Philipson v EASE Furniture [1997] IRCA 19

DECISION NO:19/97 CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - EMPLOYMENT CONTRACT - EMPLOYMENT RELATIONSHIP - PROBATIONARY EMPLOYMENT - whether wage subsidy agreement altered earlier agreed probation period - whether probation period specified in advance - whether three months period reasonable for furniture assembler in small multicultural workplace.

Workplace Relations Act 1996 (Cth) ss170CC, 170DC, 170DE Industrial Relations Regulations Reg 30B.

Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 Ryan v Furneys Stockfeeds Ltd (1996) 66 IR 298

PHILIPSON v E.A.S.E. FURNITURE VI96/2149

Before: MURPHY JR Place: MELBOURNE Date of Hearing: 28 JANUARY 1997 Date of Judgment: 11 FEBRUARY 1997

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY

VI96/2149

BETWEEN:

DEAN THOMAS PHILIPSON Applicant

AND

E.A.S.E. FURNITURE Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 11 FEBRUARY 1997 MINUTES OF ORDERS

THE COURT ORDERS THAT: 1. The application is 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 VICTORIA DISTRICT REGISTRY

VI96/2149

BETWEEN:

DEAN THOMAS PHILIPSON Applicant

AND

E.A.S.E. FURNITURE Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 11 FEBRUARY 1997 REASONS FOR DECISION

The applicant seeks a remedy under Division 3 of Part VIA of the Workplace Relations Act 1996 (Cth) (formerly the Industrial Relations Act 1988 (Cth)) ("the Act"). He alleges that on 3 July 1996 his employment as a furniture assembler was terminated contrary to the provisions of ss170DE and 170DC of the Act. The respondent's defence was first that the applicant was excluded from the operation of the Act under s170CC, as under Regulation 30B of the Industrial Relations Regulations ("the Regulations") he was serving a period of probation at the time. The respondent, in the alternative, alleged that it had a valid reason connected with the applicant's capacity or conduct to terminate his services, and that it had met the requirements of s170DC. The terms of the engagement. The respondent is a small furniture manufacturer established in late 1995. At relevant times it employed twelve production employees and a supervisor. It notified its vacancies to the CES and in May 1996 the applicant was interviewed for a position as a trainee furniture assembler. The interview was conducted by Mr Boustead, the managing director of the respondent. On Mr Boustead's evidence he advised the applicant of the terms on which he was to be employed. He was to be employed under the terms of an expired Victorian industrial award, the Furniture Trades Award. For the first three months of his employment he would be employed on probation as a trainee, being paid $9.35 per hour. He would be assessed over that period and if suitable he would then be promoted to a position as a furniture assembler at $9.49 per hour. Thereafter his performance would be reviewed each six months and he would be eligible for a promotion and a wage increase. His leave and other entitlements were also explained. Mr Boustead stressed to the applicant that it was a small company, the employees worked closely together as a team, and it was important that employees got along well together as its workforce was drawn from a number of different countries. He was told that he had to have the right attitude, be reliable, and able to get along with the other workers. The applicant replied that he was able to work with anyone. The applicant was questioned as to his experience. He advised that he had worked with his father as a builder's labourer for some years, had then been unemployed and was currently in a training program with an organisation known as "This Way Up Furniture". He was introduced to the supervisor, Mr Peres, and advised he would be contacted in due course. The applicant was later telephoned and offered the position. He commenced work on 10 May 1996 and on that day Mr Boustead briefly went over the terms and conditions of employment again. He then passed the applicant to the supervisor. The applicant's account of his engagement was that he was interviewed by Mr Boustead for approximately twenty minutes but provided with only limited details of the terms and conditions of employment. He said there was no discussion about wage rates or the fact that he would be employed on probation for the first three months. The applicant said he understood from the CES that he was to be on a probation period of two months. He further believed that he was employed as a furniture assembler, rather than a trainee furniture assembler. Although not put to Mr Boustead, the applicant said that the day after the interview he was telephoned by Mr Boustead and asked if he was a "racist". When the applicant relied in the negative Mr Boustead advised him that he had the job. As had happened previously with potential employees, when the applicant was referred by the CES the respondent was advised that if it employed the applicant it was eligible for a wage subsidy from the Commonwealth. After the respondent engaged the applicant it entered a JobStart Wage Subsidy Agreement ("the agreement"). The actual agreement with the CES (Exhibit R1) was not executed until 29 May 1996. The agreement records that the respondent was to be paid a wage subsidy of $150 per week for twenty weeks. It further states that the applicant was to be on probation for a period of one month. The agreement was signed on behalf the respondent by its administration officer, Ms Rochelle Boustead. She was not called to give evidence. The applicant received a letter from the CES dated 30 May 1996 (Exhibit A1) confirming his employment under the JobStart program and advising him that he was on probation for a month. The probation period is confirmed in writing. When the respondent commenced business it did not have an administration officer. Later one was employed and the respondent was able to start catching up with paperwork. On 1 July 1996 the respondent produced a memorandum (Exhibit R2) confirming to its employees that they had been engaged on a three month probation period. It read : "I hereby acknowledge that from the date of commencement of my full time employment with E.A.S.E. Furniture, I will be on probation for a period of three (3) calendar months. Furthermore, I acknowledge that this was advised to me prior to the commencement of my employment on a full time basis with E.A.S.E. Furniture. I understand that whilst I am on probation, if my employer deems my performance to be unsatisfactory, my employment may be terminated without further notice. I will, however, be paid any entitlements owing at the date of my termination." At that stage the need to confirm the matter of probation had become more pressing because Mr Boustead was conscious of a problem with two employees, one of whom was the applicant. He discussed it with his partner and co-director Ms Steenson, and decided that it was "better late than never". The memorandum was to be issued to all employees, even those who had been employed for more than three months. It was to serve as a reminder to employees and formalise the terms orally advised when they were employed. For consistency and fair treatment all staff were asked to sign it. Mr Boustead in cross-examination also said that a purpose of the document was to reinforce to the employees the terms of their employment agreement, namely that during the period of probation they could be dismissed without notice. The applicant was called into the office on 2 July and handed the memorandum. Mr Boustead asked him whether he recalled that he had been advised when he commenced that he was to be on a probationary period. The applicant replied that he did. The applicant was invited to read the memorandum but advised Mr Boustead that he had difficulty reading. Mr Boustead then read it to him. The applicant acknowledged that he had been advised of the matters in each paragraph. The applicant then queried that he had thought that the CES probationary period was two months. Mr Boustead had replied that the CES period in the JobStart agreement was one month, but that the employer can nominate any period beyond that. The applicant's account was that Mr Boustead had said "this is my own, do you mind signing it?" Ms Steenson was present at the meeting and corroborated Mr Boustead's evidence. She said that the applicant acknowledged that he had been made aware of a three month probationary period when he commenced employment. The applicant alleged that he was forced to sign the memorandum. He alleged that Mr Boustead advised him that unless he signed "your employment here won't be too long". The respondent's witnesses denied that there was any pressure. Events during the employment. It was the respondent's case that a series of events led to the termination without notice of the applicant's employment on 3 July 1996. The evidence of the events causing difficulties in the workplace lacked some specificity as to dates, and was the subject of denials by the applicant. It was common ground that for the first couple of weeks of his employment the applicant's performance was satisfactory. In the second or third week his supervisor, Mr Peres, came to Mr Boustead with a complaint that when he had approached the applicant asking him to desist from talking to another staff member, the applicant had been abusive and had sworn at him. Mr Boustead called the applicant in and queried what had happened. He advised the applicant that his language was unacceptable and that he had to lift his performance. On a number of other occasions Mr Boustead received reports from Mr Peres that the applicant had been disruptive in the workplace and he was not working to a satisfactory level. He went out into the factory and told the applicant that his behaviour was unacceptable. A specific incident raised was that the applicant had allegedly called a Sri Lankan fellow employee a "black mother fucker". Mr Peres, who is also Sri Lankan, was, along with the other employee, upset by this. He brought it to Mr Boustead's attention and Mr Boustead advised the applicant, in Mr Peres' presence, that his behaviour was unacceptable and that if it happened again he would "be out the door". Another racist remark was also brought to Mr Boustead's attention. The applicant had allegedly called another employee a "fucking slope". Mr Boustead advised the applicant that he was fed up. Mr Peres confirmed that he had brought a number of incidents involving the applicant to Mr Boustead's attention and that he had been present when the applicant was counselled by Mr Boustead. Mr Peres said that on one occasion when he had asked the applicant to stop talking and keep working, the applicant had replied "this is fucking bullshit.... you're fucking mad". He had brought the matter to Mr Boustead's attention. On another occasion when he had again asked the applicant to stop talking, the applicant had said "fucking bullshit, this is a prison". Mr Peres confirmed that the applicant had called another employee a "black mother fucker". He had also called him a "black bastard". When the matter had been raised with Mr Boustead the applicant had denied the comment. On another occasion Mr Peres had heard the applicant say to another employee "what would you know you slope". Mr Peres said he did not understand the meaning of the term. He had heard Mr Boustead advise the applicant that the respondent would not tolerate this behaviour, and that if he said it again he "would have to leave". Another incident involved the applicant disrupting the workplace when calling for a lunch break. The respondent had an arrangement that Mr Peres was to load delivery trucks. When a delivery truck was being loaded, loading was to have priority over any lunch break that was due. On one occasion Mr Peres was in the course of loading a truck as lunchtime approached. The applicant had shouted out across the factory "we want our fucking lunch". Mr Peres had advised the applicant of the arrangement and asked all employees to continue working. In evidence, the applicant admitted he was annoyed about the lack of a break and had said "when are we having lunch?" He denied saying "fucking lunch". The applicant denied abusive language, swearing and racist comments about Mr Peres and other employees. He maintained that he got on well with the employee that he allegedly had called "a slope". He asserted that he was not singled out for any counselling or warning by Mr Boustead. On his account the only matter specifically raised was an incident where he had cut a number of lengths of timber to the wrong size. The nail gun incident. On 2 July a nail gun went missing at the factory. Mr Boustead suspected that three employees, one of whom was the applicant, could have been responsible. On 3 July the police were called and all day shift employees present were asked if they had any information about the matter. One employee made a comment and was then questioned by the police. Mr Boustead then suggested to the police that the applicant be questioned. Before the applicant was questioned he had been working at one end of the factory. Mr Peres had seen him talking to another employee and asked him to desist. The applicant had sworn and shouted at him in the presence of the police officer. The police officer then questioned the applicant in the lunch room about the missing gun. Mr Peres was upset that the applicant had sworn at him in the presence of the police officer and brought the matter to the attention of Mr Boustead. In his evidence, the applicant was unable to recall any incident with Mr Peres that morning. The applicant was, however, upset that only two "Australians" on the shift had been individually questioned. He raised this with Mr Boustead. In the afternoon Mr Boustead called the applicant in and advised him that he had warned him on numerous occasions about his language, and his lack of concern. He advised him that he had serious concerns about racists remarks. He advised the applicant that he had been given numerous chances to improve and he did not really seem to care. He asked him what he had to say. The applicant had replied "you do what ever you want to do". The applicant had then said "you think I stole the gun". Mr Boustead had replied that "I have my suspicions but this is not why I am terminating you". The applicant had replied "I wish I fucking had stolen it". The applicant denied this exchange in his evidence. Mr Boustead had stated "I think I am going to terminate your employment" and had proceeded to do so. He denied that the applicant had been dismissed because of the theft of the nail gun. He was dismissed because of the build up of events that had led to the various warnings. Was the applicant on probation? Because a probation period under Reg30B is a complete exclusion from the protection of the Act, testimony asserting that an employee was on a probationary period, unaccompanied by a contemporaneous written record, requires close scrutiny. Reg30B(1) requires a period of probation to be determined in advance, and be reasonable. I will return to the latter requirement shortly. In relation to the first requirement, the respondent relied on Mr Boustead's evidence. This was that he advised the applicant of a three month probation period in the pre-employment interview, and told him that this was to be the basis on which he was to be employed. The applicant denied this. He maintained that the issue was not raised by Mr Boustead. Before choosing which competing version of this conversation is to be preferred, other surrounding evidence must be considered. Evidence that supports the respondent's version is that it was not in dispute that the actual wage rate of the applicant was as a trainee under the expired Award. This supports the conclusion that the respondent did not, at the time it engaged the applicant, intend to pay the applicant at the rate applicable to permanent furniture assemblers. Next, the applicant acknowledged that as a result of information from the CES, he believed he was on a probationary period for two months. If the question of probation had not been raised by Mr Boustead in the first interview, then if the applicant later found out about a probation period from the CES, he might be expected to have raised the matter with the respondent at that stage. The most contentious evidence led by the respondent was the written confirmation, dated 1 July and signed on 2 July (Exhibit R2). The respondent conceded that confirming a probation period with employees whose probation period had expired was illogical. According to Ms Steenson it was done to make it plain that no-one was being singled out. The actual document was attacked by counsel for the applicant as a "set-up". He asserted that the respondent had decided at that point to dismiss the applicant and realised it did not have any written confirmation of the probation period. The timing of the request to sign the document coincides with the disappearance of the nail gun on 2 July. However, the document is dated 1 July 1996. This points to it having been generated before the nail gun went missing. According to the respondent, the tool went missing on 2 July and the police were called on 3 July, the day the applicant was dismissed. Regardless whether the timing excites suspicion, the evidence of the respondent's witnesses was that when the applicant was asked to sign the memorandum, he acknowledged that the question of a three month probationary period had been raised with him previously. He had then queried the contents of the document because he believed from the CES that his probation was for two months. This aspect of the evidence of Mr Boustead and Ms Steenson was not directly challenged. The applicant maintained, however, that probation was not raised in the first meeting with Mr Boustead. Assessing the credibility of the competing accounts. In determining whose version of the original conversation of engagement to accept, I intend to look at the whole of the evidence of both parties. In his evidence Mr Boustead, who gave evidence first, was prepared to make concessions that on the surface damaged the respondent's defence. He conceded that the request for all employees to sign the 1 July letter was illogical, but stated that it was not irrational. It was to formalise an arrangement already in place. He admitted that he had not made up his mind on 2 July to terminate the applicant's employment, but he said he was inclining that way. He admitted that when he did dismiss the applicant, he had not, as in the case of another employee, given him a final warning. Mr Boustead's account of the events at the factory was corroborated in a number of respects by Mr Peres and Ms Steenson. While Mr Peres has an interest in supporting his employer, his evidence had a ring of truth about it. The applicant conceded that Mr Boustead had raised with all employees the fact that there was friction within the workplace. On the applicant's account, Mr Boustead had said that it was to cease or else he would need to speak to the employees individually. While this particular comment allegedly made by Mr Boustead was not directly put to him, it lends some support to Mr Peres' account that incidents involving racial disharmony had occurred. The applicant maintained that he got on well with Mr Peres, yet Mr Boustead gave unchallenged evidence that the applicant had raised with him the issue of the supervisory competence and command of English of Mr Peres. This tends to contradict the applicant's account that he got on well with and "had the utmost respect for" Mr Peres. Further, the applicant denied any racially loaded comments yet admitted he was upset when the two "Australians" were the only employees individually questioned by police in relation to the missing nail gun. The applicant denied the substance of the accounts of Mr Boustead and Mr Peres as to the various incidents in the workplace. He denied swearing at Mr Peres or using any terms of abuse at him or other employees. He denied that he had been the subject of any individual discussion with Mr Boustead. He maintained that the only time a matter was raised with him individually was an incident where he had cut a number of lengths of timber incorrectly. In relation to the lunch break incident however, he admitted that he was upset about his lunchbreak. This could, as a matter of human experience, incline a person to abusive language. The same comment applies to the applicant's concession that he was upset about the police questioning him. This may explain why he was unable to recall an incident shortly prior to that when he again was abusive to Mr Peres. Ms Steenson, the partner of Mr Boustead, corroborated his evidence as to the interview with the applicant on 2 July. While her evidence requires the utmost scrutiny, she presented as a witness of truth. She bolsters Mr Boustead's account that the applicant acknowledged at that meeting the earlier agreed three month probationary period. Conclusion - respondent's account preferred. To prefer the applicant's account of the initial employment interview requires his evidence on that aspect to be preferred over that of Mr Boustead. When the latter's evidence is looked at as a whole, it is internally consistent and inherently credible. Large parts were corroborated by Mr Peres and Ms Steenson, both credible witnesses. The applicant's evidence, in contrast, was strongly contradicted by the respondent's witnesses, and lacked conviction. With the weight of evidence supporting the respondent's version on a number of other matters, I prefer Mr Boustead's account of the crucial conversation over that of the applicant. I accept that a three month probationary period was raised at the initial meeting, and that this was the basis on which the applicant was employed. The relevance of the JobStart Wage Subsidy Agreement. Counsel for the applicant placed heavy reliance on the agreement. He submitted that the agreement recorded a one month probationary period and the respondent was bound by the document. The solicitor for the respondent, in contrast, maintained that the agreement was independent of, and separate from, the contract of employment between the applicant and the respondent. He maintained that the respondent was not bound by the one month period contained in a document that was certified by Ms Boustead on 29 May 1996 as correctly setting out the job details. When the full terms and conditions of the agreement are considered, I am unable to accept that it assists the applicant. The agreement records the terms upon which the Commonwealth of Australia, through the CES, will subsidise the respondent while it employs the applicant. For the purposes of that arrangement the agreement records some of the details of the applicant's job. It is not an exhaustive list of the applicant's terms and conditions and does not purport to over-ride or supercede any arrangement the respondent may have with the applicant. Further, it is to be noted that the agreement post-dates the contract of employment, which was orally made between the parties shortly prior to 10 May. The certification in the agreement signed by Ms Boustead is that to the "best of [her] knowledge the details" are true and correct. There was no suggestion that at some time between 10 May and 29 May she had made a fresh agreement, or a variation of the earlier one, on behalf of the respondent, with the applicant. Mr Boustead gave evidence that he had received advice from the CES that while it set a period of probation of one month, this did not prevent an employer from making an agreement with an employee for a longer period. While there was no evidence from the CES, this evidence of Mr Boustead explains both why a one month period was not discussed with the applicant prior to his employment, and the explanation given to the applicant on 2 July. I am satisfied here that a three month probation period was agreed between the parties prior to the commencement of employment and that this period was not later altered or overridden by the agreement. Are the requirements of Reg30B(1)(c) met? My acceptance of Mr Boustead's account of the initial interview, and my rejection of the applicant's denial, mean that the respondent has met the requirement that any period of probation be determined in advance: Reg30B(1)(c)(i). But is the period reasonable, having regard to the nature and circumstances of the employment?: Reg30B(1)(c)(ii). Mr Boustead's evidence was that the period of three months was fixed having regard to the fact that the expired Award provided for a training period of three months. He said that from his experience the respondent found that this period was needed to assess whether employees were suitable, to confirm their attitude to work and their ability to co-operate, and to see how they would go in the long term. His account was that for some employees it was clear in a shorter time that they were suited for the position, while others needed counselling and an opportunity to improve before being confirmed. He also said the period was required to confirm any skills that employees alleged that they held. In Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 at 208-209, Wilcox CJ held: "Whether or not the stipulated period is reasonable, is a matter that has to be determined by the person hearing the case, as an exercise of judgment. The judgment should be based on the proved objective facts, not on someone else's opinion. Probably the most important consideration, in determining what is a reasonable period, will be the nature of the job. In the case of a person employed to carry out repetitive duties under close supervision, a reasonable period may not extend beyond a week or two.... Circumstances will vary from case to case; the size, location and mode of operation of the employer being relevant factors, along with the personal characteristics and circumstances of the employee. The legislature has not prescribed the maximum extent of a reasonable period. It is not for me to do so. But I suspect that an employer will rarely be able to justify a period exceeding two or three months, in the case of an employee to whom Pt VIA now applies; that is, an award employee or a non-award employee whose wages do not exceed $60,000 per year. See s170CD of the Act." In Ryan v Furneys Stockfeeds Ltd (1996) 66 IR 298 at 302, Beazley J was dealing with an employee employed as a "loader, unloader .... carter, cleaner". The relevant award provided for a probationary period for new employees of three months. Beazley J commented at 303 that a period as short as that indicated by Wilcox CJ in Nicolson (above) "may not be sufficient to assess an employee's overall suitability for the position". In relation to the weight to be accorded an award period of probation, she said: "....there is a force in the submission .... that regard should be had to the provisions of the award, although its terms are not necessarily determinative. An award could specify a period which was not reasonable having regard to the nature and circumstances of the employment. However, it must be borne in mind that the award was made by a specialist tribunal. That is an important consideration although not a conclusive one. It specifies a period of probation which is not unusual in this country in many forms of employment, including those which do not involve a great deal of skill." The evidence of Mr Boustead in relation to the length of the probation period was not the subject of strong challenge, nor was any contradictory evidence led. The Regulations require the period of probation to be determined in advance so an employer cannot strictly rely on what in fact happened during the employment to defend a probation period as reasonable. In this case however, the events occurring over the period of the applicant's employment shed some light, in an ex post facto way, on the reasonableness of a three month period. It was only on 2 July that the respondent ascertained that the applicant had difficulty reading. This is a factor that it could be said goes to suitability for the position. Next, despite being counselled on a number of occasions in relation to his behaviour, the applicant, after some seven weeks employment, had not, on the respondent's version, responded to the requirements the respondent was laying down for its employees. There were similar problems with another employee. These events provide some support for Mr Boustead's evidence that it was his experience that a period of three months was needed to assess the suitability of employees. Although it can be said that the evidence supports a finding that the work here was somewhat repetitious and required relatively low skill levels, the wider considerations raised by the respondent cannot be ignored. This was a relatively small workplace with a close knit team of employees. The respondent had not been in business long and needed time to assess the suitability of new employees in such an environment. These factors and, applying the comments in Ryan (above), the existence of a three month probation or training period in the expired Award satisfy me that, having regard to the nature and circumstances of the employment, the period of probation of three months was reasonable. The respondent has made out its defence that the applicant is excluded by reason of the operation of Reg30B(1)(c). Having found that the applicant is excluded from the protection of the Act, it is unnecessary for the Court to consider the respondent's alternative defence. The application must be dismissed. I certify that this and the preceding fifteen (15) pages are a true copy of the reasons for decision of Judicial Registrar Murphy.