Budge v Corporation of Trustees of the Roman Catholic Archdiocese of Brisbane [1997] IRCA 248

DECISION NO:248/97 CATCHWORDS INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - VALID REASON - WHETHER HARSH, UNJUST OR UNREASONABLE - PROCEDURAL FAIRNESS WORKPLACE RELATIONS ACT 1996, s170EA, CLIFFORD CECIL BUDGE -v- CORPORATION OF TRUSTEES OF THE ROMAN CATHOLIC ARCHDIOCESE OF BRISBANE T/A LOGAN ITEC No. QI96/1108 BEFORE: BOULTON JR PLACE: BRISBANE DATE: MAY 1996 IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. QI96/1108 QUEENSLAND DISTRICT REGISTRY BETWEEN: CLIFFORD CECIL BUDGE Applicant AND: CORPORATION OF TRUSTEES OF THE ROMAN CATHOLIC ARCHDIOCESE OF BRISBANE T/A LOGAN ITEC Respondent BEFORE: BOULTON JR PLACE: BRISBANE DATE: MAY 1996 THE COURT ORDERS THAT: 1. The application be allowed. 2. The respondent pay to the applicant the sum of $11,162.50 within 14 days of this order. NOTE: Settlement and entry of orders are dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS ) COURT OF AUSTRALIA ) No. QI96/1108 QUEENSLAND DISTRICT REGISTRY BETWEEN: CLIFFORD CECIL BUDGE Applicant AND: CORPORATION OF TRUSTEES OF THE ROMAN CATHOLIC ARCHDIOCESE OF BRISBANE T/A LOGAN ITEC Respondent BEFORE: BOULTON JR PLACE: BRISBANE DATE: MAY 1996 REASONS FOR JUDGMENT BACKGROUND At all material times, the respondent operated a body called Logan ITeC at Woodridge, Brisbane. Logan ITeC had agreed with the Commonwealth Department of Employment, Education and Training on 29 July 1995 to act as the Commonwealth Managing Agent in respect of one of that department's labour market programs, known as the New Enterprise Incentive Scheme (NEIS). It had agreed also to act as a managing agent in administering a labour market program, the Self Employment Venture Scheme (SEVS) for the Queensland Department of Employment, Vocation, Education, Training and Industrial Relations. Its agreement with that department was dated 26 February 1996. The Commonwealth and State departments had agreed to a co-ordinated delivery of the services offered by the NEIS and SEVS programs. The term of the agreement between the Commonwealth and Logan ITeC was from 1 July 1995 to 30 June 1996, with the Commonwealth reserving the right to extend the period for two further 12 month periods if the department was satisfied with the past performance of the managing agent and the parties were able to agree on the services to be provided and the fee to be paid for such services. The agreement with the State of Queensland was in like terms. The applicant is now aged almost 55, having been born on 5 June 1942. He commenced work with the respondent on 1 March 1995 pursuant to a Jobskills program in a clerical/receptionist capacity with the section at Logan ITeC concerned with the delivery of the NEIS/SEVS services. The NEIS program provided a training component, namely a small business management course. The financial component was provided by the SEVS program with interest free loans of up to $6000 to cover start-up costs. After an initial period of 26 weeks, the applicant's employment status changed, with effect from 4 September 1995. He took up the position of SEVS/NEIS research officer, his employment being stated to be for the duration of the SEVS/NEIS program. In that position, the applicant's primary responsibilities were stated to be Venture Summary client approvals/rejections, research of business plans, financial analysis of business plans, report to Venture Summary Board, customer liaison and other duties as defined by the BSC Manager. It appears that from that time the applicant's employment was the subject of a wage subsidy agreement under the JobStart program. The applicant remained in this employment with the respondent until he learnt on 17 June 1996 that his employment was terminated with effect from 21 June 1996. In the letter of termination it was stated that: This termination has been made necessary due to government funding arrangements. ISSUES The respondent's case was that it had a valid reason based on its operational requirements for the termination of the applicant's employment with it. Broadly, this was put on the basis that it had been obvious to management for at least 12 months prior to 1 July 1996 that some restructuring would have to occur. The need for this became even more apparent after the respective changes of the Queensland and Commonwealth governments in early 1996. Team meetings were conducted in which the prospect of redundancies was raised. I will return to this aspect later in these reasons. Logan ITeC also engaged an independent consultant in December 1995 to advise its management committee on restructuring. Ultimately, on 17 June 1996, 15 staff members were given notice of termination of their employment. Because of the way the evidence unfolded in this matter, I do not consider it necessary for the proper resolution of it to descend to great detail about the financial considerations which led to the terminations. It seems to me that the matter is resolved by an examination of the evidence given by a Mr Speelmeyer, who was the Acting General Manager of Logan ITeC at the time of the applicant's termination. I now turn to this. Ordinarily, one would first determine whether or not the respondent had proved that the operational requirements of its business provided it with a valid reason to reduce its work-force. In my view, the respondent runs into an immediate problem in its process of justification. Mr Speelmeyer focused on the uncertainty said to surround an extension of the NEIS contract with the Commonwealth government. He did not seem to have a true appreciation of the status of this contract and the likelihood of its renewal. As I have earlier pointed out, the terms of the contract envisage an extension in the event of satisfactory performance. Mr Speelmeyer himself agrees that the performance of Logan ITeC in this area had been very good. It emerged in evidence that the Commonwealth allocated new funding under the program to Logan ITeC within two weeks of a request being submitted to it. About April 1996, the Queensland government had ceased its funding of the SEVS program. Mr Speelmeyer agreed that the ending of this funding was insignificant in the overall income of Logan ITeC. I find that at the time the decision was taken to terminate the applicant's employment, there was never a strong likelihood that the NEIS contract would not continue to contribute significant income to Logan ITeC. I do not accept that the respondent has proved there was a valid operational requirement to terminate the applicant's employment prior to finding out whether the funding from that source would continue only a few weeks later. The respondent ought properly to have made more extensive inquiries about this aspect before taking the decision communicated to the applicant on 17 June 1996. The respondent denied that issues of capacity or conduct played any part in its decision to terminate the applicant's employment. I am satisfied from Mr Speelmeyer's evidence that the applicant's capacity was, in fact, taken into account in the decision to make him redundant. An employee who kept her job was a Gay Ring, presently NEIS co-ordinator at Logan ITeC. Mr Speelmeyer gave evidence that Ms Ring kept her employment because: She was better than the applicant because she was the co-ordinator of the program. She was more efficient than the applicant and the others who were made redundant. He looked at her overall levels of expertise. I am satisfied that the respondent was in breach of section 170DC of the Workplace Relations Act 1996. The applicant was given no opportunity to respond to any perceived concerns about his capacity prior to termination - name of the case involved, Kenefick v Australian Submarine Corporation (1996) 65 IR 366. Further, it was common ground that the applicant's employment was subject to an Award of the Australian Industrial Relations Commission, namely the Community Employment, Training and Support Services Award 1991. The respondent conceded that there was no attempt by it in terminating the applicant's employment to comply with the provisions of the Award dealing with the introduction of change at the workplace and redundancy in the work-force. I think it is sufficient in the present circumstances to point to the remarks of Madgwick J in Westen v Union des Assurances de Paris NI2819 of 1995, 17 December 1996, unreported, particularly at pages 14, 15, 16 and 17 concerning the difficulty an employer is likely to face in justifying a termination where proper procedures are not adhered to and the question of the material consequences of a termination of an employee's employment is not addressed. In this case, I accept the applicant's evidence that he had no real knowledge beforehand that his employment was at risk. Whether through inexperience or otherwise, those who had a role in terminating the applicant's employment did not handle the matter at all well. As indicated above, I am satisfied that the respondent was in breach of subsection 170DE(1) and section 170DC of the Act in terminating the applicant's employment. REMEDY Reinstatement was not sought. In respect of compensation, the evidence shows that the applicant has been unsuccessful in gaining other employment since termination. The respondents admitted that the applicant had been less than vigorous in seeking other employment. The applicant is legally blind and faces difficulty in being able transport himself from place to place. This no doubt restricts not only the other employment he might find but his ability to take other employment at any distance from his home. In the circumstances, I am not satisfied that it has been proved he has failed to mitigate his loss. I am satisfied that the applicant's unemployment is likely to persist indefinitely. I calculate the loss the applicant has suffered by reason of the unlawful termination of his employment, after allowing for the payment to him in lieu of notice, as significantly exceeding the sum produced by application of the cap on compensation provided for in subsection 170EE(3) of the Act. The applicant's salary at termination was $23,325. I assess appropriate compensation to be the sum of $11,162.50. Having awarded maximum compensation, I find it unnecessary to deal with what was put on the applicant's behalf as an alternative and additional claim for severance pay, said to arise out of the respondent's breach of the Award. ORDERS I order that: (1) The application be allowed; (2) The respondent pay to the applicant the sum of $11,162.50 within 14 days of this order. I certify that this and the preceding FOUR (4) pages are a true copy of my Reasons for Judgment. Judicial Registrar: Date: May 1997 Counsel for the Applicant: Solicitors for the Applicant: Appearing for the Applicant: Solicitor appearing for the Respondent: Solicitors for the Respondent: Appearing for the Respondent: Date of hearing: April 1997 Date of judgment: May 1997