DECISION NO:77/97 CATCHWORDS INDUSTRIAL LAW -. TERMINATION OF EMPLOYMENT - legal secretary - alleged PROBATIONARY EMPLOYMENT - reasonableness of probationary period - VALID REASON for termination - offensive remarks - COMPENSATION for distress Workplace Relations Act 1996 (C'th) (formerly Industrial Relations Act 1988) Ss 170DB, 170DC, 170DE, 170DE(1), 170EA, 170EE(2) 170EE(3), 17033(5), Regulation 30(B) Aitken v CMETSWU (WA Branch) (1995) 63 IR 1 Brackenridge v Toyota Motor Corporation (1996) 67 IR 162 Burazin v Blacktown City Guardian Pty Ltd, unreported, Full Court, IRCA 606/96 Elvidge v Burswood Resort Management Pty Ltd, unreported, IRCA 631/96, Ritter JR, 16 December 1996 Fargie v Freedom Foods (Aust) Pty Ltd, unreported, IRCA 498/96 Parkinson JR, 14 October 1996 Garbett v Stothers, unreported, IRCA 416/95, Ritter JR, 27 August 1996 Kenefick v Australian Submarine Corporation Pty Ltd (1995) 62 IR 107 Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366 Lupoi v Phillips Fox, unreported, IRCA 485/96 Ritter JR, 3 October 1996 Nettlefold v Kym Smoker Pty Ltd, unreported, IRCA 469/96, Lee J, 4 October 1996 Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199 Pepper v Element Holdings Pty Ltd, unreported, IRCA 46/1995, Boon JR, 23 February 1996 Senathirajah Selvachandran v Peteron Plastics Pty Ltd, (1995) 62 IR 371 Tolevsky v Ziadon Pty Ltd, unreported, IRCA 90/1995, Staindl JR, 8 March 1995 Watt v Intercultural Management Services Pty Ltd, unreported, IRCA 518/96, Marshall J, 1 November 1996 Woods v W M Car Services (Peterborough) Limited [1982] ICR 693 PENNY MAUREEN McLEOD and CAROLINE SCICLUNA & ASSOCIATES DI 1024 of 1996 Before : RITTER JR Place : Perth (heard in Alice Springs) Date of Judgment : 13 March 1997 IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) DARWIN REGISTRY ) DI 1024 of 1996 B E T W E E N: PENNY MAUREEN mcLEOD First Applicant A N D: CAROLINE SCICLUNA & ASSOCIATES Respondent MINUTE OF ORDERS 13 MARCH 1997 PERTH RITTER JR THE COURT ORDERS AND DECLARES THAT: 1. The Respondent terminated the employment of the applicant in contravention of sections 170DB(1), 170DC and 170DE(1) of the Workplace Relations Act 1996 (C'th). 2. Subject to Order 3, the respondent is to pay the applicant compensation in the sum of $1,680.75 within 14 days. 3. The amount that the respondent is to pay to the applicant in satisfaction of Order 2 is less any sum required to be deducted therefrom by the respondent pursuant to the Income Tax Assessment Act 1936 and actually paid by the respondent to the Commissioner of Taxation with proof thereof to be served upon the applicant or her solicitors, within 14 days. 4. There be liberty to apply as to the terms 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 ) DARWIN REGISTRY ) DI 1024 of 1996 B E T W E E N: PENNY MAUREEN McLEOD Applicant A N D: CAROLINE SCICLUNA & ASSOCIATES Respondent REASONS FOR DECISION 13 MARCH 1997 RITTER JR INTRODUCTION This is an application pursuant to section 170EA of the Workplace Relations Act ("the Act") for a remedy in respect of the termination of employment of the applicant by the respondent. The respondent is a solicitor's practice in Alice Springs. It is a sole practitioner's practice operated by Ms Scicluna. The applicant was employed as a secretary with the respondent from 29 January 1996 to 1 February 1996. On the latter date, Ms McLeod was summarily terminated from her employment by Ms Scicluna. The principal issues to emerge at trial were the following: 1. Whether the applicant was an employee excluded from the operation of the relevant provisions of the Act, on the basis of being a probationary employee, under Industrial Relations Regulation 30B(1)(c); 2. If not excluded from the operation of the relevant provisions of the Act, whether the respondent had a valid reason to terminate the employment of the applicant, connected with her conduct; section 170DE(1) of the Act. Counsel for the respondent, Mr Spargo, frankly conceded that if the applicant was not excluded from the relevant provisions of the Act, then the respondent had contravened section 170DC of the Act. Mr Spargo did not submit that the termination of employment was of a type in which the exception under section 170DC applied. Similarly, Mr Spargo also conceded that, if the applicant was not excluded from the relevant provisions of the Act, then there had been a contravention of section 170DB of the Act. Again, Mr Spargo did not submit that section 170DB(1)(b) applied. The remedy that the applicant sought at the hearing was that of compensation under section 170EE(2) of the Act. The respondent agreed that if the Court reached the position that it was to consider whether and what remedy to order, compensation under section 170EE(2) was appropriate, it being agreed that reinstatement was impracticable. The respondent presented its case first and Ms Scicluna and Ms Barbara Klaer, a former secretary of the respondent, gave evidence. The applicant gave evidence in support of her case but no other witnesses were called by the applicant's counsel. BACKGROUND TO THE EMPLOYMENT OF MS McLEOD As I have said, the respondent is a sole practitioner's legal practice. At the relevant time it was operated by Ms Scicluna who employed two administrative/secretarial employees. Ms Klaer had been employed as the main secretary of the respondent for one and half years until December 1995. She was then to leave her position, which created a vacancy in the respondent. The other administrative/secretarial employee was Ms Kaye Valentine. Ms Klaer was asked by Ms Scicluna to assist her in finding a replacement. Ms Klaer telephoned a former teacher of hers at the Centralian College in Alice Springs. She asked the teacher if she knew of any people who may be suitable for the job. Later, the teacher telephoned Ms Klaer and gave her the name of Ms McLeod. Ms Klaer spoke to Ms McLeod on the telephone and then an interview was arranged. The first interview that Ms McLeod had with Ms Scicluna was on 16 December 1995. According to the evidence of Ms Scicluna she discussed with Ms McLeod her work experience. It emerged that she had no previous experience working in a legal office. Ms McLeod told Ms Scicluna she had finished a computer training course at Centralian College and had then worked as a clerk in a traineeship with Hertz Rent-a-Car. Ms Scicluna said that the interview took about one hour. At the conclusion of the interview Ms Scicluna said that she asked Ms McLeod to come to the office the following week so that Ms Klaer could show her the office computer system and the job generally and so a determination could be made as to whether Ms McLeod would be suitable to employ. This occurred on the Wednesday of the following week, 20 December 1995. Ms Scicluna said that she discussed the potential employment of Ms McLeod with Ms Klaer on the Monday and Tuesday of that week. In particular, she expressed her concern about whether Ms McLeod had adequate computer skills for what the position required. Ms Scicluna also said that she discussed with Ms Klaer that if Ms McLeod was employed, she would be placed on probation for three months to see how her employment went. Ms McLeod came in on 20 December 1995 as arranged. That afternoon she had the orientation with Ms Klaer as envisaged. After that, Ms Scicluna, Ms Klaer and Ms McLeod sat in the kitchen/staff room and had a discussion. Ms Scicluna said that she was desperate to fill the position but had a concern about Ms McLeod's computer knowledge. Ms Klaer said something like that Ms McLeod was a whiz on the computer. Ms Scicluna then said she told Ms McLeod she might give her a start and that she could commence on three months probation and they would see how it went. Ms Scicluna said Ms McLeod accepted this. It was then agreed that Ms McLeod would commence employment on 29 January 1996. When cross examined, Ms Scicluna denied that there was no mention of the employment being probationary for three-months or otherwise. Ms Scicluna said that the other administrative employee who worked in the office, Ms Kaye Valentine, had also been placed on three-months probation the previous year. Ms Klaer agreed in her evidence that Ms McLeod attended for orientation on 20 December 1995 and that there was then a discussion in the staff room involving Ms Scicluna, Ms Klaer and Ms McLeod. She said that Ms Scicluna advised Ms McLeod in the course of that conversation that she would be on three months probation. She said that Ms McLeod agreed to this. Ms McLeod gave evidence of her employment prior to that with the respondent. She said that she had worked in a meat department at a supermarket, then K-Mart, and then applied through the Commonwealth Employment Service for a traineeship with the Centralian Traineeship College. This subsequently involved a traineeship with Hertz Rent-a-Car. She was employed with Hertz for six months prior to her employment with the respondent. She agreed that she received a telephone call from Ms Klaer about the position with the respondent. There was then arranged an interview with Ms Scicluna on Saturday 16 December 1995. She said that Ms Scicluna arrived late for the interview, in her bathers, having just been swimming. Ms McLeod said that she had been nervous prior to the interview but Ms Scicluna's appearance and manner made her feel relaxed. Ms McLeod said that the interview lasted about 45 minutes and then it was agreed that she come to the office of Ms Scicluna on the afternoon of 20 December 1995. She said the purpose of this was so that she could see whether she would like to work with the respondent and the respondent could see whether they wanted her to work for them. Ms McLeod agreed that on the Wednesday afternoon, she was offered employment. She agreed that Ms Klaer was asked how Ms McLeod had gone on the computer and Ms Klaer said that she was a whiz on the computer. Ms Scicluna then discussed with Ms McLeod an appropriate date to commence employment. The sort of work that Ms McLeod was to do and the division of work with Ms Valentine was also discussed. Ms McLeod agreed that a commencement date of 29 January 1996 was agreed. Ms McLeod denied that she was told she was a probationary employee or that a three-month probationary period was mentioned. Ms McLeod said that she had to give Hertz six weeks notice and that the cessation of her employment with Hertz meant that she did not finish her traineeship with the Centralian College. It was intimated on behalf of the applicant that she would not have left her employment with Hertz and failed to get her traineeship certificate if the employment with the respondent was only probationary. Ms McLeod asserted that the first time she heard it said her employment was probationary was during a conciliation conference at the Australian Industrial Relations Commission. THE PROBATIONARY EMPLOYEE ISSUE Regulation 30B(1)(c) provides that: "30B(1) Subject to subregulation (2), for the purposes of section 170CC of the Act, the following employees are excluded from the operation of Subdivisions B, C, D and E of Division 3 of Part VIA of the Act: . . . (c) an employee serving a period of probation or a qualifying period of employment, if the duration of the period or the maximum duration of the period, as the case requires: (i) is determined in advance; and (ii) is reasonable, having regard to the nature and circumstances of the employment;" Subregulation 30B(2) does not apply to employees of the type mentioned in subregulation 30B(1)(c). To be excluded from the relevant provisions of the Act under regulation 30(B)(1)(c), an employee must: (1) Be serving a period of probation; (2) The duration of the period or the maximum duration of the period must be determined in advance; and (3) The duration of the period or the maximum duration of the period must be reasonable, having regard to the nature and circumstances of the employment. The expression "serving a period of probation" is not defined in the Act. The ordinary meaning of the word "probation" includes a period of testing or trial of a person's conduct, character, qualifications or the like (Macquarie Concise Dictionary). In my opinion, the word "probation" in the Regulation means, in the context, a time of provisional employment for the purposes of testing suitability. The Regulation is not precise on whether the period of probation must be for a fixed term before the employment can be terminated, to satisfy the requirements of the Regulation or whether a person employed for a maximum period of probation of, say, three months, but who can be terminated at any time within that three months, meets the requirement of the Regulation. The latter construction is however favoured by the use of the word "serving" rather than "served", in the Regulation. It also seems, from the decided cases, that the latter is considered the appropriate construction of the Regulation. In Watt v Intercultural Management Services Pty Ltd, unreported, IRCA 518/96, Marshall J, 1 November 1996, his Honour considered a term of an employment contract that read: "PROBATIONARY PERIOD During the first three months of your employment with the company, you will be employed on a probationary basis ("the probationary period"). During the probationary period this contract of employment may be terminated by either party on not less than five days notice in writing. In the case of notice by the company, it may, at its election, pay five days salary in lieu of notice." (Page 5). Marshall J accepted that this meant that the applicant was a probationary employee within the terms of the Regulation (page 14). In the cases of Pepper v Element Holdings Pty Ltd, unreported, IRCA 46/1995, Boon JR, 23 February 1995 and Tolevsky v Ziadon Pty Ltd, unreported, IRCA 90/1995, Staindl JR, 8 March 1995, the Judicial Registrars found that employment was probationary employment within the terms of the regulation where there was a termination within the probationary period. To similar and binding effect is the judgment of the Chief Justice in Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199. In that case, the Chief Justice found that Regulation 30(B)(1)(c) applied to the employment of Mr Nicolson when he commenced his employment on 21 February 1994, was terminated on 7 April 1994 and was subject to a two-month probation period. As a result, in my opinion, Regulation 30B in so far as it refers to an employee serving a period of probation, means an employee who is serving a trial or provisional period of employment during which the employment may be terminated by either party. The next question is whether the employment of Ms McLeod was agreed between the parties to be of this type. The evidence of Ms Scicluna and Ms Klaer was to the effect that the applicant was employed as a three-month probationary employee. However, neither Ms Scicluna nor Ms Klaer indicated that there was any discussion as to what this expression meant and in particular that it meant that the employment of Ms McLeod could be terminated at any time, without notice, during the three-month period. It appears, however, that Ms Scicluna thought that this is what she was entitled to do. This is because, as will be explained later, she did terminate the employment of Ms McLeod, without warning, after only four days. As said earlier, Ms McLeod denied that there was ever any mention of her being a probationary employee for three months. There is therefore a direct conflict on the evidence between Ms Scicluna and Ms Klaer on the one hand and Ms McLeod on the other. I am unable to resolve this conflict in the evidence, but for reasons which will emerge later, it is not ultimately necessary for my decision that I do so. With respect to Ms McLeod's evidence, I thought that she gave it in a straight-forward and matter-of-fact fashion. She was not inclined to exaggerate or be evasive, so far as I was able to detect. Her evidence that the first that she heard it suggested that her employment was probationary, was during the conciliation conference, appeared to me to be genuine. I also think the suggestion that Ms McLeod would not have left her employment with Hertz and her traineeship for the uncertainty of a probationary period of employment with the respondent, has some force. On the other hand, there was evidence not only from Ms Scicluna but also from Ms Klaer that a three-month period of probation was specified to Ms McLeod and agreed to. Ms Klaer was put forward as an independent witness, given that her employment with the respondent ceased in December 1995. I do not entirely accept this, however, as Ms Scicluna and Ms Klaer had worked together at the respondent firm for one and a half years and before that when Ms Scicluna was a solicitor at Poveys. It was obvious from the evidence given that their association was and remains a friendly one. There was, however, nothing about the way in which Ms Klaer gave her evidence that would cause me to doubt her veracity. I have some difficulty with the way in which Ms Scicluna gave her evidence. It appeared to me that when she was cross examined, she was defensive in the way in which she answered questions, almost to the point of appearing evasive. There are difficulties in taking the step from forming a subjective opinion like this of a person's evidence to a conclusion that their evidence is inaccurate or false; see, for example, the issues canvassed in Elvidge v Burswood Resort Management Pty Ltd, unreported, IRCA 631/96, Ritter JR, 16 December 1996, pages 18-21. The way the person gives evidence may be explicable on the basis of her/his personality and/or reaction to the process of being examined as a witness as opposed to the inaccuracy or falsity of their testimony. I accept there was a good reason for Ms Scicluna to want to employ the applicant on a probationary basis. This was because Ms Scicluna had no previous experience of working with Ms McLeod and she was uncertain as to whether she would be ultimately suitable for the position. She had earlier placed the other administrative employee, Ms Valentine, on probationary employment. She had only not done so with Ms Klaer because of their previous working arrangement at Poveys. Therefore I accept that Ms Scicluna may have intended to place Ms McLeod on a period of probation. However, the question is whether this was communicated to and agreed with by Ms McLeod. It is on that issue that I remain uncertain. It could be argued that if Ms McLeod was a probationary employee, in part so that she would be excluded from the relevant provisions of the Act (which was Ms Scicluna's evidence), Ms Scicluna would, as a solicitor, have documented this in a letter of appointment or contract of employment. However, as Wilcox CJ said at pages 207 and 208 of Nicolson: "Where such an easy step is omitted, it is tempting for a Judge to say that, if employers do not bother to put the terms of the agreement in writing, they ought not to expect a court to accept that there was an oral agreement for a probationary period. However, lawyers have been lamenting that commercial people often fail to put agreements in writing since time immemorial; to little effect. Notwithstanding the failure of parties to take this obvious step, courts have to take the evidence as they find it and endeavour to divine the truth. . . . But evidentiary conflicts turning on different versions of conversations are notoriously difficult to resolve. With the best will in the world, the Court may wrongly find against the employer's claim that there was an oral arrangement making the contract one to which Regulation 30B applied. By contrast, a contemporaneous letter, clearly specifying the terms of employment, would probably ensure the employer's success in defending the claim. Indeed, its mere existence may persuade the applicant not to bring, or persist with, a claim." Having regard to all of the circumstances I have set out earlier, I am, as I have said, unable to determine whether the evidence of Ms Scicluna and Ms Klaer or that of Ms McLeod should be preferred on this issue. However, even if the evidence of Ms Scicluna and Ms Klaer was preferred, I am not all convinced that it was agreed by the parties that Ms McLeod be appointed a probationary employee within the meaning of Regulation 30B; specifically, whether it was agreed that as a probationary employee the employment could be terminated at any time within the three-month time period. My doubts on this issue have arisen because of evidence that Ms McLeod gave when cross examined. She said that she thought a probationary period of employment for a specified time meant that it gave the employer and the employee the opportunity to see whether they "liked" each other. If, at the end of the period they decided that they did not, the employment relationship could be terminated. Ms McLeod said that she had been placed on a one-month period of probation with Hertz and that this is what she understood it meant. Therefore, if Ms McLeod did accept an offer of three-months' probationary employment with the respondent, what she had in mind that she was accepting was something quite different from that which Ms Scicluna was offering, and which Regulation 30B applies to. There may have been a mistake as to the agreement made, such as to have the effect that the Court could not conclude that probationary employment of the type envisaged by Regulation 30B was agreed to. However I do not have to determine this difficult legal question, as there is a clear basis on which I find the applicant was not an excluded employee under Regulation 30B. As set out earlier, to be excluded from the operations of the Act, a probationary employee must have the period of probation determined in advance and it must be reasonable, having regard to the nature and circumstances of the employment. If the evidence of Ms Scicluna and Ms Klaer is accepted, the period of probation of three months was determined in advance. However, I do not think such a period of time would be reasonable, having regard to the nature and circumstances of the employment. As I have said, the respondent's business is that of a sole legal practitioner. At the relevant time, Ms Scicluna worked with Ms McLeod and another administrative assistant, Ms Valentine. Much of the work that Ms McLeod did was under the supervision of Ms Scicluna, for example typing documents and letters from dictaphone tapes. In addition, her interaction with clients and others dealing with the respondent firm would ordinarily be monitored by Ms Scicluna. If there were difficulties in Ms McLeod's interactions with clients or others dealing with the firm, this could be expected to readily come to the attention of Ms Scicluna. Ms Scicluna also said that much of the work Ms McLeod would do was in following dictaphone recorded instructions. In my opinion, given the size and nature of the respondent firm, and the ready opportunity for Ms Scicluna to observe the applicant's proficiency, work habits and character, a probation period of three months could not be said to be reasonable, having regard to the nature and circumstances of the employment. Wilcox CJ in Nicolson at page 208 said: "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. In the case of a person employed in a marketing or managerial position, working with little or no direct supervision and whose quality of performance cannot be immediately apparent, it may be reasonable for an employer to specify a probationary period measured in months. 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 Part VIA now applies; that is, an award employee or a non-award employee whose wages do not exceed $60,000 per year." Taking into account the circumstances referred to by the Chief Justice, in my opinion a three-month probationary period for this type of employee in the circumstances of her employment, was excessive. I note that in Tolevsky, Staindl JR found that a hair dresser working under close supervision in a small salon where the proprietors would have been readily able to view the applicant at work and where the results of the work was in most cases immediately apparent, was excessive. Similar considerations apply in this case. I also think there is some heavy irony in the fact that part of the respondent's case revolved around a three-month probationary period being reasonable in all of the circumstances, when Ms Scicluna thought that she had had a sufficient opportunity to assess the applicant and terminate her employment after less than four days. It follows that Regulation 30B does not apply to the applicant's employment with the respondent and therefore she is not an employee excluded from the operation of the relevant parts of the Act. THE TERMINATION OF EMPLOYMENT As I have said, the applicant's employment commenced on 29 January 1996. On that date Ms Scicluna was interstate. She was absent from the office for the whole of that day, being a Monday, and half of the next day. On Tuesday morning, when Ms Scicluna arrived at the airport, she telephoned the office. The call was answered by an answering machine which concerned Ms Scicluna. She telephoned again and Ms McLeod answered the telephone. Ms Scicluna said that she got no satisfactory explanation as to why the answering machine had been on. (Neither Ms Scicluna nor Mr Spargo relied on this as forming part of the reason why termination was effected.) Ms Scicluna spoke to Ms Valentine who advised that all the work that had been left for her and Ms McLeod at the office had been completed by them. Ms Scicluna then advised Ms Valentine to tell Ms McLeod that she could have the rest of Tuesday off (paid) and should come to work on Wednesday morning. Ms Scicluna attended the office Tuesday afternoon and then Wednesday morning. She first saw the applicant at work on Wednesday morning. At lunchtime that day she had lunch with Ms McLeod and Ms Valentine in the office. She asked Ms McLeod what she had done with her half day off. She recalled that Ms McLeod thanked her for giving her a half day off paid and said that she had had a swim and a haircut. She also said that she had told her boyfriend that she had quit her job because "the boss is a bitch". Ms Scicluna said that she did not take this as a joke. She said that she thought this was a stupid comment and was insensitive to her. She said that she was surprised that Ms McLeod would take the issue of her employment so lightly with the person with whom she lived and had led him to believe that she had quit her job. Ms McLeod told Ms Scicluna that she told her boyfriend that it was not true when she was ready for coming to work that day. Ms Scicluna said that she was stunned. Ms Scicluna also said that Ms McLeod related to her the facts of a film where "the boss gets shot". Ms Scicluna said that Ms McLeod seemed to think that this was funny. This comment also concerned Ms Scicluna. Ms Scicluna also said that on Wednesday she got a telephone call from a counsel whom she regularly briefed who asked her who the new person answering the telephone was because she had been abrupt. The counsel was not called to give evidence and therefore the respondent has not proved that Ms McLeod was abrupt to counsel as alleged. Ms McLeod had no recollection of this. Mr Spargo acknowledged that the respondent had not proved this particular of misconduct. Ms Scicluna also mentioned that she asked Ms McLeod to show Ms Valentine how to do something on the computer. She said that Ms McLeod stood next to Ms Valentine and worked on the computer very quickly. She said that Ms McLeod seemed to have an attitude of "this is how good I am, I can do this". She said that Ms McLeod did not show a willingness to assist Ms Valentine even though it had been specified to her in the interview that this would be necessary. Ms Scicluna also said that she received a telephone call from a client that afternoon complaining about some information that had been conveyed to him by Ms McLeod, on Ms Scicluna's instructions. Ms Scicluna said that this was a mild-mannered client who was ordinarily not upset. Again, as this person was not called to give evidence, Mr Spargo recognised that this particular of alleged misconduct could not be proved, given Ms McLeod's denial of any misconduct in the way she treated the clients of the respondent. (See also the evidence of a telephone call with a client set out below.) Ms Scicluna said that on Wednesday night she thought about Ms McLeod's position. She said that she decided that evening that she could not continue to work with Ms McLeod. She thought this because Ms McLeod made her feel uneasy and made what Ms Scicluna thought were odd remarks. By Thursday morning, Ms Scicluna determined to ask Ms McLeod to leave by the end of the day. In relation to the suggested "odd remarks", Ms Scicluna and Ms Klaer also related something that Ms McLeod said in the interview on 20 December 1995. They both said that after she was offered the job, Ms McLeod said something to the effect that Ms Scicluna should be careful because she [Ms McLeod] may ultimately take her job. Ms Scicluna said that she thought this was a stupid statement to make and gave her an uneasy feeling. However, she discussed the issue with Ms Klaer and they both put it down to Ms McLeod being over confident and ambitious and that there was nothing wrong with that. Ms Klaer agreed that Ms McLeod made a comment to this effect but attributed this to Ms McLeod's confidence. Ms Scicluna said that at the end of the day on Thursday, 1 February 1996 she spoke to Ms McLeod. She advised her that she thought things had not worked out and that she did not want her to continue to work in her office. She told Ms McLeod that she did not think Ms McLeod could work as part of a team in the office. She told Ms McLeod that she was letting her go. She asked Ms McLeod whether she was interested in the reasons why and Ms McLeod said she was not. She said that Ms McLeod proceeded to leave the premises and collect some things of hers on the way out. In her evidence, Ms McLeod confirmed that Ms Scicluna was not at the office on Monday 29 January 1996 or Tuesday morning. She said that she did not recall much about the work that she did on the Wednesday. She said that there were some corrections which she had to do from the typing work that she had done the two days previously. This had involved typing from dictaphone tapes. She agreed that she spoke to Ms Scicluna and Ms Valentine at the lunchtime on Wednesday 31 January 1996. She said that to her this was just a chatty lunch. She had no other particular conversation with Ms Scicluna that day. On the following day she saw Ms Scicluna again in the office and she gave her more work to do. She continued to type from dictaphone tapes. She did recall a telephone conversation with a client which she had regarding Ms Scicluna's fees. She said that the instructions she received from Ms Scicluna were to tell the client the fee for the work that Ms Scicluna was to do for him and if the client became difficult about the matter to agree a lesser specified fee that Ms Scicluna had also given her. Ms McLeod said that she telephoned the client and informed him of the fee. The client was not impressed and Ms McLeod was about to decrease the fee to the other amount when he hung up. The issue with the client was later sorted out by Ms Valentine, to Ms McLeod's recollection. I have mentioned earlier that there is no proof of Ms McLeod's misconduct in relation to a telephone call with a client. With respect to the telephone call Ms McLeod recalled, in my opinion, the issue of negotiating the fee with the client was something which many inexperienced administrative assistants in a legal office would have some difficulty with, particularly if the client thought that the fee was excessive. On the evidence available, I am not satisfied that there was any misconduct in what Ms McLeod did involving the client; it seems as though she was merely following Ms Scicluna's instructions. Ms McLeod agreed that her employment was terminated on the afternoon of Thursday 1 February 1996. She said that Ms Scicluna asked to see her in her office. She said that things were not working out and that she had built up a business over 18 months and that Ms McLeod was not going to come in and run things for her. Her employment was then terminated. In my opinion, the differences in recollection and emphasis of the termination conversation on 1 February 1996 are not material. Ms McLeod also gave evidence about the suggested odd remarks that she made. In relation to the remark on 20 December 1995 that she would soon take over Ms Scicluna's job, she said that Ms Scicluna had seemed to her a casual and relaxed person and that she thought that the remark she made was "ok". She had a recollection that Ms Klaer laughed and snickered at the remark. She did not think that Ms Scicluna had taken the remark the wrong way. She said that she had been nervous initially at the interviews but she had then been made to feel more comfortable. As to the remarks on Wednesday 31 January 1996, Ms McLeod explained that she had been living with her boyfriend for four years and that "practical jokes is a big thing for us". She said that when she finished early on the Tuesday she decided to get her boyfriend back for other jokes that he had performed on her. She therefore told her boyfriend that she had been sacked. She did not recall making the comment that the boss was a bitch, but did not dispute that she may have said this. She decided not to tell her boyfriend the truth until the following morning. Her boyfriend had thought the whole thing was a joke and she had assumed that Ms Scicluna would also, given her assessment of Ms Scicluna's character and their interaction. She also accepted that she had been to the cinema and would have told Ms Scicluna and Ms Valentine the plot of the film. She did not recall "the boss" getting shot in the film but said if she had told them about this it would have been in the context of the plot of the film as a whole. This was during what she described as general chitchat in the kitchen during the Wednesday lunchtime. She said that Ms Scicluna did not look offended by her comments. If she thought that Ms Scicluna would be offended by the comments that she made, she would not have said them. She said the same thing in relation to the remark about taking over Ms Scicluna's position on 20 December 1995. As I have said, the suggested misconduct involving the client and counsel cannot be relied on by the respondent because there was no proof that such misconduct occurred. Mr Spargo accepted this. In addition, Mr Spargo also accepted that the comment made during the interview on 20 December 1995 could not be said to be misconduct in the course of Ms McLeod's employment. This is because the comment was made prior to the employment relationship commencing. The comment was made as part of the interview at which Ms McLeod was employed. In any event I do not regard the comment made as constituting misconduct. Therefore, what remained as the suggested misconduct were the comments that Ms McLeod made at the lunch time on Wednesday 31 January 1996. These were the comments about being sacked and/or quitting her job and that "the boss was a bitch", and the comment about attending a film at which "the boss had got shot". With respect to the latter, I am prepared to assume that it was mentioned by Ms McLeod even though she did not specifically recall saying it. VALID REASON Section 170DE(1) of the Act provides: "170DE(1) An employer must not terminate an employee's employment unless there is a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service." Northrop J in Selvachandran v Peteron Plastics Pty Ltd, (1995) 62 IR 371, at 373 said: "In its context in section 170DE(1), the adjective valid should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of section 170DE(1). At the same time, the reason must be valid in the context of the employee's capacity or conduct, or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee, where each has rights and privileges and duties and obligations conferred and imposed on them." In Kenefick v Australian Submarine Corporation Pty Ltd (1995) 62 IR 107, Wilcox CJ, at 116, agreed with the above passage of the judgment of Northrop J in Selvachandran and said it followed that: " . . . the reason must be genuine, that there must be a causal relationship between the reason and the termination and that the termination must be a logical response to the employee's capacity or conduct or the employer's operational requirements." Although the judgment of the Chief Justice in Kenefick was overturned on appeal, the appeal decision does not affect the soundness of the above passage. The Selvachandran test has been cited and applied by judges in other cases. For example, in Nettlefold v Kym Smoker Pty Ltd, unreported, IRCA 469/96, Lee J, 4 October 1996, his Honour quoted with approval from the Selvachandran judgment. His Honour also said that it was arguable in all of the circumstances that the requirements of section 170DE(1) of the Act meant a termination of employment at the initiative of the employer should not be unjust or unfair. His Honour also said that as Lord Denning had stated in Woods v W M Car Services (Peterborough) Limited [1982] ICR 693, it is an implied term of the employment contract that an employer be good and considerate to its employees. His Honour also said that: "By giving effect to the convention, the Act seeks to establish balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer." In my opinion, as I indicated in Lupoi v Phillips Fox, unreported, IRCA 485/96 Ritter JR, 3 October 1996, and Garbett v Stothers, unreported, IRCA 416/95, Ritter JR, 27 August 1996, in the context of section 170DE(1), there needs to be a qualitative aspect of misconduct such as to warrant the sanction of termination, for there to be a valid reason for termination. See also Fargie v Freedom Foods (Aust) Pty Ltd, unreported, IRCA 498/96 Parkinson JR, 14 October 1996. Giving consideration to all of these matters in this case, I am far from satisfied that there was a valid reason for the termination of Ms McLeod's employment. Ms McLeod was a relatively young (early 20s) employee with no previous experience in a legal office. The comments that she made were made without intention or knowledge that they offended Ms Scicluna. Ms McLeod was emboldened to make such comments because she perceived Ms Scicluna to be a person of informal and relaxed personality. She had no idea that Ms Scicluna would find the comments offensive. She herself said, as one would expect from a new employee, that she would not have made such comments if she thought Ms Scicluna would have been offended by them. I am quite surprised that Ms Scicluna reacted to the comments in the way in which she did. As a mature and experienced member of the legal profession, I would have expected Ms Scicluna to have dismissed the comments as being, if anything, a product of Ms McLeod's relative youth and desire to get on in the office by trying to converse with Ms Scicluna in a relaxed and informal manner. As Ms Scicluna did take some offence at the comments, however, in my opinion, the appropriate response was not to terminate Ms McLeod's employment but to discuss the issue with her. In my opinion this is what any fair-minded employer would have done. The failure of Ms Scicluna to discuss the matters with Ms McLeod but instead terminate her employment, adds weight to the view that there was no valid reason for the termination of the employment. In my opinion, in their context, the comments made by Ms McLeod did not fit the description of misconduct. Further, even if they did, the misconduct was not such as to warrant the ultimate sanction of dismissal from employment, in the absence of knowledge or warning that Ms Scicluna was taking offence at the comments and/or that they could lead to a termination of employment. There was no valid reason for the termination of Ms McLeod's employment and her application must succeed. As indicated earlier, Mr Spargo also conceded that if Ms McLeod was not excluded from the operation of the Act as being a probationary employee, there was a breach by the respondent of section 170DC and section 170DB. This concession was rightly made. The breach of section 170DC was quite clear. Ms Scicluna gave Ms McLeod no opportunity to be heard before terminating her employment. As the Chief Justice said in Nicolson, "Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as natural justice, or more recently, procedural fairness. The relevant principle is that a person should not exercise legal power over another, to that person's disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. . . . The principle is, I believe, well understood in the community. It represents part of what Australians call "a fair go". In the context of section 170DC it is not to be treated lightly. The employee is to be given the opportunity to defend himself or herself "against the allegations made"; that is, the particular allegations of misconduct or poor performance that are putting the employee's job at risk." It is a pity that Ms Scicluna was apparently unaware of or at least failed to heed the content of the requirements of section 170DC. The decision to terminate employment was made on the Wednesday night or Thursday morning, and there was no opportunity for Ms McLeod to be heard on the issue of her alleged misconduct. As the Full Court said in Kenefick v Australian Submarine Corporation Pty Ltd (1996) 65 IR 366 at page 371: "Section 170DC satisfies a need for the employee to have an opportunity to respond because . . . a convincing defence to the allegations may persuade the employer not to terminate the employment of that employee." The breach of section 170DB was also clear. Ms McLeod was entitled to at least one week's notice (s.170DB(2)) or compensation instead (s.170DB(1)(a)), whereas she was instantly dismissed without payment. REMEDY As stated earlier, it was agreed that the appropriate remedy to consider was that of compensation; section 170EE(2). Section 170EE(3) of the Act gives some guidance on the way in which to assess compensation. Ms McLeod gave evidence of her employment after she was terminated by Ms Scicluna. She first returned to Hertz to see if there was a position available for her. She was offered three hours work per day for one week. She then began work in a cafe in the Rainbow Shopping Centre for three to four hours work for a few days. She then worked for a few days in the Rainbow Supermarket in the Meat Department. She forwarded her resume to a few offices in Alice Springs. One of these was that of Andrew Maloney, Chartered Accountant. She had an interview with the Office Manager of Mr Maloney's office and then with Mr Maloney himself. She was then offered employment and commenced on 5 March 1996 as an administrative assistant. She is still employed in that position. Details of Ms McLeod's income prior to her employment with Mr Maloney were tendered to the Court. From her employment with Hertz, after the employment with the respondent, Ms McLeod was paid $487.27 net. She was paid $118.76 net from the Rainbow Supermarket. With respect to the cafe, she has not as yet received her group certificate but earned in the vicinity of $99 net. When she commenced working with Mr Maloney she was paid $20,000 per year salary. She worked with Mr Maloney for a two-month probationary period and after that she was confirmed in her employment and her income was increased. It was subsequently increased to a salary of $24,500 per annum, or $375 per week net. When her income was $20,000 per year with Mr Maloney she received $326 per week net. Ms McLeod was paid $276 net for the four days that she worked with Ms Scicluna. Ms Ridsdale, counsel for Ms McLeod, calculated that the total loss of earnings to the time when Ms McLeod's income with Mr Maloney was such as to be equal to or in excess of that which she was receiving from the respondent, 6 May 1996, was $1,180.75. This figure was not challenged by Mr Spargo. In my opinion, Ms McLeod should be awarded compensation of this amount. Awarding this amount of compensation rests on the assessment that if Ms McLeod's employment had not been wrongfully terminated by Ms Scicluna, the employment relationship would have continued until the time when Ms McLeod's income with Mr Maloney equalled what she was paid by the respondent. In my opinion, on balance, this is what would have occurred; particularly if Ms Scicluna had discussed with Ms McLeod any personality difficulties she had with her in a sensible and constructive manner. After 6 May 1996, Ms McLeod's income with Mr Maloney's practice was such that there has been no further economic loss as a result of the termination of employment by Ms Scicluna. However, Ms Ridsdale in closing, submitted that an allowance should be made for compensation for distress for Ms McLeod. The evidence of distress really only emerged in Ms McLeod's re-examination, although Mr Spargo did not seek to restrict this line of re-examination or further cross examine Ms McLeod on this issue. Ms McLeod said that she was stunned and disappointed when she was first dismissed. She said that thereafter she felt miserable and had suffered a loss of confidence. She said that she had built up a lot of confidence from her traineeship and her work with Hertz, and mentioned that her supervisor at Hertz had done a good job in building up her confidence. She said that she had not been employed doing office work prior to her traineeship and intimated that it was a big step up for her to be working at Hertz and then in a legal office. However, by the Thursday afternoon when she was summarily dismissed by Ms Scicluna, she thought this had all been done for nothing. Apart from this, there was no other evidence of Ms McLeod suffering stress or distress and, fortunately, it seems that the employment with Mr Maloney has largely ameliorated the long-term effects that could have occurred because of the manner and nature of the termination of her employment by Ms Scicluna. At the time of the hearing of this matter, the Full Court had reserved its decision in Burazin v Blacktown City Guardian Pty Ltd. One reason why I reserved my decision was so that I could await that decision to be handed down. The Court (Wilcox CJ, von Doussa and Marshall JJ) handed down its decision on 13 December 1996; Burazin v Blacktown City Guardian Pty Ltd, unreported, Full Court, IRCA 606/96. The Court found that in making an assessment of compensation under section 170EE(2), the shock, humiliation and distress suffered by an employee in respect of their unlawful termination of employment could be taken into account (pages 27-28). In doing so, the Full Court resolved a difference of opinions between Lee J in Aitken v CMETSWU (WA Branch) (1995) 63 IR 1 at page 9 and Beazley J in Brackenridge v Toyota Motor Corporation (1996) 67 IR 162 at pages 184-185. Lee J considered that compensation could be awarded to compensate an employee for mental distress or injured feelings caused by an unlawful termination of employment, whereas Beazley J disagreed. Madgwick J at first instance in Burazin also agreed with the judgment of Beazley J. The Full Court in Burazin said that: "There is an element of distress in every termination. To ensure compensation is confined within reasonable limits, restraint is required." (Page 28). The Court found that in the particular case before them there were "unusual exacerbating circumstances that make it appropriate to include in the compensation an allowance for the distress unnecessarily caused to Ms Burazin". This included Ms Burazin suffering the humiliating experience of being unnecessarily escorted from the employer's premises by the police (page 28). The Court increased the amount of compensation to be paid to Ms Burazin by $3,000 to take into account distress. As the Full Court said, restraint is required in considering compensation being awarded for distress. The restraint is required at two levels in my opinion. The first is that compensation of any amount should not be lightly awarded for distress. Secondly, the amount of compensation must be tempered by restraint. Ordinarily, in my opinion, for a substantial quantum to be awarded for the distress suffered by an unlawful termination of employment, there would need to be evidence of psychiatric or psychological illness or effects from the unlawful termination of employment. However this need not be so in all cases. The facts and decision in Burazin illustrate this. In my opinion, the facts of this case do warrant compensation for the stress and distress suffered by Ms McLeod from the termination of her employment. This is for a number of reasons. Firstly I accept Ms McLeod's unchallenged evidence that she suffered genuine surprise, disappointment, and upset from the fact and manner of her termination. Secondly, the reasons for which and the manner in which the employment was terminated were very harsh. In a new position as a legal secretary, which Ms McLeod thought was a step up in her working life, she had worked for only four days. She was then summarily dismissed without counselling, warning or notice. This was obviously deflating and humiliating for Ms McLeod, especially when there was no valid reason for termination. Thirdly, at no time was she adequately or constructively advised of the reasons for the termination of her employment. Finally, when she later asked about termination payment, the message that she received from Ms Scicluna, via Ms Valentine was, I accept, that she was not entitled to termination payment and that she should "see a lawyer". This is reflective of an unnecessarily indifferent approach from a former employer and is undermining of the self esteem of a youngish ex-employee. As Lee J said in Aitken at page 6: "It is well known that the circumstances and manner of termination of an employee's services can affect an employee's self esteem and confidence and impact adversely on the employee's ability to secure further employment. It is, therefore, considered to be in the public interest to ensure that employees whose services are terminated are treated in a fair and reasonable manner enabling them to retain confidence in their self worth and reducing the prospect that they will have cause to rely on relief payments from public revenue." I accept there were genuine emotional consequences for Ms McLeod as a result of the termination of her employment and that this distress went above that of an ordinary termination of employment because of the manner and circumstances of the termination. I therefore think it appropriate to award an additional amount of $500 in compensation to Ms McLeod. The total amount awarded for the contraventions of sections 170DC and 170DE of the Act will accordingly be $1,680.75. Ms McLeod would also have been entitled to damages of the equivalent of one week's remuneration for the breach of section 170DB; see section 170EE(5). However, in this case, this will not be separately awarded to Ms McLeod. This is because this entitlement has already been taken into account in assessing the pre-trial loss referred to above. To award one week's remuneration in addition to this, would be to overcompensate Ms McLeod. Therefore the total amount to be paid to Ms McLeod by way of compensation will be $1,680.75 and I will allow the respondent 14 days to make this payment. I certify that this and the preceding thirty (30) pages are a true copy of the reasons for decision of Judicial Registrar Ritter. Associate: Date: APPEARANCES Counsel for the Applicant: Ms Ridsdale Solicitors for the Applicant: Morgan Buckley Counsel for the Respondent: Mr Spargo Respondent: Caroline Scicluna & Associates Date of hearing: 9 December 1996 Date of judgment: 13 March 1997