DECISION NO:636/96 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - redundancy - whether valid reason for termination - offer to work out notice rejected by applicant. Workplace Relations Act 1996 (C'th) (formerly the Industrial Relations Act 1988) SS 170DB(2), 170DC, 170DE(1) and 170EA State of Victoria v The Commonwealth of Australia (1996) 138 ALR 129 LEONARD PAGE v LOOK OF AUSTRALIA PTY LTD WI 1329 of 1996 Before : BOON JR Place : PERTH Date of Judgment : 18 DECEMBER 1996 IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) WI 1329 of 1996 B E T W E E N: LEONARD PAGE Applicant A N D: LOOK OF AUSTRALIA PTY LTD Respondent MINUTE OF ORDERS 18 DECEMBER 1996 PERTH BOON JR THE COURT ORDERS THAT: 1. The respondent pay to the applicant two days' wages in respect of the rostered days off to which he became entitled prior to the date of termination; and 2. The balance of the application be dismissed. 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 ) WESTERN AUSTRALIA DISTRICT REGISTRY ) WI 1329 of 1996 B E T W E E N: LEONARD PAGE Applicant A N D: LOOK OF AUSTRALIA PTY LTD Respondent REASONS FOR DECISION 18 DECEMBER 1996 BOON JR This is an application under section 170EA of the Workplace Relations Act 1996 (Cth) ("the Act"). The applicant, Mr Page , seeks payment of compensation arising out of the alleged termination of his employment by the respondent. Mr Page alleges that in terminating his employment, the respondent breached the provisions of the Act in a number of ways. In the first place, it is said that he was not given the period of notice required by section 170DB(2). In relation to this allegation the respondent says that Mr Page was offered the required one week's notice but that Mr Page abandoned his employment on the date he was given notice of the termination. Secondly, Mr Page says that he was not given an opportunity to respond to allegations against his conduct or performance as required by section 170DC. The respondent says that it could not reasonably be expected to give Mr Page that opportunity. In the third place, Mr Page says that there was no valid reason connected with the employer's capacity or conduct or based on the operational requirements of the undertaking, establishment or service for the termination. The respondent says that the company was experiencing severe financial difficulties and it decided to make Mr Page redundant. It says that there had been problems with Mr Page's conduct or performance and that that was the reason why he was chosen for redundancy instead of another employee. Further, the respondent says that Mr Page earned a higher salary than any of the other employees in its Perth based office and it made good economic sense for its business to make the highest wage earner redundant. There is a further claim by Mr Page in the associated jurisdiction of this court. He alleges that he was underpaid by the respondent whilst he was employed with them and seeks payment of an amount of $1,242.52. The respondent denies that it has underpaid Mr Page and puts Mr Page to proof of this claim. BACKGROUND Look of Australia Pty Ltd is a company which was set up in 1995 to act as an optical dispenser. It presented a new concept in Australia in that it acted as a provider of prescription glasses for a private health fund, Medibank Private. Look of Australia opened up branches in each state and territory of Australia. Members of the public who were members of Medibank Private would come to Look of Australia and be provided with prescription glasses on a bulk billing basis. Mr Page was made manager of the Western Australian branch on 28 August 1995 and was responsible for starting up and developing the practice in Perth. There were four other employees of the Perth branch. In 1995, Look of Australia had 28 employees throughout the country. By early 1996 a major competitor had entered the market. Look of Australia started experiencing financial difficulties. The financial position of the company has gradually worsened to the extent that it now has only 14 employees and has sold three of its shops. The other shops continue to trade until they are able to be sold. Evidence was given that Look of Australia has debts of over $250,000 to a national bank and there was a winding up order set down for hearing on 9 December 1996. Evidence was given on behalf of Look of Australia by Mr Alan Gibson, a director, that in February 1996 there was a meeting of the directors of the company at which it was decided that they would have to reduce staff numbers because of the financial difficulties being faced by the company. Although Mr Page puts Look of Australia to proof of the need to reduce staff numbers, I accept Mr Gibson's evidence that the company was experiencing, and continues to experience, severe financial difficulties and that there was a need to make staff redundant. Mr Gibson gave evidence that he decided that Mr Page was the most appropriate person to be made redundant in the Perth office. There were several reasons for this. The main reason was that there had been many complaints by other staff members in the Perth office, Medibank Private officers and members of the public about Mr Page's alleged aggressive and rude behaviour. One of Mr Page's fellow employees in the Perth office was a woman with whom he was having a relationship. Mr Gibson had been advised by other staff members that Mr Page had been violent to this fellow staff member to the point of reducing her to tears and intimidating her in the workplace situation. Further, Mr Gibson was advised that other female staff members were scared of and intimidated by Mr Page. This caused a very difficult working environment for the rest of the staff. Mr Page denies these allegations but did admit that he had been violent to the fellow staff member during the course of their relationship. Further, Mr Page admitted that he kicked a hole in one of the doors of the Perth office and had been the cause of a towel rail coming off the wall but gave explanations for those occurrences to the effect that they happened by accident. On the date on which Mr Page's employment was terminated, namely 10 April 1996, he overheard a telephone conversation which another staff member was having with Mr Gibson. This lead Mr Page to infer that this other staff member was being offered his job. Mr Page then spoke to Mr Gibson by telephone and asked what was going on. Mr Gibson confirmed that he had offered Mr Page's job to the other staff member and that Mr Page was being made redundant. Mr Gibson's evidence was that he had not given Mr Page an opportunity to respond to the allegations against his conduct because he was concerned about the safety of the other staff members. He had arranged for a male optometrist to be in attendance while Mr Page was told of the termination of his employment, to protect the female staff members. Mr Page was known to fly off the handle and to have a violent disposition. Mr Gibson's evidence was that he felt there was no other way in which the matter could have been handled. Mr Gibson did however offer Mr Page one week's notice of termination. Mr Page's evidence was that on the date on which he was advised of the termination of his employment he had been unwell and had visited the doctor who had advised him that he had an ear infection. The doctor offered him a certificate certifying him as unfit for work for the following three days but Mr Page had chosen not to accept that certificate. Mr Page admitted that after he was advised of his termination he packed up all of his belongings and left the office saying to other staff members that they could "have the fucking shop". Mr Page said that he had had an argument with Mr Gibson during their telephone conversation about how much notice the company was required to give him. Mr Page felt that he should be given two week's notice and Mr Gibson said that he felt one week was appropriate. Under the provisions of section 170DB, because Mr Page was employed for less than one year with the respondent, he was required to be given at least one week's notice. After he stormed out of the office Mr Page returned to his doctor and told him that he had just had his employment terminated and that he was stressed. He obtained a doctor's certificate, which was tendered at the hearing, stating that he was unfit for work for the following three days. The last two days of the week of the "notice" period were Mr Page's rostered days off. He had worked extra days because another staff member had been ill. He was due to take the two days as rostered days off instead of claiming an overtime payment. This had all been arranged prior to Mr Page being given the notice of termination of his employment. In my view, the respondent did not breach the provisions of section 170DB in terminating Mr Page's employment. He was clearly offered one week's notice of termination but in my view Mr Page abandoned his employment when he packed up his belongings and "stormed" out of the premises. He clearly did not intend to return. I do however consider that Mr Page is entitled to a payment representing two days' wages in respect of the two days on which he was due to be rostered off work. This is because he had already worked the extra hours before the date of termination which entitled him to the two rostered days off. As to the allegation that the company breached section 170DC in terminating Mr Page's employment, I accept the respondent's position that it could not reasonably be expected to give Mr Page the opportunity to defend himself against the allegations made against his conduct or performance because there was a risk to the balance of the staff of the Perth office. In my view there was a real risk that Mr Page might have lashed out at other staff members if he had been confronted fully with the allegations against his conduct. Mr Page himself admitted that he had been violent to the staff member with whom he had been having a relationship. I am strengthened in my belief by observing Mr Page's demeanour in the court room at the hearing. In relation to the alleged breach of section 170DE, Mr Page says that his termination was harsh, unjust or unreasonable because he felt that one of the casual employees should have been made redundant before he himself was made redundant. I explained to Mr Page that in the High Court decision in State of Victoria v The Commonwealth of Australia (1996) 138 ALR 129, handed down on 4 September 1996, section 170DE(2) of the Act was held to be constitutionally invalid. It is my view that there has been no breach of section 170DE(1) because there was a valid reason connected with the operational requirements of the respondent's undertaking, namely, its severe financial difficulties, for the termination of Mr Page's employment. Mr Page presented to the court calculations relating to his claim that he was underpaid during the period of his employment by Look of Australia. Those calculations were based upon comparing the gross wages he should have received per fortnight on the basis that he earnt an annual salary of $40,000.00 with the gross figure for his salary earnt over the period of his employment as stated on his group certificate. According to Mr Page's calculations, he should have received a gross fortnightly figure of $1,539.76. The pay slips which he tendered to this court indicate that in fact Mr Page was paid the amount which he says he should have been paid. It is my view on the basis of the material submitted to me that the most likely explanation is that the figure on the group certificate may be inaccurate. On the balance, I am not satisfied on the basis of the information supplied to me by Mr Page that he was underpaid in respect of his salary, superannuation or holiday pay. The appropriate orders are: 1. The respondent pay to the applicant two days wages in respect of the rostered days off to which he became entitled prior to the date of termination; and 2. The balance of the application be dismissed. I certify that this and the preceding seven (7) pages are a true copy of the reasons for decision of Judicial Registrar Boon. Associate: Date: APPEARANCES Applicant: Mr Page Representative for the respondent: Mr A Gibson Director of Look of Australia Date of hearing: 20 November 1996 Date of judgment: 18 December 1996 <