Atwell v Simon Transport Pty Ltd [1996] IRCA 508

DECISION NO:508/96 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1725 of 1996 B E T W E E N: Paul ATWELL Applicant A N D SIMON TRANSPORT PTY LTD Respondent REASONS FOR DECISION 18 October 1996 PARKINSON JR This is an application made pursuant to Section 170EA of the Industrial Relations Act 1988 ('the Act'). The applicant was employed as a truck driver. He was initially employed in 1990 by a company known as Ambassador Transport Pty Ltd ('the previous operator'). The business and assets of that company were purchased by the respondent in August 1994. This included various trucks and equipment and existing contracts with customers of the previous operator. The respondent was engaged in general delivery and interstate delivery. One significant component of its business was a contract for delivery of carpets with a major supplier. The applicant became an employee of the respondent at the purchase of the business by the respondent. I am satisfied that he completed work for the previous operator on one day and on the following working day he presented at the same work place to commence work for the respondent. Upon presenting for work he performed the same work and his evidence is that save for a brief group discussion as to uniform requirements and other such matters there were no discussions as to terms of employment, nor was there an initial employment interview with the respondent. There is a dispute as to the period to be recognised as service for purposes such as termination payment having regard to the transmission of the business. The applicant contends that he is entitled to recognition of all service with the previous operator for such purposes. The respondent says that only the service in the employ of the respondent is relevant. The respondent contends that the termination of the applicant's employment was for valid reason, that reason being the operational requirements of the business, consequent upon a loss of a delivery contract. There is no dispute that the contract for delivery of carpet was lost to the respondent and that this contract did constitute a significant component of the respondent's carpet delivery business. The applicant contends that the applicant was wrongly selected, in that he was not a driver working on the carpet delivery contract which had been lost. That the employment of another driver shortly after the termination of the applicant's employment identifies that there was no operational requirement and that the selection criteria applied was flawed. It is further contended that he was not given an opportunity to be heard in relation to the performance issues that were relied upon as the basis for selecting him for redundancy. On 2 May 1996 the applicant was advised by a Mr Lewis, the operations manager of the respondent, that the applicant was no longer required and was being given a weeks notice. The applicant worked out this notice period and on Wednesday 4 May 1996 the applicant was called into the office wherein he was offered his employment back. His evidence was that he declined the offer advising: "I'm sorry, I've lost all faith in the company." His evidence was that he was told by a Mr David Smith that: "there had been a big mistake and that I'd like you to stay." The applicant then sought a guarantee of ongoing employment, which guarantee was not forthcoming. He declined to accept the offer of re-employment. The persons with whom the applicant had the conversation referred to above were not called to give evidence. I accept the applicant's evidence as to the conversations which were held. The evidence of Mr Simon, the respondent's Chairman of Directors, was that it was he who decided that the applicant ought be selected for redundancy. His evidence was that he made this decision having regard to the applicant's work performance and in particular the failure of the applicant to attend a drivers training course in Toowoomba, Queensland as expected. His evidence was that he did not speak to the applicant's supervisor to discuss his selection, nor did he take into account the fact that the applicant had been unable to attend at the training course due to the illness of his spouse at the time the first training course was scheduled. The applicant's evidence was that he was never advised of a date for the next training course. This evidence is not contested. It is my view that the decision to terminate the applicant's employment for the reason of redundancy was not a decision which could be supported as being sound and defensible at the time it was made. The applicant was not employed in the area or performing the work which was the subject of the loss of contract. The evidence of the applicant is that the respondent hired an additional employee at or around the same time it says there was an operational requirement to reduce the number of employees and that there remains an employee performing his duties and functions. The conduct of the respondent of informing the applicant that it had made a terrible mistake, during the course of the notice period, also identifies that the decision which was taken to terminate the applicant's employment was taken without full and proper analysis or appreciation of the operational requirements of the business. I am not satisfied that on 2 May, 1996 the respondent had valid reason for the termination of the employment of the applicant. In so finding I have considered the submissions of the parties in relation to the recent High Court decision in The State of Victoria v The Commonwealth of Australia (1996) 138 ALR 129 and the decision of Lee J in Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, Lee J, 4 October 1996) wherein his Honour Justice Lee considers the operation of s170DE(1) and observes: ( at page 6 ) " Neither counsel made any submissions on the question whether the phrase "valid reason" used in sub-s170DE(1) of the Act imposed a requirement that in all the circumstances a termination of employment at the initiative of an employer not be unjust or unfair. The terms of the Act suggest that such a construction is arguable. Section 170CA of the Act states that the object of Div 3 of Pt VIA is to give further effect to the Termination of Employment Convention ("the Convention") the text of which is set out in Schedule 10 of the Act. Art 8 of the Convention requires a contracting party to the Convention to ensure that a worker who has been dismissed is entitled to challenge that dismissal in an appropriate tribunal if the worker considers that his or her "employment has been unjustifiably terminated" and pursuant to Art 9 of the Convention that tribunal is to be empowered "to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified". The following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371 at 373 on the meaning of the expression "valid reason" are pertinent: (at page 373 ) "Section 170DE(1) refers to a 'valid reason, or valid reasons', but the Act does not give a meaning to those phrases or the adjective 'valid'. A reference to dictionaries shows that the word 'valid' has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: '2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.' In the Macquarie Dictionary the relevant meaning is 'sound, just or well founded; a valid reason.' In its context in s 170DE(1), the adjective 'valid' should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must 'be applied in a practical, commonsense way to ensure that' the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s 170DC." As Ld Denning stated in Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 it is an implied term of an employment contract that an employer be "good and considerate" to its employees. By giving effect to the Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer. "