DECISION NO:63/97 CATCHWORDS INDUSTRIAL LAW - UNLAWFUL TERMINATION - EMPLOYMENT CONTRACT - BREACH OF CONTRACT - EMPLOYMENT RELATIONSHIP - VALID REASON - REDUNDANCY - NOTICE OF TERMINATION - ACCRUED JURISDICTION - employee accepting transfer - original position abolished - offer of lower position. Workplace Relations Act 1996 (Cth) s170DE Yetton v Eastwood's Froy Ltd (1967) 1 WLR 104; SALOMAN v WD & HO WILLS (AUSTRALIA) LTD VI96/1654 Before: MURPHY JR Place: MELBOURNE Dates of Hearing: 3, 4 & 5 MARCH 1997 Date of Judgment: 5 MARCH 1997 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI96/1654 BETWEEN: JEANETTE SALOMAN Applicant AND WD & HO WILLS (AUSTRALIA) LTD Respondent BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 5 MARCH 1997 MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The application is dismissed; 2. The applicant's claim for relief in the Statement of Claim filed 20 November 1996 is dismissed; 3. The applicant's solicitors, Messrs Rigby Cooke, pay to the respondent the sum of $1,000 reserved costs within 14 days. 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 VI96/1654 BETWEEN: JEANETTE SALOMAN Applicant AND WD & HO WILLS (AUSTRALIA) LTD Respondent BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 3 MARCH 1997 REASONS FOR DECISION Delivered ex tempore - revised from the transcript The applicant alleges that on 29 March 1996 her employment was terminated contrary to section 170DE(1) of the Workplace Relations Act 1996 (Cth) ("the Act"). She also claims in the Court's associated jurisdiction that the termination of employment by the respondent was in breach of implied terms of the employment agreement due to the failure to pay her a redundancy package or to give her reasonable notice or payment in lieu thereof. The respondent's defence to the claims was that it denied that it had repudiated any term of its contract with the applicant in its dealings with her. There was a deal of evidence in the proceeding that had only marginal relevance to the central issues before the Court. The central issues related first to the terms of the employment contract between the parties, and in particular, the basis on which the applicant moved from Melbourne to Sydney in May 1995. The second major issue to determine was whether the respondent breached any agreement with the applicant when in February and March 1996 it offered her a different position from that she had previously held. The applicant's transfer from Melbourne to Sydney. The respondent operates its tobacco distribution operation on a state basis. Within each state various modes of delivery are described as channels and are managed accordingly. Within the hierarchy marketing representatives are at the bottom. They report to area managers, who in turn report to channel managers, who in turn report to state or other managers. The applicant commenced with the respondent in 1991 as a hostess and graduated to a temporary marketing representative in August 1992. In May 1993 she was confirmed as a trade marketing representative (Exhibit R2). She was given a car and a sales territory. In October 1994 the applicant was promoted to a position as an Area Manager - Non-Food (Exhibit A1). She then had representatives reporting to her. She moved from the staff to the management payroll, was granted a salary and leave increase, and joined a non-contributory superannuation scheme. In her performance assessment in early 1995 (Exhibit A20), she was rated excellent. In about March 1995 the applicant approached the then Victorian state manager, Mr Merrett, about a possible transfer to Sydney. He advised the applicant that her future lay in Victoria. The matter was left there. In May 1995 the applicant again approached Mr Merrett. She indicated to him that for personal reasons associated with a medical condition her sister was suffering she wished to resign so that she could move to Sydney to help her. Mr Merrett was sympathetic to the applicant and told her that the respondent took a compassionate approach to these types of matters. He told her he would see if there was a position available for her in Sydney. The applicant indicated to him that she was only interested if she remained as an area manager. Mr Merrett contacted the New South Wales human resources manager, Mr Flay, and then the New South Wales state manager, Mr Hoskings. There was some conflict in the evidence as to the precise position regarding area managers in New South Wales at the time. I accept Mr Hoskings' evidence, however, that on the basis of assisting the applicant he indicated to Mr Merrett and to her that he would make available a position for her in New South Wales for a period of up to twelve months. Mr Hoskings conveyed this to Mr Merrett who, in turn, conveyed it to the applicant. I am satisfied that the applicant was told by Mr Merrett that she could be placed in New South Wales with her existing title and salary as an area manager for a period of up to twelve months. The applicant went to Sydney and had a discussion with Mr Hoskings. Mr Hoskings said that when he spoke to the applicant in Sydney he told her she was an extra, would have a variety of jobs, and there was nothing he could guarantee for the full twelve months. I accept his evidence that he told the applicant that she was not in a position within the New South Wales organisation but that for twelve months she would work in various jobs within the trade marketing section. She would have the title "Area Manager Special Projects" so that she could retain the benefits of that position, which included access to a sedan motor vehicle. He also discussed the duties with her and indicated that she would work in the Non-Food Channel and then the Customphone section. On the applicant's own evidence he did not indicate to her duties beyond six months. The most contentious issue in relation to the transfer to Sydney is what would happen at the end of the twelve months. It was common ground that Mr Hoskings made no commitment to the applicant beyond that period. It was the applicant's evidence that she asked Mr Merrett what would happen at the end of twelve months. He said she would return to Victoria. He said she would return as an area manager and that if there was no position available at that time she would "have to wait until one became available". In cross-examination the applicant said she told Mr Merrett that this was unacceptable and she wanted a guarantee. She conceded that he did not agree to that and that the matter was left up in the air. Mr Merett's evidence was to similar effect, in that he denied giving any guarantee. His evidence was that there was no guarantee that he could offer a position in any capacity. Although Mr Merett's evidence was strongly challenged, other evidence as to the wider circumstances supports his evidence that he gave the applicant no undertaking of a return to Victoria as an area manager at the end of twelve months. This evidence was Mr Merett's knowledge that the respondent was in the process of restructuring its channels and this may affect the number of area manager positions. The applicant called evidence from Mr Thibou, a marketing services and sales development manager, to the effect that Mr Merrett advised the management team meeting that the applicant was on a type of secondment to Sydney as an area manager special projects for a period of up to twelve months and that the applicant's position was not to be filled on a permanent basis. It was his understanding that she would return to her position. Mr James Grammar, the sales development manager, also said the applicant's position was to remain vacant as she was being seconded to New South Wales for twelve months. This evidence, led by the applicant, does not assist in resolving this aspect of the case. On the applicant's own evidence, Mr Merrett would not give her any guarantee about an area manager position at the end of twelve months. Leaving her a position open would obviously give him flexibility at that time, but with the threat of restructure in the air, Mr Merett's account of his reluctance to give a future commitment to the applicant is convincing. The evidence of the other witnesses called by the applicant is consistent with Mr Merett's account that he told the applicant there was no guarantee of a position upon her return. It was consistent with his statement that he knew that with restructuring there might not be as many area manager positions available. The evidence led by the applicant about what was said by Mr Merrett to the other witnesses must also be seen in the light of the fact that the restructuring that Mr Merrett knew was under consideration (Exhibit R3) had not yet occurred and did not, in fact, occur until February 1996. The important issue is that Mr Merrett had, on the applicant's own account, left himself the flexibility of not offering the applicant an immediate return to area manager position when or if she returned from Sydney. This reservation by Mr Merrett must be seen in the light of the negotiations between the parties. The applicant was seeking a favour in circumstances where she was being talked out of resigning. The respondent was seeking to accommodate her. It did this by detaching the applicant from its Victorian structure. At the end of the Sydney interlude, the precise position in which the applicant was to be returned to was to be the subject of future decision. I am satisfied that the proper way to characterise the applicant's position when she left her position as an area manager in Victoria is that the end of her twelve months the respondent agreed that it would endeavour at the end of that time to find a suitable position for her, but not necessarily as an area manager. I am satisfied that the applicant, when she left for Sydney, accepted that this was, indeed, the position. I do not accept that the statements made by Mr Merrett to other witnesses called by the applicant altered the caveat put by Mr Merrett on the position of the applicant at the end of twelve months. Such a conclusion is supported by the evidence that at that time the duration of the applicant's time in Sydney was uncertain. She admitted in her response to a question from the Court that her position upon her return was "left up in the air" between herself and Mr Merrett. In cross examination the applicant said that, "Mr Merrett told me I could come back as an area manager if there was one there. If not, I would have to wait." The applicant told him she was unhappy with that but it was left at that. Events in Sydney. There was no real contest that the applicant in Sydney performed a range of duties, some of which were within the rubric of an area manager. She worked for a period in Non-Food under Mr Pringle, the New South Wales grocery channel manager. She then replaced Ms Kennedy, an area manager who had been working on secondment as a Customphone supervisor. The applicant performed the duties associated with that position until March 1996. At the time she retained the salary benefits and authority level of an area manager. She had a business card describing her as an "Area Manager". She had the appropriate vehicle. She was described in the respondent's documents as an "Area Manager Special Projects". The applicant had a higher authority level than the other Customphone supervisors. There was much debate in cross examination as to whether the applicant, in fact, had a position as an area manager in New South Wales. I accept the respondent's evidence that the applicant did not have a substantive position as an area manager in New South Wales. This is, to some extent, clear from the two contemporaneous memoranda announcing her transfer for personal reasons to New South Wales, (Exhibits A5 and A6). On neither of these is she described, in contrast to the other employees mentioned, as having been appointed to a substantive position. The first memorandum (Exhibit A5) from Mr Hoskings states that the applicant: "will relocate to NSW for family reasons and work within NSW Trade Marketing for a period of approximately 12 months..." That is confirmed in the second memorandum (Exhibit A6) from Mr Flay of 25 May 1995. There was evidence that the title "Area Manager Special Projects", had been previously used in New South Wales but it was never conceded by Mr Hoskings that the applicant appeared on an organisation chart. I am satisfied that she was described as an "Area Manager Special Projects". This was not a substantive position within the New South Wales organisation but an ad hoc arrangement created to accommodate the applicant with duties for up to twelve months and to maintain the salary package comparable to that she left in Victoria. That the position was not a permanent one is to some extent confirmed by the fact that the applicant was approached about a permanent position as a Customphone supervisor. Her objection to this was that it did not carry the right to a vehicle and thus the benefits were inferior to those she already held. To the extent that it is appropriate to describe the applicant as having a position in New South Wales, it was not in dispute that the maximum duration of that position was to be twelve months. This makes the position of the applicant different from Ms Kennedy, who had a permanent position as an area manager before she was seconded for a period to Customphone and then subsequently returned to a substantive position as area manager grocery. The applicant is offered a position as trade marketing representative. On 28 February 1996 the applicant was offered a position as a trade marketing representative in New South Wales (Exhibit A8). She saw that as a demotion and refused to accept it. The following day she had a discussion with Mr Lasses, the national employee relations manager. It was common ground that at that meeting there was a discussion as to whether the applicant would be offered a redundancy package. Mr Lasses told the applicant that she would not be made an offer similar to that made to some other area managers. This was because at that stage she was not performing an area manager role and was not in a comparable position to those others who had been offered the packages when their positions became redundant. I am satisfied that in two conversations with the applicant around this time Mr Lasses clarified that the respondent's proposal did not result in any reduction in salary or benefits to the applicant and was available in either New South Wales or Victoria. The only difference would be a change in the vehicle and, of course, the different duties. The applicant sought legal advice and there was a flurry of correspondence wherein the applicant put the position that the proposed position was a demotion and she refused to accept it. By letter dated 27 March 1996 (Exhibit A16) the solicitors for the applicant advised the solicitors for the respondent that she was treating the respondent's action as a repudiation of the contract of employment. She then proceeded to issue these proceedings on 29 March. Was the respondent entitled to offer the applicant the position that it did? I am satisfied that as a result of the discussions between the applicant and Mr Merrett in May 1995 the respondent was entitled to offer the applicant the position it did. There were two aspects to the offer. The first was the maintenance of her salary and benefits at the same level as that of an area manager. She had held those since her appointment in October 1994. The second aspect of the offer was as a trade marketing representative. This position was of a lower status within the respondent than that of area manager. It is, therefore, not appropriate to characterise this as a lateral transfer or as a secondment. It was accepted by Mr Merrett that a move from an area manager to a trade marketing representative would be a demotion in status. It was the applicant's evidence that she saw it this way because of the way she had climbed the ladder and the assurances that she had received that she would continue on that upward path. In the present case, however, it is necessary to consider whether the respondent, within the employment relationship, was entitled, without breaching the agreement between the parties, to do what it did. It was urged by counsel for the respondent that it was. Counsel for the applicant submitted, on the other hand, that the job offer constituted a breach of the employment agreement entitling the applicant, as she in fact did, to treat it as a repudiation. He submitted that the repudiatory conduct resulted in losses measured by the value of the redundancy package or an amount in lieu of reasonable notice. Here I am satisfied that, given my findings about the agreement between the parties when the applicant went to Sydney, there was no contractual right of the applicant to a redundancy package. Her position was not redundant because she had voluntarily relinquished that position when she went to Sydney. I accept Mr Lasses' evidence that the respondent's package applied only to those like Ms Kennedy who had a substantive position that they lost. I do not accept that the applicant had to be consulted about the abolition of the area manager position in Victoria because at that stage she held no such position. Next, I accept that the respondent did not engage in repudiatory behaviour when it made its offer to the applicant. As a result of the May 1995 agreement, the applicant accepted that within twelve months she would be offered another position if an area manager position was not available. Mr Hoskings could not give her duties for any longer than up to twelve months. He made that clear to the applicant. In fact, the offer of an alternative position came after only nine months. The duration of the applicant's position in Sydney was not to be longer than twelve months. This was Mr Hoskings' unchallenged evidence. It is consistent with the two memoranda (Exhibits A5 and A6), both of which refer to "approximately 12 months". The respondent's action in offering the applicant a position as a trade marketing representative was, I am satisfied, one that was not in breach of the respondent's obligations under its agreement with the applicant. The next issue was whether the applicant was justified in responding to it as a demotion and refusing to accept it. Here the balance is a fine one. The applicant took an early position that it was a demotion. It was common ground that the status was lower than that of an area manager. It is significant that Ms Kennedy did not accept such a position as a trade marketing representative. In her eyes it was a demotion. This evidence is important in characterising the applicant's response. The applicant saw it the same way. In Yetton v Eastwood's Froy Ltd (1967) 1 WLR 104 at 118, Blain J said, when determining whether an employee has acted reasonably in refusing a position: "Certainly personal factors do not have to be ignored in the making up of the dismissed servant's mind when he comes to a decision reasonable or unreasonable." Here it is necessary, again, to go back to the May 1995 discussions. Mr Merrett did not specify what position the applicant would have to wait in before an area manager position came up for her if one was not available. On the material before the Court I am satisfied that the applicant did not act unreasonably in refusing the position that she did. I accept that she genuinely believed that the position was a demotion and that this guided her response to it. The next issue is whether the applicant has suffered any loss that the respondent must compensate her for. I do not accept that she has. Her contract of employment allowed it to be terminated upon on month's notice on either side. It was within the contract that the respondent made the offer it did. It was within the contract that the applicant refused to accept the offer of the new lower status position. She effectively gave notice to terminate the contract. The respondent has paid the applicant a month's pay in lieu of notice. It follows that the applicant has not made out on either of the contractual claims that she has pleaded in the associated jurisdiction of the Court. Turning to the application of the Act, I am satisfied that the employment was terminated at the initiative of the employer here when, in the face of the applicant's refusal to accept the new position, it directed her to do so. The initiating act of the series of events was the new position offer, even though it was the applicant's solicitors who stated that they accepted the actions as constituting repudiation and then proceeded to issue the proceedings. I am satisfied, however, that the respondent had a valid reason to terminate the employment because the applicant refused to accept the position offered. She was paid the notice requirements under the Act and under the contract of employment. It follows that her application for relief under the Act must be dismissed. In relation to the reserved costs for 23 October 1996, previously fixed at $1,000, I order that they be paid by the solicitors for the applicant, Messrs Rigby Cooke. The accrued jurisdiction claim that was the basis of the Notice of Motion and the adjournment should have been made far earlier than it was. On that basis the costs occasioned by the adjournment of $1,000 were as a result of the default of the solicitors for the applicant and they ought to compensate the respondent for the loss occasioned by their default. The orders of the Court will be: (1) The application is dismissed; (2) The applicant's claim for relief in the statement of claim filed 20 November 1996 is dismissed; (3) The applicant's solicitors, Messrs Rigby Cooke, pay to the respondent the sum of $1,000 reserved costs within 14 days. I certify that this and the preceding twelve (12) pages are a true copy of the reasons for decision of Judicial Registrar Murphy as recorded in the transcript and revised by the Judicial Registrar. Associate: KAREN HALSE Dated: 5 March 1997 APPEARANCES Counsel appearing for the applicant: MR P MCDERMOTT Solicitors for the applicant: RIGBY COOKE Counsel appearing for the respondent: MR M MCDONALD Solicitors for the respondent: FREEHILL HOLLINGDALE & PAGE Dates of Hearing: 3, 4 & 5 MARCH 1997 Date of Judgment 5 MARCH 1997