DECISION NO: 262/96 C A T C H W O R D S INDUSTRIAL LAW - termination of employment - whether casual employment terminated - consultation - whether lack of consultation unfair - not unfair in the circumstances - failure to give notice Industrial Relations Act 1988 ss.170DB, 170DE, 170EA Liquor and Accommodation Act 1990 (Tasmania) SS75 and 77 CASES: Siagian v Sanel Pty Ltd (1995) 1 IRCR 1 APESMA and Skilled Engineering Proprietary Limited (1995) 1 IRCR 106 Grout and Gunnedah Shire Council (1995) IRCR 143 Reid v River House Packaging Proprietary Limited (unreported) IRCA, 24 October 1995, matter No VI95/2164, Jones and the Department of Energy and Minerals, (1995) 60 IR 304 Gregory and Philip Morris (1988) 24 IR, 397 Byrne and Frew v Australian Airlines (1995) 131 ALR, 422 Bostick Australia Proprietary Limited and Gorgevski (No 1 ) (1992) 36 FCR 20 Selvachandran v Peteron Plastics Proprietary Limited (1996) 62 IR 371 NETTLEFOLD -v- SMOKER No. TI-1334 of 1995 Before: Judicial Registrar Ryan Place: Devonport Date: 6 June 1996 INDUSTRIAL RELATIONS COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY TI-1334 of 1995 B E T W E E N : NETTLEFOLD Applicant AND SMOKER Respondent MINUTES OF ORDERS Judicial Registrar Ryan 6 June 1996 THE COURT ORDERS: (1) The application pursuant to section 170EA be dismissed; (2) The Respondent pay to the Applicant for breach of section 170DB the sum of $250. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY TI-1334 of 1995 B E T W E E N : NETTLEFOLD Applicant AND SMOKER Respondent Before: Judicial Registrar Ryan Place: Devonport Date: 6 June 1996 REASONS FOR JUDGMENT (EX TEMPORE) THE CLAIM The Applicant claims unlawful termination of employment. The application for remedy sought reinstatement and compensation and was signed by the Applicant and her solicitor on 5 December 1995 and filed in the Tasmanian District Registry on 14 December. However, in evidence the Applicant stated that she would feel uncomfortable going back to work with the Respondent and the application was pursued at the hearing as if it were primarily an application for compensation. The Respondent operates the Alexander Hotel in Formby Road, Devonport. The Applicant worked as a kitchen-hand at the hotel for just over six months from 17 May to 24 November 1995. She was 16 years of age at the time. Statutory references in this judgment are to the Industrial Relations Act 1988 as amended, except where otherwise specified. The Respondent's statement of facts and issues states that on 24 November 1995 the Applicant was told there was no longer any work available for her and that this advice to her was based on the operational requirements of the business. Although advice of that nature is almost a classic formulation of a termination at the initiative of an employer for a valid reason described in S170DE(1) as a valid reason based on the operational requirements of the undertaking, establishment or service, counsel for the Respondent did not concede termination at the initiative of the employer. He asserted that: (1) there was no termination at the initiative of the employer but an amicable agreement between the Respondent and the Applicant that there was no further casual work available at that stage and that the Applicant would be called in and offered further casual work as a kitchen-hand if and when it became available (2) if the employment relationship was held to have ended on 24 November and held to be a termination at the initiative of the employer it was for a valid reason in the terms of S170DE(1), and was not harsh, unjust or unreasonable pursuant to S170DE(2). At the conclusion of final addresses, counsel for the Respondent conceded that if the Court found the termination of employment to have been at the initiative of the employer then the Respondent was in breach of section 170DB in that the Respondent did not give the Applicant a period of notice of at least one week or compensation instead of such notice. Counsel for the Applicant alleged that the termination of employment was brought about by the Respondent and was not for valid reason and was in any event harsh, unjust and unreasonable. At the hearing, although termination at the initiative of the Respondent was not conceded, counsel for the Respondent indicated that he was prepared to call evidence first. One witness was called, Kimberley Clarence Smoker, an hotelier and company director. He is the director of the Respondent company which operates the Alexander Hotel. RESPONDENT'S EVIDENCE Mr Smoker's evidence included the following: (1) on 24 November 1995 he called the Applicant into the office at the hotel, asked her to sit down and explained to her that work was not there, that is, at the hotel, for her any more (2) in cross-examination he stated that he cannot recall stating to the Applicant at this stage that the hotel could not afford to keep her on because there was not enough work but rather that he said, "The work is not there", and explained about the two new chefs. This was a reference to his earlier evidence that two new chefs had taken over on 14 November and 21 November from two chefs who had left voluntarily and that the way in which the new chefs worked reduced the demand for the Applicant to be involved in food preparation (3) again in cross-examination he stated that he could not recall the Applicant saying words to the following effect, "So, I am sacked" (4) he thinks he made a remark to the effect that, "If we get busy, we will call you in". The Applicant confirms such a statement and Mr Smoker commented in his evidence, "If I had sacked her I would not have said that." And later, in his evidence again he stated that, "I think I did say if things picked up I would be prepared to call her back in" (5) Mr Smoker concedes that earlier that day, that is 24 November 1995, he sat down with his co-director, Mr Astor, and said that, "If there is no work we will have to lay Cindy - (that is the Applicant) - off" THE APPLICANT'S EVIDENCE Counsel for the Applicant called the Applicant and the Applicant's father. The Applicant's father gave very brief evidence which was to the effect the Applicant was upset and crying when she returned home on the evening of 24 November and stated that she had been sacked. The Applicant's own evidence in respect of the conversation on 24 November is reasonably consistent with that of Mr Smoker. There are differences in the evidence of the two witnesses but in relation to their conversation in the hotel office on 24 November there are few differences of substance. The Applicant's evidence is that: (1) Mr Smoker told her he could not keep her in because there was not enough work (2) Mr Smoker used words to the effect that, "If we need you, we will call you back in" (3) the Applicant states that she did say words to the effect of, "So, I have got the sack" and that she then asked for a reference and that Mr Smoker indicated he would give her a reference and indeed some few days later did provide a written reference for her - at least I assume it was a written reference; in any event he provided a reference for her. (4) the Applicant agreed that she worked on a casual basis but stated she was never called in to work at short notice and rarely sent home early because of lack of work (5) in cross-examination the Applicant agreed that she understood that the arrangement suggested on 24 November was that she would be called in when needed (6) in re-examination the Applicant stated that she had expected to be working at the hotel after 24 November but was not called in to work after that date. THE ENDING OF THE EMPLOYMENT The Applicant's concessions in examination-in-chief, in cross-examination and in re-examination that she was, in effect, offered the possibility of work on a casual-when-needed basis and her evidence that she expected to be offered such work after 24 November raises the question of whether the Respondent at any stage terminated the contract of employment whereby the Applicant had worked part-time on a regular and systematic basis for a period in excess of six months. However, I have come to the conclusion, after assessing the evidence of Mr Smoker and the Applicant, that the Respondent, through Mr Smoker, did terminate the regular, systematic, casual employment of the Applicant and that Mr Smoker suggested the Applicant would be or might be offered future casual employment but never offered any further employment to her after 24 November. I add that even if the Respondent had offered occasional casual employment to the Applicant after 24 November that would not necessarily mean that the Respondent would have been found to be innocent of a termination of the employment such as to attract the jurisdiction of Division 3, Part VIA. It would depend on the circumstances. What the Respondent did was a termination of an arrangement whereby the Applicant had regularly worked 16 to 20 hours a week and often for longer periods. The court notes the weekly payments to the Applicant from week ending 4 July 1995 to week ending 14 November 1995 (in Exhibit A1) never dropped below $177, in nine weeks during that period exceeded $200 and in six weeks during the period exceeded $240. The Court also notes that the payments for the last two weeks, namely, week ending 21 November and week ending 28 November were the lowest gross payments in the period covered by exhibit A1, being $166.64 and $157.89 respectively. I have no doubt this was a termination of employment at the initiative of the employer and was a termination within the terms described by the Chief Justice, by Gray J and Moore J respectively in the cases of Siagian v Sanel Pty Ltd, APESMA and Skilled Engineering Proprietary Limited and Grout and Gunnedah Shire Council, which cases are all reported in (1995) IRCR at 1, 106 and 143 respectively. It also follows that I have no doubt that this was a termination which attracts the jurisdiction of Division 3, Part VIA. The fact that the Respondent may have what counsel described as an "unbending policy" of not giving references to employees who are dismissed but did give a reference to the Applicant is of no moment. The Respondent may not have believed the actions of 24 November constituted a termination by the employer of the employee but it did and I so find. VALID REASON However, I am equally certain that this was a termination for a valid reason connected with the operational requirements of the Respondent's undertaking, establishment or business. I accept the evidence of the Applicant that she not only undertook cleaning and washing and other kitchen-hand duties but also prepared food and at times set out entrees and desserts. However, on her own evidence, she never at any stage worked as a waitress. The Court likewise accepts that the sort of work she says she did is quite consistent with the duties of a kitchen-hand in a busy but relatively small hotel. It is clear that the two new chefs were employed, one, on or about 14 November and the other on or about 21 November. The Court likewise accepts that chefs have their own individual ways of working and there is no evidence contrary to the evidence of Mr Smoker that the way in which the two new chefs chose to work reduced the demand for a kitchen-hand to perform the duties previously performed by the Applicant. At first blush, the evidence of the Applicant that she did more food preparation and all of the entrees after the new chefs arrived could be seen as inconsistent with the evidence that the need for the Applicant as a kitchen-hand had declined with the arrival of the two new chefs. On the other hand, the lowest payments to the Applicant, at least in the period 1 July 1995 to 24 November 1995 came in the weeks ending 21 and 28 November, albeit that the sixth highest payment of $243.31 came in the week ending 14 November 1995. While the Court does not have evidence of the exact payments to the Applicant in the period 17 May 95 to 30 June 1995, the payments to the Applicant from 1 July to 24 November are a reasonable indication of payments during the bulk of the employment period. It is not for the court to interfere with or second-guess the uncontradicted operational requirements of an hotel, running separate kitchen, bar and packaged liquor departments. It is not for this court to assume the managerial chair and I rely there on the comments of the Chief Justice in the case of Nicolson and Heaven and Earth Gallery Proprietary Limited, also reported in (1995) IRCR 199. The uncontradicted evidence is that the advent of the new chefs led to a drop in demand or need for a kitchen-hand. The fact that the Respondent had in the 14 days prior to 24 November, put in train arrangements which led to an additional waitress being employed, does not detract from the Respondent's position. That position was that the way in which the kitchen was to work no longer provided a requirement for a kitchen-hand on a regular, systematic basis in which the Applicant had been employed since 17 May 1995. The fact that by February 1996 the Respondent had once again employed a kitchen-hand on a casual basis does not alter the fact that on 24 November 1995 the Respondent made a decision in accordance with its operational requirements and the Respondent's perception of appropriate operational requirements. This is not dissimilar to Reid v River House Packaging Proprietary Limited (unreported) IRCA, 24 October 1995, matter No VI95/2164, where at page 3, a different type of restructure was held to constitute a valid reason for what was a genuine, if short term, redundancy. FAIRNESS Counsel for the Applicant asserts that even if the termination was for a valid reason connected with the operational requirements, and I have so found, it was nevertheless an unfair and unlawful termination in that it was harsh, unjust and unreasonable. Counsel for the Applicant did not really specify how or why the termination was allegedly harsh, unjust and unreasonable. However, it is fair to assume that he was arguing that the termination of the Applicant's regular casual employment without notice and without consultation was harsh, unjust and unreasonable. He also asserted that no real attempt was made by the Respondent to find alternative employment for the Applicant and that the lack of notice, the lack of consultation and the lack of exploration of alternative options, rendered the termination harsh, unjust and unreasonable. I will return to the lack of notice later but will note that the failure to give the Applicant notice or payment of at least one week in lieu of notice was undoubtedly a breach of S170DB. However, I do not accept that in this case a casual employee of an hotel subject to changing demands must be consulted before a decision which ends her regular casual employment because of the operational requirements of the business. Furthermore, I do not accept that the Respondent failed to give any consideration to the possibility of alternative casual employment. LACK OF CONSULTATION Taking first the undoubted lack of consultation, it is indisputably true that recognition has often been accorded to the importance of consultation as an element of procedural fairness in dismissals for redundancy. Authorities so holding in a variety of circumstances of redundancy are summarised by Ryan J in his comments on procedural fairness in Jones and the Department of Energy and Minerals, (1995) 60 IR 304 at 310-313. However, at 311 he states: "The authorities in this area support the view that the context of the duty of fairness in the sense of the procedures to be followed before deciding to dismiss an employee will vary according to the circumstances of each case." Again, at 311 he cites Jenkinson J in Gregory and Philip Morris (1988) 24 IR, 397 at 398 as follows: "The question whether the termination is unreasonable is one of fact. This question required the determination by reference to moral values and prudential considerations current in the community of what the tribunal of fact thinks a reasonable employer in the circumstances would have decided to do at the time when the Respondent terminated the appellant's employment." The Court further notes that in Gregory at 415, Wilcox and Ryan JJ emphasised the need to consider the circumstances of each case. They expressed a wish not to propound any universal rule and went no further than to express the view that a provision such as now contained in S170DE(2) may often necessitate consultation. I draw attention to the fact that the three judges cited in Gregory and the judge cited in Jones do not suggest that consultation is always necessary to avoid the categorisation of a termination on the grounds of redundancy or operational requirements as harsh, unjust and unreasonable. I draw attention to the more recent High Court judgments in Byrne and Frew v Australian Airlines (1995) 131 ALR, 422. At 433, Brennan CJ and Dawson and Toohey JJ state: "Whilst the adoption of an unfair procedure may render a dismissal harsh, unjust or unreasonable, whether it does so or not must depend on all the circumstances." At 462, McHugh and Gummow JJ state: "The distinction between procedure and substance is elusive. In our view it is unhelpful and contrary to the tenor of the award to introduce it into clause 11(a). (Clause 11(a), of course, is an award clause in terms similar to S170DE(2).) That is not to say that the steps taken or not taken before termination may not in a given case be relevant to consideration of whether the state or affairs that was produced was harsh, unjust or unreasonable. Thus it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable. But the question is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking to the first issue before there is seen to be any need to enter upon the second. Some assistance and support for the conclusions we have reached is provided by the decisions of the South Australian Courts upon the legislation of that State and also of the Federal Court in proceedings upon awards with like provisions to clause 11(a)." Again, I repeat, clause 11(a) is in similar terms to S170DE(2). Their Honours then cite relevant passages from four well known and much cited authorities and conclude with the comments of Shepherd and Heerey JJ in Bostick Australia Proprietary Limited and Gorgevski (No 1 ) (1992) 36 FCR 20 at 28: "A court must decide whether the decision of the employer to dismiss was, viewed objectively, harsh, unjust or unreasonable. Relevant to this are the circumstances which led to the decision to dismiss and also the effect of that decision on the employer. Any harsh effect on the individual employee is clearly relevant but of course not conclusive." The circumstances here are those of a rather modest hotel with about 17 employees, many of them casual employees. The hotel has three separate departments: food, bars and packaged liquor. The way in which the new chefs chose to prepare and serve food led to a lack of work for the Applicant, a 16-year-old kitchen hand. I do not consider the decision of the Respondent to be irrational or unreasonable in such circumstances. To some extent it was an arbitrary decision but not entirely. Notice was not given, it should have been given, but with that exception I find that the Respondent considered alternative options, albeit briefly. In the practical, demanding, changing world of a small hotel in a very competitive industry, the termination was rational and reasonable. To use the words of Northrop J in Selvachandran v Peteron Plastics Proprietary Limited (1996) 62 IR 371 "the reason for termination was not capricious, fanciful, spiteful or prejudiced but sound, defensible or well-founded". There were no practicable alternative options for a 16 year old employee. The suggestion that she could have been employed as a waitress and exempted from the requirements of sections 75 and 77 of the Liquor and Accommodation Act 1990, Tasmania, because supervised in serving liquor by a person aged over 21 years of age, is devoid of commercial reality. It is one thing to occasionally and for brief periods allow minors for training purposes to serve liquor under supervision of adults; it is another to suggest that the Respondent should have offered the Applicant regular casual employment as a waitress who either did not serve liquor at all or who served it only under supervision. NOTICE, SECTION 170DB I find that in the circumstances, the termination was not harsh, unjust or unreasonable but that the Respondent failed to give the Applicant notice or payment in lieu of notice pursuant to section 170DB. I consider that reasonable payment in lieu of notice would be $250. This is in excess of the Applicant's average weekly earnings in the period of employment but I note from exhibit A1 that the gross weekly earnings in four weeks exceeded $250, that is, in the weeks ending 26 September, 3 October, 10 October and 24 October. MINUTES OF ORDERS THE COURT ORDERS: (1) The application pursuant to section 170EA be dismissed; (2) The Respondent pay to the Applicant, for breach of section 170DB, the sum of $250. 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 10 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan. Associate: Dated: 19 June 1996 Counsel for the Applicant: Mr S Mackey Counsel for the Respondent: Mr G Richardson Date of hearing: 5 June 1996 Date of judgment: 6 June 1996