Pearson v Franklins Limited [1996] IRCA 165

DECISION NO: 165/96 CATCHWORDS INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - fair and proper implementation of company policy for removal of property - - worthless property removed by employee - whether MISCONDUCT - investigation of allegations of employee's conduct - whether VALID REASON for termination - appropriate penalty - REMEDY - reinstatement - compensation Industrial Relations Act 1988, ss 170 EA, s 170 DC, s 170 DE, s 170 EE John Neale Nelson v. Scholle Industries unreported, 1234R/1995

Michael Turner v K&J Trucks Coffs Harbour Pty Limited unreported, NI1246/9 Anthony A Allison v Bega Valley Council No. IRC 1166 of 1995 Schaale v Hoechst Australia Ltd (1993) 47 IR 249 Bostik (Aust) Pty Ltd v Gorgeevski (1992) 36 FCR 20 Geoffrey Robert PEARSON v FRANKLINS LIMITED NI 2286 of 199 Before: Tomlinson JR Place: Sydney Date: 26 March 1996 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA NSW DISTRICT REGISTRY NI 2286 of 1995 B E T W E E N Geoffrey Robert PEARSON Applicant A N D FRANKLINS LIMITED Respondent MINUTES OF ORDER 7 May 1996 TOMLINSON JR THE COURT ORDERS THAT: 1. The respondent reinstate the applicant to his former position within fourteen days of to-day's date. 2. The respondent pay to the applicant all moneys he would have received by way of wages and accrued entitlements had his employment not been terminated within 14 days of do-day's date. 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 NSW DISTRICT REGISTRY NI 2286 of 1995 B E T W E E N Geoffrey Robert PEARSON Applicant A N D FRANKLINS LIMITED Respondent REASONS FOR DECISION 7 May 1996 TOMLINSON JR This is an application for compensation and reinstatement under the Industrial Relations Act 1988 arising out of an allegedly unlawful termination. The applicant commenced work in 1988 with the respondent as a storeman unloading trucks at its Chullora warehouse. On occasion damaged work clothing would be returned to the warehouse from the respondent's various retail outlets and that mostly such clothing was thrown out. The applicant told the court that the first time he had removed such clothing from the premises of the respondent was during 1994. The applicant stated that it was "a regular thing" for other employees of the respondent to remove discarded clothing from the premises of the respondent. The applicant knew the respondent had installed surveillance cameras to monitor the movements of staff and stock and the court heard that the issue of surveillance cameras had recently been for the Industrial Commission. I place no weight on the evidence surrounding the involvement of surveillance cameras as little importance was attached to them. It was the evidence of the applicant that some two years ago management advised staff that random searches of employees' vehicles in the car park would be conducted and that a white plastic chain would be placed in front of the vehicle to be searched. It was allegedly agreed between management and staff that union delegates were to be notified that such a search was to take place. The applicant stated that as a result of certain union/management negotiations that had he come out from his place of work to find a white chain in front of his car he would have ignored the matter and driven away if a union delegate had not been in attendance at the time. The applicant stated that towards the end his shift towards 1 am on the night of 11 January 1995 he took from the rubbish three items of damaged work clothing - two pairs of freezer pants and a freezer suit - and that he placed them in plastic bags. He then placed the bags in his car. The applicant was aware surveillance cameras were operational in the car park. Marked as exhibit 1 in the proceedings were three pieces of damaged clothing, all in need of repair. The applicant drove his car to the bundy clock and there he met with Mr Eddy the Assistant Manager and Mr Renton, a Supervisor. The applicant was informed that he had been seen on the surveillance camera putting something into the boot of his vehicle. The applicant did not deny the suggestion and stated that the bags contained old freezer clothing obtained from the rubbish. Mr Eddy said words to the effect; "Did you obtain a gate pass" to which the applicant replied that he had not. The applicant said words to the effect; "Why do you want to make a big deal out of it Ray - it's only rubbish". Mr Eddy according to the applicant asked the applicant to remove the bags from the car to which the applicant allegedly sarcastically replied; "Yeah, Ray, no worries". The applicant stated he then got into his vehicle and drove home. The next day a supervisor asked the applicant to go the office, which he did together with his union representatives, Messrs Nasr and Scardinale where he met with management, Mr Alan Freitas the shift manager, Mr Ray Eddy the supervisor and Mr Noel Kane, the site manager of Chullora. Mr Kane stated that he wished to find out what happened last night and the applicant replied; "I can't understand why you're making such a big deal out of it Noel". According to the applicant Mr Kane indicated the issues being investigated were the fact that the applicant went to his car ten minutes early and that he ignored a request by a supervisor. The applicant stated that he did not believe he was under any obligation to comply with management requests concerning the plastic bags as there was no union delegate in attendance. The applicant stated he was then terminated "for breach of company policy". Mr Kane apparently ignored the response by the applicant that Mr Eddy and Mr Renton should similarly be terminated for breach of company policy. Mr Kane indicated to the applicant that he did not want the freezer clothing returned. The next day the applicant met with his union organiser. The applicant was of the view that the organiser made representations on his behalf to the respondent but no other evidence in that regard was placed before the court and so little weight can be placed on that evidence. The applicant remains unemployed. In cross examination the applicant confirmed that despite the matter of random searches being settled in the Industrial Commission he was of the opinion that he was entitled to drive off as no union delegate was present when the request was made for him to allow the respondent to search his bags. The applicant expressed the view that he drove off without acceding to the request of management because what was happening was a car search and there was in fact no union representative present. Further, the applicant agreed that Mr Eddy at the time stated he would arrange to get a gate pass in respect of the items in the plastic bags and further that he did not ask for union representation. In cross examination the witness explained that he did not take Mr Eddy seriously when he stated he wished to inspect the bags and also he was of the view that the supervisor "had a set against him" arising out of a previous matter involving pizzas. On behalf of the applicant the court heard from Mr Milad Nasr an employee of the respondent's and a union organiser. Mr Nasr stated that it was his view that the company would have had to have a union delegate present at the search. Mr Nasr confirmed that in November of 1994 he made an announcement over the public address system advising workers there was no obligation to comply with company requests concerning searches if no union delegate was present and stated that on the night in question he could easily have been paged by management - and that Mr Eddy was in possession of a mobile telephone. The witness stated he had seen workers simply drive off if no delegate was present when the respondent was attempting to perform a vehicle search. At the meeting investigating the matter held by management it was the evidence of Mr Nasr that towards the end Mr Kane said to the applicant words to the effect "You are terminated". Mr Nasr asked for the reasons for the termination allegedly Mr Kane stated that the applicant had failed to comply with company policy and that he had driven of with company damaged stock without a gate pass. Whereupon Mr Nasr invoked Clause 28. The effect of Clause 28 was to "preserve the status quo" in a matters of dispute. Marked as exhibit 5 in these proceedings was a document entitled "The Federated Storemen and Packers' Union of Australia, New South Wales Branch, and the Retail Traders' Association of New South Wales" dated 18 June 1987, clause 28 of which is entitled "Settlement of Disputes" and provides inter alia: " During the discussions the Status quo shall remain and work shall proceed normally. "Status Quo" shall mean the situation existing immediately prior to the dispute or the matter giving rise to the dispute". Mr Kane accepted this position and it was accordingly understood by those present that things would remain as they were until the matter had been further looked at by the union on behalf of the applicant. However the applicant remained terminated and did not return to work. It was the evidence of Mr Nasr that he from time to time had taken things out of the premises without a gate pass but that he would not know if other employees had done similarly, and that he had learned over time by practice, not by specific company directive, that it is necessary to obtain a gate pass prior to taking company goods out from the premises. In cross examination Mr Nasr denied the suggestion that in the absence of a union representative management would still ask an employee to open a bag for inspection at the exit gate and that management would have breached "the agreement" in conducting a search without a union delegate present. Mr Nasr gave evidence to the effect that Mr Kane conducted a thorough inquiry into the events of the previous evening. On behalf of the applicant the court heard from Mr James Hough a cleaner and long time employee of the respondent. It was the evidence of Mr Hough that it was "common practice" among employees to take discarded clothing from work and further that he had never seen the gate-pass system used. To the witness, it was simply a matter of "asking permission" and that if the worker did not possess a gate pass, then the company would have the right to ask the employee to stop. On behalf of the respondent the court heard from Raymond Eddy the afternoon shift manager. Mr Eddy confirmed on the night in question he received a telephone call whereupon he went to the gatehouse and looked at the video screen. He then telephoned Mr Freitas and went to the bundy area where he happened to meet Bruce Renton. It was the evidence of Mr Eddy he with Mr Renton walked to the applicant's vehicle, saw a garbage bag on the floor, and stood there and waited for Mr Pearson to come out from the forklift bundy clock area. The court heard no evidence at that time as to when Mr Eddy made the decision to search the plastic bags or the vehicle of the applicant, nor of any decision Mr Eddy made to alert a union representative that a search was about to take place. Mr Eddy stated a conversation took place with the applicant concerning a gate pass and that he offered to obtain one for the applicant. Mr Eddy confirmed he attended the meeting in Mr Kane's office the following day and that Mr Kane terminated the applicant failing to obtain a gate pass and refusing to follow a management request. In cross examination the witness stated that company practice had changed with regard to requiring the presence of a union delegate for a vehicle search and that a union delegate perhaps may be present for a vehicle search and further stated that he did not have enough time on the night in question to call a delegate to the car of the applicant. The applicant was shown exhibit 6 being a decision of Commissioner Tabbaa of 20 August 1993 handed down in the Industrial Relations Commission of New South Wales dealing with a dispute between the respondent in these proceedings and the Nation Union of Workers. Clause 3 of that decision provides inter alia: "3 The delegates were concerned that the document does no provide for a union representative to be present during searches other than locker inspections. During discussions of this concern, it was accepted by the parties that: - delegates may be present at all searches - the presence of the union delegates is not one of active participation but more to act as a witness in the interests of the parties; - it is up to the union delegates to ensure that they are present at the conclusion of each shift so as to witness the searches both at the warehouses and at the Carapook areas. Otherwise the searches will proceed without hindrance in their absence; and - the presence of the union delegates will not be considered as time worked for payment purposes". It was the evidence of Mr Eddy that he had seen it before, when it was shown to him by Alan Freitas, who then allegedly "filed it away". Mr Eddy stated he had not read the document. On behalf of the applicant the court heard from Bruce Renton a warehouse supervisor with the respondent at Chullora. The witness confirmed that at the night in question Mr Eddy asked the applicant if he had a gate pass and the applicant said that he did not. The witness was shown exhibit D being the notes he made after the incident. That exhibit stated inter alia: "To Alan Freitas From Bruce Renton Re: Geoff Pearson At 1 am to-day (close of shift 11/1/95) Ray Eddy asked for my presence when he spoke to Geoff Pearson, in regards to 2 bags of goods in his car. These bags were located behind the passengers seat in the rear of his vehicle Ray approached Geoff and asked if he had a Gatepass for the 2 bags to which he replied 'No I have asked Brian before but he will not give gatepasses out due to another supervisor doing something wrong' or words to that effect. Ray then asked Geoff if he would remove the bags from his car and would try to fix up a gatepass for him. Geoff replied 'no worries I will do that'. Geoff then got into his car and drove away...:" In cross examination the witness stated in response to the request from Mr Eddy to remove the bags from the his car; " yeah Ray, no worries" in an obliging manner. Mr Renton stated old freezer clothing is usually thrown out by the company or given to charity. He was not aware that some employees where in the habit of using the clothing and stated further that gate passes were not necessary to remove old magazines, but were necessary for the removal of old card board boxes. Mr Renton agreed that the policy with regard to gate passes is passed on by word of mouth and is not written anywhere and available as such to employees. On behalf of the respondent the court heard from Mr Neol Kane, the site manager. On the day of 12 January 1996 the witness was told by Alan Freitas of the incident of the previous evening. Mr Kane convened a meeting of himself, Mr Eddy and Mr Freitas, together with Messrs Pearson Scardinale & Nasr. Mr Kane stated there were several matters of concerns, namely that the applicant failed to show Mr. Eddy the contents of the bags, that the applicant drove off and failed to comply with a request from management and that the applicant had failed to obtain a gate pass for the contents of the bags. Mr Kane confirmed earlier evidence that he recalled the applicant saying during the course of the investigation that he did not approach Brian Bowran to get a gate pass as Mr Bowran had previously stated he would not issue such passes. Mr Kane agreed that "given time we would have notified the delegate" and that he was aware that Mr Eddy had a mobile phone with him at the time and further that management could have put a public address announcement over the loud speaker system for a union delegate to be present. CONCLUSION The application is out of time as the legislation provides such application must be lodged 14 days after the employee receives written notice of the termination. Exhibit A the employment separation certificate is dated 10 February 1995 and the application under section 170 EA was lodged 26 May 1996. A decision of Justice von Doussa handed down 17 October 1995 (after the first day of the hearing in this matter) in John Neale Nelson v Scholle Industries (unreported, Matter no 1234R of 1995) is authority for the proposition that a separation certificate constitutes written notice for the purposes of the Industrial Relations Act and so the 14 day period commences to run from 10 February 1996. Principles for Extension of Time The respondent argued that there was nothing sufficiently unusual in this case to allow proceedings to be commenced so many months out of time, especially having regard to the respondent's reduction in its workforce. However the court heard no evidence that the respondent no longer needed forklift drivers nor that the area in which the applicant was employed no longer operated. In Michael Turner v K&J Trucks Coffs Harbour Pty Limited (unreported, NI 1246 of 1994) Beazley J discussed the principles for extension of time and referred to the judgment of Wilcox J (as he then was) in Hunter Valley Developments v Cohen (1948) 3 FCR 344 at 349. Those considerations are: 1. "Special circumstances need not be shown but the court will not grant the application unless positively satisfied that it is proper to do so. The "prescribed period'.. is not to be ignored (Ralkon Agricultural Co Pty Ltd v Aboriginal Development Commission (1982) 43 ALR 535 at 550). Indeed, it is the prima facie rule that proceedings commenced outside the period will not be entertained (Lucic v Nolan (1982) 45 ALR 411 at 416). It is a pre-condition to the exercise of discretion in his favour that the applicant for extension show an "acceptable explanation of the delay" and that it is "fair and equitable in the circumstances" to extend time (Duff at 485; Chapman v Reilly unreported (Federal Court of Australia, Neaves J, 9 December 1983 at 7). 2. Action taken by the applicant, other than by making an application for review under the Act, is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished. A distinction is to be made between the case of a person who, by non-curial means, has continued to make the decision-maker aware that he contests the finality of the decision (who has not "rested on his rights"; per Fisher J in Doyle v Chief of Staff (1982) 42 ALR 283 at 287) and a case where the decision-maker was allowed to believe that the matter was finally concluded.. 3. Any prejudice to the respondent including any prejudice in defending the proceedings occasioned by the delay is a material factor militating against the grant of an extension: see Doyle at 287, Duff at 484-485, Hickey at 525-527 and Wedesweiller at 533-534. 4. However, the mere absence of prejudice is not enough to justify the grant of an extension: Douglas, Lucic at 416, Hickey at 523. In this context, public considerations often intrude (Lucic, Hickey). A delay which may result, if the application is successful, is the unsettling of other people (Ralkon at 550, Becerra at 12-13) or of established practices (Douglas) is likely to prove fatal to the application. 5. The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted: Lucic at 417, Chapman at 6. 6. Considerations of fairness as between the applicants and other persons otherwise in a like position are relevant to the manner of exercise Wedesweiller at 534-535" Explanation of delay In his evidence in chief the applicant stated that after the incident the union organiser requested the applicant to provide a written statement as to what had happened. The applicant did that and on the Monday after the incident, being 16 January 1996 he met the organiser at the Granville office of the union. The applicant's evidence was that at that meeting he was advised he had "no chance" of getting his job back. Thereafter the applicant contacted Legal Aid and then the Law Society. In April of 1996 the Society referred the applicant to solicitors and his application to this court was the result. Accordingly I am of the view that the applicant has been sincere in his attempts to bring this matter to court and that properly taking the merits of his claim into consideration, it is right that the court exercise its discretion in his favour and allow the application to proceed out of time. Reasons for Termination Section 170 DE of the Industrial Relations Act provides an employer must not terminate employment unless there is a valid reason, connected with the employee's recent capacity or conduct or based on the operational requirements of the undertaking. The termination to the applicant at the time was not in writing and so from the evidence of Mr Kane the reasons for the termination appear to be that the applicant failed to get a gate pass prior to removing company property, that the applicant refused to obey a lawful instruction and thirdly that the applicant left his place of work early without permission. I place no weight on this last issue as nothing was made of it during proceedings. I am unable to place much weight on the first issue as there was some evidence before the court that the respondent's procedures involving gate passes were far from clear. The issue of the applicant failing to obey a lawful instruction means that the applicant refused to comply with a request to submit to a vehicle search and to allow the company to inspect items he was removing from its premises. The evidence shows that the applicant was first observed by a security guard on surveillance camera in the "Titanic" area where he worked placing something in bags and then walking towards his car. There was no attempt at concealment of his actions. The security guard notified management. Management had the opportunity at that particular point to call a union representative to be at the vehicle of the applicant. It is a finding of this court that had the request been made by management for the applicant to show the contents of the bags when he was carrying them, and that at that point if the applicant had refused, such refusal would have amounted to misconduct and failure to obey a reasonable and lawful command. That however did not happen and events went past that and if the respondent wished to inspect the bags after they were placed in the car of the applicant then the respondent should have carried out the procedures of a car search. It is a finding of this court that the respondent did not have a valid reason to summarily dismiss the applicant for failing to obey a lawful command. It is a finding of this court that the applicant has satisfactorily demonstrated that what was occurring in fact was a car search. It was not a random search. I place no weight on the fact that in this case a white chain did not appear as that issue is irrelevant. The decision to request a vehicle search was not made so that enough time could be allowed for a white chain to be put in place. However the request to inspect the contents of the bags cannot totally be ignored. On behalf of the applicant it was argued that in Schaale v Hoechst Australia Ltd (1993) 47 IR 249 the applicant was dismissed by the respondent for evading security and climbing over a fence to get into the plant knowing that this was a breach of security and against the express wishes of the respondent that he should not be on the plant on the night in question. The respondent led evidence which stressed the importance of security for the plant. In particular, there was a real fear of deliberate damage or sabotage by organisations opposed to the kind of business the respondent was engaged in. In other words, the respondent in effect also alleged that the applicant's action damaged the very integrity of its security system. On behalf of the respondent it was argued that an employer can not be put in the position where having properly exercised its right to preserve the integrity of it's security system it is then defeated by an employee improperly ensuring that nobody can challenge his version of events. It is my view that the security system of Franklins Limited cannot be said to have had complete integrity and secondly the respondent did nothing to ascertain the value of the property concerned. The court heard no evidence of the kinds of thefts the policy of the respondent was aimed at preventing and so an accurate assessment of the gravamen of the actions of the applicant cannot be made. In failing to comply with the request made by management the applicant relied on two "loopholes" in the respondent's security methods. First it is a finding of this court that a loophole existed in the practice allegedly of employees always needing a gate pass no matter what was to be removed. It was shown by evidence that gate passes are not always necessary to take material out and secondly there was some evidence that one of the supervisors was un-cooperative in this regard. Secondly the applicant relied on the loophole that existed in the form of confusion as to exactly what procedures should be followed with regard to a car search. The evidence showed a differing beliefs to be held by the witnesses as to the correct procedure to be followed. The respondent had taken no direct steps to countermand or alter the announcement put over the public address system by Mr Nasr as to the requirement of the presence of a union representative. It is correct to say that Mr Eddy revealed in his evidence that a union delegate had been standing a few feet away from himself and from Mr Pearson by the car and could have been called over at the time. I agree with the assertion on behalf of the applicant that in these circumstances, the reasons for not calling a delegate given by Mr Eddy and Mr Kane that "there was not time" and "I did not wish to embarrass the applicant" are unsustainable. The evidence shows the paging system could have been used to obtain a union delegate and Mr Eddy had a mobile telephone. It is a finding of this court that the respondent did not have a valid reason to summarily dismiss the applicant for failing to comply with a request for a car search. Consequences of the Parties Actions I agree with the submission on behalf of the applicant that he acted hastily and unwisely on the morning of 12 January 1995. It was unwise of him first, whether sarcastically or not, to agree to allow a search of the bags and then to drive away from the scene and from management. From those unwise actions certain consequences - that is, summary termination -flowed, and these proceedings make it necessary to determine liability in that regard and whether the termination was lawful. I do not agree with the submission on behalf of the applicant that the applicant acted openly and honestly. The applicant was most certainly incensed at the position he found himself in. The respondent has not sufficiently discharged its responsibility to prove that it had a valid reason to terminate summarily and accordingly it is also a finding of this court that the effect of the termination was harsh and unjust and unreasonable. That finding is further reinforced by the fact that the parties concede the value of the goods involved was nil. It is a finding of this court that there has not been a fair and proper implementation of the respondent's policy on the removal of property from its premises. Had there been a fair and proper implementation of that policy the applicant would have been under no illusion as to the consequences of his actions. Further, that failure by the respondent has resulted in breaches of s 170 ED and s 170 DC of the Act causing the applicant to be unlawfully terminated. In Bostik (Aust) Pty Ltd v Gorgevski (1922) 36 FCR 20 there was no evidence that the applicant was aware that a breach of the no smoking policy would result in instant dismissal. Procedural Fairness With regard to the breach of s 107 DC the day after the incident the respondent conducted an investigation in that it asked the applicant, in the presence of his union representatives, what had occurred. During that process the fact that the items removed were valueless should have been given weight and put into proportion, as a theft policy has to be based on reasonableness common sense. So in this case the reason for summary dismissal - that the applicant failed to obey a lawful command - to show worthless clothing to a supervisor - should have been re-considered in the cold hard light of the following day. In Anthony A Allison v Bega Valley Council a decision of the Industrial Relations Commission of New South Wales, Peterson J and Marks J and Connor CC dealt with the situation where Mr Allison removed to valueless doors from a building site the property of his employer. The Commission found, in dealing with the merits of a dismissal over something of no value that: " On no view of the matter, involving as it did taking from scrap two crappy doors", would Mr Allison's conduct have justified summary dismissal". It is true the respondent was, because of circumstances, prevented from ascertaining the "worthlessness factor" at the time of the incident, but such prevention was partially its own fault. The respondent argued the court should not go as the criminal standard in evaluating cause and effect when one party destroys evidence and to that end cited R v Connor, unreported, 14.10.91, a decision of Carruthers, J and also Craig v Haig (20 Beav. 219) where it was held that when an accounting party destroys the accounts before matters between the parties have been finally adjusted, the Court will presume everything most unfavourable to that party as far as such a presumption is constant with the established facts. Again it is noted the parties agreed the value of the goods removed by the applicant was nil. A lesser penalty for Mr Pearson should have been considered at that time, such as a formal warning or even suspension, and that would have been more appropriate as the applicant is not without fault in the incident. Remedy The applicant seeks reinstatement and compensation. I agree withe the submission on behalf of the applicant that despite the fact that redundancies of forklift drivers may have occurred over the last 12 months or so, no evidence was led by the respondent that if Mr Pearson had still been employed he would be among the number made redundant. No evidence was led by the respondent as to the method of selection for redundancy applied by the respondent. Accordingly it is ordered that the respondent reinstate the applicant to his former position within the next 14 days and secondly to pay to the applicant all moneys by way of back pay and accrued entitlements that the applicant would have otherwise received had his employment not been terminated. I certify that the preceding pages are a true and correct copy of the Reasons for Decision of Judicial Registrar Tomlinson Associate: J A Liston Dated: May 1996 APPEARANCES Solicitor for the applicant: Taylor & Scott Counsel for the applicant: Mr J Wallace Counsel for the respondent: Mr A G Rodgers Dates of hearing: 28 September 1995, 8 December 1995 26,27 March 1996