Industrial Relations Commission of New South Wales CITATION : Davidson and Karen Cartwright [2003] NSWIRComm 227 APPLICANT PARTIES : Roxie Davidson RESPONDENT Karen Cartwright FILE NUMBER: IRC 1637 of 2003 CORAM: Harrison DP CATCHWORDS : Application re unfair dismissal pursuant s84 of the Act - abuse of staff discount policy - failure to provide adequate warnings - procedural unfairness. Held - conduct of employer and employee equally poor - termination of employment harsh, unreasonable and unjust - not so as to warrant invervention - compensation refused. LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Electricity Commission of New South Wales T/as Pacific Power v Nieass and Others (1995) 81 IR 46 HEARING DATES: 06/16/2003 DATE OF JUDGMENT: 07/28/2003 APPLICANT Mr R Hale Solicitor Colin A Hogan & Co Solicitors LEGAL REPRESENTATIVES: RESPONDENT Mr P Amos Workplace Relations Consulting JUDGMENT: - 8 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Monday, 28 July 2003 Matter No IRC 1637 of 2003 ROXIE DAVIDSON AND KAREN CARTWRIGHT Application by Roxie Davidson re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996. DECISION [2003] NSWIRComm 227 1 The application in this matter was filed on 24 March 2003 and subject to Conciliation and Directions proceedings on 9 April 2003 which established that settlement could not be reached by agreement between the parties. 2 Directions were issued to bring the matter to hearing on 16 June 2003. 3 On hearing, Mr R Hale of Colin A Hogan & Co. Solicitors appeared on behalf of Ms R Davidson. Mr P Amos of Workplace Relations Consulting appeared on behalf of the respondent with Mr A Cartwright. 4 Mr Hale brought evidence from Ms Roxie Davidson. 5 Mr Amos brought evidence from Mr Andrew Cartwright, Director of Hanzac Pty Ltd t/as Belmont Specialty Cakes; and Ms Julia Ninnes, a part time employee of the company. 6 The evidence is that the applicant was employed by the respondent at Belmont Specialty Cakes & Pies as a casual shop assistant from August 1998 to 5 March 2003 pursuant to the Shop Employees (State) Award ('the Award') 324 IG 935. 7 The applicant's evidence is that she was required to work at either of two shops, located within walking distance of each other, operated by the respondent in Belmont. The applicant worked an average of 35 hours per week in accordance with a regular roster. She was at times required to open or close either shop. 8 The applicant's employment was terminated on 5 March 2003 on the basis of abuse of a staff discount policy. The applicant had previously been subject to written warnings, comprising of two group and two personal warnings, in respect to compliance with uniform policy, disobedience, punctuality and failure to serve customers promptly. Ms Davidson describes these events in her statement of evidence (Exhibit 1) as trivial or without substance, and accordingly unjustified. 9 Ms Davidson deposed that she was encouraged to disregard these warnings, putting that the respondent had informed her that: "No matter how many warnings I get, she would never, ever fire me". 10 Ms Davidson deposed that she was never asked to attend an interview with the respondent following these warnings in order to receive instructions on appropriate behaviour or for improving performance. The applicant further contests that the final warning given of 5 March 2003 is in fact a notice of dismissal, evidence in itself that she was never given an opportunity to explain or defend her actions, amounting to procedural unfairness. 11 Ms Davidson deposed that she had applied herself diligently on behalf of her employer and had been given two positive references in respect to her work performance (tendered Annex. A and B to Ex 1). 12 The staff discount policy is an honesty system permitting employees of the respondent to purchase goods at half price. These purchases are to be recorded on the staff food list at full price; at the end of each week the total purchases are calculated and the discount value of 50% given. The policy provided that failure to complete the staff food list, including a nil entry where applicable, resulted in a $10 deduction from the employees next pay. There is no evidence of written authority by employees for this deduction suggesting that the practice of payroll deduction is unlawful. The staff discount policy is communicated to employees by notation on the staff food list and further by a general warning notice issued by the employer. 13 The staff discount policy is set out on the top of the staff food list for the week ending 11 January 2003 in the following terms: "All food, drinks, bread, birthday cakes are to be listed below every day at full price. We will ½ it at the end of the pay week. If you are getting food for anyone else e.g family members or friends it does not go on this list it is full price . This is your list only." 14 The warning notice (Attch. "D" to Ex 1) states: "ATT. ALL STAFF We appear to be still having problems with people giving discounts to non staff members (people who are not employed here). No-one other than yourselves are to get anything for ½ price, your parents and friends are not to come to the counter asking for ½ price nor are you to give it to them, this is a privilege for you only, if this keeps happening there will be no more discounts of ½ price given to any staff members. The next person caught giving a non staff member a discount will be dismissed from their shift immediately. Everyone is to sign this to say they have read and understand everything." 15 The notice was distributed prior to Ms Davidson's first purchase of goods in December 2002. The notice is not signed by the applicant, however, she conceded that she had read the notice and understood its contents. 16 The evidence is that in late January 2003 Ms Davidson purchased a large cake and a large quantity of sausage rolls to the retail value of $287.00 as a birthday present for a friend. The applicant denies breaching the policy stating that the goods purchased were for her as her birthday gift to her friend, and as an employee she was entitled to the half price discount bringing the cost of the items to $143.00. The evidence of Mr Cartwright is that the production cost of these goods is $230.00. 17 In her statement of evidence the applicant deposes that she informed other staff members who accepted her order. Ms Davidson further deposed that she undertook the transaction with another staff member, asserting that the entire matter was transparent and consistent with the staff discount policy. 18 At point 13 of exhibit 1 Ms Davidson deposed that on the Monday morning following the purchase of the cake and sausage rolls i.e. late in January or early February, she had been asked to explain the transaction by Mrs Karen Cartwright, spouse and business partner of Mr Paul Cartwright. Ms Davidson's evidence is that she explained that the purchase was for her to give as a gift, which she put Mrs Cartwright accepted. Ms Davidson's evidence is that later that day Mrs Cartwright asked her to pay an additional $80.00 which she questioned; the matter was not pressed by Mrs Cartwright and the applicant's evidence is she heard nothing more of the matter until the termination of her employment on 5 March 2003. 19 The evidence of Mr Paul Cartwright is that he experienced difficulties with the applicant's work performance, which he described as an aversion to serving customers resulting in her seeking out other work to do; and some dissatisfaction with her opening and closing, asserting that on one occasion she closed early and on another allowed a friend, an ex-employee, into the premises contrary to policy. Mr Cartwright deposed that he reduced the applicant's shifts to encourage her to look for alternative employment and was hopeful that when she completed a bar course in 2002 she would resign and move to Sydney to take up that occupation. 20 Mr Cartwright deposed that he offered the applicant a reference, although she had no requested he do so, to further encourage her to find alternative employment. 21 Mr Cartwright deposed that following the breach of policy the respondent contacted Ms Davidson to discuss the incident. Following this discussion a meeting was held between the three partners of the respondent company in which it was determined to terminate the applicant. This decision was based on Ms Davidson's actions 'in deliberately deceiving the Company, disregarding a lawful instruction of the Company regarding the staff discount system, dishonesty and the continual breaking of the rules.' 22 Ms Davidson's employment was terminated on 5 March 2003. She was handed correspondence from Mrs Cartwright in the following terms: "Roxie Davidson this is your last warning, unfortunately for you we cannot run a business with staff that continue to break the rules this is your 5th warning and not to mention all the verbal warnings. There are signs up in both shops about the food discounts you should have known the rules. Also you did not sign off at the end of the shift yesterday 4/3/03 which you have also been told about many times before. As you know we do not like having to dismiss staff, doing this causes a lot of stress for Karen, Andrew and Peter specially when we like the person that we are dismissing. We sincerely wish you all the best for the future." 23 Mr Cartwright's evidence is that subsequent to the purchases in late January, the catalyst for termination of the applicant's employment, he discovered that the applicant had made further purchases in the three weeks prior to that incident. 24 Mr Cartwright deposed that the first purchase was a 21st birthday cake for her own birthday to which there was no objection taken; the second purchase was a 21st birthday cake and other goods for the applicant's boyfriend's 21st birthday; and subsequently another 21st birthday cake for a friend. 25 Mr Cartwright deposed that the total retail value for all four orders was over $700, with the cost of producing the goods approximately $550, for which payment of $350 was made. Mr Cartwright deposed that he made enquiries of other staff members and none confirmed that the applicant had informed them of the purchases. Mr Cartwright deposed that he established that there had not been any approval by management. Mr Cartwright put that the first reference to advice to other staff members is found in the affidavit filed by the applicant in these proceedings on 6 May 2003 (Ex 1) and that she had not raised this at any earlier time, including during the conciliation process, which he suggested is evidence of a late fabrication to suit the applicant's case. 26 Mr Cartwright deposed that his enquiries established that the orders placed by the applicant were never checked off as staff orders nor was the money received by another employee, leading to his conclusion that rather than ensuring the purchases were transparent, the applicant went out of her way to ensure that management were unaware. 27 Mr Cartwright's evidence confirms the request by Mrs Cartwright to the applicant that she pay an additional $80. Mr Cartwright's evidence is that it was reported to him that the applicant agreed to this, stating that her friend's mother would make the extra payment. The additional payment was never made. 28 Mrs Cartwright was not called to give evidence, nor is corroborative evidence available on behalf of the applicant to reinforce her assertion that she had informed other staff members of the purchases. SUBMISSIONS 29 Mr Hale submitted that there was no basis for summary dismissal stating that the previous warnings were for trivial matters and that at no time was the applicant provided with a warning of termination. 30 Mr Hale further submitted that the staff discount policy rules are ambiguous at best and do not make it clear that the policy should not be taken advantage of for the reason of purchasing goods as a present for friends. 31 Mr Hale submitted that Ms Davidson purchased the goods believing she was allowed to do so, as she had made such purchases on previous occasions without warning or rebuke. 32 Mr Hale and Mr Amos took me to a range of relevant case law and to the Industrial Relations Act 1996 ("the Act") to support their arguments. 33 Mr Amos submitted that although Ms Davidson had received four warnings throughout her employment with the respondent the termination was concerned with the breach of staff discount policy. Mr Amos stated that the notice given to employees made direct reference to the consequences of abusing the staff discount policy which Ms Davidson testified she understood. CONSIDERATION 34 The principle question to emerge is whether the staff discount policy is so unclear and ambiguous as to be capable of the interpretation taken by the applicant. The answer to this question must be no. The wording of the notice on the staff list and particular warnings given are clear that a staff discount is for personal consumption. Personal consumption suggests further a minimal scope to the scheme and against this framework it is not conceivable that goods to the value of several hundred dollars would be included. 35 This was sufficiently communicated to the applicant. The adequacy of warning is another issue. 36 The issue of degree and purpose of a warning is considered by the Full Bench in Electricity Commission of New South Wales t/a Pacific Power v Nieass and Others (1995) 81 IR 46. The relevant comments by Fisher P and Bauer J and Patterson CC are found at pp 67 and 68 in the following terms: "The purpose of warnings, includes the notion that an employee, having received a warning in terms has an opportunity to improve his work performance, meet the work requirements of the employer, and preserve his employment." ... ... "We do not wish to say that absence of warnings in appropriate circumstances, might be taken into consideration in contemplating notions of harsh, unjust, and unreasonable. In industrial circumstances as in other avenues of life an employee or employer must be taken to be aware of the natural and probable consequences of their actions. However, we reject as industrially inappropriate any notion that adult, responsible, and senior employees are entitled to a warning that they might be dismissed if they continue to misconduct themselves within employment, dishonestly. No employee of ordinary understanding and certainly not employees of mature age, substantial classification and seniority, need to be told that if they deal dishonestly with their employer they may be dismissed, any more than they need to be told that they should be careful in crossing the street." 37 There is no basis to regard the applicant to be other than an employee of ordinary understanding and sufficient maturity to comprehend the staff discount policy. I do not regard the applicant to be dishonest in the general meaning of that term however her abuse of the staff discount policy must be regarded as substantive misconduct to a degree which justifies termination of employment. 38 The respondent's conduct and general dealing with staff leaves much to be desired. I have commented earlier on the operation of the staff food list. There is further deficiency in the ambiguity found in Exhibit 1 which commences as a warning and concludes as a termination of employment. This leads to a consideration whether the procedural ineptitude of the employer amounts to sufficient procedural unfairness to render the termination of employment harsh, unreasonable and unjust. The answer to this question must be yes. 39 The evidence discloses that the respondent was substantially unhappy with the performance and attitude of the applicant, though rather than put warnings in clear and specific terms and then follow up those warnings to ascertain whether the required alteration in conduct had been achieved, the respondent chose to put warnings in what might be described as soft and oblique terms. The respondent further furnished the applicant with a glowing reference in the fervent hope that she would seek alternative employment, thus foisting his problems upon someone else. 40 The essential dilemma arising in these proceedings is that the conduct of both the applicant and the respondent was wrong. The balance of responsibility in the present circumstances must lay with the respondent. The employer has a duty to instruct, educate and inform the employee, who has a reciprocal duty to act in good faith and appropriate diligence to the extent of their capacity in the discharge of their duties. 41 The consideration in this matter is finely balanced. In weighing the relevant considerations I find the termination of the applicant's employment to be harsh, unreasonable and unjust, however the applicant's conduct is not such as to warrant intervention by the Commission. 42 The application is dismissed. Matter No IRC 2003/1637 is so concluded. oo0oo DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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