BENIER and FOWLER v OLDER PERSONS RIGHTS SERVICE INC [1997] IRCA 59

DECISION NO:59/97 CATCHWORDS INDUSTRIAL LAW - Termination of employment - claim of unlawful termination - no appearance by respondent - incorporated association - compensation Workplace Relations Act 1996 (C'th) (formerly Industrial Relations Act 1988 (C'th)) Ss 170DB, 170DE(1), 170EA MEGAN PATRICIA BENIER and JEANETTE TERESA FOWLER v OLDER PERSONS RIGHTS SERVICE INC. Before: BOON JR Place: PERTH Date: 28 FEBRUARY 1997

IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA DISTRICT REGISTRY ) WI 1470 of 1996 and WI 1471 of 1996 B E T W E E N: MEGAN PATRICIA BENIER First Applicant A N D JEANETTE TERESA FOWLER Second Applicant A N D: OLDER PERSONS RIGHTS SERVICE INC. Respondent MINUTE OF ORDERS 28 FEBRUARY 1997 PERTH BOON JR

THE COURT ORDERS THAT :

1. The respondent pay to Ms Benier compensation in the amount of $1,663.60, within 14 days of the date of this order. 2. The respondent pay to Ms Fowler compensation in the amount of $3,060.00, within 14 days of the date of this order. 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 1470 of 1996 and WI 1471 of 1996 B E T W E E N: MEGAN PATRICIA BENIER First Applicant A N D JEANETTE TERESA FOWLER Second Applicant A N D: OLDER PERSONS RIGHTS SERVICE INC. Respondent REASONS FOR DECISION 28 FEBRUARY 1997 BOON JR INTRODUCTION The applicants, Megan Benier and Jean Fowler, have applied under section 170EA of the Workplace Relations Act 1996 for payment of compensation arising out of the alleged unlawful termination of their employment by the respondent, Older Persons Rights Service Inc., trading as The Residential And Community Care Advocacy Service (TRACCAS). Ms Benier and Ms Fowler allege that TRACCAS has breached section 170DE(1) of the Act in that there was no valid reason connected with their conduct or performance for the termination of their employment. There was no appearance by TRACCAS at the hearing of this matter or indeed at any of the hearings, including conciliation at the Australian Industrial Relations Commission, in this matter. As the applications related to similar sets of circumstances the two matters were heard together in the absence of the respondent. BACKGROUND TRACCAS was at all material times an incorporated association under the Associations Incorporation Act, 1987 (WA). Although it was incorporated under the name Older Persons Rights Service (Inc), it operated an agency known as The Residential And Community Care Advocacy Service. TRACCAS provided an advocacy service for older persons and also for younger people with disabilities. It received funding from both Commonwealth and State Health Departments. At the time of the termination of the applicants' employment, it employed amongst other staff four advocates. TRACCAS had a membership of interested people who supported the aims of the organisation and paid $10 or $5 (depending on their status) to join. It had over 70 members, many of whom joined after they had been helped by the Association. TRACCAS was managed by a committee of management which was elected by the members. Ms Benier gave evidence that she was employed as a full-time advocate with TRACCAS from 5 May 1993. She had a written contract of employment which was tendered in evidence. Ms Benier's evidence was that until her employment was terminated on 4 October 1996 she had received no complaints about her work performance. On 6 September 1996 Ms Benier was given a reference from Karl Reinl, chairperson of TRACCAS, at her request. The reference was very complementary of her work. Ms Benier gave evidence that she continued in her employment until 3 October 1996 when she was asked to go into a meeting in the conference room at the TRACCAS premises. She was not told what the meeting was to be about. When she arrived at the meeting, she was met by Mr Reinl and the Secretary, Len Vicarage. Mr Vicarage told Ms Benier that they had received notice that the organisation was to close down as of 8 October 1996. He said that the Commonwealth and State Health Departments were aware of some difficulties within the organisation and the committee had agreed to transfer the funding to another, unnamed, sponsor. The meeting lasted approximately half an hour. Ms Benier said that at the end of the meeting she felt shocked, especially at the speed with which these events had taken place and also that the membership of the organisation had apparently not been told of this decision. After the meeting, a letter was placed in Ms Benier's pigeonhole at work. The letter was dated 3 October 1996 and was signed by Mr Reinl. The letter reads in part as follows: "Dear Ms Benier, Following the official verbal notification of Wednesday 2 October we now have to hand information from our representative with the Chamber of Commerce, Mr M. O'Connor. By industrial law we are required to notify you in writing of the decision of the management committee to relinquish the advocacy services carried out by TRACCAS. On 1 October we received the agreement from State and Commonwealth governments to transfer the service to another sponsor, yet unknown. We therefore have no option but to terminate your employment with us owing to the lack of funding..." Following that meeting Ms Benier was asked by Ms Joan Ross, the contact liaison person at TRACCAS, to hand over her case load to the other advocates. Ms Benier complied with that request. According to Ms Benier, when she handed over her cases, Ms Ross told her that she was not to advise her clients that the organisation was closing down. Another advocate was in the room at the time and said in the presence of Ms Ross that the service was going to be continuing on as normal. On the following day, 4 October 1996, at approximately 10am Ms Ross advised Ms Benier to leave the premises within half an hour. Ms Ross handed to Ms Benier a letter that reads as follows: "Dear Ms Benier, Your entitlement has been paid in full, up until 4pm Tuesday, 8 October 1996. In view of the fact you have severed all connection with your clients, I see no reason why you should continue to occupy your office. I would appreciate it if you leave the premises within the next half hour with your personal effects only, all TRACCAS property and documents are to remain." Upon receipt of that letter Ms Benier gathered her personal belongings, handed in her keys and left the premises. She contacted her union, The Australian Municipal Administrative Clerical and Services Union ("ASU"). Ms Benier also contacted her accountant who confirmed that her severance pay had not been calculated properly. After some liaison with TRACCAS' financial consultant, Ms Benier was eventually paid everything to which she was entitled by way of payment in lieu of notice under the terms of her original contract. According to Ms Benier, she was given no reason for the termination of her employment other than that the management committee had decided to relinquish the advocacy services carried out by TRACCAS. Ms Fowler gave evidence that she started employment with TRACCAS in February of 1994. She also signed a written contract. She was employed as an administrative officer and her duties included all office work including managing the payroll, the accounts and membership funds. Ms Fowler went on leave on 1 October 1996 and was due to return after 4 October 1996. According to Ms Fowler, prior to going on holidays she had not been advised by anyone that her employment was in jeopardy. She had never received any complaints about her work performance. On 2 October 1996 she received a telephone call from Ms Ross. Ms Ross advised Ms Fowler that the organisation was closing down on 8 October 1996 and as she was on holiday there was no point in returning to work. On 4 October 1996 Ms Ross delivered a letter dated 3 October 1996 to Ms Fowler. The letter was signed by Mr Reinl and was in identical terms to the letter received by Ms Benier. Ms Fowler said that she was given no reason for the termination of her employment other than that which was stated in the letter. Ms Fowler said that she was shocked when her employment was terminated and was also shocked that the place was closing down. She had received no warning at all that this was to happen. The court also heard from Ms Rachel Sackville, an industrial officer with the ASU. Ms Sackville was on leave when the employment of Ms Benier and Ms Fowler was terminated. When she returned from leave Ms Sackville made contact with the chairperson of TRACCAS who advised her that they had dissolved the organisation. Ms Sackville made enquiries with the Ministry of Fair Trading on 6 February 1997. She was advised by the Ministry that the company was still incorporated. Ms Sackville obtained certified copies of the Certificate of Incorporation and the Constitution of the organisation on 11 February 1997. Ms Sackville gave evidence that after Mr Reinl had given Ms Benier a reference in September of 1996, Mr Reinl sent a letter to Ms Benier criticising Ms Benier about the circumstances in which she asked for the reference. Ms Sackville represented Ms Benier in relation to that matter. After Ms Sackville became aware that Ms Benier's employment had been terminated, she contacted Mr Reinl who did not want to meet with her to discuss the matter. Ms Fay Ward was subpoenaed to give evidence. She did not appear as a witness of her own free will but nevertheless gave her evidence frankly. Ms Ward gave evidence that she was on the management committee for TRACCAS from May 1996 until about November 1996. She said that attended every management committee meeting which was called. Ms Ward gave evidence that she was not aware of any complaints from the organisation's clients in relation to either Ms Benier or Ms Fowler. She was able to say that everybody seemed happy with Ms Fowler's performance. Ms Ward gave evidence that a special meeting of the management committee was held at the offices of the Department of Health and Community Services on 24 September 1996. She was surprised when she was telephoned by Ms Ross who said that she was acting manager and advised Ms Ward that she had been directed by the funding bodies to have a meeting on 24 September. Ms Ward asked what the meeting was being called for and Ms Ross said that she was not allowed to tell her. Ms Ward was not given an agenda in relation to that meeting. Ms Ward said that she was not happy about that as it was a lot for her to drop everything that she was doing and attend the meeting, so she tried to find out why the meeting was called. She rang other members of the management committee who indicated to her that they did not know why the meeting was being called either. The meeting was held at 4pm on 24 September 1996. At first the meeting proceeded with a discussion about the inaccuracy of the reports to the funding bodies. The representatives of the funding bodies had left the room when there was a discussion about Ms Benier and Ms Fowler. According to Ms Ward, there was quite a lot of animosity towards "the two girls". Ms Ward said that the conversation was mostly conducted by Mr Vicarage, but also by Mr Reinl. Mr Vicarage moved a motion that because of irresolvable differences between Ms Benier and Ms Fowler on the one hand and the committee members on the other hand the organisation would seek to transfer its funding. Mr Vicarage said that Ms Benier and Ms Fowler had brought it on themselves as they had visited the union. Ms Ward said that she suggested that they sort the matter out with the two employees but Mr Reinl had said that Jean Fowler had been very rude to him. Mr Vicarage voiced animosity towards Ms Benier. Nobody spoke on behalf of the two employees at the meeting. The meeting took place without any formal agenda. Ms Ward said that she was caught by surprise and she was not aware that the motion was going to be put forward at the meeting. Not all members of the management committee were present at the meeting. There was a telephone link-up with two other members of the management committee as Mr Vicarage and Mr Reinl wanted to push the motion through. The motion to wind TRACCAS up was carried. Ms Ward said that she voiced a concern at this meeting about whether the remaining employees were being paid and was told that the other advocates were running the place on a voluntary basis. On 24 September 1996 Ms Ward was told that the reason why the management committee had sought a transfer of funding was because of the two applicants in this matter. At that time the question of staff was brought up and the committee was told that the rest of the staff would hopefully be taken over by the new funding body. The purpose of the transfer was that all of the other staff would be kept on but Ms Fowler and Ms Benier would no longer be with TRACCAS. Ms Ward said that she was told at that meeting that under no circumstances was she allowed to tell any staff member of what would happen. Ms Ward said that there was an annual general meeting of TRACCAS on 8 October 1996. There was a motion to dissolve TRACCAS put to the annual general meeting on that date and passed. Clause 19 of the Constitution of TRACCAS states in part as follows: "The Association shall not be dissolved except by approval of not less than three-quarters of the members present and voting at a meeting called for that purpose of which not less than twenty-eight (28) days written notice including notice of the proposed dissolution has been given to all members and that a copy of the resolution to dissolve the Association is lodged with the Ministry of Fair Trading within fourteen (14) days after the passing of the resolution." Ms Ward said that that part of Clause 19 had not been complied with in this case. The 28 days written notice was not provided to the members. Ms Ward's evidence was that at the annual general meeting on 8 October 1996 she voiced a concern about the remaining advocates who were still running the organisation. She asked if they were being paid and at the annual general meeting she was told that they would be paid until the end of the month. Ms Ward said that she attended one further meeting of the management committee in early November 1996. She gained the impression from that meeting that the dissolution of TRACCAS was being finalised. She had no personal knowledge of what happened to the organisation after that date. It was submitted on behalf of Ms Benier and Ms Fowler that the evidence pointed to the management committee deciding that the whole body would be dissolved for the purposes of terminating the two staff members. According to the organisation's constitution, the dissolution could not have been valid. The respondent carries the burden of proving that there was a valid reason for the termination of the applicants' employment. No representative of the respondent has appeared. In these circumstances it is my view that the respondent has not discharged its onus of proving that there was a valid reason for the termination of the employment of Ms Benier and Ms Fowler. They were given no warning of their impending termination and it appears that the reason that they were given was not a genuine reason. It appears that the management committee of TRACCAS may have acted improperly. In any event, I am satisfied that there has been a breach of the provisions of section 170DE(1) of the Act. APPROPRIATE REMEDY Neither Ms Benier nor Ms Fowler is seeking reinstatement. I am satisfied that to order reinstatement would be impracticable. In these circumstances, the appropriate remedy is payment of compensation. Under section 170EE(2) this Court may, if it considers it appropriate in all the circumstances of the case, make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate. It appears that TRACCAS may still be trading. The respondent has chosen not to provide this Court with any evidence that an order for compensation would be inappropriate. Under section 170EE(3), in working out the amount of the compensation for the purpose of subsection (2), this Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation must not exceed the amount of remuneration that would have been received by the employee in respect of the period of six months that immediately followed the day on which the termination took effect if the employer had not terminated the employment. Ms Benier gave evidence that at the time of the termination of her employment she was receiving remuneration at the rate of $634 gross per week. She eventually received four weeks' pay in lieu of notice as required by the terms of her original contract of employment. She started work on 20 November 1996 with Wellcare, albeit on a casual basis. Her total gross earnings in that position to 7 February have been $7,212.40. The hours vary a lot and over the Christmas period Ms Benier was working far more than she now usually works because a lot of staff were away on holiday and she was filling in for them. Taking into account the four weeks' pay already received by Ms Benier in relation to the six months immediately after the termination of her employment, Ms Benier would have received an extra 22 weeks pay at the rate of $634 gross per week, which amounts to a total of $13,948. Instead, her total gross earnings to 7 February have been $7,212.40. From 8 February until 4 April (the last day of the six months period following the date of her termination) represents a period of eight weeks. Although it is difficult to estimate what Ms Benier will earn in her present position, it appears that she has been earning at least as much as she was earning in her employment with the respondent. If one estimates that she will earn over the next eight weeks the same rate of pay as she was earning at her position with TRACCAS, she will earn a total of $5,072. That sum, added to the $7,212.40 already earned by Ms Benier up to 7 February 1997 amounts to a total of $12,284.40. That total figure, subtracted from the $13,948.00 which she would have earned over the 22-week period already mentioned, amounts to a sum of $1,663.60. In the case of Ms Benier, I am satisfied that her total remuneration lost as a result of the termination of her employment for the six months following the termination of her employment amounts to $1,663.60. In the case of Ms Fowler, she was earning $520 gross per week at the time of the termination of her employment by TRACCAS. She also received her entitlements for the first four weeks of the six month period immediately following termination. The remaining 22 weeks at $520 per week amounts to a total remuneration she would have received of $11,440. Ms Fowler is currently employed in another position in which she earns $430 per week. Ms Fowler was successful in obtaining this employment about one month after the date of her termination. Over the same 22-week period, she can expect to earn a total of $9,460. This represents a difference of $1,980. As the funding for TRACCAS was apparently granted on a yearly basis, I am not prepared to assume that its funding would be renewed in the 1997-1998 financial year. I do consider it appropriate to recognise that Ms Fowler suffers a continuing loss at the rate of $90 per week and is likely to do so beyond 4 April until the end of the financial year. In that case, I consider it appropriate to add an extra 12 weeks at the rate of $90 per week, amounting to a total of $1,080.00, to the award of compensation for Ms Fowler. Therefore, the total award to Ms Fowler, should, in my view, be $3,060.