DECISION NO: 261/96 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - VALID REASON - NOTICE - CONDUCT - CONTRACT OF EMPLOYMENT - AWARD PROVISIONS - UNDERPAID WAGES - LONG SERVICE LEAVE - ANNUAL LEAVE LOADING - INTEREST - COMPENSATION Industrial Relations Act 1988, S 170 DB DC DE (1) DE (2) EA EE(2) EE (3) EE(5) 178(6) 179 179A Dry Cleaning Industrial Award Keating v. Teico Investments Pty Limited (unreported, Decision No 64/94 17 October 1994) No. QI 1280 of 1995 MARK STRUDWICK WALTON V MERMAID DRY CLEANERS PTY LIMITED (A.C.N. 065 993 008) CORAM: LINKENBAGH JR PLACE: CANBERRA (Heard in Brisbane) DATE: 12 JUNE 1996 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QI 1280 of 1995 MARK STRUDWICK WALTON Applicant MERMAID DRY CLEANERS PTY LIMITED (A.C.N. 065 993 008) Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra (Heard in Brisbane) Date: 12 June 1996 MINUTES OF ORDERS (1) That pursuant to Section 179 of the Act and by consent the respondent pay to the applicant the sum of $158.00 for Annual Leave Loading (2) That pursuant to Section 179 of the Act and by consent the respondent pay to the applicant the sum of $488.85 for Long Service Leave (3) That the respondent pay to the applicant the sum of $7,821.60 as compensation pursuant to the provisions of Section 170 EE (2) of the Act Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QI 1280 of 1995 MARK STRUDWICK WALTON Applicant MERMAID DRY CLEANERS PTY LIMITED (A.C.N. 065 993 008) Respondent Coram: Judicial Registrar Linkenbagh Place: Canberra (Heard in Brisbane) Date: 12 June 1996 REASONS FOR JUDGMENT This is an Application under Section 170 EA of the Industrial Relations Act, 1988 in which the applicant seeks remedies under Section 170 EE (3) and (5) arising from the termination of his employment by the respondent. He also seeks Orders in the accrued jurisdiction of the Court in relation to underpaid wages, Long Service Leave and Annual Leave Loading. The applicant was employed by the respondent between 9 August 1994 and 29 July 1995. For about 37 years previously, the applicant had worked at the same business under three separate employers, and from 28 April 1994 his employer had been Mrs. Harris, who controls the respondent. He was a Dry Cleaner employed under the Dry Cleaning Industrial Award. The business was very small, with two other employees at the most, and the applicant attended to all aspects of the work at the business from time to time, in addition to his duties as a Dry Cleaner, except for pressing. There were times when Mrs Harris left him in charge of the business, including a period of about two and a half weeks in June/July of 1995 when she went overseas. It was agreed by the applicant and Mrs Harris that the employment was terminated by her at the end of the working day on 29 July 1995 with the words "I'll have to let you go". That constitutes a termination of the employment at the initiative of the employer. There is no evidence of any other conversation relevant to the termination of the employment or the reasons for it, notwithstanding that the Court allowed several opportunities to Mrs Harris in the course of her evidence to explain her decision. There is evidence that the applicant and Mrs Harris had differences of opinion from time to time, that she did not approve of his smoking outside the back door of the business premises, and that at one stage the applicant tendered, and withdrew, his resignation. There is also evidence that the applicant received tokens of appreciation from Mrs Harris, the last as late as in July 1995 when she returned from her overseas trip. The applicant was unemployed until 18 November 1995 when he took up full time work as a Dry Cleaner with another employer. SECTION 170 DB The applicant claims that he was not paid his correct entitlement under Section 170 DB of the Act, for pay in lieu of notice. He was paid two weeks, and claims a further three weeks on the basis that he was employed for more than five years and is aged over 45 years. The success of that claim rests on the meaning to be given to the word "employer" in Section 170 DB (1). Section 170CB of the Act provides that an expression has the same meaning in the relevant Division of the Act as it has in the Termination of Employment Convention, which is Schedule 10 to the Act. The Convention does not define "employer". Section 4 of the Act defines "employer" as including a person who is usually an employer. That definition is of little use and the Court must look to the ordinary meaning of the word. The word "employer" in Section 170 DB of the Act is in the singular, and in my view refers to the legal entity which was a party to the employment contract with the employee at the time of termination. The applicant submits that, in effect, the respondent as the successor in title to the business inherited the accumulated obligations of previous owners towards continuing employees, and that those obligations included the consequences flowing from the employee's length of service and the application of the formula in Section 170 DB. That submission has no merit whatsoever generally, if only because an employee is never a party to the contract for the sale of the business in which he works. In the present case, the applicant relies on Clause 10 of the Contract for Sale between K.J. & M. Brown Pty Limited and Leonie Harris which is to the effect that any existing employees re-employed by Mrs Harris would be employed on terms and conditions which are not less favourable than those current at the date of that contract. Even if that clause had the effect argued by the applicant, and it does not, it could not assist in this case because the employer at the time of termination was Mermaid Dry Cleaners Pty Limited and there is no evidence before me that that company was a party to any contract in those terms. A contract of employment creates personal rights in the parties and comes to an end when an employer sells the enterprise and therefore no longer requires the services of the employees. It is not necessary in this case to decide whether such a termination of the contract can be construed as a termination at the initiative of the employer so as to oblige every vendor of a business to satisfy Section 170 DB in respect of all employees at the date of the sale. A new contract of employment comes into existence between the new owner and those employees the new owner chooses to engage. In this case a new contract of employment was formed between the applicant and Mrs Harris on 28 April 1994 and another was formed between the applicant and the respondent on 9 August 1994. The relevant period of employment for the purposes of Section 170 DB is 9 August 1994 to 29 July 1995. The required period is therefore at least one week, and as two weeks wages were paid, the requirements of the Section have been met. Counsel for the applicant referred me to the decision of Judicial Registrar Tomlinson in Keating v. Teico Investments Pty Limited (unreported, Decision No 64/94 of 17 October 1994). The Court there found that there was an obligation on the respondent to give notice based on the period of employment at the enterprise. The reasons for that finding are not clear and appear to be related to contractual obligations between the parties. The Court made no separate Order for damages under Section 170 EE(5) and I do not accept that that decision is of assistance in the case before me. SECTION 170 DE My findings as to the history of the working relationship leave no room for a finding that there was a valid reason for the termination of the employment. The evidence does not reveal what the reason Mrs Harris had in mind on 29 July 1995 and there is no reason apparent on the facts before me. The respondent's evidence of incidents which illustrate differences between Mrs Harris and the applicant over the period of their association are not of significance in relation to the termination of the employment because they were few in number and inconsequential at the time they occurred. Those instances must be seen in the overall context of life in the workplace and in the light of Mrs Harris' conduct in leaving the business in the care of the applicant only a few weeks before 29 July and her expressions of appreciation made after her return from her overseas trip. The respondent is therefore in breach of Section 170 DE (1) and I do not need to address Section 170 DE (2). SECTION 170 DC It follows from my finding that there is no reason apparent on the facts before me for the termination of the employment that the issue of compliance with Section 170 DC does not arise. THE AWARD CLASSIFICATION The applicant asks the Court to determine the appropriate Classification pursuant to the Award for the purposes of determining the correct rate of pay applicable to him. There is no evidence of compliance by the parties with the requirements of the Award which are intended to achieve agreement between the parties as to the applicable Classification. The evidence does not satisfy me that the applicant's duties were other than those described for a Dry Cleaner or that he is entitled to the additional wage applicable to those persons who are solely responsible for the operation of a self-contained dry-cleaning establishment. He therefore falls strictly within Classification C at an ordinary wage of $366.40. CLAIM FOR UNDERPAID WAGES The applicant claims that he was not paid according to the terms of the Award for overtime. He was paid regularly the sum of $480.85 per week, made up of $358.40 ordinary pay for a Classification C employee $42.45 for regular Saturday overtime and $80.00 bonus. After termination he was paid an adjustment to take account of an increase in the ordinary rate which became effective on 25 May 1995. No record was kept of his true hours of attendance. He worked Monday to Saturday and there is evidence that his meal breaks were flexible in timing and duration and that he sometimes was absent from the premises during the day for unspecified periods. I am not satisfied that there is sufficient evidence of the hours actually worked on which I could base a finding that he was underpaid or a calculation of underpaid wages. I also note the evidence that the applicant was paid, and accepted, a payment of $80 per week bonus, on a regular basis from the time Mrs Harris became his employer, and that he was paid a small additional bonus on a couple of occasions. The contract of employment in that regard varied the application of the Award provisions in relation to wages. I am not satisfied that the amount paid was less than the applicant's entitlements under the Award. CLAIM FOR PRO RATA LONG SERVICE LEAVE The parties requested that I make an Order by Consent for payment of an amount equal to one week's wages for Pro-Rata Long Service Leave and the amount was to be determined by me according to my findings as to the appropriate Award Classification. The respondent in its submissions resiles from any agreement in those terms on the basis that the evidence shows that there was no continuity of employment. Whether that be correct, there was an agreement between the parties at the hearing which gave rise to the request for the Consent Order and I propose to make that Order based on the agreement between the parties. The amount will be $488.85. CLAIM FOR LEAVE LOADING The parties requested that I make an Order by consent for payment of $158.00 for unpaid loading on Annual Leave and I shall make that Order CLAIM FOR INTEREST The applicant claims interest under Section 179A of the Act. That Section allows for interest on monies ordered in exercise of the Court's powers under Sections 178(6) or 179. Section 178(6) is not relevant and the only Orders I make today which could be said to be in exercise of power under Section 179 are the Orders for the Long Service Leave payment and the Leave Loading. The cause of action in respect of each payment arose on 29 July 1995. The total amount is $646.85. The Section obliges me to order payment of interest unless good cause is shown to the contrary. I find that such cause is shown, for the reasons that the respondent's liability for both the amounts was indefinite and arguable before the Court, the amount involved is relatively small, and the parties elected to ask for Consent Orders without addressing the issue of interest. REMEDY The applicant is successfully re-employed and does not seek reinstatement. I have no difficulty in finding that that remedy is impracticable. I find that in all the circumstances of the case an Order for compensation pursuant to the provisions of Section 170 EE(2) and (3) is appropriate. The amount of compensation which is appropriate is the wages lost during the period when the applicant was unemployed, being 16 weeks at $488.85 or $7,821.60. The orders I make are therefore : (1) That pursuant to Section 179 of the Act and by consent the respondent pay to the applicant the sum of $158.00 for Annual Leave Loading (2) That pursuant to Section 179 of the Act and by consent the respondent pay to the applicant the sum of $488.85 for Long Service Leave (3) That the respondent pay to the applicant the sum of $7,821.60 as compensation pursuant to the provisions of Section 170 EE (2) of the Act I certify that this and the preceding 4 pages are a true copy of my Reasons for Judgment Maria Linkenbagh Date: 12 June 1996 Counsel for the Applicant: Mr. M.J. Campbell Solicitor for the Applicant: Deborah Jean-Therese Kelly Counsel for the Respondent: Mr. C. Rosser Solicitor for the Respondent: Reynolds Lawyers Date of hearing: 9 May 1996