Toal v Carpet Call (Vic) Pty Ltd [1996] IRCA 404

DECISION NO: 404/96 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - TERMINATION NOT AT INITIATIVE OF EMPLOYER - in any event valid reason existed and if termination had been at initiative of employer it would not have been unlawful Industrial Relations Act 1988 ss.170DB, DC, DE, EA CASES: Grout v Gunnedah Shire Council (1994) 1 IRCR 143

Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200

Western Excavating (ECC) Ltd v Sharp, [1978] ICR 221

TOAL -v- CARPET CALL (VIC) PTY LTD No. VI-5492 of 1995 Before: Judicial Registrar Ryan Place: Melbourne Date: 4 April 1996

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI-5492 of 1995 B E T W E E N : DAVID TOAL Applicant AND CARPET CALL (VIC) PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Ryan 4 April 1996 THE COURT ORDERS: 1. That the application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V0.I-5492 of 1995 B E T W E E N : DAVID TOAL Applicant AND CARPET CALL (VIC) PTY LTD Respondent Before: Ryan JR Place: Melbourne Date: 4 April 1996 REASONS FOR JUDGMENT (Ex Tempore) In this case the Applicant claimed that his employment with the Respondent was unlawfully terminated by the Respondent. He initially sought reinstatement but at the hearing amended the claim to one for compensation only. Both parties were represented by counsel and at the conclusion of the second day of the hearing I dismissed the application. These are the reasons for the decision and were given when judgment was delivered. The Applicant and the Respondent executed an employment agreement on 1 October 1993 (Exhibit A1). On that date the Applicant also signed a memorandum in which he indicated his acceptance of a commission structure (Exhibit A2). The structure provided for the payment of commission on weekly retail sales provided that the salesperson achieved a minimum of 520 metres of carpet sold in each four week period. The commission structure was later changed to a minimum based on profit achieved rather than volume sold. The Applicant began as a salesman on 4 October 1993 and was quickly promoted to store manager in December 1993. It is undisputed that from October 1993 until December 1994 the Applicant was highly regarded and was unreservedly acknowledged as a good salesman and a competent manager. The Respondent asserts that in and from December 1994 right through to the ending of the employment relationship on 9 October 1995, the Applicant's work performance was adversely affected by personal difficulties experienced by the Applicant because of the deterioration and breakdown of his marriage. The Applicant somewhat reluctantly conceded that his marital difficulties did impact on the performance of his work but he steadfastly refused to acknowledge that these difficulties impacted on his sales or that the decline in his punctuality was the result of excessive drinking. He admitted that in 1994 he was on occasions late to work and late in opening various stores in which he was manager in charge. However, he claims that such lack of punctuality was the result of working late in the evening. He also admitted that in 1995 he found it difficult to get out of bed in the mornings and it can be inferred from his evidence that depression, linked to his personal difficulties, may have been a causative factor. The cause of the lateness is not of much moment but the fact that he was late and admitted it, is of some importance. So, too, the causes of poor performance are of less moment but the actuality of poor performance is important. The Applicant denies any deterioration in his appearance, dress or grooming in 1995, while the Respondent asserts that such a decline did occur and that the Applicant's performance, attitude and punctuality were all adversely affected by the Applicant's personal difficulties and by inappropriate and excessive use of alcohol. The Applicant gave evidence and so too did Colin Jinks, James Smith and John Goodchild, respectively State Sales Manager, Managing Director and Regional Manager with the Respondent company. The Respondent asserts that the Applicant ended the employment relationship on 9 October 1995 when Mr Jinks told him that the company could not afford to give him any more sales leads. The Respondent asserts that the Applicant's claim is without jurisdiction because the Applicant in effect resigned or abandoned his employment. In the alternative the Respondent claims that if the Court finds that the employment ended because of an initiative of the employer, there was a termination for valid reason, namely, the unacceptable performance of the Applicant. The Respondent further asserts that the Applicant was counselled and warned, albeit mostly in an informal fashion and that the Applicant knew his employment was jeopardy and that he had ample opportunity to respond to the allegations of poor performance and that in all the circumstances the termination was not harsh, unjust or unreasonable. The Applicant's position is that: (i) there was no valid reason for termination (ii) the termination was at the initiative of the respondent (iii) the Applicant was not given an opportunity to respondent to allegations of poor performance, lack of punctuality or inappropriate attitude and appearance and the applicant denies poor sales performance, attitude and poor appearance. (iv) apart from the meeting with the Managing Director, Mr Smith, and the State Sales Manager, Mr Jinks, on 2 October 1995, the Applicant was never counselled or warned (v) the Respondent produced no documentary evidence of a decline in the Applicant's sales performance or any documentary evidence of sales performance anywhere by anyone in 1994 and 1995 (vi) the documentary evidence that did exist and was produced tended to support the Applicant's assertion that the respondent terminated his employment (vii) the Applicant was given inadequate notice (viii) the termination was harsh, unjust and unreasonable (ix) the termination breached ss170DB, 170DC, 170DE(1) and 170DE(2) (x) reinstatement is not sought and is impracticable but the Applicant should be awarded maximum compensation under S170EE(3) and certain compensation under S170EE(5). The preliminary jurisdictional issue is simply expressed in the perennial question, which is - did he jump or was he pushed? It is simple to ask and more difficult to answer. Often it is impossible to answer that question beyond reasonable doubt but it need only be answered using the test of balance of probabilities. In Grout v Gunnedah Shire Council (1994) 1 IRCR 143 at 160-161, Moore J determined whether termination was at the initiative of the employer by asking whether the steps taken by the employer "effectively terminated" the employment. The Full Court adopted that passage from Grout in Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200, and stated: "A termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship." Counsel for the Applicant submits that the action of Mr Jinks and the expressed intention of Mr Goodchild not to give the Applicant any more sales leads was a culminating step in a series of steps taken by the Respondent. She submits that: (i) this was the principal contributing factor which led to the termination of the employment relationship (ii) the removal of leads effectively deprived the Applicant of the opportunity to work as a salesman (iii) this removal of leads varied and indeed repudiated the employment agreement (iv) the effect was that the Applicant was effectively a subject of constructive dismissal. (v) the alternative test in Western Excavating (ECC) Ltd v Sharp, [1978] ICR 221 at 226 per Lord Denning MR, also demonstrated that the employer here breached the contract of employment and showed that it no longer intended to be bound by an essential term of the contract, i.e. work as a salesman, and that the result was the constructive dismissal of the Applicant. (vi) the test in Grout and Mohazab should be preferred to the test in Sharp because Sharp deals with specific U K legislation I agree with Counsel for the Applicant that the Grout and Mohazab tests are preferable to that in Sharp. However, I do not accept that the undoubted refusal to give the Applicant more sales leads, at least in the foreseeable future, amounted to and act or initiative of the employer which ended the employment relationship. I have no doubt that decision to give the Applicant no further sales leads in the short term future was a potent contributing factor which led to a decision by the Applicant to end the employment. However, I find it was the Applicant's decision to leave. I also find that the Applicant's behaviour in the last few days he was pursuing sales leads was unacceptable and that it was quite reasonable for the Respondent to bring the Applicant into the office and warehouse. I also find that the Respondent was giving the Applicant one more chance, which may or may not have been the last chance, to re-establish control over his personal and working life. In my view the applicant was distressed and disturbed and. for whatever reason or reasons, he had been performing his work inadequately from December 1994 and especially from June to October 1995. The Applicant is an intelligent man. He well knew that his performance was way below par. He conceded this in several ways at several times in his evidence. In my view, his conduct on 2 June 1995 (failure to open the Essendon store, failure to notify his employer and refusal to attend at work at any time on that day) justified summary termination on that count alone. The Applicant very much knew his employment was in jeopardy and I accept evidence from Mr Jinks that the Applicant expressed this view to him by telephone at about 10.30 am on Monday, 2 October. I do not accept that the decision to deprive the Applicant of leads and restrict him to the Mulgrave store repudiated the employment agreement. In my view, the Applicant was at the end of his tether and had lost control of his working life and elected to leave when told that he would be given no more sales leads. I have no doubt that Mr Jinks was delighted to encourage the Applicant to leave and acted promptly to ensure that he went and went quickly. Having said that, the employer had tried on a number of occasions to help the Applicant. I find after careful assessment of all the evidence, and especially that of Mr Jinks and the Applicant, that the ending of the employment relationship was not at the initiative of the employer. Having reached that conclusion I must and do dismiss the application for lack of jurisdiction. However, if I were to be found to be wrong in concluding as I have, and if the Court had had to assess the termination as at the initiative of the employer, the Court would have found that there was a valid reason for termination being the inadequate performance of the Applicant and especially, but not exclusively, on 2 June, 3 June, 10 August, 30 September and every day between 2 and 7 October 1995. The Court would have found that while the warning and counselling of the Applicant was invariably informal and recorded only by way of Mr Jinks' diary notes and infrequently at that, nevertheless, Messrs Smith and Jinks, and especially the former, did counsel, warn and reprimand the Applicant. Where there has been a conflict in evidence between that of the Applicant and the three respondent witnesses, I have preferred the latter but I must say that I did not detect substantial conflicts except in areas in which the Applicant denies point blank counselling or warning. In that respect I prefer to conclude that the Applicant has a faulty recollection and/or is suppressing the reality of what occurred. I find that the Applicant was a gifted and talented manager and salesman and, with some qualification, a reasonably honest witness. His decline in performance in 1995 seems to have emerged from unfortunate personal problems for which he must take responsibility. It is hoped that he has or will seek professional assistance and thus take responsibility for his future professional and personal career. If the Court had found jurisdiction it would not have found any breach of Part VIA of Division 3 of the Industrial Relations Act 1988 and would not, in all the circumstances have found the termination harsh, unjust and unreasonable even if a breach had been found. The application is dismissed. MINUTES OF ORDERS