DECISION NO: 102/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - whether termination at initiative of the employer - RESIGNATION CASES: Mohazab v Dick Smith Electronics Pty Ltd, Full Court of the Industrial Relations Court of Australia, (unreported) No. NI 2571 of 1995, 28 November 1995 Gunnedah Shire Council v Raymond Ernest Grout, (1995) 134 ALR 156 HADI MONSEF - v - A & M COTTRELL PTY LTD No. VI 3869 of 1995 Before: Judicial Registrar Millane Place: Mildura Date: 26 March 1996 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3869 of 1995 B E T W E E N : HADI MONSEF Applicant AND A & M COTTRELL PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Millane 26 March 1996 THE COURT ORDERS THAT: 1. The application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 3869 of 1995 B E T W E E N : HADI MONSEF Applicant AND A & M COTTRELL PTY LTD Respondent Before: Judicial Registrar Millane Place: Mildura Date: 26 March 1996 REASONS FOR JUDGMENT The applicant is a 56 year old Iranian by birth who described himself as a agriculturalist having trained and worked in this discipline in Iran. He came to Australia in 1982 and, because his foreign qualifications were not recognised in Australia, he sought and found employment eventually being employed by the respondent in 1987 as a casual at its vineyard in the Mildura area. By 1 September 1990 the applicant graduated to permanent employment with the respondent working principally at its 100 acre block at Paringi as a supervisor of casual labour for at least 26 weeks of the year as well as performing skilled work in; for instance, bunch trimming vines, rolling vines and pruning vines. On 7 July 1995 the applicant's employment with the respondent came to an end. On his part he contends that his employment was terminated by the respondent in contravention of Division 3 Part VIA of the Industrial Relations Act 1988 (the Act). This contention is vigorously contested by the respondent who says that in or about the first week of July 1995 it decided to appoint another permanent employee, John Evans, as manager of the Paringi block where the applicant worked. Until then Peter Charles Cottrell (Cottrell), one of the directors of the company, had resided on the block and managed the business there. Because Cottrell was intending to devote more time to other properties owned and operated by the family, it was decided to appoint Evans as manager in his stead. It is the respondent's case that the applicant, who did not like Evans, took umbrage and declined to work under his management. This it was alleged, was despite the respondent's efforts to reassure the applicant that his, and in particular his supervisory duties, were to remain the same and that he was a valued and much needed employee. The respondent's witnesses specifically denied that the applicant was, in effect, demoted to only labouring duties with his supervisory duties being assumed by Evans and, further, denied that the cessation of the applicant's employment was brought about by any act or at the initiative of the employer. THE EVENTS BEFORE 7 JULY 1995 It was readily agreed by the respondent that the applicant was a valued employee at all times. However, to understand some of the conflict in the evidence given it is necessary to bear in mind both the applicant and his wife's somewhat literal approach to any exchange conducted in the English language, which is not their native tongue, and the fetter this placed on effective communication. Indeed the experience in Court, whilst it did not demonstrate a need for an interpreter to be called in, did highlight how difficult it can be for a witness being examined by articulate advocates in the witnesses' non-native tongue. In this case I am able to say that having observed the applicant and his wife, and Cottrell and his brother Andrew Mark Cottrell in the witness box, they all impressed me as witnesses of truth. Nevertheless, what emerged from their evidence is that there was a profound misunderstanding in at least the ten days between 28 June 1995 and 7 July 1995 when the applicant left his employment. On the evidence given I am satisfied that the respondent had no intention of demoting the applicant to the position of labourer and directing his duties as supervisor to Evans, whilst maintaining his pay and conditions otherwise. On the other hand, I am satisfied that when the applicant met Cottrell at the applicant's home on 28 June 1995 he was advised by Cottrell that there were to be changes in the management structure. The applicant, who was then on two months' vacation, was not told however that his duties would remain the same and this omission left the applicant with the suspicion that he was, in his words, being "diplomatically sacked". The applicant is a proud and conscientious individual who took considerable interest in his employer's enterprise, giving much time and energy to the tasks he performed; not to mention, forging valuable links with casual labour he arranged and supervised particularly through the picking season. To come to grips with the applicant's reaction to the news given to him on 28 June 1995 it is necessary to take into account two important considerations. The first is that he and Evans had an uneasy relationship. Bluntly, Evans offended the applicant by his rudeness and coarse language from time to time. It was the applicant's uncontested evidence that on occasions Evans had called the applicant a "dickhead" and had said to him, "could you suck my dick?". At no stage did the applicant say that he would not work under Evans but he clearly felt some distaste in having to do so. More importantly, he had on a number of occasions after Cottrell had informed him of the management changes, expressed strong views to the effect that Evans was unsuitable for the job; not only because of his rudeness but because he was not competent to manage the block in the way that it should be managed. There was no suggestion made that the applicant sought the position given to Evans for himself and was thereby motivated by self interest in making these comments. On the contrary, he appears to have been genuinely, if incorrectly, concerned about the impact on the business operation. The second consideration is that in about October 1994 the applicant hurt his back in the course of his employment and this injury was the subject of a workers compensation claim. The applicant convalesced for four weeks before returning to light duties, apparently against his doctor's recommendation, but because he wanted to be at work and assist his employer. The evidence points to the respondent accommodating the applicant's disability by allowing him to perform activities that suited him. However, because of the injury and the physical limitations the applicant was experiencing he was less able to perform the labouring component of his duties with any long standing or repetitive bending, whereas his supervisory activities were not physically demanding in the same way. Accordingly, the applicant's views of Evans made him somewhat resistant to the idea of Evans undertaking a management role and his injury left him vulnerable and insecure in his employment, particularly in circumstances where he formed the belief that Evans would be taking over his supervisory role. Interestingly enough, in answer to a question from the Court, Cottrell told the Court that since 7 July 1995 Evans has performed the supervisory function of the applicant; although the respondent needs and intends to employ a replacement to perform this work. In mid June 1995, whilst the applicant was still on leave, he was contacted by the respondent to arrange for nine casual workers to attend the block to perform pruning tasks. This was done and was followed by the meeting with Cottrell on 28 June 1995 when the applicant was appraised of the management changes. Before resuming work on 2 July 1995 it is agreed that the applicant rang Cottrell and was instructed to start rolling the young vines in a particular section of the block. He did as he was instructed, receiving no instructions as to what to do with the casual staff arriving on the same day. On the morning of 2 July 1995 the applicant was approached by the casual pruning staff who he usually supervised and asked for instructions on what to do. Because he had no instructions himself he referred them back to Cottrell who directed them to the duties they were to perform. Subsequently, on the same day, the applicant alleged that he travelled by car with Cottrell to a neighbouring property run by the respondent during which journey he asked what Evans' duties were and was told that Evans was supervising the block. In response to his next query concerning what his job was the applicant alleges that Cottrell said, "I don't know". Cottrell only had a vague recollection of the abovementioned car journey maintaining at all times that he did not at any stage tell the applicant that his supervisory duties were to be taken on by Evans. I accept that in all the circumstances it is unlikely that Cottrell intended to convey this impression to the applicant. However, notwithstanding his intentions, it is probable that he did give this impression because he did not clearly discuss with the applicant what his position would be after Evans commenced his management duties. It does seem that from time to time the word "supervisor" was interchanged with the word management. This is demonstrated by the letter dated 25 July 1995 (Exhibit 1) from the respondent's solicitors to the applicant's solicitors, where they describe Evans as the newly appointed supervisor of the block. Mr Richards, the respondent's solicitor and representative at hearing, did attempt to accept responsibility for this alleged error, however, no proper evidence was called to explain the confusion of terms. The applicant remained working on the vines for the balance of the week. There were a number of conversations where he appears to have challenged the wisdom of the decision to appoint Evans to Cottrell's position and, in doing so, cemented in Cottrell's mind the view that the applicant was disgruntled by Evans' appointment and because of this chose to leave his employment on 7 July 1995. On the occasions the issue of Evans' appointment was discussed Cottrell reaffirmed the respondent's decision and informed the applicant that the respondent was going to "stick to it". This response, the applicant interpreted as placing him in an untenable position because with his restrictions caused by his back injury he was not able to perform essentially labouring duties on a full-time basis. On 7 July 1995 when the applicant attended Cottrell's home to collect his cheque he told Cottrell's wife in Cottrell's hearing that he believed that he was being "diplomatically sacked". This statement is certainly consistent with a genuinely held belief that that was the case. THE EVENTS FOLLOWING 7 JULY 1995 Andrew Cottrell is also a director of the respondent's company, engaged primarily in looking after the wages and paperwork of the company. He was on holidays when the applicant left his employment and on the following Sunday the applicant attended Andrew Cottrell's home to obtain a reference and return the Subaru motor vehicle he used as part of his employment package. It was Andrew Cottrell's evidence that the respondent was hopeful that the applicant would remain in his position, suggesting that the applicant retain the motor vehicle in case he changed his mind. He too recalled being told by the applicant on more than one occasion that he had been diplomatically sacked and this was quite apart from the applicant forcefully suggesting that Evans was not an appropriate person to put in charge of the block. In any event, on the occasion of the discussion the applicant insisted on returning the motor vehicle. After receiving what was an excellent reference (Exhibit A5) from the Cottrell brothers, the applicant was concerned because it contained no explanation for prospective employers of the reasons for his employment being terminated. He again contacted Andrew Cottrell who delivered a second reference (Exhibit A6) attributing the applicant's leaving of his employment to "differences between himself and the newly appointed manager". The applicant was distressed by the abovementioned reference and an application was filed in this Court on 18 July 1995 seeking reinstatement and compensation. It is agreed that the receipt of the application upset and concerned the respondent to such an extent that on 28 July 1995 Cottrell visited the applicant and his wife at their home. Whilst that visit did involve Cottrell in asking the applicant to return to his employment with the respondent and concluded with Cottrell agreeing to see if he could do something about providing a motor vehicle for the applicant to use to go to and from work, it did nothing to clarify in the minds of the applicant and his wife whether the respondent was offering to have the applicant return to his old duties; including supervision of the casual staff. There was a second meeting on 30 July 1995 between the Cottrell brothers, the applicant and his wife, at which time the offer to resume employment was reiterated by the respondent. However the offer was made on the basis that the respondent could not give the applicant the same motor vehicle as before because that vehicle had, in the interim, been given to another family member for use on another property. Instead the respondent offered to increase the hourly rate paid to the applicant from $9.50 to $11.00 for a forty hour week. This was in circumstances where the other permanent employees were paid $10.50 per hour, living on the blocks but at the same time having the use of motor vehicles for exclusive use in their work on the block or travel to the respondent's other nearby properties. The Court was told that historically the difference in the rate of pay went back to 1993 when instead of a pay rise the applicant asked for the provision of a motor vehicle to travel to and from work, agreeing that he would be paid $1.00 per hour less than the other two permanent employees who did not require a vehicle to travel to and from work but had lesser vehicles provided for their use around the work site. The $40.00 difference per week paid appears to have been indicative of the agreed cost of petrol taking into account the applicant's estimate that he travelled some 20,000 kilometres per annum in the vehicle for work purposes. Andrew Cottrell's evidence makes it clear that at the last meeting there was no discussion of the duties to which the applicant was to return, the respondent's assumption being that they were the same as before. I am satisfied, however, that the applicant and his wife, apart from the issue of the motor vehicle, still did not understand that the duties would be the same. In some ways the provision of the motor vehicle and the discussions surrounding it distracted the parties from any real resolution of the problem. The applicant told the Cottrell brothers, and I accept his and his wife's evidence on this matter, that even if they paid the applicant $13.00 per hour it would not be enough to cover the cost of him purchasing and running a motor vehicle which he then did not own to travel some 30 kilometres to and from his employment each day; remembering that he attended work on occasions before 7.00am to supervise the casual staff as they arrived. One of the difficulties I found with the case run by the respondent and its legal representative, Mr Richards, was that the respondent persisted in the view that the value of the motor vehicle to the applicant each week was only $40.00; that is to say, the agreed value of weekly petrol. The applicant claims, and I accept in all the circumstances his evidence as being both plausible and logical, that when the use of the motor vehicle was negotiated it was then considered that it was worth some $6,000 per annum to him because, despite the constraints on the use to which he put the vehicle, to own and operate his own vehicle in order to travel to and from work would cost him more than the price of weekly petrol. The applicant had the use of a fully maintained vehicle to travel to and from work, therefore, the value to him was more than the cost of petrol to undertake these trips and any valuation of his remuneration package would necessarily have to reflect such a value. In making these observations I have ignored the further evidence accompanying the respondent's written submissions; such evidence not being properly before the Court. By a letter dated 28 July 1995 (Exhibit A10) from the applicant's solicitors to the respondent's solicitors, the applicant responded to the letter of 25 July 1995 and indicated his position in the following way: "We acknowledge receipt of your letter dated 25th. July, 1995. We are instructed that the Applicant was demoted by the Respondents from Supervisor to Labourer on Monday 3rd. July, 1995. On 27th. July, 1995 we received instructions from the Applicant that he is prepared to accept an offer of reinstatement of employment on the basis that employment is the position he held prior to Monday 3rd. July, 1995, namely Supervisor, earning $9.50 gross per hour, with a Subaru utility provided by the Respondents and provision of fuel by the Respondents. We note that Mr. John Evans was appointed to the Applicant's position, in part. The Applicant will accept reinstatement of employment on the basis he has all the duties and responsibilities that he had prior to Monday 3rd. July, 1995." It appears that the abovementioned letter was not seen by the Cottrell brothers before they attended on the applicant and his wife on 30 July 1995 and they left that meeting believing that there was an impasse because the respondent was no longer in a position to return the motor vehicle or pay an hourly rate sufficient to compensate the applicant for the purchase and maintenance of a vehicle to travel to work. On any view of it, the offer made on 30 July 1995 did not place the applicant in the same position, at least so far as his remuneration package was concerned, as that enjoyed by him prior to 7 July 1995. Exhibit A10, if nothing else states very clearly what the applicant's position was and it was consistent with his claim that at all times he was prepared to continue his employment so long as it was on the same terms and conditions as those enjoyed by him prior to him resuming his employment after his holidays concluded in July 1995. The abovementioned letter received no response and this matter proceeded to hearing. TERMINATION Because of my findings concerning the facts it is apparent that there was no demotion in reality apart from the applicant's perception that this was the case and the respondent's failure to appreciate that this was the reason for the applicant leaving a job that he would otherwise have remained in. Indeed, by 30 July 1995 the only issue of significance between the parties was the respondent's inability and unwillingness to reinstate the applicant's employment with an identical remuneration package or monies representing the true value of the pre-termination package. The applicant's resignation on 7 July 1995 was, on the facts, accepted by me was not a voluntary one in the sense that he wanted to leave his employment. The Full Court of the Industrial Relations Court of Australia has on two recent occasions had the opportunity to consider the question of whether there was termination at the initiative of the employer; there being a resignation by an employee in circumstances where the resignation may not have been considered an entirely voluntary decision. In Mohazab v Dick Smith Electronics Pty Ltd, (unreported) No. NI 2571 of 1995, 28 November 1995, it was said at page 9 that: "... a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship". The Court went on to say at page 10: "In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship." In its most recent decision in Gunnedah Shire Council v Grout, (1995) 134 ALR 156 the Full Court dealt with a resignation proffered in circumstances where the employee was clearly suffering from emotional stress. On the facts the employer endeavoured to dissuade the employee from resigning before he tendered his written resignation, accepted almost immediately by the employer. Subsequently the employee attempted to withdraw the resignation; not being permitted to do so by the employer. On the question of Grout's mental state when he resigned, the Full Court observed at page 166 of the decision: " It seems to us that, if the council knew, or should have known, that Mr Grout was then suffering such a degree of confusion or pressure that his act of resignation was not a considered and voluntary act, it was not open to it to resolve to accept the resignation." The abovementioned extracts from the Full Court decisions were relied upon by the applicant in support of his contention that it was the act of the respondent which was the principal contributing factor leading to the termination of the employment and, further, in some way the respondent should have understood that the resignation was not a voluntary and considered act because of statements made by the applicant to the effect that he believed that he was being "diplomatically sacked". Regrettably for the applicant my findings on the facts do not support his submissions. The applicant made a considered decision to leave his employment and did so in circumstances where even shortly after leaving Andrew Cottrell was attempting to persuade him to remain by keeping the motor vehicle whilst he reconsidered his position. The respondent operates a large business and, generally speaking, an employer should be entitled to accept a resignation where there is no clear knowledge on its part of any relevant circumstance indicating to it that the resignation is not a voluntary one. It follows from my observations that there is not a factual basis for saying that the termination was at the initiative of the respondent; rather it was the applicant who took the initiative having wrongly assumed that his duties were in some way diminished by the changes to be made in the management of the operation. Even at this late stage it is to be hoped that the parties accept that a lack of full and clear communication between then initially and subsequently the letter from the respondent's solicitors have led to a considerable loss on both sides. On the applicant's part he has remained unemployed and on the respondent's part it has lost the skills and dedication of a valued employee. They have it within their power to remedy the situation however the Court is obliged to dismiss the applicant's application where he has failed to discharge the onus he carries of showing that there was termination at the initiative of the respondent. MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The application is dismissed. 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 twelve (12) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: .................................................. Dated: 26 March 1996 Solicitors for the Applicant: J.N. Zigouras & Co Counsel for the Applicant: Mr Chris O'Grady Solicitors for the Respondent: Irwin & Richards Counsel for the Respondent: Mr Keith E. Richards Date of hearing: 19 & 20 February 1996 Date of judgment: 26 March 1996