TYRELL v BODYTECH AUSTRALIA PTY LTD [1997] IRCA 122

DECISION NO:122/97 CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - VALID REASON -REDUNDANCY - OPERATIONAL REQUIREMENTS - employer terminating employment without consultation and subsequently filling a position that employee may have been qualified for.

Workplace Relations Act 1996 (Cwth) ss170DE, 170EE.

Benson v Reg Hunt Motors Pty Ltd (unreported, Industrial Relations Court of Australia, Murphy JR, 9 April 1997); Nettlefold v Kim Smoker Pty Ltd (unreported, Industrial Relations Court of Australia, Lee J, 4 October 1996):

TYRELL v BODYTECH AUSTRALIA PTY LTD VI96/2670

Before: MURPHY JR Place: MELBOURNE Date: 14 APRIL 1997

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY

VI96/2670

BETWEEN: JIMMY TYRELL Applicant

AND BODYTECH AUSTRALIA PTY LTD Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 14 APRIL 1997 MINUTES OF ORDERS

THE COURT ORDERS AND DECLARES THAT:

[1] The respondent has breached s170DE(1) of the Act; [2] The respondent pay to the applicant compensation pursuant to s170EE(2) of the Act in an after taxation amount of $1,512.00; [3] The respondent is directed to remit to the Australian Taxation Office on the applicant's account, any amounts that it is required by law that will leave the applicant with the after taxation compensation amount in paragraph 2 hereof.

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

VI96/2670

BETWEEN: JIMMY TYRELL Applicant

AND BODYTECH AUSTRALIA PTY LTD Respondent

BEFORE: MURPHY JR PLACE: MELBOURNE DATE: 14 APRIL 1997 REASONS FOR DECISION Delivered ex tempore

The applicant seeks a remedy under the Workplace Relations Act 1996 (Cwth) ("the Act"). He seeks a declaration that the respondent, when it terminated his employment in October 1996, was in breach of s170DE(1) of the Act. He seeks compensation. Mr O'Brien, the Warehouse Manager of the respondent, appeared as an authorised officer of the respondent and gave evidence. The applicant gave evidence. There was no significant dispute on the evidence between the parties. The central issue is the legal consequences of what was, in effect, common ground. It has been said many times that the provisions of the Workplace Relations Act are to be applied in a practical manner in real workplaces where both employers and employees have rights, duties and responsibilities. In Benson v Reg Hunt Motors Pty Ltd (unreported, Industrial Relations Court of Australia, Murphy JR, 9 April 1997) I extracted some comments from decisions of judges of the Court indicating that the purpose of the legislation was in effect to require a level of management of employees. In Nettlefold v Kim Smoker Pty Ltd (unreported, Industrial Relations Court of Australia, Lee J, 4 October 1996) Lee J said: "By giving effect to the [Termination of Employment] Convention the Act seeks to establish a balance between the right of an employer to duly manager 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 this case Mr O'Brien gave frank evidence that he was not responsible for the decision to terminate the applicant as a storeperson with the respondent. He said he was the messenger. He said he was told on the date that the applicant was terminated. On 15 October 1996 at about 3.45 pm, he was told to call the applicant in and tell him that he and another employee were retrenched. The decision was made by a director of the respondent. The applicant had, prior to August, been the acting warehouse manager of the respondent's operation and in the three and a half years that he had been employed by the respondent he had been a good employee. The applicant gave evidence that he was devastated by the decision of the respondent to terminate his services. He did not work for a couple of weeks and then picked himself up and obtained casual employment. He has now obtained permanent employment and is earning $16 per week net less. Mr O'Brien gave evidence that he would not have done what he was required to do by the respondent in the way he terminated the applicant. He explained that he would have called all the employees in and discussed the financial predicament which he had been told was the basis for the decision of the respondent to terminate the applicant and another employee. He frankly admitted that the applicant could have been consulted about whether he was suitable for other duties within the respondent but he was told to terminate the applicant's employment. In fact, the following Saturday, the respondent advertised for a position as a storeperson/quality control employee. The applicant gave evidence that he would have been quite capable of performing that job. Mr O'Brien employed another person for that position and subsequently was criticised by a director of the company for doing so, given the financial state of the company that presented itself shortly after the applicant was terminated. The substitute employee only lasted a couple of weeks. The fact that the respondent advertised for a position that the applicant, at the very least had the relevant qualifications to be considered for, is a decisive consideration in the Court's conclusion that the respondent has not discharged its onus of proof that it had a valid reason based on its operational requirements to terminate the applicant's employment. The respondent chose not to call more senior management than Mr O'Brien to explain the reasons why the applicant was selected for termination when the respondent had in train a warehouse restructuring that involved advertising for a position that the applicant may have been suited for. This leaves aside the other aspect of the respondent's actions which relate to the sudden termination of the applicant's employment without any consultation with him. For a person like the applicant, who had held a position of considerable authority as the acting warehouse manager, this must have been quite a considerable blow to him. It is to his credit that he has picked himself up and been able to obtain further employment with relatively low losses. It is clear from the decisions that I canvassed in Benson (above) that what happened should not have happened. Mr O'Brien again frankly admitted that the respondent did not do what they should have done which was to consult the applicant. Mr O'Brien argued for the respondent that it is not the law that the respondent should be required to provide some form of financial security to a former employee and that companies should have the right to operate their business and their own financial affairs without that constraint. That submission, in the abstract, may have some validity but it fails to take account of the purpose of the provisions of the Workplace Relations Act which is to strike a balance between the right of employers to manage their businesses and the rights of employees to be properly treated. Here the applicant, as a result of what could perhaps be described as capricious managerial action by the respondent, has sustained losses. The losses at present run to $680 net and they continue at $16 net per week. Whether the applicant would have remained in the employ of the respondent, had the termination not occurred, is a matter of speculation but because of the respondent's action he was denied the opportunity to be consulted about a decision which, as he said, had a significant impact on him. The cases that I have referred to require employers usually, as a matter of proper managerial practice, to consult employees in those circumstances and this did not happen. It is that requirement that they consult employees which is needed for the decision to terminate to become a defensible one. It may well be that in certain circumstances of redundancy an employee can be consulted and after that consultation it is clear that the only alternative open to the employer as a result of its managerial requirements is termination but that did not happen here. Thus the applicant was thrown on to the employment market at a time not of his own choosing. When the applicant now comes to the Court and says that he seeks compensation for the breach of the Act by the employer, he is not imposing an obligation on the employer to provide him financial security. He is seeking compensation for the actions of the employer in terminating him without a valid reason back in October 1996. The consequences that he presently suffers as a result of that unlawful action of the respondent back in October 1996 are that he has lost $680 net to date and he is presently losing $16 a week. As time goes on, the contingencies are such that, but for the unlawful act of the employer, he may or may not have been working for the respondent. He may have gone elsewhere, the respondent may have restructured its warehouse and he may have been lawfully terminated. That is a matter of speculation. The decisions of the court, however, make it clear that it can be appropriate to order a measure of compensation that reflects the fact that proper managerial standards were not adhered to by the respondent in terminating the employment of an employee. Here I declare that the respondent has breached s170DE(1) of the Act. I find that the applicant's losses to date total $680 net. I am satisfied that he is losing as a result of the respondent's actions $16 per week net, or $832 per year net. I am satisfied that a net amount of $832 plus his losses to date is appropriate compensation for the respondent's breach of the Act, a total sum of $1,512. I propose to order the following: (1) I declare that the respondent has breached section 170DE(1) of the Act; (2) that the respondent pay to the applicant compensation pursuant to section 170EE(2) of the Act in a an after taxation amount of $1,512; (3) the respondent is directed to remit to the Australian Taxation Office on the applicant's account any amounts that it is required to by law that will leave the applicant with the after taxation compensation amount in paragraph 2 hereof. I certify that this and the preceding five (5) pages are a true copy of the reasons for decision of Murphy JR as recorded on transcript and revised by the Judicial Registrar.