DECISION NO: 255/96 CATCHWORDS INDUSTRIAL LAW TERMINATION OF EMPLOYMENT - decision to terminate applicant was taken whilst he was on accrued annual leave - VALID REASON - termination said to be based on grounds of REDUNDANCY - ONUS OF PROOF - termination was HARSH, UNJUST or UNREASONABLE - COMPENSATION Industrial Relations Act 1988 ss 170DB, 170DE, 170EA, 170EE Shane Ball v Tip Top Bakeries, WI R575 of 1994, Industrial Relations Court of Australia, 12 January 1996, Marshall J, unreported Kenefick and Others v Australian Submarine Corporation Pty Ltd, Industrial Relations Court of Australia, SI 290, 292, 293, 294, and 295 of 1994, 26 March 1996, Full Court, unreported Dean Kenneth Hockey v Multiskip Pty Ltd, Industrial Relations Court of Australia, WI 439R of 1994, 29 September 1995, Marshall J, unreported Pam Coker Godson v National Dairies Limited, Industrial Relations Court of Australia, VI 0262R of 1994, 4 August 1995, Marshall J, unreported No. VI 3657R of 1995 ROY STANLEY JONES v SWAN HILL QUALITY MEATS PTY LTD JUDGE: Marshall J PLACE: Melbourne DATE: 14 June 1996 IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. VI 3657R of 1995 BETWEEN: ROY STANLEY JONES Applicant AND: SWAN HILL QUALITY MEATS PTY LTD Respondent JUDGE: Marshall J PLACE: Melbourne DATE: 14 June 1996 ORDER THE COURT ORDERS THAT: 1. It is declared that in terminating the employment of the applicant the respondent contravened ss 170DE and 170DB Industrial Relations Act 1988. 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 ) ) VICTORIA DISTRICT REGISTRY ) No VI 3657R of 1995 BETWEEN: ROY STANLEY JONES Applicant AND: SWAN HILL QUALITY MEATS PTY LTD Respondent JUDGE: Marshall J PLACE: Melbourne DATE: 14 June 1996 REASONS FOR JUDGMENT BACKGROUND On 5 July 1995 the applicant filed in the Victoria District registry of the Court ("the registry") an application pursuant to s170EA Industrial Relations Act 1988 ("the Act"). The applicant sought the remedy of compensation for what he alleged to be the unlawful termination of his employment by the respondent on 26 June 1995. A notice of employer's appearance was filed in the registry on 13 July 1995 by the solicitors then acting for the respondent, Messrs Mitchell, McKenzie and Co of Moama, New South Wales. On 14 August 1995, Deputy President Drake of the Australian Industrial Relations Commission ("the Commission") certified that the Commission had been unable to settle the matter by conciliation. On 24 November 1995 the respective solicitors for the parties were advised by the registry that the matter had been set down for trial on 19 February 1996 at Mildura. On 15 February 1996 Mitchell, McKenzie and Co filed a notice in the registry, dated 8 February 1996, advising that the firm had ceased to act for the respondent in the proceeding on 8 February 1996. On 16 February 1996 an affidavit of service of the notice on the respondent was filed by Mitchell, McKenzie and Co. On 19 February 1996, the matter was heard by Judicial Registrar Millane. In the second paragraph of her ex-tempore reasons for judgment given that day, the Judicial Registrar said:- "The respondent was represented by solicitors until 8 February 1995 when they ceased to act. On the return date the respondent was not represented in compliance with the requirements of section 469 of the Act. I am satisfied that the respondent was on notice of the hearing date, notified to its former solicitors in November 1995. Accordingly, the matter proceeded as an undefended matter." The Judicial Registrar ordered the respondent to pay to the applicant $13,000 by way of compensation pursuant to s170EE(3) of the Act and $2,000 by way of damages pursuant to s170EE(5) of the Act. By way of notice of motion dated 7 March 1996 the respondent, now represented by Tanya Cirkovic and Associates, sought a review of the exercise of power by Judicial Registrar Millane. The respondent also sought an order staying the operation of the orders made by the Judicial Registrar. Due to the fact that the applicant's solicitor is based in Swan Hill, the Court decided to conduct the directions hearing in the review by telephone on 1 April 1996. When it became apparent that evidence would be called regarding the respondent's stay application at the directions hearing, the parties sought, and the Court granted, an adjournment of the directions hearing including the taking of evidence in relation to the stay application. The matter was adjourned to Melbourne on 4 April 1996 at 9.30 am. It was also considered by the parties and the Court to be conducive of efficient use of time and resources to commence the hearing of the review in the time remaining on 4 April 1996. In support of its stay application the respondent relied upon an affidavit of Robert Henry Woodward sworn 4 April 1996. The affidavit contained the following material:- "1. I am a director, and the owner of the Respondent and am authorised to make this Affidavit on its behalf and do so from my own knowledge and belief save where otherwise indicated. 2. On about 28 June 1995, the Applicant was dismissed from his employment with the Respondent. 3. On about 5 July 1995, the Applicant filed an Application with this Honourable Court claiming that he had been unfairly dismissed. 4. The Application was posted to a butcher's shop operated by the Respondent at Swan Hill in about July 1995. As was the usual practice of the Respondent in this kind of matter, Mr Scott Mackenzie was left in charge of dealing with the Application. 5. I understand that Mr Scott Mackenzie then instructed solicitors, Mitchell, McKenzie & Co., to defend this Application. 6. In or about October 1995, a dispute arose between myself and my former business partner Mr Robert Mackenzie, which was the subject of litigation. The dispute has subsequently been resolved. This dispute and litigation was disruptive to the management of the business of the Respondent for a period of about 5 months. 7. I believe, that as a result of that dispute, Mr Scott Mackenzie had taken minimal action in relation to this Application. 8. In or about December 1995 my son, Mr Robbie Woodward informed me that he had become aware of this matter and that it did not appear to have been dealt with fully by Mr Scott Mackenzie. I agreed that Mr Robbie Woodward would continue to instruct Mitchell, McKenzie & Co. to defend this Application. 9. On 8 February 1996, Mitchell, McKenzie & Co. sent by facsimile to the Respondent, a Notice by Solicitor Ceasing to Act. Now produced and marked "RHW1" is a true copy of the Notice. 10. Neither I nor any other representative of the Respondent had received any prior warning that the Respondent's solicitors would cease to act for us in this claim. 11. I instructed my son, Mr Robbie Woodward to attend and represent the Respondent at the hearing of this claim on 19 February 1996. Mr Robbie Woodward was not an employee or a director of the Respondent, but had full authority to represent the Respondent. I did not know that he would not be able to represent the Respondent when I instructed him to attend. 12. I understand from Mr Robbie Woodward who stayed in Court to hear the claim that Judicial Registrar Millane ordered that the Respondent pay the Applicant $13,000.00 compensation and $2,000.00 damages. 13. The Respondent did not have an opportunity to put its case against this claim, and therefore it would be unjust to require the Respondent to pay such a large sum of money before this Honourable Court has heard the Respondent's case. 14. The Respondent did make attempts to be represented at the hearing of this claim by Judicial Registrar Millane, and the only reason it was not represented was that I did not know my son was not able to represent my company. 15. In the circumstances, I humbly request that the Honourable Court grant the Orders sought in the accompanying Application." Mr Misso, of counsel, who appeared for the applicant on the review did not seek to cross examine Mr Woodward on the contents of that affidavit. Ms Cirkovic, who appeared for the respondent with Mr Muir, conceded that in order for the Court to grant a stay of the Judicial Registrar's orders pending the hearing and determination of the review, the respondent "is required to show special or exceptional circumstances" (see transcript pp 9-10). Ms Cirkovic also conceded that the Judicial Registrar's order in respect of damages was not under challenge and that the $2,000 would be paid to the applicant shortly. Ms Cirkovic did not put in issue the applicant's ability to re-pay the $13,000 in the event that the Court decided that no compensation or a lesser amount should be ordered. It was further conceded that no blame may be laid at the feet of the applicant regarding the matter. After hearing Ms Cirkovic I did not find it necessary to call upon Mr Misso on the question of the stay. In an ex-tempore decision in transcript, at p15, I held that:- "The only special circumstance in this case seems to be that the respondent was badly advised as to the manner of its representation before Judicial Registrar Millane. In the circumstances it is not appropriate to deprive the applicant of the fruits of his victory; however, the applicant should be aware that it may be that as a result of the hearing and determination of this review that the moneys, or at least $13,000 of the moneys he will receive in the interim may have to be repaid, and he should note I have so ordered in another case." I was there referring to my decision in Shane Ball v Tip Top Bakeries, Marshall J, WI R 575 of 1994, 12 January 1996, unreported, where I set aside orders of a Judicial Registrar inter alia for the payment of "remuneration lost" in circumstances where Lee J had earlier declined to stay the payment of the relevant sum, co-incidentally also $13,000.00. I ordered in the current matter that the stay application be dismissed and that $2,000 be paid to the applicant on or before 9 April 1996 and a further $13,000 be paid to him on or before 26 April 1996. I then commenced to hear the review at 11.10 am on 4 April 1996. BACKGROUND - THE FACTS The applicant is a man of 65 years of age, having been born on 7 November 1930. His formal education extended to Year 8. He completed an apprenticeship as a butcher. He has variously been employed as a shop butcher, an abattoir worker and as a stock agent. The latter employment occurred between 1970 and 1975. In November 1987 the applicant commenced employment with the respondent as a shop butcher at the respondent's retail butcher shop (then known as "Peats Butchery") at 254 Campbell Street in Swan Hill. The respondent's sales were enhanced by its engagement of the applicant, who generated extra business for the respondent as a result of bulk sales to restaurants, hotels and clubs. Sometime in 1988 the applicant was promoted to the position of manager of the shop. In the third year of his employment the applicant was paid a "profitability bonus". He was a valued employee who assisted in the promotion of the respondent's business. In December 1992 the shop was relocated to a busier block in Campbell Street, four doors from the Post Office. Five people were employed at the new premises. There were four shop butchers, including the applicant as manager, and one part-time shop assistant, a Mrs Judy Devereaux. Additionally, Mrs Woodward, who in recent times has become a director of the respondent, attended the shop most evenings and some afternoons to perform book-keeping duties. The relocation of premises was anticipated by Mr Woodward to bring greater profits to the respondent. Unfortunately, this expectation appears not to have been realised. Mr Woodward testified that sales "volume" started dropping in February 1994. Mr Woodward, like the applicant, had difficulty recollecting the dates of various relevant occurrences. It appears from the evidence as a whole that sales had been on a slow decline since relocation and that the decline had become steeper in early 1994. In January or February 1994, Mr Ray Smith was engaged as the manager of the shop. He had previously been employed there as a shop butcher since September 1993. When Mr Smith was made manager, the applicant reverted to his former duties as shop butcher. However, as a result of an arrangement between Mr Smith and the applicant, the applicant was responsible for the front section of the premises, subject to Mr Smith's overall management. The reason for the promotion of Mr Smith was the respondent's desire to change its main focus from "bulk sales" to retail sales. The applicant's wages did not alter as a result of the new arrangements. He continued to be responsible for decorating the shop window and continued to perform his duties as a shop butcher. Despite the hopes of Mr Woodward, the profitability of the shop continued to decline in 1994. In April or May 1994 two shop butchers were transferred to an abattoir conducted by another company of which Mr Woodward is a director, Ashton Pty Ltd. Mr Smith and the respondent parted ways in late May 1995. Shortly before then, in late April 1995, the applicant commenced a substantial period of accrued annual leave. When the applicant commenced such leave, apart from Mr Smith, the following persons were employed at the shop:- · the applicant (on leave) · Mr Devereaux (shop butcher) · Mr McCartney (shop butcher) · Mrs Devereaux (part-time shop assistant) By late May 1995 there were only two shop butchers actively engaged as such in the shop, with Mr McCartney taking over the role as manager when Mr Smith ceased to be employed by the respondent. The business of the shop continued to decline. During the applicant's absence on annual leave, Mr Woodward formed the view that the shop did not need three shop butchers, so he decided to terminate the applicant's employment. He testified that he made the decision in late April or early May 1995. The applicant testified that he had been on annual leave for about eight weeks when his employment was terminated on 26 June 1995. It is likely that the decision to terminate the applicant's employment was made in the second half of May 1995, given that Mr Woodward testified that the applicant had been on leave for about a month when he decided that the applicant's employment should end. Having made the decision to terminate the applicant's employment, Mr Woodward did not communicate that decision to the applicant until shortly before the applicant was due to return from annual leave in late June 1995. In mid-June 1995, during the applicant's annual leave and shortly after the decision was made to terminate his employment, the respondent employed another shop butcher, Mr Penno. Mr Penno was still employed by the respondent at the time it terminated the employment of the applicant, i.e., 26 June 1995, allegedly on the grounds of redundancy. At about 6.30 pm on 26 June 1995 the applicant attended at the abattoir conducted by Ashton Pty Ltd and met with Mr Woodward. A conversation ensued between the two men. The content of that conversation is a matter of controversy between the parties. However, the following is not in contest:- · the applicant agreed that the shop's business was not going well; · the applicant accepted the decision of the respondent in a calm manner; · the men shook hands and the applicant departed. VALID REASON The respondent contended that the applicant's employment was terminated for a valid reason based on the operational requirements of the respondent's establishment, i.e., redundancy. The respondent bears the onus of proof on this issue. See Kenefick and Others v Australian Submarine Corporation Pty Ltd, Industrial Relations Court of Australia, SI 290, 292, 293, 294, and 295 of 1994, Full Court, 26 March 1996, unreported at 14-16. In my view, the respondent has not discharged its onus of proof. I do not accept that, as at 26 June 1996, the applicant's job as a shop butcher was redundant. It strains credibility in the extreme to accept that such was the case in circumstances where a new shop butcher had been employed by the respondent shortly before the termination of the applicant's employment. Redundancy was the only ground put forward by the respondent's counsel for the termination of the applicant's employment. Having determined that the applicant's job was not redundant, it necessarily follows that the applicant's employment was terminated in contravention of s170DE of the Act. HARSH, UNJUST, UNREASONABLE In the event that I am in error as to whether the applicant's job was truly made redundant, it is necessary to consider whether the respondent otherwise contravened s170DE of the Act. It is not disputed that prior to terminating the employment of the applicant, the respondent did not consult the applicant or avail itself of any objective selection criteria upon which the applicant was chosen to be made redundant. The applicant was not given any opportunity to address the question as to whether he should be the one to be made redundant, as distinct from any of the remaining shop butchers, including one who had recently been engaged. In my opinion, the termination of his employment, in the circumstances, was harsh, unjust and unreasonable. See Dean Kenneth Hockey v Multiskip Pty Ltd, Industrial Relations Court of Australia, WI 439R of 1994, Marshall J, 29 September 1995, unreported at 10-14 and the authorities cited therein. REMEDY The respondent submitted that the compensation payable to the applicant should be reduced in the event that the Court finds that the termination was unlawful. It was submitted that if the applicant had not been terminated on 26 June 1995, his employment would have lasted only for a short time thereafter. In support of that submission, the Court was directed to evidence that Mr Penno remained with the respondent only until mid-July 1995 and that he was not thereafter replaced. Significantly, Mr Penno was not made redundant but left the respondent to work for a supermarket. Even if the respondent formed the view that it only needed two shop butchers after mid-July 1995, in circumstances where the applicant would have been still employed, in the absence of the formulation of objective selection criteria for redundancy, the Court will not know with any certainty that the applicant would necessarily have been chosen for redundancy. See Pam Coker Godson v National Dairies Limited, Industrial Relations Court of Australia, VI 0262R of 1994, 4 August 1995, Marshall J, as yet unreported at 11. Additionally, as Ms Cirkovic conceded, there was no basis for concluding that the applicant may not have been retained in employment in a part-time capacity for a substantial period of time after mid-July 1995 but for his termination. In the circumstances, I consider that but for the termination it is likely, given his long years of service, some of which occurred during declining sales, that the applicant would have been engaged in some capacity by the respondent for at least twelve months but for the termination. Consequently, I would not reduce the compensation which the respondent has been ordered to pay by reason of the submission of the respondent regarding the likely duration of the applicant's employment but for the termination. It was also contended by the respondent that compensation should be reduced because of alternative job offers allegedly made to the applicant by the respondent after the termination. To deal with this submission it is necessary to traverse the disputed parts of the conversation of 26 June 1996 referred to above. Mr Woodward testified in his evidence in chief that he told the applicant after he had dismissed him that "there could be part-time work in the butcher shop or at the abattoir". He said such work was available to the applicant but not accepted by him. He further said that the applicant's response was that he was "close to receiving the old age pension" and "didn't want to disrupt that situation". Under cross examination, Mr Woodward said that "there wasn't a part-time job ready and waiting for him but I was going to make one". He said that there was work available at the abattoir and that the applicant could have started there "the very next day". Later in cross-examination, Mr Woodward said that he told the applicant that there was a job ready and waiting for him at the abattoir and that he could start tomorrow. He then said that a job was available " at the abattoir immediately and at the shop at a later date". He later clarified his answer as meaning that "immediate commencement" was available at the abattoir and "there may have been something part-time at the shop at a later stage". The applicant testified that Mr Woodward said to him:- "I've been trying to find a hole for you at the abattoir but I can't find one, I've just got to put you off." He said that the first he heard of any offer of other work was when Mr Woodward mentioned it in the witness box. He said that there was no offer of other work and denied that he said anything to Mr Woodward about going on the "old-age pension". I prefer the evidence of the applicant on this issue. Mr Woodward's evidence on this aspect of the case was extremely unconvincing. In examination in chief he testified, in essence, about a possibility of part-time work for the applicant. When first challenged about this under cross examination, his reply was that the part-time job wasn't then ready but was going to be made available for the applicant. When further pressed by Mr Misso, Mr Woodward asserted that he told the applicant that the job at the abattoir was available immediately. In contrast, the applicant was firm in his recollection of the precise words used by Mr Woodward. Further, the respondent had previously transferred excess shop butchers to the abattoir in 1994. There is no reason why this may not have occurred in June 1995 in respect of the applicant, with his consent. He testified that he had had a deal of experience as a slaughterman and was available to work at the abattoir when terminated. If Mr Woodward had really intended to give the applicant work at the abattoir, the logical thing to do would have been to offer him a transfer rather than make him redundant. The Court does not accept that any alternative employment offer was made to the applicant on 26 June 1996 and rejected by him. Shortly after the termination of his employment, the applicant telephoned Mr Woodward and asked for a separation certificate. Mr Woodward gave evidence that on that occasion he offered the applicant a position looking for cattle agistment for him in the Mallee. He said that the applicant declined saying that he had a delivery job and was being paid in cash. The applicant denied that he was offered a job looking for cattle agistment. He said that he only told Mr Woodward that he "had a little delivery job down to Kerang" and that he "only got $90 per week". As with the conversation of 26 June 1996, I prefer the evidence of the applicant. The applicant had not worked as a stock agent since 1975 and it is highly unlikely that any such offer would have been made to him. I do not consider the evidence of Mr Woodward to be reliable on any issue relating to any alleged offer of alternative employment. Consequently, I find that at no stage after the termination of his employment was the applicant offered any alternative work by the respondent or Mr Woodward. ORDER It was common ground that should the Court find that there was no basis for it to reduce the compensation payable to the applicant, the sum awarded by the Judicial Registrar should not be increased. It represents six months wages for the applicant. Given that the respondent has admitted that it breached s170DB of the Act in only giving the applicant one weeks' wages in lieu of notice and has paid $2,000 damages in respect of that breach and $13,000 compensation in respect of its breach of s170DE of the Act, it is only necessary for the Court to make an order declaring that the relevant contraventions of the Act have occurred. I certify that this and the preceding 17 pages are a true copy of the Reasons for Judgment herein of his Honour Justice Marshall. Associate: Date: 14 June 1996 Counsel for the Applicant: P Misso Solicitor for the Applicant: Dwyer Mahon and Robertson Counsel for the Respondent: T Cirkovic with C Muir Solicitor for the Respondent: Tanya Cirkovic and Associates Date of hearing: 4 April and 29 May 1996 Date of judgment: 14 June 1996