Zabel v Australian Submarine Corporation [1997] IRCA 299

CATCHWORDS INDUSTRIAL LAW - Termination of Employment - unlawful termination conceded by Respondent - COMPENSATION - calculation of compensation WORKPLACE RELATIONS ACT 1988, ZABEL V AUSTRALIAN SUBMARINE CORPORATION SI94/287 JUDICIAL REGISTRAR: L FARRELL PLACE: ADELAIDE DATE: 17 NOVEMBER 1997

IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) SOUTH AUSTRALIA DISTRICT REGISTRY )

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B E T W E E N: STEVEN ZABEL Applicant AND AUSTRALIAN SUBMARINE CORPORATION Respondent

MINUTES OF ORDER

BEFORE: JUDICIAL REGISTRAR L FARRELL PLACE: ADELAIDE DATE: 21 NOVEMBER 1997

THE COURT ORDERS THAT: 1. The Respondent pay compensation to the Applicant in the sum of $24000 within 21 days. 2. The Respondent pay interest to the Applicant in the sum of $2880 within 21 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 ) SOUTH AUSTRALIA DISTRICT REGISTRY )

No.SI94/287

B E T W E E N: STEVEN ZABEL Applicant AND AUSTRALIAN SUBMARINE CORPORATION Respondent

BEFORE: JUDICIAL REGISTRAR L FARRELL PLACE: ADELAIDE DATE: 17 NOVEMBER 1997

REASONS FOR JUDGMENT

This is an application claiming unlawful termination of employment. The hearing of the application commenced in March 1995 at the same time as a number of other claims against the Australian Submarine Corporation following redundancies in December 1994. This application was adjourned along with a number of others, when it became apparent that all the claims could not be concluded in the allotted time. At the time of the hearing in March 1995, it was not anticipated that this matter would be delayed so long. The Respondent has conceded that it has breached Section 170DC in relation to this Applicant. The Applicant claims compensation. The applicant has sought to be compensated in addition for shock and distress. He does not seek reinstatement. The concession by the Respondent that the termination was unlawful, pursuant to Section 170DC renders it unnecessary to test the validity of the reason for the termination of the Applicant, exception so far as it can impinge on the amount of the award of compensation. Mr Zabel's application was part heard as from that date on which it was adjourned in March 1995. The evidence given prior to this application being adjourned in March 1995 forms part of the evidence in this matter. In addition there was some transcript from the matter of Ross Williams v Australian Submarine Corporation which was tendered in evidence by consent. The Applicant gave evidence as did Mr Chris Williams, an employee in the Outfitting Department. The respondent's witnesses were Mr Ritchie, head mechanical foreman and Mr Wilson, foreman. The factual background to this matter can be found in various Kenefick v Australian Submarine Corporation judgments. It is unnecessary for me to repeat the facts set out in those judgments. The Applicant was employed as a Mechanical Fitter in the Outfitting Department at the time his employment was terminated. He was employed from 13 January 1992 until 7 December 1994. He was aged 39 years at the time of the termination of his employment. He was one of 5 mechanical fitters who were dismissed out of a total workforce of 70 or 80. Subsequently he has been employed in a variety of jobs. He has now found seemingly secure employment and has advanced to a leading hand. The reasons that the applicant was selected for retrenchment are relevant here because they have a bearing on the amount of compensation that the applicant is entitled to receive. The matter involves a consideration of the reasons that the applicant's employment was terminated because it is central to an assessment of the likelihood that the applicant's employment would have been terminated lawfully in any event. The assessment of compensation involves a consideration of the applicant's chance of being selected for retrenchment in any event. The assessed chance is then applied to the calculation of the difference between the subsequent earnings of the applicant and the earnings he would have received had he remained employed by the respondent. The delay in this hearing has produced certainty at least as to the applicant's earnings since the termination of his employment as well as the amount that the applicant would have earned in a similar position had he continued to be employed by the respondent. The respondent did not dispute that the applicant made reasonable attempts to find alternative employment since the termination of his employment. The factors which led to the termination of the applicant's employment are found in the evidence of Mr Wilson and Mr Ritchie, the evidence of Mr Bews and the document know as document F. Since the retrenchments of December 1994 five mechanical fitters have left the Submarine Corporation. None of them have been replaced by external employees, however a number of other tradesmen have been transferred into the outfitting department. The evidence of Mr Bews in March 1995 regarding the numbers of employees who were likely to be retrenched in June 1996 has not been borne out. The applicant was on the highest tradesman classification known as a 100% tradesman. The main reason he had attained that level was because of the weighting given to formal qualifications in the respondent's classification process. Mr Wilson and Mr Ritchie gave evidence that he was not in fact one of the best tradesmen, he was an average tradesman. I have taken into account that the applicant may have been unfairly considered for retrenchment because the respondent's classification system was weighted in favour of those tradesmen with formal qualifications. The actual assessment of him by his supervisors was that he was an average tradesman. The applicant should not have been considered for redundancy merely because the respondent's own classification system rated him as a 100% tradesman which, in the eyes of his supervisors, he was not. Ten mechanical fitters volunteered for retrenchment. It seems to me that in circumstances where there are only marginal differences between employees a respondent has a duty to consider such volunteers before proceeding to terminate an applicant's employment. I heard evidence of the reason that the Applicant's position was made redundant. The Respondent's witnesses have given evidence that the Applicant's employment would not have been terminated except for the redundancy situation having arisen in late 1994. There is some likelihood of redundancies in the near future. I have taken into account the fact that the Applicant may well have been included in those redundancies. The reasons for the termination of the applicant's employment. In Mr Bews' evidence concerning the retrenched workers generally he referred to a "a marginal comparison of the relative contribution of employees". More particularly in relation to Mr Zabel he referred to three reasons on his affidavit, they were; his proficiency was less than that expected of an Advanced level Engineering trades person, he lacked motivation, and he required supervision. Document F, a document prepared by Mr Lemonius on advice from Mr Ritchie listed five reasons why the applicant was selected for retrenchment. 1 "100% does not perform to that level" 2 "Only does what he has to do has to be pushed" 3 "Average tradesman" 4 "Requires close supervision" 5 "A bit of a stirrer behind the scenes" Mr Ritchie gave evidence about his observations around the site. He had to tell the applicant to get on with his work. He regarded the applicant as not warranting the '100%' classification. Mr Ritchie had referred to the applicant as 'a bit of a stirrer behind the scenes.' In evidence in chief Mr Ritchie was unable to recall why he had referred to the applicant as a bit of a stirrer behind the scenes. But in cross examination he was able to recall that he had heard comments about Mr Zabel that he had never checked out with him. He was unable to recall if he had checked through his diary. It seemed to me the evidence of Mr Ritchie consisted largely of generalisations studded with examples of minutiae from which I was unable to draw some objective evaluation of the applicant by comparison with the rest of the mechanical fitting workforce. Mr Wilson gave evidence that the applicant's technical work was average. On many occasions he would find the applicant standing around. He always had excuses. He rated the applicant's performance ninth or tenth out of his crew of 12. The applicant had refused to carry heavy gear on to a submarine, he would not clean unless pressured to do so. He was never spoken to regarding his proficiency. He had never been counselled about any of these matters which ultimately led to the termination of his employment. In my view 'a marginal comparison' as described by Mr Bews would have involved some assessment of a proportion of the workforce if not all the workforce. Whereas I have gained the impression here that no workers, except those selected for retrenchment, were subject to any close scrutiny or any objective process of examination. There was no ranking of employees conducted at the time of the termination of the applicant's employment. The respondent argued that the applicant's chance of being selected for retrenchment was increased because he had suffered from dermatitis caused by his work, and for which he had been incapacitated. A comparison was drawn between the applicant and Mr Kenefick who had suffered an injury at work and remained partially incapacitated for work at the time his employment was terminated. I am satisfied that there is a qualitative difference between the circumstances of Mr Kenefick and Mr Zabel because of the kind of injury that this applicant suffered and because his incapacity would not interfere with him carrying out the majority of the duties that he was expected to perform. I am left with some doubt that the applicant would have been selected for retrenchment had some fair and objectively ascertainable process, fairly applied, been used. However I am satisfied that the applicant was at some risk that he would have been selected for retrenchment and that can be expressed as a fifty percent chance. Remedy I have not taken into account the applicant's termination payment as it seems to me that on the evidence before me that at some time in the future his employment would have been likely to come to an end by the same means. From the date of termination of his employment until the hearing the applicant has earned $108,202.75. The parties have agreed that the applicant would have earned $151,142.48 up to June 1997 had he remained working for the respondent. The applicant's past loss of earnings therefore was $42,939.73 The applicant continues to suffer a weekly loss of $40.30, based on his current average earnings of $1,095.84 per week and the projected rate of earnings he would have received had he remained working for the respondent. It is difficult to say for how long the applicant will continue to suffer the weekly loss of $40.30, he has already progressed to a higher position. I have assumed for the purposes of this decision that he will no longer be suffering a loss within about two years from now. On that basis his total loss will be approximately $47,000. The maximum compensation that the applicant can receive in accordance with the Act is $28,668.90 Using the method set out above I calculate the compensation payable to the applicant for his economic loss to be $23,500. The applicant sought an award for shock and distress, he gave evidence about his personal circumstances at the time of the termination of his employment and the effect that the termination of his employment had on him. An award for shock and distress in these circumstances ought to be nominal. I have allowed the sum of $500. The total compensation in my view should be an amount of $24,000. I note that the parties will consider their respective positions before any final judgment is recorded for the applicant, concerning what if any interest will be awarded to the applicant. The parties were going to wait for the outcome of an appeal against the decision of Judge Von Doussa dated 13 June 1997 in Simpson v System Services Pty Ltd. However that matter has now resolved. I certify that this and the preceding four pages are a true copy of the reasons for my judgment.