Davey v Hannanprint Victoria [1996] IRCA 337

DECISION NO: 337/96 CATCHWORDS INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - whether termination for VALID REASON of CONDUCT OR PERFORMANCE - whether termination HARSH UNJUST OR UNREASONABLE - COMPENSATION Industrial Relations Act 1988, ss 170EA, 170DE(1), 170DE(2), 170EE(3) Slifka v JW Sanders Pty Ltd, North J, Industrial Relations Court of Australia, unreported, VI 94/2741R, 19 December 1995 JEFFREY NEIL DAVEY v HANNANPRINT VICTORIA VI 6164 of 1995 Before: PARKINSON JR Place: MELBOURNE Date: 26 JULY 1996

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 6164 of 1995 B E T W E E N: Jeffrey Neil DAVEY Applicant A N D HANNANPRINT VICTORIA Respondent MINUTES OF ORDERS 26 July 1996 PARKINSON JR THE COURT ORDERS THAT: 1. The respondent pay to the applicant the sum of $24,140.00 in compensation. 2. Time for payment is twenty one days from the date of order. 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 VI 6164 of 1995 B E T W E E N: Jeffrey Neil DAVEY Applicant A N D HANNANPRINT VICTORIA Respondent REASONS FOR DECISION 26 July 1996 PARKINSON JR This is an application made pursuant to s170EA of the Industrial Relations Act 1988. The applicant is 54 years of age. He was employed by the respondent at its plant in Victoria. The respondent employs 230 permanent employees and 30 casual employees. The applicant's employment was terminated by the respondent on 8 December 1995. The applicant was originally employed by the respondent on 10 May 1984 as a labourer and was promoted to a supervisory position and then to the position of maintenance manager in August 1992. He was previously employed in engineering and boiler room work, and obtained his experience and knowledge for this work during his nine years of naval service. He has no formal trade qualifications. After his promotion to maintenance manager in 1992, the applicant was responsible for coordinating maintenance work including trades supervision and contractor supervision. He was directly accountable to the Operations Manager, Mr Terry Moore, and through him to the General Manager, Mr Kevin Rodda. He also apparently had some line accountability to the Plant Manager, Mr Ian Galloway. I accept that there is some evidence that the applicant did not always perform these duties at the level expected by the respondent. The evidence suggests that the applicant on occasions did not follow up aspects of the work as he was required to do, and that on occasions he did not adequately supervise or arrange for supervision of contracting works. However, overall the evidence does not establish that the applicant's work performance was such as to establish a valid reason for the termination of his employment. Further, whilst there were some performance related issues raised by the respondent from time to time, in particular by Mr Galloway, I am not satisfied that the applicant had any appreciation that there was a concern with his work performance as maintenance manager until a discussion with Mr Rodda at which Mr Moore was present on 4 December 1995. That meeting involved a number of issues including some remarks made by the applicant to another employee, Mr Bryce, concerning Mr Rodda. I am satisfied that a principal part of the meeting was directed towards the remarks made by the applicant about Mr Rodda's demeanour on the previous Saturday. Mr Rodda heard a recorded version of a conversation which the applicant had had with Mr Bryce in relation to Mr Rodda's complaint about the supervision of contractors on site. In that conversation the applicant described Mr Rodda as "being off his head". I accept that the description "being off his head" is a frequently used colloquial expression meaning "angry". This was the context in which the applicant says he used the expression and I accept that is the case. The comments made by the applicant were perhaps inappropriate, but certainly not vindictive or designed, as Mr Rodda treated them, to undermine Mr Rodda or anybody else at the respondent. I accept that the meeting which was held was a tense meeting, with the applicant being cross-examined as to his conduct in relation to the comments referred to above. I accept that as a result of that meeting the applicant was upset and felt that he was in some way under threat from Mr Rodda. However, I am not satisfied that the potential threat to his continuing employment was raised with the applicant at that time. On 5 December 1995, as a result of the meeting on 4 December, the applicant raised with his supervisor, Mr Moore, his anxiety about his relationship with Mr Rodda and asked whether he might be able to "return to the tools" or "return to the floor", meaning, stand down from the supervisory position. The applicant was told not to rush into any decisions in this regard. Mr Moore repeated the conversation to Mr Rodda who, as a consequence, decided that the applicant's employment ought be terminated. Mr Rodda's evidence was that this was ostensibly because he concluded that the applicant had lost interest in the job and would therefore be unsuitable to continue in the position. This decision was made on 5 December 1995. It was made at a meeting in the absence of the applicant. The applicant was not asked for any explanation of his request. There were no further discussions with the applicant in relation to his position. The applicant was called into Mr Moore's office in the presence of Mr Galloway on that day and informed that his employment was terminated. The applicant was given five weeks pay in lieu of notice. He was not provided with a reference. His employment separation certificate described the reason for the termination of employment as being for misconduct. He was given no opportunity to be heard in relation to the conclusions reached by Mr Rodda as to his ongoing suitability for the position of maintenance manager, or his desire to remain in it. Nor was the possibility of the applicant going back to the tools discussed with him or even seriously considered by the respondent at any time. That option was dismissed out of hand without any consideration by the respondent. It is appropriate at this point to comment upon the documents produced by the respondent and identified as representing notes made of the content of the meetings of 4 December and 5 December 1995 where the decision to terminate the employment was taken (exhibits R3 and R6). I am not assisted by these notes. They are file notes, identified by Mr Rodda as having been produced by him shortly after the meeting. They do not constitute minutes of a meeting and they are not signed or endorsed as having been shown to the applicant or made in his presence, nor are the original notes from which the typed documents were said to have been made produced to the court. The file note documents merely record the respondent's version of the events and, whilst admissible as business records as established by Mr Rodda's evidence, they are of little probative value in circumstances where the applicant's version of events differs significantly. I am not assisted by such documents. I am satisfied that the principal or substantial motivating factor in the decision to terminate the employment of the applicant was the contents of the telephone conversation overheard or replayed by Mr Rodda and referred to above. I am not satisfied that the comment about Mr Rodda, made in the context in which I am satisfied it was made, constituted valid reason for the termination of the applicant's employment. I am not satisfied that the decision to terminate the employment was based on an alleged longstanding concern with the applicant's work performance, or on a reasonable belief in the respondent that the applicant no longer wished to be employed as the maintenance manager. I am not satisfied that the respondent had valid reason to terminate the employment of the applicant. The respondent in terminating the employment of the applicant contravened s170DE(1) of the Act. Whilst it is not necessary to do so having regard to my findings in relation to s170DE(1) above, it is appropriate to set out my findings as to s170DE(2). In my view, the termination of the employment contravened the requirement of s170DE(2) that an employer not terminate an employee's employment harshly, unjustly or unreasonably. The implementation of the termination of employment in the circumstances was arbitrary and harsh having regard to the applicant's length of service and age at the date of the termination of employment. It was also unreasonable of the respondent to move to terminating the employment arrangements so quickly and with no consideration of alternatives. The applicant was employed by the respondent for a period in excess of ten years. During that time, his overall conduct and work performance was satisfactory. In terms of the years of employment "on the floor" his work performance was acknowledged to be very good. I am also satisfied that an influencing factor upon the decision to terminate the employment of the applicant was the existence of memoranda encouraging or requiring a reduction in labour in the respondent's divisions. Those memoranda were received by Mr Rodda on 24 November 1995 and 4 December 1995. These matters were relied upon by the respondent as evidencing why the alternatives to terminating the employment were limited. However, whilst such staff limitations may have made the task difficult, and the ultimate outcome of an investigation into alternatives may even have identified that no positions existed or could be created, I satisfied that no attempt was ever made to consider any alternatives. This is despite it being available to Mr Rodda to seek to rely upon the special circumstances provisions in the memorandum of 4 December to justify a reorganisation of staffing or hiring of additional employees. Finally in relation to this aspect of s170DE, the applicant was given no advance warning or notice of the termination of the employment. He was paid an amount of five weeks pay in lieu of that period of notice. In the circumstances of this employment, having regard to its length and the reason relied upon by the respondent for terminating the employment, the amount of notice given to the applicant was unreasonable. It was open to the respondent to provide a longer period of notice. There is no evidence before the court to suggest that, even on the respondent's interpretation of events, it was desirable to immediately remove the applicant from the workplace. The applicant was afforded no opportunity to elect to seek alternative employment during the course of the notice period and whilst still employed. This in my view is another factor in the respondent's treatment of the applicant which constituted the termination of employment as harsh, unjust and unreasonable. The respondent in terminating the applicant's employment contravened s170DE(2) of the Act. I turn now to consider the question of remedy pursuant to s170EE of the Act. The applicant does not seek reinstatement and says that such an order would be impracticable in view of the circumstances of the termination of employment. I accept his evidence as to the distress caused to him by the circumstances of the meetings with Mr Rodda and the manner in which his employment was terminated. I find that an order for reinstatement would be impracticable. I am satisfied that it is appropriate in the circumstances to make an order for compensation. But for the termination of the employment in contravention of the Act, the applicant's employment was likely to continue with the respondent for a substantial period of time. I am satisfied that the applicant would have been likely to remain with the respondent for a substantial period of time. It is reasonable to anticipate him remaining in the employment until eligible to retire from employment which, at the earliest, was likely to have been at age 60 years. This puts his likely retirement date as being some five years from the date of the termination of employment. I do not accept that the circumstances of the employment establish that the employment was likely to terminate lawfully in the short term. Neither the conduct or work performance of the applicant, nor the particular circumstances of the respondent suggest that this is so. I do not consider that the matters raised by the respondent against the applicant in the course of the proceedings, which matters I have found not to be the substantive reasons for the termination of employment, are relevant in the exercise of discretion pursuant to s170EE(3). There are no other circumstances or issues of conduct which would be relevant in exercising my discretion not to award compensation or to award nominal compensation. The applicant had not obtained alternative employment at the date of the trial, and his evidence was that he was finding it difficult in view of the reason given for the termination on the separation certificate. I accept that his age would also be a contributing factor to his difficulty. The applicant's losses are continuing and at the date of the trial they were in excess of the limit of the amount of compensation available to be awarded by the court pursuant to s170EE(3) of the Act. Save for the operation of s170EE(3) in limiting the amount of compensation able to be ordered, the applicant's losses would have resulted in a sum in excess of 12 months remuneration, having regard to the years of employment which he would have remained with the respondent even with deduction or reductions for exigencies of life and other matters. I have had regard to the decision of North J in Slifka v JW Sanders Pty Ltd (Industrial Relations Court of Australia, unreported, VI 94/2741R, 19 December 1995) as to the assessment of the quantum of compensation, including accounting in that compensation for taxation obligations. There is no evidence in these proceedings as to the applicant's marginal rate of tax, nor have the parties addressed the court in relation to the taxation implications of any award of compensation. In any event, in view of the ongoing loss which I am satisfied is suffered by the applicant as a consequence of the termination, and the limitation upon the compensation available, compensation in the gross amount without deduction for any taxation does not result in the applicant receiving a windfall, or compensation in excess of his losses, in the sense discussed in Slifka. I make no provision for taxation. This is because but for the limitation on the quantum of compensation provided for by s170EE(3) and (4), the applicant would have been entitled to compensation in excess of the amount ordered, even accounting for any taxation obligation which might exist. I have decided that the applicant is entitled to the full amount of compensation available to the court to order. That is the sum equivalent to the remuneration the applicant would have earned in the six months immediately following the date of termination of employment, subject to any applicable limitation arising from the application of S170EE(4) of the Act as a result of the applicant not being an employee covered by an award or industrial agreement. The applicant was in receipt of a salary of $42,000.00 at the time of the termination of the employment, together with superannuation contributions of 5 per cent of his salary. His remuneration package also included an allowance based upon 200 litres of petrol per month. This I calculate to represent the sum of $140.00 per month for vehicle and petrol expenses. The applicant would have been entitled to an amount of $840.00 as a result of these vehicle remuneration entitlements in the period relevant to the assessment of compensation. He also received an amount of $100.00 in contribution to each of his quarterly phone bills. There would have been two such telephone amounts payable in the period under consideration for compensation. This I calculate to be the sum of $200.00. The applicant would have earned salary in the amount of $21,000.00 in the period relevant to the assessment of compensation, and superannuation contributions of $2,100.00 would have been made on his behalf by the respondent. The applicant is entitled to compensation in the sum of the total of all of the above amounts. The amount of compensation which will be ordered to be paid to the applicant is $24,140.00. No allowance has been made in this judgment for long service leave entitlements foregone as a result of the termination of employment. Whilst loss of future long service leave expectations was referred to in submissions, no evidence as to the basis for or quantum of any entitlement was put before the court. The order of the court will be that the respondent pay to the applicant the sum of $24,140.00 in compensation. I certify that this and the preceding eight (8) pages are a true copy of the reasons for decision of Judicial Registrar Parkinson. Associate: Dated: 26 July 1996 APPEARANCES Counsel appearing for the applicant: Ms J Patrick Solicitors for the applicant: Ryan Carlisle Thomas Counsel appearing for the respondent: Mr M McDonald Solicitors for the respondent: Minter Ellison Date of hearing: 5 June 1996