from the store, regardless of the circumstances. 2. Any staff member may request a sample of a product for their own use and if approved by Management, a signed chit will be issued to cover the sample. There is no exception to the above rule and any Staff Member who disregards this instruction, does so to their own detriment. J.S. Meldrum Group Operations Manager" While the extent of the "detriment" is not set out in the written policy, it was the evidence of Mr Reginald Riebling, Jasol's production manager, that on any occasion that stealing came to his attention, and the identity of the culprit could be established to the satisfaction of the company, it had resulted in dismissal. On previous occasions, for example, cartons of toilet paper had been consistently disappearing, leading to staff meetings, a car search and the issuing of this particular memorandum. Jasol was eventually satisfied that someone other than its employees was responsible for the problem. On another occasion, an employee was found by Jasol to have removed safety boots from the workplace, and to have later sold them to a casual employee of the company, and was dismissed as a consequence. Mr Steedman was this employee's witness during the interview leading to the termination of his employment. On other occasions, there had been allegations to management that product had been taken sometime the previous day. On two occasions the allegations concerned retail product; one or two cartons of product had been on the pallet when employees went to go home and were gone when they got back the next morning. On another occasion it was claimed that about 10 litres of product had been removed from the wet floor. Management could not prove who was responsible, because the reports were made too long after the event. Mr Harold Bell ("Mr Bell"), who was Mr Steedman's foreman, and who was considered by Jasol to be part of management, gave general evidence to the effect that there had also been a matter involving a breach of the policy concerning a young male employee, who was merely reprimanded. Mr Riebling did not recall this. Significantly, Mr Derek Perrin ("Mr Perrin"), the production supervisor who was therefore also part of management, said that his understanding of Jasol's policy regarding removal of product was that removal of product without company authorisation or management authorisation was resultable in dismissal (my emphasis). When I questioned him further about this, he said that "those sort of discretional moves I suppose are made by Mr Riebling. I mean, I'm led to believe that the result is dismissal." He was not aware of a case within the last 2 years where it had not resulted in dismissal, but he believed there had been instances before then. The policy does not in its terms state that breach of the policy will invariably lead to dismissal. I am satisfied that there was scope for Mr Riebling to exercise some discretion as to the detriment which would result. Certainly, the employees and a significant part of management were not aware of the absence of such a discretion. Mr Steedman Removes A Container of Liquid From Jasol's Complex. Mr Steedman was employed as a "product maker", and his duties included making up product to specifications and filling and packing bottles of the products. I find that soon after commencing work at about 7am on Thursday 22 June 1995, Mr Steedman removed a 5 litre container filled with "Depend" laundry liquid from his work area to his van, which was parked outside Jasol's gates but on land owned by Jasol. The container was not a standard container normally used to package the liquid for retail sale. Mr Steedman gave evidence that the liquid in question had been produced on the previous day, Wednesday 21 June 1995, "towards the end of the run" and was part of a much larger quantity of liquid which was discoloured. Mr Steedman reserved some of the discoloured liquid in the 5 litre container before "dumping" the remainder of the discoloured liquid on the direction of his foreman, Mr Bell. Mr Riebling agreed that such reserved liquid would have had no commercial value. Jasol led no evidence to contradict this aspect of Mr Steedman's evidence, but there was a submission from Mr Tomlinson in his closing address that, if I were to find Mr Steedman's evidence unreliable in other respects, then I might still find that the liquid removed was not the liquid to be dumped, but rather saleable product, notwithstanding the lack of evidence contradicting Mr Steedman's evidence on this point. I find, having considered the evidence, that the liquid removed was of no commercial value. In so finding, I note that Mr Bell confirmed in evidence that on the day in question, Wednesday 21 June 1995, he told Mr Steedman to put some discoloured laundry liquid down the drain. I also note that Mr Victor Cable ("Mr Cable"), another employee of Jasol, confirms in evidence that Mr Steedman told management in a meeting on 23 June 1995, that the material he took was to be dumped. Mr Cable said he did not recall it being disputed. Mr Perrin volunteered to the Court that he believed the product was intended to be dumped. Mr Perrin was the member of management who ultimately found the container. He wasn't questioned as to the basis for his belief. I note at this point that if the liquid was saleable product, the cost to Mr Steedman of purchasing it was $4.50. Investigation and Dismissal At about midday on Thursday 22 June 1995, Mr Riebling, the production manager, instructed Mr Perrin, the production supervisor, to conduct a search of the employees' vehicles. The evidence as to the motive for this instruction was hearsay, but obviously Mr Riebling had his reasons. Mr Riebling issued the instruction after having consulted with Mr Peter Gustharst, Jasol's State Manager, and Mr Jim Van Dyke, Jasol's Technical Manager. He says that Mr Gustharst told him: "Well, if we are going to do this, bear in mind that whoever we find must be treated the same way, whatever we find or whoever we find." I will consider in due course whether that was appropriate advice. Mr Perrin conducted the search by approaching the employees in each of the departments on the plant in turn, taking them to the car park and inspecting their vehicles in their presence. Mr Christopher Ashford ("Mr Ashford"), a fellow employee of Mr Steedman, gave evidence that he told Mr Steedman that there was a car search on. Someone had told Mr Ashford about the car search 5 to 10 minutes before he spoke to Mr Steedman; he could not recall who. He may have already had his car searched. It was put to Mr Ashford by Mr Tomlinson that the conversation took place at about 1.30pm that day on the landing just outside the "wet area" where Mr Steedman worked. Mr Ashford's response to Mr Tomlinson's proposition was qualified. "I remember something, yes", he said. He certainly had a conversation with Mr Steedman in those terms. He was not sure of the time. He did not recall Mr Steedman's response. Mr Steedman did not recall the conversation, but says it could have occurred. He said he did not remember Mr Ashford telling him that the company was searching all vehicles. It was his recollection that he learnt of the car search from Mr Perrin. Mr Perrin says he observed Mr Steedman and Mr Ashford in conversation on the landing outside the wet area. He didn't hear the conversation. As Mr Perrin approached the stairs, Mr Steedman came down, as if to meet him. Mr Perrin said - "I suppose you know what's going on". Mr Steedman says he replied "No, what?". Mr Perrin does not recall Mr Steedman saying that. Mr Perrin told Mr Steedman he could either allow Mr Perrin to check his vehicle or he could wait for the police to come, as Mr Cable had decided to do. Mr Steedman responded that he might as well wait for the police to come, and then entered in the side door which led to Jasol's sales counter and office. Mr Steedman said he had his hand on the door at the commencement of the conversation. On leaving the office, Mr Steedman went back to work, and learnt that Mr Cable had by then allowed his car to be searched. Rather than have the police attend especially for him, he decided to agree to let the company search his van. When asked why he initially refused to have his van searched, Mr Steedman responded that he was "just being awkward". Mr Cable was not asked why he initially refused. Mr Steedman then approached Mr Perrin in the car park and told him he could search his van. Mr Steedman opened the van, and told Mr Perrin there was a container in the car, showing him where it was. Mr Perrin says the container was in a cardboard box, together with a road directory and some rags, on the floor in the front of the vehicle. It was not between the seats, but "where the gear stick would come out of the floor". Mr Perrin said he would not have seen the liquid if he were looking into the van from the outside, because he would never have thought to have looked into the box, had Mr Steedman not told him that was where the product was. The box had loose flaps, and Mr Perrin doesn't recall whether they were open or shut; Mr Steedman says it was open. Mr Perrin says he could have seen the box from outside the car. Mr Steedman says he could have seen the top of the container. I do not consider there to be evidence to support Mr Tomlinson's contention that the container was deliberately hidden by Mr Steedman. Mr Steedman says he told Mr Perrin he was getting a price on the liquid. He says that at the end of the search, Mr Perrin merely said "Oh, that's cool, John." Mr Steedman said, and it wasn't disputed, that no-one in management indicated to Mr Steedman on that day that they had any concerns about the material that had been found in the car. That may explain why Mr Steedman said nothing more at that time in his defence. At about 7am on the morning of Friday 23 June 1995, Mr Riebling convened a meeting with Jim Van Dyke (Jasol's Technical Manager) and Mr Perrin. Mr Steedman was summoned to the meeting from his work. Mr Victor Cable, a fellow employee, also attended as Mr Steedman's witness. Typed notes from this meeting were tendered (Exhibit S1), and evidence was given of the meeting by all except Mr Van Dyke. Mr Steedman denies that the notes are a complete record. When asked at the meeting to explain the 5 litres of liquid found in his car, Mr Steedman stated that Mr Bell, his foreman, had given him permission for the liquid to be removed. Mr Steedman concedes that this was the first occasion on which he had raised this, and now concedes that Mr Bell's actions could not accurately be described as giving him permission. In his evidence to the Court, Mr Steedman was somewhat more precise as to exactly what Mr Bell was said to have said. I consider this matter in detail in due course. Mr Bell was then called in to join the meeting. He denied that any permission had been given to Mr Steedman. Mr Steedman did not question him about the events of the preceding day. Mr Bell left the meeting without making any further contribution. Mr Steedman then advised that he had paid for the product. The circumstances in which he did so are canvassed below. Jasol took the position that this was simply restitution by Mr Steedman after the fact, motivated by the knowledge that he was about to be discovered having removed the product. Mr Steedman says he told management at the meeting that the liquid he took was to be dumped. Mr Cable confirms this. Mr Riebling says he has no recollection of this issue being raised. Neither Mr Steedman nor Mr Cable recall anyone at the meeting disputing Mr Steedman's contention that it was not saleable product. Mr Perrin couldn't recall the claim that the liquid was to be dumped being raised, but explained that he was actually just outside the office during the meeting; there wasn't enough room in the office for them all to fit in. At the conclusion of the meeting, Jasol concluded that the act of removing the product without any permission had in fact occurred. The decision was then taken to dismiss Mr Steedman. Mr Steedman was provided with a letter dated that day confirming that "due to the unauthorised removal of Company property you have been dismissed with immediate effect for what we regard as 'Serious Misconduct'". No pay in lieu of notice was paid. No current term accrued annual leave was paid. Mr Steedman's Employment History Mr Steedman is a man of 57 years of age. He had been employed by Jasol for more than eight years. A great deal of evidence was led relating to Mr Steedman's past employment history, and the experiences of other union activists at Jasol. This evidence was not directly relevant. Jasol was not contending that perceived past problems in Mr Steedman's performance were a factor in his dismissal. Nor was the Union formally contending that Mr Steedman's union activities were a reason for his dismissal. It was argued however that this background evidence was indirectly relevant in that it tended to explain Mr Steedman's state of mind at the relevant times. I was asked to take these past events into account when considering what inferences should be drawn from Mr Steedman's actions. Mr Steedman received warnings on 8 May 1995 and 25 May 1995 (Exhibit S2) concerning alleged instances of inadequate performance of his work. The second of these warnings led to Mr Steedman being moved to a different work area, from the dry room to the "wet floor take off". This was generally considered to be a demotion, though it did not affect his pay. He was warned on the second occasion that Jasol were "not prepared to accept any more negligence caused errors" and warned that "the next step will be the termination of your employment". There was also some evidence of earlier perceived problems with Mr Steedman's performance dating back to September 1994 and of an occasion when Mr Steedman caused Jasol embarrassment by bringing a matter to the attention of its quality control auditors. Mr Steedman claims the latter event caused Mr Riebling to accuse him of "industrial sabotage". There was evidence that Mr Steedman had been active in pursuing health and safety issues, and had secured the intervention of the Department of Occupational Health, Safety and Welfare ("DOHSWA") to cause Jasol to establish a safety committee which complied with the requirements of the relevant legislation. He'd also been involved with enterprise bargaining negotiations. There was some argument and conflicting evidence as to whether the warnings issued to Mr Steedman were justified. It is not necessary for me to decide whether they were. I note that some of Mr Steedman's fellow employees gave evidence which supported the proposition that he may not have deserved the second warning in particular, and I note that Mr Steedman enlisted the assistance of the Union in an attempt to have the warnings withdrawn. In any event, I am satisfied that Mr Steedman genuinely believed that the warnings were not justified, and had formed the view that Jasol were, as Ms Ellery put it, "looking for ways to get him". Whether Mr Bell Gave Permission Mr Steedman told the Court that as he was tipping the liquid down the drain, he said to Mr Bell, "Well, this be all right (sic) - I can use some of this". He says Mr Bell's response was to the effect of "Do what you like". Mr Steedman then filled the 5 litre container and put it to one side, dumping the rest. Mr Riebling gave evidence that he spoke with Mr Bell before the meeting with Mr Steedman. According to Mr Riebling (and it was not covered in the policy memorandum) only Mr Riebling and Mr Van Dyke had the power under the policy to authorise the taking of samples. Mr Riebling says that he knew that they hadn't given authority. He reasoned that the only authority Mr Steedman could possibly claim was that his foreman, Mr Bell, might have given him permission. While Mr Bell did not technically have that power, Mr Riebling says that if Mr Bell had have given permission, Mr Riebling would have "backed" him. What he meant by this is considered below. Mr Riebling explained that he would have "told Harold (Bell) off, but... it wouldn't have been classed as stealing". Accordingly, Mr Riebling saw Mr Bell alone at about 7am on Friday 24 June 1995 before the meeting with Mr Steedman. When asked exactly what was said between them, Mr Riebling gave evidence of the following exchange: Mr Riebling: "Did you give John Steedman permission to remove any product from the company yesterday?" Mr Bell: "No, I didn't".. In his evidence to the Court, Mr Bell did not accept that Mr Steedman told him he was going to take 5 litres of the liquid. He said he did not say to Mr Steedman words to the effect of "do what you like". He conceded that there was a lot of machinery going and that Mr Steedman could have said something with Mr Bell not hearing. I accept that Mr Steedman acted openly in reserving liquid in the 5 litre container which would otherwise have been dumped. I accept that he honestly believed that Mr Bell was aware of what he was doing. Mr Bell has never been called upon to deny that he was so aware. In the circumstances, it is not unlikely that Mr Steedman would have mentioned what he was doing to Mr Bell. Perhaps Mr Bell didn't hear him. Perhaps he wasn't concentrating. The response attributed to Mr Bell does not suggest that he displayed any interest whatsoever. It is unlikely that it would have seemed significant to either of them at the time. However, two days later on the Friday morning, it suddenly assumed potentially enormous significance. Mr Bell was the first to be put on the spot by Mr Riebling. I formed the view from his evidence that Mr Bell is a very nervous man, though I don't doubt that he is an honest one. He was asked by Mr Riebling, in terms which would have conveyed to him that he was potentially implicated in an alleged breach of company policy, whether he had given Mr Steedman permission to remove any product from the company. Clearly he hadn't, and he said so. There would have been no incentive for Mr Bell to search his mind for hazy recollections of half-remembered conversations which might amount to acquiescence on his part. It is similarly understandable that when Mr Steedman was called upon at the meeting to explain himself, he was concerned to show that he hadn't been acting covertly or dishonestly in reserving the liquid. He over-reached himself somewhat, describing as "permission" from Mr Bell what would more accurately be described as "acquiescence". Perhaps there was in fact no conversation between them. Perhaps Mr Steedman has reconstructed it, based upon what he honestly believes would have been said, given that he was not hiding his actions. Even if that were so, I do not find that Mr Steedman was intentionally untruthful in the explanation he gave at the meeting or in his evidence to the Court on this point. The Significance of Mr Steedman's Payment for the Product Mr Steedman says he didn't take the container of liquid home the night before because he hadn't paid for it. He had to go to Fremantle to pick his wife up from work. He put the container in his car before work at just after 7am on Thursday morning, when he thought of it, with the idea of paying for it later, when he got a minute. He says he knew he had all day to pay for it. It was put to him that he took the container to the car before work because at that time all his supervisors were engaged in a management meeting. Mr Steedman disputed this, saying that the gates didn't open until 7am, which meant Mr Perrin had left the meeting and the meeting had dispersed. This evidence was not disputed. There was a 15 minute smoko at 10 am and half an hour for lunch at 12pm. Some of Mr Steedman's fellow employees routinely joined him to use his van for smoko and for lunch instead of the lunchroom. The van was outside the gates, which were shut during lunch. Mr Steedman had to unlock the van for the other employees. Mr Steedman agreed that he chose to pay for the product during working time, when there was a lull in work, rather than during lunch or smoko. That is not a surprising choice for an employee to make. He said that in the afternoon - at about two o'clock he thought - he was just going into the office to pay for the liquid, when Mr Perrin approached him to ask to search his car. I accept the evidence of Mr Ashford and Mr Perrin to the effect that the matter was first raised with Mr Steedman by Mr Ashford, moments earlier. Again, this is a matter on which Mr Steedman could have been honestly mistaken. His general position was that he was on the way to the office to pay for the liquid when he learnt of the car search. It is not surprising that he might forget who it was who told him, and slightly reconstruct the conversation with Mr Perrin to fit in with his mistaken recollection. After that conversation, Mr Steedman went into the office and asked to pay for the liquid. The woman with whom he spoke told him that, because 5 litres was not a standard amount, she would have to ask the state manager for a price. The state manager told him to ask the technical manager. The technical manager was on the telephone. Mr Steedman gave up and returned to work, agreeing to the car search soon after. After the car search, Mr Steedman went back to the office and the technical manager gave him a price for 5 litres of product - $4.50 - and Mr Steedman immediately paid it. When asked why he had paid for product that was rubbish, he replied: "Well, if the treatment I had been getting from Jasol was anything to go by I had to do that, plus the fact they had issued me with two letters warning me of different things..." It is possible that Mr Steedman was sufficiently apprehensive about Jasol's perceived attitude toward him that he always intended to pay for the liquid, as he says. If that were so, then his failure to do so until after lunch would be understandable. He felt he had all day, and a convenient opportunity (preferably during paid time, no doubt) hadn't arisen. On balance, however, I find that it is more likely that he did not form the intention to pay for the liquid until he was confronted with the atmosphere of crisis arising from the car search. Up to that point, Mr Steedman had been acting completely openly. He was taking home some liquid which was of no use to anybody to wash his dog blankets. Had he meant to do it secretly, he could have more safely done it the night before, taking it directly home, rather than leaving it in his car all day; he knew of the phenomenon of car searches, having been at Jasol at the time the cartons of toilet paper were going missing. On being told that there was a car search in progress, he would have immediately reflected on whether he had something to hide. The container of rejected detergent which had previously seemed innocent would have then become a cause of concern to him. He was no doubt worried that Jasol would find a way to use it against him. His immediate reaction was to try to pay for it, so there could be no question of him stealing. He may have thought that was a more certain solution to his possible predicament than trying to argue his entitlement to take the rejected liquid to an employer whom he did not trust to act in good faith. That reaction has, in my view, caused him more problems than it has avoided. Whether There was a Valid Reason for the Termination If Jasol can establish that Mr Steedman breached the policy, then they have established a valid reason for his dismissal relating to his conduct. The policy was not harsh of its very nature. Mr Steedman denied he took the liquid "off site" because he says his van was on Jasol's land all day, though it was outside the fence, next to the verge. I accept that the van was on Jasol's land, and that Mr Steedman did not believe an employee would be in breach of the policy until they left to take unpaid for product home. However, such a policy would be difficult to police. Reference to Exhibit J2 reveals that the policy in fact refers to removal of any product from "this complex", which might more readily be interpreted as referring to the company's buildings rather than its entire land. However, the policy was generally described in evidence by the representatives of management in terms of removal from "the site", or "the premises", so Mr Steedman's confusion was understandable. More obvious are the problems arising from the definition of the word "product". I find it difficult to construe that term, in its context, to include items of no commercial value to the company - in other words, "rubbish". The reference in the memorandum to purchasing the product "at a concessional rate", and the reference to collecting it from the store, combine to reinforce the conclusion that the policy was not intended to apply to rubbish. On balance, as I have said, I do not believe that Mr Steedman believed he had an obligation to pay for the rejected liquid, despite the appearance of his later actions to the contrary. Mr Riebling said in evidence that, even if he were sure Mr Steedman had been advised that the liquid was unsaleable product, it would not have changed his decision. He claimed that if someone had come to him and asked for permission to take home a product that was to be dumped he would undoubtedly have refused permission, and quite readily given them a sample of the retail product. He explained that it could be dangerous, or useless. I found that evidence unpersuasive. There was no suggestion that the particular liquid taken by Mr Riebling would have been dangerous, nor that it would have been useless for the task he had in mind - that of washing his dogs' blankets. I conclude therefore that I am not satisfied that, in removing from the factory to his van the rejected detergent, Mr Steedman was in breach of the policy in the terms set out in Exhibit J2. Accordingly, I am not satisfied that there was a valid reason for dismissal and I find that Section 170 DE(1) of the Act has been breached. Whether the Termination Was Harsh, Unjust or Unreasonable I put it to Mr Riebling that, even assuming the product was retail product and valued at $4.50, it seemed a very small sum of money to lose one's job over. He replied that from Jasol's point of view, there was no level at which stealing was acceptable. Any amount of stealing is looked at the same way, he said. As I have observed above, there was evidence of Mr Perrin and Mr Bell to the contrary, and I am satisfied that there was scope for Mr Riebling to exercise some discretion as to the extent of the "detriment" which would result from a breach of the policy. Certainly, the employees and a significant part of management were not aware of the absence of such a discretion, and the absence of such a discretion may have been sufficient to render the policy harsh of its very nature. Certainly, if an employer wished to uphold a policy which imposed mandatory dismissal, the inflexible nature of the sanction would need to be far more clearly communicated to the workforce than it has been here. If there were ever a case where management should exercise its discretion to impose a sanction other than dismissal it is in a case such as this, where the product is, at most, worth a mere $4.50 or, as I have found, was worthless. I find that the failure to exercise such discretion is enough in itself to render the dismissal harsh, unjust and unreasonable, and thus in breach of Section 170DE(2) of the Act. This is compounded by the evidence of the selective manner in which the policy was applied. For example, Mr Riebling conceded in cross-examination that his evidence that he would have "backed" Mr Bell if Mr Bell had in fact given permission for Mr Steedman to take the liquid meant he would have backed Mr Bell in his breach of the policy. He explained this apparently inconsistent application of the policy on the basis that Mr Bell would have been classed as management. He was paid to make decisions and it didn't matter that the decision was wrong. By contrast, Mr Riebling said that if Mr Bell had taken the product himself, then he would have been dismissed. The policy didn't differ, he said. It goes right to the top. However, Mr Riebling expressed surprise to have learnt that in the course of the hearing others had admitted removing product in breach of the policy. Mr Ashford admitted in cross-examination that he had removed material from the site without going through the procedure. He had heard of other employees doing it. Mr Perrin admitted to acting outside the policy by authorising employees to remove product from the site, after acknowledging that under Jasol's policy he had no power to do so. Presumably, Mr Riebling would back him also. I am not advocating that Jasol now demonstrate their consistency in applying the policy by dismissing Messrs Ashford and Perrin. To the contrary, their evidence demonstrates the wisdom of Jasol reserving some discretion to take into account the extent and the nature of any such breach of the policy in determining the appropriate penalty. Whether Mr Steedman Was Given the Opportunity to Defend Himself It is not necessary for me to decide whether Jasol was in breach of Section 170DC of the Act. Without canvassing the matter in detail, I am inclined to the view on balance that they were not. Remedy: Opposition to Reinstatement The primary remedy available under Section 170EE of the Act is reinstatement and under Section 170EE(2), it is only appropriate to award compensation where the Court thinks that reinstatement is impracticable. Ms Ellery, for the Union, seeks Mr Steedman's reinstatement and contends that reinstatement is practicable. Mr Tomlinson, who represented Jasol, opposes reinstatement. The respondent's summary of defence contends that Mr Steedman's work performance, which they allege was poor and had led to written warnings, demonstrated his unsuitability for reinstatement. In my view where a poor work performance has not resulted in termination of employment, it should not be a bar to reinstatement. The respondent's primary contention, however, was that "the respondent believes that reinstatement is impracticable because the employment relationship has broken down to such an extent that the respondent would not be able to trust the applicant in any capacity that would place him in contact with company products". I have found that Mr Steedman did not believe he was stealing from the company. However, Mr Riebling gave evidence that the employment (sic) had nonetheless "irretrievably broken down... confidence in the employer-employee is irretrievably destroyed... We don't have confidence in what he is saying besides the fact that he has removed product from our company. His explanations have changed as the time has progressed". It was Mr Tomlinson's contention that during Jasol's investigation, and again before the Court, Mr Steedman had not told the truth. His submission was that, if the Court were to find that it didn't trust Mr Steedman's evidence, then the Court could not expect the employer to rebuild its relationship with Mr Steedman. For the Court to reinstate Mr Steedman in those circumstances, Mr Tomlinson said, would be to "make the whole system unworkable". The only aspect on which I do not, on balance, accept Mr Steedman's evidence is on the issue of when he formed the intention to pay for the liquid. I am not certain that his evidence is not accurate on this point, but I have found that it is more likely to be inaccurate than not. In considering the consequences of this finding in determining the appropriate remedy, much depends on the manner in which the Court applies the term "impracticable". The Principles Governing Reinstatement. Wilcox CJ put his interpretation of the term "impracticable" briefly, with Keely J, in Liddell v Lembke (1994-5) 127 ALR 342 at 360; 56 IR 447 at 466: "...although 'impracticable' does not mean 'impossible', it means more than 'inconvenient' or 'difficult'". Gray J's view, also expressed in Liddell v Lembke (1994-5) 127 ALR 342 at 367-8; 56 IR 447 at 474, is that: "Reinstatement is ... required if it can be done. If the employer is still employing or able to employ someone to perform the same or similar tasks, then reinstatement will be practicable. It's practicability does not depend on notions of loss of confidence in the employee. Nor does it depend on the existence of grounds which were not relied on, because unknown to the employer at the time of termination." Spender J has twice cited both Gray J's and Wilcox CJ's formulations without indicating a preference between them (Mitchell-Collins v The Latrobe Council, IRCA No. 422 of 1995, unreported at 26; Chambers v James Cook University of North Queensland, IRCA No. 459 of 1995, unreported at 46). Northrop J reinstated an employee in Johns v Gunns Ltd (1995) 60 IR 258 without reference to either formulation and without offering any observations of his own as to the general approach to be adopted. Wilcox CJ considered the matter at greater length in Nicholson v Heaven & Earth Gallery Pty Ltd (1994) 126 ALR 233 at 244; 57 IR 50 at 60-1: "It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word impracticable requires and permits the court to take into account all the circumstances of the case, relating to both the employer and the 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 'impracticable' to order reinstatement, notwithstanding that the job remains available." This approach to the meaning of the provision was followed by Von Doussa J in Cox v S.A. Meat Corporation 60 IR 293; and by Beazley J in Izdes v L.G. Bennett & Co Pty Ltd t/as Alba Industries IRCA No. 465 of 1995, unreported. Marshall J, in Abbott-Ethrington v Houghton Motors IRCA 528 of 1995, unreported at 8, agreed with Gray J that the practicability of reinstatement does not depend on notions of loss of confidence in the employee. He preferred Gray J's approach on that point to the formulation of Wilcox CJ in Nicholson v Heaven & Earth Gallery Pty Ltd unless that formulation is properly to be understood to relate to "serious embarrassments" and "serious disharmony". I note that very recently, in Patterson v Newcrest Mining Ltd (unreported, WI 0595R of 1994, 21 December 1995), Marshall J suggested that Wilcox CJ intended that the words "unacceptable problems or embarrassments" be read distributively, so that he was referring to unacceptable embarrassments rather than mere embarrassments. Marshall J expressed the view that the decisions in Cox v S.A. Meat Corporation and in Izdes v L.G. Bennett & Co Pty Ltd t/as Alba Industries, when related to their facts, were equally consistent with the approach of Gray J as they were with Wilcox CJ's Nicholson formulation. I consider Northrop J's decision in Johns v Gunns Ltd to be, if anything, more consistent with the approach of Gray J than with Wilcox CJ's formulation. The final observation I would make, having surveyed the judicial authority on the matter, is that it is clear that the Court has regard to the manner in which the parties should reasonably act, in all the circumstances, rather than have a party obtain an advantage from a threat to act unreasonably in the event of reinstatement. In Janicek v ICI Dulux Australia (IRCA No. 559 of 1995, Wilcox CJ, unreported), for example, it was contended that antagonistic individuals would come into contact from time to time in the event of reinstatement, and that claims made since termination would give rise to conflict. Wilcox CJ ordered reinstatement, noting that the antagonists need have nothing to do with each other, and that the events following the termination would be a problem only if one of the parties chooses to make it a problem. Wilcox CJ assumed the applicant would act intelligently and sensibly, and said that it would be wrong to say that reinstatement was impracticable merely because management might create a problem and persecute an employee. Compensation is often a greatly inferior remedy, particularly in a case such as this, given Mr Steedman's age and length of service. Reinstatement is the primary remedy under the Act. It may be that, where the parties are agreed that it is impracticable, the Court will not look far beyond that agreement. However, where one of the parties asserts that reinstatement is not impracticable, then the primary remedy should not be lightly denied. Accordingly, I propose to adopt and follow Marshall J's analysis of the proper principles to be applied. Reinstatement is Practicable Applying that analysis to the facts of this case, I find that reinstatement is not impracticable. I am not certain that Mr Steedman's evidence was, in some respects, inaccurate. If however I am right in finding on balance that he has wrongly convinced himself in the months since his termination that he had always intended to pay for the liquid, then I do not believe it should stand in the way of his reinstatement. It is perhaps a subconscious manifestation of his desperation, given his circumstances, to retain his job. While all employees bear greater responsibilities in these days of total quality management, I am satisfied Mr Steedman is worthy of the levels of trust and responsibility which will be required of him in his day to day employment with Jasol. Finally, I note that Northrop J did not let the fact that he did not accept the evidence of Mr Johns in its entirety prevent him from ordering his reinstatement in Johns v Gunns Ltd (1995) 60 IR 258 at 263. Similarly, I consider it practicable to order Mr Steedman's reinstatement. Consequential Orders I have made similar consequential orders to those of Marshall J in Abbott-Ethrington v Houghton Motors. He noted that, where reinstatement is ordered, PAYE taxation should be deducted from any amount lost by the applicant because of the termination of his employment, after consultation with the Australian Tax Office, and that only the net amount be paid to the applicant. There was evidence of Mr Steedman's gross salary and some limited evidence as to his superannuation arrangements, including his personal contributions, which appear to have been paid out to some extent. I do not have sufficient evidence to confidently make orders which would have the effect of placing Mr Steedman as nearly as possible into the position he would have been in had his employment not been terminated. I have therefore left it to the parties to reach agreement on this matter, which should not be difficult, or alternatively to apply to the Court equipped with further evidence and submissions. The respondent's obligation to reinstate Mr Steedman is immediate, and is not dependant upon the agreement of the amount of remuneration lost. I certify that this and the preceding 23 pages are a true copy of the Reasons for Judgment of Judicial Registrar R D Farrell. Associate Date: Representative for the applicant: Ms S Ellery Australian Liquor, Hospitality and Miscellaneous Workers' Union Representative for the respondent: Mr A Tomlinson Chamber of Commerce and Industry of Western Australia Hearing date: 13 & 14 November 1995 Judgment date: 8 December 1995