DECISION NO:35/97 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - REDUNDANCY - whether the employer discharged the onus it carried of establishing a valid reason based on its operational requirements Workplace Relations Act 1996 s 170DE(1) Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366 RONALD RAWKINS - v - GARRY ROGERS MOTORS (AUST) PTY LTD No. VI 2356 of 1996 Before: Judicial Registrar Millane Place: Melbourne Date: 20 February 1997 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2356 of 1996 B E T W E E N : RONALD RAWKINS Applicant A N D GARRY ROGERS MOTORS (AUST) PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Millane 20 February 1997 THE COURT DECLARES THAT: 1. On 4 September 1996 the respondent terminated the applicant's employment in contravention of section 170DE(1) of the Workplace Relations Act 1996. AND THE COURT ORDERS THAT within 21 days of the date of making these orders: 2. The respondent reappoint Ronald Rawkins to the position in which he was employed immediately before his termination on 4 September 1996. 3. The respondent pay to Ronald Rawkins the remuneration lost by him because of the termination. 4. In default of agreement on the calculation of and the amount of the remuneration lost and referred to in the preceding order, there be liberty to either party to apply to the Court on reasonable notice. AND THE COURT FURTHER ORDERS THAT: 5. The employment of Ronald Rawkins be deemed to have been continuous for all purposes from 4 September 1996 to the date of reinstatement. 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 VI 2356 of 1996 B E T W E E N : RONALD RAWKINS Applicant A N D GARRY ROGERS MOTORS (AUST) PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 20 February 1997 REASONS FOR JUDGMENT The applicant seeks reinstatement to his position as a driver with the respondent. He alleges that on 4 September 1996 the respondent terminated his employment in contravention of the Workplace Relations Act 1996 (the Act). At hearing the respondent was represented by its general manager, Errol John Stubblety (Stubblety), who also gave evidence on its behalf. It was argued by Stubblety that the termination was connected with the respondent's operational requirements. In short, the respondent's case was that there was a downturn in its business and profitability which necessitated the reduction by one of its forty-eight strong workforce. The reason given to the applicant at termination was that there was not enough work for the number of people employed. He was given no reason as to why it was he who was selected for termination. Although the respondent sought to defend its case by establishing that there was a bona fide redundancy on 4 September 1996, it was conceded by Stubblety that he did not make the decision to reduce the workforce nor did he make the decision to select the applicant from that workforce. In fact, he was informed by Geoff Nicholas (Nicholas), the manager, only the day before the termination that Nicholas and Garry Rogers, the owner of the business, had decided to reduce the workforce by one because of the shortage of work. On 4 September 1996 he was instructed that that person was the applicant and when he queried the decision he was told, in effect, that someone has to go because profitability was down. The evidence given by Stubblety shows very clearly that he had no part to play in the termination process other than to arrange for the final payment. He concedes that that payment included three weeks' pay in lieu of notice but ignored the applicable award requirement to pay the applicant a redundancy payment in the order of eight weeks' pay. He told the Court that subsequent to the termination he was made aware that the respondent was required to make the redundancy payment. It has not done this pending the outcome of this hearing. He also conceded that because of matters drawn to its attention following the termination, the respondent had not paid the applicant at the appropriate gross rate of $403.50 per week payable pursuant to the award provisions. This is a significant matter because, although there was no claim before the Court seeking any shortfall to the date of termination, it was the applicant's contention that a few weeks prior to his termination he raised the issue of underpayment of his wages with Nicholas on no less than three occasions. On the last occasion, approximately one week prior to termination, when the applicant again raised the issue with Nicholas because he had by then ascertained that another driver was being paid at a higher rate, Nicholas "went off" and told the applicant if he did not believe him he should look for employment elsewhere. The respondent carries the burden of proving the existence of a valid reason at termination. In this case, where it was said there were no performance issues, it was incumbent on the respondent to establish on the balance of probabilities the need to reduce its workforce by one and, further, establish a valid reason for selecting the applicant from its large workforce (see Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366). The respondent operates a motor dealership with three franchises for the sale and servicing of vehicles. The franchises include Nissan, Subaru and Daewoo. It appears that Nissan is the principal franchisor and Stubblety was able to give evidence to show that there has been a downturn over some years in the need for spare parts for Nissan vehicles connected with the drop in sales of that vehicle in Australia. The respondent's dealership has a number of divisions consisting of a sales, spare parts and service departments. Across the board it employees forty-eight staff. As at 3 September 1996 it employed eleven staff in the spare parts department including the applicant. It was said by Stubblety, and this was contested by the applicant, that on the date of termination there were four drivers in the spare parts department including the applicant and the respondent only had work for three drivers. The applicant alleges that there were, in fact, three full time drivers including the applicant who had been employed as a driver delivering parts for the respondent since May 1992. The fourth driver was a person referred to as Sutton whom the applicant indicated had been working for a year or so in the store section of that department getting deliveries ready for drivers and arranging for the couriering of deliveries before the termination. Because of the work pressure on the drivers which on occasions meant that they were losing their lunch breaks, Sutton also did driving deliveries from time to time. In regard to the lastmentioned evidence, I have accepted the applicant's evidence because Stubblety did not appear to have a clear knowledge of all these matters. What is noteworthy is that Sutton is now listed as a driver along with the other two drivers who remained in employment after the applicant was terminated. The applicant gave uncontested evidence that on 4 September 1996 Nicholas asked him into his office at approximately 2.00pm. He was informed that he was no longer needed and that the respondent did not have enough work for the amount of people it employed. According to the applicant when he questioned why he had been selected, he received no response from Nicholas. The applicant also claimed that Nicholas produced a resignation written by Nicholas which he was unsuccessful in getting the applicant to sign. The applicant also referred to an incident approximately one and a half months' before the termination when he had an argument with Nicholas about the taking of lunch breaks because he and other drivers found there was no time to do this. If he was late returning, Nicholas, he said, would argue with him about being late. On that occasion he was told to find time for a break on the road. Whilst Stubblety did his best to put before the Court information concerning the respondent's profitability and to generally put the respondent's case, it was apparent that the respondent had not grasped the need to call appropriate evidence to discharge the burden of proof it carried. It is not enough to give evidence of a decline in profitability without establishing the casual nexus between that and its decision to reduce the workforce. The changing fortunes of a company's profit margins do not necessarily lead to a reduction in its workforce or the termination of a particular employee. Accordingly, my finding is that the respondent failed to discharge the burden of proof it carried of establishing a valid reason for the reduction in the workforce by one employee. Had I been satisfied that there was such a valid reason the respondent also failed to establish a valid reason for selecting the applicant for termination by reference to objective selection criteria. It is not enough to say someone has to go and nominate an employee. The impression I gained with regard to the respondent's case is that it did not have any or any proper understanding of its obligations when effecting a termination and the need to establish the objective truth of the facts relied on other than matters that might make any decision it made subjectively defensible. In the circumstances of this case it is appropriate that I draw an adverse inference from Nicholas' failure to attend and give evidence. This failure also left the applicant's evidence uncontested on a number of material issues. In these circumstances my finding is there was a contravention of section 170DE(1) of the Act at termination. REMEDY The applicant seeks reinstatement and an order for lost remuneration. Apart from saying that someone will lose their job if the applicant is reinstated, the respondent did not lead any evidence that would persuade me to adopt the view that reinstatement is impracticable in all the circumstances. Accordingly, I propose to make an order reinstating the applicant to his former position as well as an appropriate order for remuneration lost. I note from the applicant's evidence that he obtained employment as a casual night filler at Safeways from 24 October 1996. Depending on the hours worked he receives between $350 and $450 net per week. In determining the amount to be paid for lost remuneration it will be necessary for the parties to calculate the sum payable at the award rate of $403.50 per week plus the average bonus payment of $21.22 per week from the date of termination to the date of reinstatement and subtract from that sum the remuneration received for income earning activity in the relevant period as well as monies paid in lieu of notice. Without precise figures from the parties I am unable to make a final order on the sum to be paid. This being so I have granted the parties liberty to apply with respect to the calculation of the appropriate sum in default of agreement on the amount to be paid. MINUTES OF ORDERS THE COURT DECLARES THAT: 1. On 4 September 1996 the respondent terminated the applicant's employment in contravention of section 170DE(1) of the Workplace Relations Act 1996. AND THE COURT ORDERS THAT within 21 days of the date of making these orders: 2. The respondent reappoint Ronald Rawkins to the position in which he was employed immediately before his termination on 4 September 1996. 3. The respondent pay to Ronald Rawkins the remuneration lost by him because of the termination. 4. In default of agreement on the calculation of and the amount of the remuneration lost and referred to in the preceding order, there be liberty to either party to apply to the Court on reasonable notice. AND THE COURT FURTHER ORDERS THAT: 5. The employment of Ronald Rawkins be deemed to have been continuous for all purposes from 4 September 1996 to the date of reinstatement. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding six (6) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: Dated: 20 February 1997 Solicitors for the Applicant: Ryan Carlisle Thomas Counsel for the Applicant: Ms Jane Patrick Respondent represented self. Representative for the Respondent: Mr E. Stubblety Date of hearing: 14 February 1997 Date of judgment: 20 February 1997