Industrial Relations Commission of New South Wales CITATION : Ballard v Incoll Management [2001] NSWIRComm 181 APPLICANT: Richard Ballard PARTIES : RESPONDENT: Incoll Management Pty Limited FILE NUMBER: IRC 4365 of 1998 CORAM: Boland J CATCHWORDS : Unfair Contract - Contract of employment - Applicant employed for four months - Disagreement over basis of which applicant employed - Termination of employment unfair - Contract varied - Respondent to pay applicant two months' pay in lieu of notice - Costs reserved LEGISLATION CITED : Industrial Relations Act 1996 Supreme Court Act 1970 Buckman v Burdekin Resources Inc (1998) 85 IR 415 CASES CITED : Harcourt Brace & Co v Cory (1997) 81 IR 321 Ross v GN Comtext (Australia) Pty Limited [2000] NSWIRComm 133 HEARING DATES: 12/04/2000; 12/05/2000; 03/30/2001 DATE OF JUDGMENT: 08/22/2001 APPLICANT: Initially Mr A Moses of counsel Subsequently Mr D Re of counsel Subsequently Mr R Ballard (Applicant) Solicitors: Initially Mr C McArdle Phillips Fox Lawyers LEGAL REPRESENTATIVES: Subsequently: Mr C McDuff RAJ Lawyers RESPONDENT: Mr R Reitano Solicitors: Mr P Macken Leigh Virtue & Associates JUDGMENT: - 34 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: BOLAND J 22 August, 2001 Matter No IRC 4365 of 1998 Richard CHARLES Ballard v Incoll Management PTY LTD Application under s 106 of the Industrial Relations Act 1996 Judgment 1 On 14 July 1997 Richard Charles Ballard, the applicant in these proceedings, commenced employment with Incoll Management Pty Limited ("the respondent"). On 19 November 1997, the respondent terminated Mr Ballard's employment. Mr Ballard claimed that his contract of employment with the respondent was unfair, harsh or unconscionable. On 11 August 1998 Mr Ballard caused to be filed a summons for relief under s 106 of the Industrial Relations Act 1996. On 30 November 2000 an amended summons was filed. The orders sought in the amended summons were as follows: 1. An order declaring that the contract or arrangement between the Applicant and the Respondent, whereby the Applicant performed work in the construction industry, was harsh, unfair or unconscionable or contrary to the public interest. 2. An order declaring void in whole or in part or varying in whole or in part and either from its commencement or from some other time the said contract or arrangement between the Applicant and the Respondent ('the Contract') whereby the Applicant worked for the Respondent as a Construction Management Consultant, except to the extent that the Applicant received remuneration and benefits from the Respondent, or was or became entitled to receive such remuneration or benefits. 3. Further, or in the alternative, an order varying the Contract from its commencement or from some other time so as to include the following terms: (a) The Respondent shall not be permitted to deny to the Applicant access to skilled tasks promised by the Respondent to the Applicant and necessary to maintain the Applicant's high level of skills and market presence; (b) Termination of the Contract shall not be harsh, unjust or unreasonable. For the purpose of this clause termination of employment shall include termination with or without notice; (c) Upon termination of the Contract for any reason the Respondent shall give to the Applicant 12 months notice of termination or payment in lieu of such notice of termination; (d) For the purposes of (c) above, payment in lieu of notice shall be calculated by reference to the total of all benefits that the Applicant would have received during the notice period including, without limiting the generality of the foregoing: (i) Payment of annual leave and long service leave amounts which would have accrued during the notice period; (ii) Payment of superannuation entitlements which would have accrued during the notice period; and (iii) Payment of an account equivalent to the value of commissions and benefits associated with the Applicant's employment. For the purposes of clauses (c) and (d) above, the amounts payable shall be calculated on the basis of annual remuneration of $100,000 per annum plus benefits. 4. An order that the Respondent pay to the Applicant an amount of $11,100 representing the value of work performed by the Applicant for the Respondent, less the amount received by the Applicant. 5. Further, or in the alternate, an order that the Respondent pay to the Applicant such amount of moneys in connection with the Contract so voided or varied as may appear to the Commission to be just in the circumstances. 6. An order that the Respondent pay the Applicant's costs of and incidental to these proceedings. 7. An order that the Respondent pay to the Applicant interest on such amount of moneys as is ordered to be paid to the Applicant in connection with the contract at the rates set out from time to time by the Supreme Court. 8. Such further or other relief and such further and other orders as this Honourable Commission may deem just in the circumstances. 2 The matter had been scheduled for hearing on 26 and 27 June 2000. However, on 26 June due to difficulties that arose regarding the admissibility of the applicant's affidavit, the hearing dates of 26 and 27 June were vacated by consent. The question of costs in respect of the vacation of the hearing dates was reserved. The matter was consequently relisted for hearing on 4,5 December 2000 and 30 March 2001. Written submissions were filed and served, the last of those being received by the Court on 9 May 2001. 3 At the core of this matter is a fundamental disagreement between the parties as to the basis on which the respondent employed the applicant. The applicant claimed he was employed as a project manager to perform and be paid for the work of a project manager. Instead, the applicant claimed he performed work of a different nature at a reduced salary and that when this work was completed he was terminated. The applicant alleged that the respondent engaged in deceitful conduct and never had any intention of employing him on a permanent basis as a project manager at an appropriate salary; that, in effect, the applicant was treated as a source of cheap labour and then discarded when he was no longer needed. 4 The respondent, on the other hand, claimed that the applicant, previously unemployed, was engaged at the applicant's request on probation to perform a number of tasks the nature of which was agreed at the time of engagement. The respondent alleged that once the applicant was employed, he attempted to assert the existence of an employment contract involving entirely different terms to that which had been agreed, including a significantly higher salary and the right to undertake work that was not available. Section 106 5 The power exercisable by the Court in relation to this matter is contained in s 106 of the Industrial Relations Act 1996. The section provides: 106. Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. 6 A "contract" is relevantly defined in s 105 of the statute as meaning "any contract or arrangement, or any related condition or collateral arrangement …"; and an "unfair contract" is defined as one "that is unfair, harsh or unconscionable". Factual background 7 The applicant holds the degrees of Master of Business Administration from the University of Cape Town and Bachelor of Science from the University of Natal. He was employed as a project manager in the early nineties in South Africa and, on coming to Australia, worked as a project engineer during 1995, 1996 and part of 1997. 8 On 3 July 1997 the applicant wrote to Mr Greg Incoll, a director of the respondent, applying for the position of project manager. The application was not in response to any advertisement by the respondent but was part of the effort by the applicant to find employment, having been unemployed for three months. Mr Incoll telephoned the applicant and arranged an interview for 7 July 1997. There is considerable disagreement about what was said at the interview. The applicant's version of what occurred may be summarised as follows: · Mr Incoll said that his immediate requirement was to prepare a risk report over the next three weeks for a large project and asked whether the applicant could assist. The applicant said he could although he did not particularly like report writing. · Mr Incoll said that the respondent's strategic direction was towards the retail, health, education and infrastructure markets and noticed the applicant had retail experience. Incoll said that the respondent had recently lost a retail opportunity because it did not have staff with suitable experience. The applicant's retail experience was the major topic of conversation. · Other topics discussed included: strategic direction of the respondent; report writing ability; proposed salary; the possibility that during employment with the respondent the applicant may be offered another job that he had applied for; autonomy; staff turnover. · The applicant said that he was asking about $80,000 and whether Mr Incoll would consider an offer comprising a salary discounted for a period and rising to $80,000 after the respondent had been able to assess his worth. Mr Incoll replied that he would. The applicant said he would need to think about his position and get back to Mr Incoll the following day. · The applicant agreed that during the interview there was no discussion on notice of termination, probationary employment or the availability of a project manager position. 9 Mr Incoll's version of the interview may be summarised as follows: · There was no discussion about retail projects or the applicant's retail experience "in particular" and no discussion about the report writing taking three weeks. · He did not remember having lost a retail project but there may have been an unsuccessful tender and he did not remember the applicant saying he did not like any particular type of work. · The applicant did not say he needed to think about his position after the interview. · The applicant asked whether Mr Incoll would consider taking him on for a six months' probationary period and if he proved satisfactory, take him on permanently; that this would be a worthwhile arrangement because the applicant was not known to Mr Incoll and if the applicant's performance was not satisfactory or Mr Incoll did not have work, Mr Incoll would not be exposed. · He said to the applicant that he thought $80,000 was above the market for someone with so little experience in Australia; that the applicant should put something in writing in relation to the proposed salary and probation and the respondent would consider it. · He thought that as the applicant had been unemployed for about three months the applicant was keen to do any work that was available. · The applicant told him that he was awaiting another job offer, that he would have to accept it at reasonably short notice and that he probably would accept it. 10 On 9 July 1997 the applicant wrote to the respondent. The letter: · Proposed that the applicant be employed on a temporary basis for six weeks at a salary of $45,000 and subject to a two-week notice period. · Proposed that if no notice of termination had been served by either party by the end of the fourth week of the applicant's employment, employment would "continue after the sixth week on a permanent basis and at a salary of $60K p.a. for a probation period of six months, and that my salary thereafter be increased to an amount to be agreed at that point. I anticipate the amount to lie between $70 and $80K p.a. A notice period of one month would apply to the permanent employment…" · Advised the respondent that the applicant expected an offer from another employer. · Indicated a belief that the applicant would be engaged initially "for the assessment to be undertaken for the banking syndicate which you discussed, but although I have strong analytical and report writing skills which would be valuable to this exercise my true value would become visible only in a situation where I am directly accountable for results. I would therefore consider it important that I be engaged in such a suitable capacity should I become employed on a permanent basis." · Stated: "I hope that the above proposal eliminates any significant financial risk with which you may otherwise have been faced and I look forward to discussing this matter with you further." 11 On 10 July 1997 the applicant said that Mr Incoll phoned him and said "Your proposal is acceptable. You can start right away", and the applicant replied "OK, I'll start next Monday." Mr Incoll denied he accepted the applicant's proposal. His recollection was that he said words to the effect "We will put a letter of offer to you and if you agree you can start on Monday". 12 The applicant commenced work with the respondent on 14 July 1997. On that day the respondent gave the applicant a letter. The letter outlined an offer of "a contract engagement". Mr Incoll said that the letter was consistent with and in the same general terms as offers made to other employees except as to the probation period of six months. Key aspects of the offer contained in the letter were as follows: · The position of Project Manager. · A salary of $45,000 per annum for an initial period of six weeks and thereafter an annual salary of $60,000. · Information relating to superannuation, leave, travel, training, hours of work and salary reviews. Salary was to be reviewed at the end of January 1998. · Termination: "As stated in your 9 July 1997 letter. Thereafter one month's notice shall be given by either party. The Company reserves the right to pay one month's salary in lieu of notice." 13 The applicant expressed some misgivings about the letter, including the reference to "contract engagement" and the absence of any clear commitment to pay between $70-$80,000 per annum as proposed in the applicant's letter of 9 July 1997. Nevertheless, the applicant said he "did not want to sour relations in my new job" and after considering the matter "for a number days", signed and returned the letter to the respondent with a handwritten notation that acceptance of the offer was "subject to my letter dated 3 August 1997." 14 During late July and early August 1997 the applicant became concerned that he "may have been employed simply to resource the Citibank/Park Plaza Report." This was, he said, based on a number of developments including that he had been introduced to staff by Mr Incoll as someone who would be "with [them] for a few weeks"; he had not been allocated a desk of his own; his payslips stated "Contract period: 14/7/97 to 24/8/97". The applicant also became concerned following a discussion with the respondent's line manager, that the manager knew nothing about the applicant's work experience, something he would have expected if he was to assume the position of a project manager. In response, Mr Incoll's evidence was that he had not introduced the applicant to other staff as a person who would be with them for a few weeks; he understood the applicant may wish to leave if he was offered other employment; as the applicant's position had been "created"' there was no existing space for him in the office; the wording on applicant's payslips reflected Mr Incoll's understanding that "the engagement of the applicant's services was by way of a contract for services and this was reflected in the offer of employment." 15 In a letter dated 3 August 1997 to the respondent, the applicant raised a number of his concerns including concerns relating to the letter of appointment dated 14 July 1997. In the letter the applicant referred to the failure of the letter of appointment "to mention the salary band within which proposals are to be contained when my salary is reviewed in January 1998. It was a material term of my offer that said proposals lie within my expectation band." The letter went on to state: My offer comprised three stages which were designed to limit your risk up until a point at which you would be in a reasonable position to establish whether you should accept my required salary which would fall between $70 and $80K p.a. Under the terms of our agreement the first stage employment is not freely severable and in accepting the offer you are deemed to have considered continuance of my employment beyond the first stage significantly probable rather than contingent upon some unexpected event. 16 The letter also appeared to suggest that the applicant did not agree that he accepted the respondent's offer of employment on the basis of an immediate short-term need for staff to assist in preparing the Citibank report. Finally, the letter stated: I have not been interested in temporary employment per se and if you have accepted my offer primarily as a means by which to satisfy demand on Citibank it would be incumbent on you to now advise me accordingly. In the event that I hear nothing further in this regard within the near future it should be considered that we have reached consensus ad idem on this matter. 17 On receipt of the letter, Mr Incoll agreed in his evidence that although he recognised that the applicant was attempting to qualify the acceptance of the employment offer in the letter of 14 July 1997 he took the view that it did not affect the terms of the contract entered into because " the employment was given to him [the applicant] on the morning of 14 July and I didn't hear further from him after that for three weeks so I assumed that he did not have a problem with the correspondence until that arrived." Mr Incoll said he saw the letter of 3 August as an attempt to open up matters that had been settled three weeks earlier. 18 On 6 August 1997 a meeting took place between the applicant and Mr Incoll. It was the applicant's evidence that: · Mr Incoll queried the applicant's non-attendance at Friday night drinks and told him all staff were expected to attend. · He said to Mr Incoll, "I have not offered my services on a temporary basis … and I would like your assurance that you have entered into the agreement in good faith" to which Mr Incoll replied, "I can assure you I am acting in good faith." · He asked Mr Incoll when he was going to be given a project management role and Mr Incoll replied, "I am working on it. It should not be long now." · He expressed concern that there was no mention of the $80,000 salary that the applicant expected in six months' time to which Mr Incoll replied, "We can pay you that." 19 Mr Incoll had a quite different recollection of the meeting on 6 August. It was his evidence that he said to the applicant that he regarded the contract of employment to be in the terms of the offer of 14 July and that the offer was not subject to any qualifications. Mr Incoll said that the applicant accepted what he had to say at the meeting by saying, "Yes, I accept that." Mr Incoll did not believe that at the meeting there was any discussion about Friday drinks. Importantly, Mr Incoll denied that he said to the applicant that he would pay him $80,000 "or anything like that." Following the meeting Mr Incoll said he made a handwritten notation, which appears on the applicant's letter of 3 August 1997, as follows: Discussed GI/RB 6/8/97. Advised our offer was not subject to any subsequent qualifications. We weren't accepting responsibility for 'alleged' losses. He accepted. 20 The applicant then asserted that he commenced permanent employment with the respondent on 25 August 1997, that is six weeks after commencing and in accordance with the applicant's proposals in his letter of 9 July 1997. The applicant claimed that at this time he was given exclusively "management consultancy tasks" and not the work for which he had contracted, namely, project management. Mr Incoll denied that the applicant commenced permanent employment on 25 August. Mr Incoll said: It was my clear understanding of the agreement with the applicant that he was on a 6 month probation which was continuing at that time. At that time the only change that occurred was a salary adjustment from $45,000.00 per annum to $60,000.00 per annum and a change in the notice period from 2 weeks to 1 month. The applicant was not engaged on management consultancy tasks. He was using the experience I understood him to have, having regard to his resume and what he had told me previously, to carry out various types of tasks that I felt was consistent with his contract of services. 21 During the period 26 August 1997 to 6 October 1997 the applicant said that he forwarded three letters to Mr Incoll challenging the respondent's right to employ him as a consultant. Further, that in the letters the applicant "notified the respondent as to the negative impact that severance of continuity of my project management employment would have on my career." The applicant was unable to produce the letters. Mr Incoll said in his evidence that the only letter he received in the period referred to by the applicant was one dated 3 October. That letter referred to "the significant deviation" from the employment agreement between the applicant and the respondent given the report writing work that the applicant was required to perform as opposed to project management. The letter indicated that if the respondent wanted to employ the applicant in a report writing role, the applicant considered that an appropriate salary would be in excess of "$100K p.a." 22 On 7 October 1997 the applicant wrote a further letter to Mr Incoll that was received by him on 10 October. The letter complained that certain responsibilities had been allocated to the applicant and under protest he had no alternative but to accept the work. The letter went on to say: I appreciate that you may be having difficulty deploying me as you had intended and in light of our recent discussion I will continue being patient for another month or so. I am committed to making a success of our employment arrangement as the salary discounts will present a loss to me in excess of $15K if our arrangement is not continued into the medium term. My commitment cannot be expected however to extend to the execution of all and sundry responsibilities that others step back from. Therefore, given any circumstance where I am required to action a QA audit which I objected to weeks ago, I must now serve notice that if in around one month's time it becomes necessary either to; · Renegotiate my salary for a change in job description, or · Accept that there is no future for me in this organisation, …then my salary must at that time be deemed to have with immediate effect today, been raised to the level discussed in my previous correspondence, payable in arrears. 23 The applicant did not take the action described in his letter of 7 October. The applicant said at the time he wrote the letter he did not believe that Mr Incoll had any difficulty in providing project management work and that suitable opportunities were available, which of course, was inconsistent with the statement in the letter that "you may be having difficulty deploying me". The applicant said in his evidence that whilst he did not believe there was any difficulty in providing suitable work he indicated in the letter a contrary belief because he hoped it would help in resolving matters. 24 In relation to the letter of 7 October Mr Incoll stated in his evidence that he met with the applicant on 10 October and said to the applicant words to the effect "What is going on, you know that project management work is not currently available. You are required to do what you are given." Mr Incoll said that the applicant responded by saying "I just wanted to put on the record that I wanted project management work." 25 On 21 October 1997 Mr Incoll wrote to the applicant for the purpose of eliminating any "misunderstanding". In the letter, Mr Incoll made four points: 1. Your employment conditions are not changed nor can be "deemed" to be changed. There are no "arrears" payments. 2. There is no "loss" to you, and should you willingly wish to go elsewhere, please advise. Otherwise, salary increases will be based, as they are for all staff, on performance. 3. We are attempting to place you into a suitable long-term project as you desire, but short-term assignments must be undertaken in the interim. 4. Your working relationship with other staff members is poor, and has been the subject of considerable complaint to me. This will need to improve, irrespective of other issues. 26 The applicant replied in writing the same day. In his letter the applicant: · Indicated that he took the job with the respondent to manage projects and in order to gain that opportunity agreed to work on the Citibank report. Further he agreed to "a two-tier salary discount which will constitute a loss for me if my employment is for whatever reason ended prematurely." · Complained that he had been employed as a "Management Consultant" rather than a "Project Manager" and in the former position his salary was well below the market rate. · Said that he resolved to bear the situation and to keep the respondent advised that the situation was contrary to the employment agreement and untenable in the long term and that "I understand that it will now come to a head one month from the date of my previous letter. If it becomes necessary to renegotiate the terms of my employment I would seek to have the new terms made effective from the date of my previous letter. If it does not become necessary then the terms of the original agreement would continue to apply." · Indicated that he may proceed to make employment enquiries elsewhere. · Denied that relationships with other staff were poor. · Stated that "Notwithstanding any of the above please advise me within the next few days in the event that you do not intend to agree an end-salary which is at the top of the band detailed within my initial offer. This has now become a further complication as I had expected to have approximately six months within which to demonstrate a Project Manger ability which would place me in a position to negotiate at the top of the said band." 27 The applicant said that by 21 October 1997 he was running short of work. After receiving the letter from Mr Incoll the applicant said that he felt "the situation might never be corrected despite any past assurances Mr Incoll might have given me to the contrary, and so I decided to look for another job." The applicant said that about 21 October 1997 he commenced making inquiries for other jobs. 28 Mr Incoll said that as soon as receiving the applicant's letter of 21 October he went to discuss it with him and said words to the effect of "What is this?" Mr Incoll said that he indicated to the applicant that he would not suffer any loss. Mr Incoll also said to the applicant at the time "Other employees (Susan, Bill, Brad and others) are not prepared to work with you." 29 In late October or early November 1997 the applicant said that he had a conversation with Mr Incoll where the applicant was told that he had been "put forward for the Citibank [Park Plaza] project". The applicant inquired whether this involved a full project management role and was told that the respondent would be appointed to certify the works and some other company would manage the project. The applicant said at the time he indicated neither acceptance nor rejection of the appointment but that despite being told by Mr Incoll it was a full time appointment, the applicant did not believe Mr Incoll. The applicant also said that about the same time as the conversation regarding the Citibank project, Mr Incoll brought him the Citibank contract to proof check on the afternoon it was about to be signed. The applicant said he found a serious flaw in the document that "rendered the Respondent a de-facto guarantor of timely completion of the project." The flaw was shown to Mr Incoll who said to the applicant words to the effect "I don't know what we would have done had you not noticed that" and later, "I am not sure what we would have done without you." 30 Mr Incoll's evidence in relation to the appointment to the Citibank project was that the applicant said words to the effect "I do not want to be considered for that project because it is only certification work and not project work as such." Mr Incoll said he then arranged alternative resources for the role. As to the flaw in the contract document, it was Mr Incoll's evidence that he had no recollection of the applicant identifying any serious flaw although he did from time to time ask the applicant to comment on contract documents. 31 On about 14 November 1997 the applicant gave evidence that he was summoned to Mr Incoll's office and was told that he should not be using business time to apply for other jobs and that he would not be paid for taking time off to attend job interviews. The applicant said he was told that he should go away and think very carefully about whether he wanted to continue working for the respondent. It was Mr Incoll's evidence that he confronted the applicant about failing to turn up for work until lunchtime and the applicant said he had been to a job interview with "Bovis". Mr Incoll said he advised the applicant that what he had done was okay but that next time he should let him know beforehand. The applicant denied that he had taken time off to attend job interviews and denied the substance of Mr Incoll's evidence as to what occurred. 32 On 16 November 1997 the applicant wrote another letter to Mr Incoll and gave it to him the following day. The main points in the letter were that: · The applicant agreed that the Citibank project "was a full-time job for myself as assisted part-time by Brad, Marcus and Rebecca. Consequently it is no longer necessary to negotiate any changes of terms of employment." · It was only speculation on Mr Incoll's part that the applicant had re-entered the job market. · It was not the applicant's intention to terminate his employment. 33 The applicant said in his evidence that it should not be inferred from his letter of 16 November that he had previously said no to the Citibank project but merely that he had disagreed with Mr Incoll that it was a full-time project. 34 On 17 November the applicant sent a handwritten note to Mr Incoll indicating, amongst other things, he was available to proceed with Citibank immediately upon being given authority to do so. On 18 November Mr Incoll received another handwritten note from the applicant stating that the applicant "did not have enough on" and that he was still "Awaiting final authority to proceed" in relation to the Citibank project. 35 On 18 November Mr Incoll had a conversation with the applicant where Mr Incoll was alleged to have said that he had no further work for the applicant but that he would do what he could to find something for the applicant and that he would introduce him to another client. The applicant said he responded by saying: This is not acceptable. I might have seen it coming. Do what you can, but I'll start looking for another job immediately anyway. I will discuss it further with you in the next few days. 36 Mr Incoll denied he said to the applicant he would introduce him to another client. In his affidavit Mr Incoll said: At that time I did not talk to him about the deficiencies in his work performance generally and his inability to get on with other staff (having previously raised them) as I did not want to make the ending of the employment relationship acrimonious and I did not want to particularly interfere with his ability to obtain work elsewhere. I did however point out to him that he was free to use the office or the facilities within the office in obtaining employment over the notice period. On the 19 November, 1997 I gave the applicant a letter confirming the termination of his employment and giving notice. 37 The termination letter gave one month's notice and stated the reason for the termination was "primarily related to insufficient workload." On 20 November the applicant replied with a further letter rejecting "the effective date of your notice of termination of employment." The letter went on to say: I have agreed only to seek alternative employment elsewhere and as soon as the same has been secured, though obviously within a reasonable period of time, I will terminate my employment here. 38 In the letter, the applicant repeated his allegations regarding the subterfuge perpetrated by the respondent that he engaged the applicant on the pretext of placing him as a project manager when the position became available and paying him as such, and instead using him to "address the backlog and current demand for claim preparation and general consultancy". The applicant's letter also rejected the idea that his termination was redundancy and the letter implied that the applicant might take "court" action. The applicant said he left the letter in Mr Incoll's in-tray and shortly after doing so Mr Incoll came into the applicant's office and allegedly said to him: You go ahead with this and I'll ensure that you never get another job in this city. What you say about redundancy is irrelevant. You are not being made redundant. You are being dismissed for poor performance. 39 The applicant said that he then packed up his personal belongings and prepared to leave. 40 Mr Incoll's evidence about the discussion with the applicant on 20 November was that he said to the applicant words to the effect that "The lack of work is only one of the reasons for the termination of your employment. Your performance in general and your ability to integrate with clients is causing a problem." Mr Incoll alleged that the applicant replied by saying "I know there are other reasons other than lack of work for the cessation of my employment contract". 41 On 21 November Mr Incoll wrote to the applicant. The main points in the letter were as follows: · It was alleged that the applicant, from day one, had sought to build a case seeking additional monies from the respondent. It was said that this was despite the applicant being the one who proposed the "concessional" employment arrangements. · The respondent's offer was on the basis of "contract engagement". The probation period of six months as proposed by the applicant had not yet expired and a permanent appointment was not anticipated until the end of January 1998. · There had been constant complaint regarding the applicant's role. · Loss had been suffered by the respondent in that: a) The respondent had endeavoured to keep the applicant in constant employment notwithstanding that anticipated project roles had not been realised; b) The applicant had regularly chosen not to attend the office when work was available; c) The applicant had engendered complaints from both clients and staff; d) The applicant's work had been "esoteric and without applicability to the Client's needs"; e) The applicant had repeatedly accessed other employees' files despite the respondent's objections; f) The applicant had apparently abandoned attendance at the office without seeking approval. · The respondent no longer required the applicant's attendance for any part of the one-month notice period. Payment in lieu of notice was enclosed together with accrued statutory entitlements. 42 The applicant contended that the termination of his employment coincided with the seasonal downturn in the construction industry. He also contended that his "employability" as a project manager had suffered because of the gap in his employment history as a project manager whilst working for the respondent as a consultant. The applicant subsequently gained employment as a site administrator in May 1998 until May 2000. The applicant contended that this position was junior to a project manager. 43 The applicant had made application pursuant to s 84 of the Industrial Relations Act 1996 alleging unfair dismissal but proceedings in relation to this application were discontinued on 31 July 1998. Submissions for the applicant 44 The applicant was initially represented by Mr A Moses of counsel and later by Mr D Re of counsel. It seems that in providing a written submission in reply, the applicant represented himself. 45 The case for the applicant may be summarised as follows: 1) The applicant was employed as a "Project Manager". However, the tasks assigned to the applicant could not be classed as project management work. The respondent does not deny that the applicant was performing tasks other than project management after 25 August 1997. 2) Project management was the applicant's chosen career path. Continuity of employment as a project manager was important to his employability and career development. 3) The applicant's uncontested evidence was that he was paid the equivalent of $55 per hour by a previous employer for doing the type of work he performed for the respondent but that the respondent paid him a salary of between $20 and $27 per hour. 4) The contract of employment was unfair, harsh or unconscionable in that it allowed the respondent to direct the applicant to do tasks that he had not been engaged to do while in permanent employment and at a far lower rate than he would have been paid had he been properly remunerated for the task. Further, the contract allowed the respondent to terminate it without warning at an extremely inconvenient time for someone employed in that industry hence seriously damaging the applicant's prospects of obtaining immediate alternative employment. 5) The contract of employment was also unfair, harsh or unconscionable in that it allowed the respondent to pay the applicant considerably less than the $80,000 that he earned in previous employment and in his subsequent employment. 6) The contract of employment was unfair, harsh or unconscionable in that it allowed the respondent to discriminate against the applicant, relative to other employees in employing him on a lengthy probation period. 7) The applicant had been unemployed for several months when the respondent employed him. Their respective bargaining positions were very unequal. The applicant offered the respondent a lengthy period of probation as an inducement to the respondent employing him in the expectation that it would lead to permanent employment at an appropriate salary level. The unemployed are more vulnerable to exploitation and thus more likely to accept a non-standard condition of employment against their own interest. This is what occurred here. 8) The respondent gave no legitimate reason why the applicant alone should have been employed on a probationary period. The respondent did not inform the applicant that it did not employ other project managers on probation. In this sense the respondent misrepresented by omission its standard conditions of employment to the applicant. In not informing the applicant of this, the respondent did not allow the applicant to make an informed decision as to whether he would offer a period of probation to the respondent. 9) Probation for six months is disproportionate to the nature and seniority of the job. 10) The overwhelming inference available was that the respondent did not intend to employ the applicant as a project manager. The applicant was employed as an "odd jobs person" and not in accordance with the terms of the contract. The contract was therefore unfair in that the respondent misrepresented to the applicant that it would employ him as a project manger and that it would employ him on a permanent basis. 11) Procedural fairness requires an employer to warn an employee if his or her job performance is unsatisfactory and to allow the employee the opportunity to correct it. Firstly, the respondent's complaints about the applicant's work performance are unclear. Secondly, the respondent's evidence is contradictory: On the one hand the respondent was putting the applicant forward to work on the Citibank project and on the other hand in the termination letter the respondent referred to the applicant's work as being "esoteric" and "without applicability". 12) The existence of a probationary period does not stand in the way of a proper warning to be given to employees regarding their work performance. 13) The respondent asserted that the applicant had been made redundant but no redundancy pay was paid and the applicant was not counselled or assisted to find alternative employment. 14) The contract of employment was unfair in that it allowed the respondent to deny the applicant the work opportunities that it promised at the commencement of the contract. The applicant's career suffered as a result of him being denied these opportunities. 15) As to credit, the applicant's evidence should be preferred in the event of any conflict on matters of substance. 16) In circumstances of the respondent's treatment of the applicant the applicant should not be required to mitigate his losses: Harcourt Brace & Co v Cory (1997) 81 IR 321 at 338 and his post-termination employment should not be considered in determining a reasonable period of notice: Ross v GN Comtext (Australia) Pty Limited [2000] NSWIRComm 133. Submissions for the respondent 46 Mr R Reitano of counsel appeared for the respondent. His submissions may be summarised as follows: 1) There is no issue that the approach in respect of employment with the respondent came from the applicant and not anyone else. 2) It is clear that the understanding of both the applicant and Mr Incoll at the time the applicant was seeking employment that the respondent's need was to obtain a person to write a particular report. 3) Following the employment interview it was the applicant who put forward a proposal for consideration by the respondent as to the terms of engagement. That proposal did not address the position or capacity in which the applicant was to be engaged. The proposal involved a salary after six weeks employment of $60,000 per annum with a six months probation period after which the salary was to increase to an amount to be agreed at that point. There was no agreement as to an amount or range within which such increase would be agreed. 4) The applicant offered the respondent significant inducements to employ him such as temporary employment, discounted salaries and a probationary period of six months. This was designed to eliminate "any significant financial risk" to the respondent. 5) Once employed the applicant commenced the process of erecting financial burden for the respondent almost immediately. The question of fairness needs to be considered in that light. 6) The letter of appointment given to the applicant on 14 July 1997 recorded the terms of his employment. The applicant chose to do nothing about that letter until 3 August 1997 when he wrote to Mr Incoll. It is apparent from the applicant's letter of 3 August that he was seeking to change the basis of his employment and/or retreat from his proposal that was intended to "eliminate financial risk". The letter of 3 August 1997 is the first indication that the applicant was recanting from the inducements of the 9 July 1997 letter. 7) In the correspondence during October 1997 the applicant's two complaints appear to have been that he was not provided with what he regarded to be "Project Management work" and, secondly, that he was not being paid what he considered to be the salary that he ought to have been paid. As to the first matter there is considerable disagreement between the applicant and the respondent about what is project management work. The evidence was that the types of tasks given to the applicant were those expected of a project manager in the employ of the respondent. The gravamen of the applicant's complaint appears to boil down to the fact that the work he was provided with did not meet his definition of project management work. The applicant never worked as a project manager in the Australian environment and so it is difficult to understand how he can maintain his claim to have such an intimate knowledge of project management work and what it involved. The applicant had no history of project management work in Australia so it is nonsense to suggest his career development would be affected. The applicant's complaint in respect of salary flies in the face of what he was offered and what Mr Incoll accepted on the question of salary. 8) It is noteworthy that the applicant's submissions identify a ground of unfairness reliant as it is upon a claim that the contract allowed the respondent to direct the applicant to do tasks that he had not been engaged to do whilst in its employment. Yet there is nothing in the evidence as to what the task was that the applicant was required to perform. Other than the Citibank report there was no discussion or articulation or correspondence concerning the precise tasks that were expected of the applicant. Moreover, this ground of unfairness was not a ground referred to in either the Summons or the Amended Summons. 9) The applicant's evidence was evasive and in parts untruthful. 10) The claim that the contract was unfair because it required a lengthy probation period was not a ground articulated either in the Summons or in the Amended Summons. Raising new grounds in final submissions is procedurally unfair. 11) If the Commission is to have regard to the submissions relating to probation period the following submissions are made: Firstly, the effect of deleting the probation period from the contract would have the effect of allowing the applicant to escape the representation, promise and inducement he offered to the respondent in employing him on a six months probationary period. Secondly, it is unsurprising that Mr Incoll did not deal with the question of other staff on probation because it simply did not arise. Thirdly, there is nothing inherently unfair that emerges in the circumstances of this case about the probation period in any event. Fourthly, it was submitted that the respondent provided no legitimate reason why the applicant alone should have been employed on probation but it was the applicant who provided the reason i.e., it was part of a number of provisions intended to eliminate the financial risk of employing him. 12) A cursory review of the applicant's progressive correspondence, which seeks to change the terms of the employment, leaves open the very real inference that the approach taken by the applicant may have been contrived from the outset despite the applicant's protestations that what he was doing on 9 July 1997 was eliminating financial risk for the respondent. 13) As early as 21 October 1997 the applicant was put on notice that his working relationship with other staff members was poor. It is clear from the applicant's own evidence that he accepted he had problems with other employees. Complaints raised by the respondent at the point of termination were matters on which the applicant was afforded an opportunity to be heard and had been discussed with the applicant. 14) The respondent was not seriously challenged on its claim that it was concerned about the applicant's work performance being deficient. It is incorrect to say that the applicant had not received any warning about his conduct or behaviour in respect of his working relationship with other staff. In any event the existence of the probationary period did not mandate in fairness the need to accord procedural fairness in all the circumstances. This is particularly so having regard to the acrimonious, demanding, discourteous and disrespectful tone of the constant flow of letters that the applicant was forwarding to Mr Incoll. 15) There was no need to offer the applicant a redundancy payment, as he was paid one month's pay in lieu of notice. 16) The applicant's conduct in relation to securing employment with the respondent in the way he did is a significant matter to be taken into account in determining whether the contract was unfair. In the event that the Commission finds that the contract was unfair the same conduct by the applicant is relied on by the respondent as forming a sound basis as to why the Commission should not exercise its discretion in favour of the applicant. 17) There is nothing that supports the contention that a period of twelve months' notice that is sought in the Amended Summons or the relief claimed in the Amended Summons is in any way appropriate or fair. Whilst emphasising that each case turns on its own circumstances the Commission has been influenced by three significant factors in determining what is fair in respect of notice, namely, length of service, size of remuneration and age. The applicant had only four month's service, was on no view nearing retirement age and was receiving a salary of $60,000 per annum. A period of one month's notice in those circumstances was fair. 18) It is inappropriate in the circumstances of this case for the Commission to exercise its discretion to vary the notice period or in any way vary the contract of employment. 19) The application should be dismissed. The question of costs should be reserved until after Judgment is delivered. Submission by applicant in reply 47 The applicant, representing himself at this stage of the proceedings, made a submission in reply consisting of some 36 typewritten pages. The submission sought to address each paragraph of the respondent's written submissions in great detail. While much of the applicant's submission in reply was repetitive I have taken the whole of it into account in my consideration of this matter. The evidence of the applicant and Mr Incoll 48 This is a case where discerning the truth is not without some difficulty. The two main protagonists, namely the applicant and Mr Incoll, consistently disagreed with each other's version of what took place or what was said at various meetings between the two. As a general proposition I regarded the applicant as a truthful person who genuinely believed the respondent had dealt with him unfairly. As for Mr Incoll, I did not find him entirely forthcoming in the manner in which he gave his evidence and I did have doubts about the veracity of parts of his evidence because, as it will be seen, I have preferred the applicant's version of events rather than that of Mr Incoll in respect of certain discussions between them. However, I do not accept that Mr Incoll constructed an elaborate plan to deceive and mislead the applicant in the manner alleged. Basis on which applicant was engaged 49 In considering the issues in this case, it seems to me that the first critical matter for determination is the basis on which the respondent engaged the applicant. The applicant appears to have been of the belief that what he was being offered by way of employment by the respondent was the position of project manager subject to completing what were essentially report writing tasks associated with the preparation of the Citibank report. That is, he believed once he had completed the Citibank report he would be placed in the role of managing a construction project. When this did not eventuate the applicant perceived that Mr Incoll had misled him, indeed, deceived him by promising the position of project manager but, instead, using the applicant to eliminate a backlog of report writing, claims preparation and other odd jobs at a rate of pay lower than what would otherwise be payable. 50 For Mr Incoll's part, he conceded in his evidence that he employed the applicant as a project manager and, indeed, the position referred to in the letter of offer was that of project manager. However, Mr Incoll said that in employing the applicant as a project manager he did so on the basis that at the time of the interview there were no such positions available, although I note his evidence that there were "certain project management roles which were pending and which had the potential to arise in the near future…" Mr Incoll said that the other qualification on the applicant's employment as a project manager was that during the six months' probation period the respondent would have the opportunity to assess the applicant's worth and that "if sufficient work was not or did not become available that employment could be terminated." 51 In seeking to determine whether the applicant was misled or deceived from the outset, as he alleges he was, I have closely examined the evidence relating to the applicant's initial approach to the respondent seeking employment, the subsequent interview and the correspondence that followed. It appears from this that the applicant was experiencing a period of unemployment and was searching for work. He wrote to the respondent on 3 July 1997 applying for the position of "Project Manager". The letter was prompted by some information that the applicant had received from a third party that the respondent might be looking to recruit project managers. The applicant contacted Mr Incoll and was requested to send in his résumé. 52 The applicant attended an interview with Mr Incoll on 7 July 1997. Mr Incoll said in his evidence that he indicated to the applicant that the respondent "was not actively recruiting in the market place" but that he had a number of tasks that he considered that the applicant was capable of undertaking, including the preparation of a report in respect of a large project known as the Citibank/Park Plaza project ("Citibank project"). The applicant said he informed Mr Incoll that he did not much like the work of report writing but that he would take it on. In relation to salary the applicant said he mentioned a figure of $80,000 per annum – not as a starting salary but as figure that might be payable after a period during which Mr Incoll could assess the applicant's worth. Mr Incoll said he expressed the view that $80,000 was above the market for someone with so little experience in Australia. Nevertheless, Mr Incoll said he asked the applicant to put something in writing about salary and a period of probation. It appears that the applicant also informed Mr Incoll that he was awaiting another job offer and that he would have to accept it at reasonably short notice if it was offered. 53 The applicant provided a written proposal as to the terms of his employment in the letter to Mr Incoll dated 9 July. The proposal, in my opinion, was framed against the background of the applicant having been out of work for three months and being anxious to find work as well as the prospect that he might have to leave at short notice to take up a job that he had previously applied for. Hence the somewhat unusual arrangements regarding notice, salary and probation designed, I think, to make it attractive to the respondent to employ the applicant. In the letter of offer of employment of 14 July, Mr Incoll reflected a number of the proposals as put by the applicant in his letter of 9 July, namely: 1) The applicant would be employed in the position of project manager. 2) The commencing salary would be $45,000 per annum. After six weeks the salary would increase to $60,000. 3) In January 1998 the respondent would review the applicant's salary. There was no agreement or undertaking to the effect that at the time of the salary review the applicant's salary would increase to between $70,000 and $80,000 per annum although the applicant may have expected such an increase. 4) Termination of employment during the first six-week period of employment could be effected by two weeks' notice. After the initial six-week period and for a further period of six months during which the applicant would be employed on probation, the notice period for termination of employment of employment would be one month. After the six months period of probation termination of employment could be effected by one month's notice by either party with the respondent reserving the right to pay one month's pay in lieu of notice. 54 It is clear that Mr Incoll saw as the priority in employing the applicant that the applicant would undertake the task of writing the Citibank report. As I have said, the applicant accepted this. Mr Incoll also had the impression that as the applicant was keen to find work he, therefore, would have no objection to doing tasks other than the Citibank report. However, it was submitted for the respondent that at the time of the applicant's employment there was no discussion about the kind of work or duties that the applicant would be required to perform after writing the Citibank report. It was also submitted that "The letter of 9 July 1997 failed to identify any specific position which Mr Ballard would occupy or any specific capacity in which he would be employed". I am not sure where such a submission takes the respondent but it appears that what I am being asked to accept is that because there was no discussion about specific duties, other than the Citibank report, it is to be implied that report writing and claims preparation work, which the applicant was required to undertake after the Citibank report was completed, should be regarded as part of a project manager's work within the context of the respondent's business. 55 I do not accept that the basis on which the applicant was engaged gave the respondent the unfettered right to direct the applicant to perform tasks other than the writing of the Citibank report and project management work if such work became available. The evidence and the proper inferences to be drawn from it are quite clear: The priority for the respondent was to have someone write the Citibank report. The applicant agreed to do this, albeit with some reluctance, as a prelude to his appointment as a project manager. In my opinion it is nonsense to suggest, as Mr Incoll did, that anyone assigned by the respondent to do work in connection with a project was involved in project management. Mr Incoll knew very well in the light of the applicant's previous experience what the applicant's expectations were in relation to project management work and that was to manage a construction project, not write reports and prepare claims. Moreover, if the work that the applicant was doing was, indeed, to be regarded as project management work, why was it that Mr Incoll found it necessary from time to time to assure the applicant that he was continuing with his effort to place the applicant in a project manager's role? 56 I return to the more critical issue: Whether Mr Incoll deliberately misrepresented to the applicant that as soon as he had completed his work on the Citibank report he would be appointed to a project manager's position. I think that on the balance of probabilities it is unlikely that at the interview on 9 July Mr Incoll deliberately misrepresented to the applicant that as soon as the Citibank report was completed he would place the applicant in the role of managing a construction project. There was no evidence that such a role was available as at 9 July and, indeed, the evidence points to there being no such role immediately available. If Mr Incoll had said that he would place the applicant in a project management role as soon as the Citibank report was completed one would have expected some discussion about the particular project that Mr Incoll had in mind. I note that at the interview there was some discussion regarding the applicant's "retail experience" and the respondent's need for someone with such experience. Even so, if the applicant believed he was being employed as a project manager for his retail experience, I would have expected some discussion about the particular retail project to which the applicant would be assigned and there was none. Moreover, in a discussion between the applicant and Mr Incoll on 6 August that I will come to in more detail shortly, Mr Incoll assured the applicant that he was working on finding the applicant a project management role and the applicant appeared to have accepted this assurance. The giving of this assurance and its acceptance is consistent with the position that at the interview on 9 July, Mr Incoll did not represent to the applicant that upon the completion of the Citibank report there was a project manager's position immediately available to be filled by the applicant. 57 Nevertheless, I think that arising out of the interview on 9 July, the applicant's state of mind was such that he expected to be initially engaged on a report writing task during which time Mr Incoll would arrange a project manager's position and that on 6 August, Mr Incoll was still in the process of making those arrangements for him. In entering the contract of employment, the applicant did not expect that after the Citibank report had been completed he would be required to continue to perform other report writing and claims preparation work. For his part, I think that in entering into the contract of employment with the applicant, Mr Incoll failed in three respects: Firstly, he did not make it clear to the applicant that if the project's manager's position had not become available by the time the applicant had completed the Citibank Report, he would be required to perform other work; secondly, the applicant was not informed as to the nature of this other work and thirdly, he failed to inform the applicant of the time frame within which he might be expected to be placed in a project manager's role. 58 The applicant entered into the contract of employment with the respondent based on a substantial misapprehension brought about by Mr Incoll's failure to adequately and fairly convey the terms of the employment offer. I do not find that Mr Incoll deliberately misled or deceived the applicant. 59 The contract ultimately entered into between the applicant and the respondent was not a contract for services and it was not a fixed term or fixed task contract. It was a contract of service terminable by two weeks' notice during the first six weeks of employment and one month thereafter. This is evident from the respondent's letter of offer of 14 July. 60 At some time between 14 July and 3 August the applicant had returned the letter of offer to the respondent signed as accepting the offer "subject to my letter dated 3 August 1997". When it was that the applicant returned the letter of offer indicating qualified acceptance is not clear from the evidence but it would seem that was on or about 3 August. There was no satisfactory explanation as to why it took the applicant nearly three weeks to sign acceptance (albeit qualified) of the offer of employment but in any event, I do not consider that the letter of 3 August impacted in any way on the terms of the contract. 61 My conclusions regarding the basis upon which the respondent engaged the applicant are as follows: 1) The applicant was seeking a position with the respondent of project manager. Such a position involved managing a construction project. 2) The applicant understood that the respondent's priority in employing him was to have him assist in the preparation of a report in relation to the Citibank project. This was essentially a report-writing task. The applicant agreed to this. This task was to take three to six weeks to complete. In the result it took about six weeks. 3) The applicant was not informed of and did not understand that he would be required to undertake other tasks the focus of which was report writing or claims preparation. This other work was not an obligation on the applicant under the contract of employment and it could not be said to constitute a project management role. 4) If the applicant's work performance proved to be satisfactory he would be placed in a project manager's role when one became available. 5) The commencing salary would be $45,000 per annum. After six weeks the salary would increase to $60,000. 6) In January 1998 the respondent would review the applicant's salary. There was no agreement or undertaking to the effect that at the time of the salary review the applicant's salary would increase to between $70,000 and $80,000 per annum although the applicant may have expected such an increase. 7) Termination of employment during the first six-week period of employment could be effected by two weeks' notice. After the initial six-week period and for a further period of six months during which the applicant would be employed on probation, the notice period for termination of employment would be one month. After the six months period of probation termination of employment could be effected by one month's notice by either party with the respondent reserving the right to pay one month's pay in lieu of notice. Applicant's misgivings about respondent's intentions 62 It would appear that in the three-week period between 14 July and 3 August the applicant began to have misgivings about the respondent's intentions under the contract of employment. Hence, the applicant's letter of 3 August referred to earlier. These misgivings were generated by the applicant being introduced to other staff as a person who would be with them for a few weeks, that there was no desk for him and his payslips referred to a "contract period" between 14 July and 24 August 1997. These matters, I think, were satisfactorily explained by Mr Incoll: there was still some uncertainty about whether the applicant might leave to take up another job offer; there was no desk because the applicant was a supernumerary, and; the first six weeks of employment was agreed between the applicant and Mr Incoll to be temporary employment. 63 In any event, the main issue of concern to the applicant was that he had been engaged only on a temporary basis to undertake the work of writing a report in relation to the Citibank project. Other concerns flowed from this. For example, in the letter of 3 August the applicant expressed concern that the letter of offer of 14 July did not refer to the applicant's expectations of receiving a salary of between $70,000 and $80,000 after the expiry of the six-month probation period. 64 A discussion regarding the letter of 3 August took place between the applicant and Mr Incoll on 6 August. Mr Incoll's evidence was that he said to the applicant "Our offer was not subject to any subsequent qualifications. We are not accepting any responsibility for alleged losses". Mr Incoll indicated that the applicant accepted what he said in this regard. The applicant said that he asked for an assurance that the respondent was acting in good faith; that Mr Incoll said he was working on finding the applicant a project management role and that in response to the applicant's concern regarding his expectation of a salary increase to between $70,000 and $80,000 in six months time, Mr Incoll replied, " We can pay that." 65 Mr Incoll said in his evidence that he saw the letter of 3 August as an attempt to "open up other things than the offer that had been put forward, three weeks after he had started work." Putting aside the applicant's penchant for somewhat esoteric language and wordy correspondence, the letter of 3 August was merely an expression of concern about the basis of his employment and his expectation regarding the amount of salary he would receive after six months. It does not seem to me that he was attempting to re-open the terms of his engagement, but rather his letter was an attempt to clarify those terms. 66 I believe that the applicant came away from the meeting on 6 August reassured, at least to some extent, that his employment was not temporary, that Mr Incoll was continuing to look for a project management role for the applicant and that following a review of salary in January 1998 in accordance with the letter of offer, a salary of $70,000 to $80,000 was not out of the question. 67 The applicant said that between 26 August and 6 October 1997 he sent a further three letters to Mr Incoll challenging the respondent's right to employ him as a consultant. Apparently, the applicant was concerned that he was being given exclusively "management consultancy tasks" to perform and had received no indication from Mr Incoll about the imminence or otherwise of a project management role. Only one of these letters was in evidence and that was the letter of 3 October 1997. Mr Incoll does not appear to have responded to this letter. 68 Mr Incoll gave evidence that he said to the applicant in a conversation on 10 October that there was no project management role currently available and that the applicant was required to do any work that he was given. The applicant denies that this was put to him but makes no statement in his evidence as to what was said in the conversation on 10 October. Mr Incoll also said in his evidence that about this time (10 October) he was concerned about the applicant's performance, which he considered deficient, and adverse comments had been made to him about the applicant by other members of the staff and clients. Mr Incoll did not take up his concern with the applicant until 21 October. 69 The situation, as I perceive it to have been at about 10 October, was that against all of his expectations, the applicant was continuing to perform tasks that were not part of his obligations under his contract of employment and that by this time he was very concerned about Mr Incoll's motives. In other words, he felt he had been deceived into taking on employment with the respondent on the pretext that initially he would be required to write the report relating to the Citibank project and then move on to a project management role. Instead, some three months after commencing employment with the respondent, the applicant found himself doing what he felt were all the odd jobs that no one else liked doing and with no obvious prospect of being appointed to project manager despite, he said, such positions being available. 70 As I have already inferred, I think Mr Incoll was probably genuine in employing the applicant on the basis that he did i.e., to write the Citibank report and to place the applicant in a project management role if one became available and if the applicant proved suitable. There was no evidence of any sinister intent on Mr Incoll's part to the effect that from the outset he hatched a plan to lure the applicant into employment by promising him a project manager's role, exploiting him by having the applicant undertake report writing and other tasks at a rate below the market for such work and then terminating his employment when he had completed the backlog of work. I do not think that at the time of the interview with the applicant in July Mr Incoll was in a position to confidently judge how the applicant might perform in his employment. It may well have been the case that the applicant proved to be an outstanding candidate for the role of project manager in which case the respondent would have presumably placed him in that role as soon as possible if one became available. Moreover, the fact that the applicant was engaged on a commencing salary at what might be said to be less than the market rate and that he was employed for a probationary period of six months, does not suggest any ill-intent on Mr Incoll's part. These employment conditions were those proposed by the applicant in order to make it more attractive for the respondent to employ him in circumstances where he had been out of work for some months and where the respondent did not have a position of project manager available at the time. Applicant's work performance and conduct 71 As I have already recorded, by early October Mr Incoll says he became concerned about the applicant's employment performance, which Mr Incoll said was, in his view, deficient. Further, Mr Incoll said he had received adverse comments about the applicant from other members of staff and from clients. There are two aspects of this that I need to consider. Firstly, whether Mr Incoll had any basis for his concern about the applicant's work performance and, if so, what action he took in relation to that concern. Secondly, given that up to this point I have accepted that Mr Incoll was genuine in saying that he was committed to finding a project manager's position for the applicant, it is important to consider whether the applicant's work performance and the alleged adverse comments against him may have caused Mr Incoll to have a change of heart about the applicant's suitability as a project manager. If so, I think it is important to determine whether Mr Incoll allowed the applicant to continue to believe that a project manager's position was still in prospect and by doing so, wrongfully induced the applicant to stay on in employment with the respondent in order for him to complete any outstanding report writing and other tasks before advising the applicant, at Mr Incoll's convenience, that there was no more work. 72 As to the allegations about the applicant's work performance and the alleged adverse comments made against him, these are summarised in Mr Incoll's letter to the applicant dated 21 November 1997, that is, after the applicant had been given notice of termination. I acknowledge that Mr Incoll had referred to the applicant's poor relationship with other staff members in his letter of 21 October 1997 and in a discussion with him on that date. However, the reference to the applicant's performance and his conduct in the letter of 21 November smacks of a belated attempt to shore up the respondent's position in the event that the applicant carried out an earlier threat of litigation. Taking the evidence on this issue as a whole and in the absence of any corroborating material, I do not place much weight at all on the allegations of poor performance and poor relationship with clients and other staff as a sound basis for terminating the applicant's employment. 73 There were three main allegations going to performance and relationships with other staff and clients. Firstly, that the applicant had "regularly" chosen not to attend the office when work was available to be done and that the applicant had been attending job interviews during these absences. There was only one occasion when Mr Incoll found it necessary to raise this matter with the applicant and on that occasion his evidence was that he said to the applicant it was "ok" to take time off to attend job interviews as long as he let Mr Incoll know beforehand. The applicant denied that he had taken time off to attend job interviews. 74 The second allegation was that the applicant "had engendered complaints from both Clients and staff" to Mr Incoll. Mr Incoll said he raised the matter of complaints against the applicant with Mr Ballard on 21 October and 14 November and it does appear that the applicant's relationship with a number of the staff was strained. However, if it had been a significant problem jeopardising the applicant's continued employment, the proper course for Mr Incoll would have been to take some action to resolve the relationship problem or, if the applicant was at fault, to counsel the applicant rather than merely raise it as an issue with the applicant. Furthermore, if it was such a problem, and it appears that Mr Incoll felt it was because it constituted part of the reason for terminating the applicant's employment, in defending these proceedings one would have expected some corroboration or, at the very least, stronger evidence than that which was produced. As to the allegation of client dissatisfaction with the applicant, there is nothing in the evidence to support this other than a bald assertion by Mr Incoll. 75 The third allegation went to the applicant's work performance and, specifically, complaints about the Citibank report and the "Melocco briefing". The applicant's involvement with the Citibank report and the Melocco briefing occurred during the first six weeks of his employment. If the applicant's work in relation to these two matters had to be redone by others at a "significant abortive cost" why did the respondent continue to employ the applicant beyond the initial six-week period of temporary employment; why wasn't his performance relating to these two tasks ever taken up with the applicant; and, why would the respondent have appointed the applicant as the Certifier on the Citibank project in late October/early November if his work in relation to the Citibank report and the Melocco briefing was unsatisfactory? 76 There was a fourth allegation in the letter of 21 November from Mr Incoll alleging that the applicant had repeatedly and improperly accessed files relating to past and present employees, notwithstanding Mr Incoll's objections. The applicant said in his letter of 21 October that he had come across employment applications and unfamiliar names "littered on the IT network". I presume that it was this incident that Mr Incoll was referring to in his letter of 21 November. There is no reliable evidence that the applicant had "repeatedly" accessed files over Mr Incoll's objection. The only evidence of Mr Incoll's objection and that he may have conveyed such an objection to the applicant was in the post-termination letter of 21 November. 77 In my opinion, the matters referred to by the respondent relating to the applicant's work performance and his relationship with staff and clients did not constitute sufficient grounds for terminating the applicant's employment. To the extent these matters were taken into account by the respondent in its decision to terminate the applicant's employment and constituted a reason for termination, I find the respondent's conduct was unfair. 78 Even if it could be said that there was some substance in Mr Incoll's complaints about the applicant's conduct, I see no evidence that there was a proper investigation by the respondent into the alleged complaints by other staff or clients or that the specific nature of the complaints were articulated to the applicant so that he might be in a position to offer a proper defence. It was plainly inadequate for Mr Incoll to say to the applicant "Your working relationship with other staff members is poor, and has been the subject of considerable complaint to me. This will need to improve, irrespective of other issues". Similarly, there is no evidence that the allegations regarding the applicant's work performance and accessing of files were put to the applicant in a reasonable and proper manner thereby allowing the applicant to defend himself against the allegations. To this extent I find that the applicant was not accorded procedural fairness. 79 It was submitted for the respondent that "the existence of the probationary period did not mandate in fairness the need to accord procedural fairness in all the circumstances." I think that in the circumstances it was incumbent on the respondent during the six-month period when Mr Incoll was assessing the applicant's performance to raise with the applicant any matter of concern about that performance and to do so in a proper manner. As the Full Bench said in Buckman v Burdekin Resources Inc (1998) 85 IR 415 at 418: Indeed, the very nature of probationary employment may reasonably lead to an expectation in an employee receiving information, and perhaps corrective advice if necessary, during such period rather than being informed by the employer at or near the end of the period that no continuing employment would be available. Respondent's intentions regarding project manager position 80 I come to the issue of whether the applicant's conduct, whilst falling well short of justifying termination of employment, may have caused Mr Incoll to change his mind regarding his original intention of placing the applicant in a project manager's position. In this regard, I think that there were grounds for Mr Incoll having second thoughts about Mr Incoll's suitability for the role of project manager. I have the clear impression from the evidence that the applicant was somewhat aloof and a person who did not fit easily into the respondent's work environment. This is no criticism of the applicant's conduct or performance but the applicant's personality may not have worked in his favour in any consideration by Mr Incoll of his suitability for the position of project manager. The evidence also shows that the applicant generated what I would regard as an abnormally large, and somewhat unnecessary, amount of written correspondence in a relatively short period, especially given that the person to whom the correspondence was directed occupied the office next door to the applicant. Whatever motivation the applicant may have had for putting everything in writing, something he did from the very early period of his employment, it is understandable this may have caused some doubt in Mr Incoll's mind about the applicant's suitability in being able to deal with clients and other parties in the role of project manager. 81 It was also alleged by Mr Incoll that he received adverse comments from other employees and clients about the applicant and that certain employees were not prepared to work with the applicant. Although these adverse comments did not constitute grounds for termination, the evidence suggests that the applicant's relationship with a number of other staff members was not entirely harmonious as partly reflected in the applicant's comment: "The failings of certain staff members has been cause of much frustration to me throughout." 82 Thus, there is material to support the view that Mr Incoll may have formed a doubt in his mind that the applicant was not proving suitable for the role of project manager. And despite his evidence that he was dissatisfied with the applicant's work performance, Mr Incoll retained the applicant in his employ and continued to provide him with work relating to report writing, claims preparation and other work such as that associated with a quality assurance audit. If Mr Incoll had decided that the applicant was unsuitable for the role of project manager he had not, of course, informed the applicant of that view. One interpretation, therefore, open to the Court is that Mr Incoll allowed the applicant to continue to believe that a project manager's position was still in prospect and by doing so wrongfully induced the applicant to complete any outstanding report writing and other tasks before advising the applicant, at the respondent's convenience, that there was no more work. I note that as late as 21 October, Mr Incoll had confirmed in writing that he was still looking for a suitable project for the applicant. 83 There are, however, two significant difficulties with this interpretation of events. The first is that in late October/early November Mr Incoll said to the applicant that he had been put forward to undertake the certification role for the Citibank project. As I understand the evidence, the role of certifier is not the same as project manager but there are similarities between the two roles. The applicant said he neither accepted nor rejected the role at the time he was told he had been put forward for it. The applicant took some time to consider his position and informed Mr Incoll of his willingness to undertake the role on 17 and again on 18 November. The applicant's delay in making up his mind was not so much because the work was not project management work but because he was concerned it may not have been a full time appointment. He eventually accepted Mr Incoll's assurances that it was a full time role and appears to have accepted that the work of certifier was a reasonable substitute for the role of project manager. 84 By the middle of November, however, the respondent had not been formally appointed to certify the works on the Citibank project and, indeed, the evidence was that on 18 November Mr Incoll informed the applicant that the project was subject to delay. Putting aside the different versions in the evidence about whether or not the applicant did or did not initially reject the certifier's role, it appears that because of the delay on the project Mr Incoll did not find it necessary to address the issue of the applicant's willingness to take on the certification role when he was informed of such on 17 and 18 November. Moreover, given the applicant had run out of work to do by mid-November, it was Mr Incoll's position that he had no other option other than to terminate the applicant's employment. 85 If Mr Incoll had changed his mind about the applicant's suitability for the role of project manager in about mid-October it hardly seems likely that he would have put him forward for a similar role of certifier on the Citibank project in late October/early November. This role had an expected life of about three years. 86 There was one other instance where it might be said that Mr Incoll made a tangible attempt to secure a position for the applicant as a project manager. On 18 November Mr Incoll proposed to the applicant that he be introduced to "Woolworths", who I took to be a client in the retail market sector and who might have represented an opportunity for the applicant to be appointed as a project manager. In the meantime, however, the applicant's employment was to be terminated, so I think it could be said that the proposed Woolworths introduction was a somewhat empty gesture on Mr Incoll's part. 87 This brings me to the second difficulty in finding that Mr Incoll misled or deceived the applicant about his intention to look for a project manager's position for the applicant. In his affidavit the applicant said: During the course of my employment with the Respondent, other project management staff commenced employment with the Respondent, and other project management work was outsourced. At the time that these opportunities had arisen, and against my expressed will, I had been fully committed on consulting tasks. 88 Despite his belief that Mr Incoll did not make a genuine effort to find him work as a project manager, there was no evidence at all that would allow me to find that Mr Incoll did not make a genuine effort either prior to early October when Mr Incoll formed doubts about the applicant's suitability, or after that time. Firstly, there was no reliable evidence that project management work was outsourced or allocated to another employee at the applicant's expense. Secondly, even if project management work had been outsourced or allocated to another employee there was no evidence to show that the work was suitable for, and should have been allocated to, the applicant. 89 In his submissions in reply the applicant submitted that there was a major inconsistency in Mr Incoll's position. It was contended that, on the one hand, Mr Incoll said he continued to try and place the applicant in a project manager's position but, on the other hand, said that the applicant was unsuitable for such a position because he had no Australian experience in the role. There was no evidence to the effect that Mr Incoll said the applicant was unsuitable for the position of project manager because he lacked local experience. 90 I do harbour some doubt as to why it was that over the four months of the applicant's employment no suitable project manager's position could be found for the applicant, especially when Mr Incoll said at the time he interviewed the applicant in July that there were project management roles pending. Nevertheless, on the balance of probabilities I find that Mr Incoll did not induce the applicant to accept employment with the respondent by misrepresentation or deception. Respondent's treatment of the applicant 91 The only remaining issue relating to the project manager's position is the respondent's treatment of the applicant in circumstances where no such position became available. Despite the steady stream of protest by the applicant about having to perform work outside his contract of employment, Mr Incoll insisted that the applicant was required to do any work assigned to him. I have already found that the work that the applicant was called upon to perform after completing his work on the Citibank project was not project management work and was not part of his contract of employment. In these circumstances, and especially in light of the applicant's protests, it was an inadequate response on the part of Mr Incoll to simply say he was continuing to look for a suitable project manager's position and was still saying that after four months without any evident success. 92 In my opinion, having failed at the outset to convey in clear terms what was expected of the applicant under the contract of employment, the proper course for the respondent to have followed was that after the completion of the Citibank report, there should have been a review of the applicant's employment and a realistic assessment of whether a project manager's position was or would become available in a reasonable space of time. The applicant should then have been advised of the position. It would have been open to the respondent to put to the applicant that no opening for a project manager had presented itself, if that were in fact the case, but that other work was available. It would then have been a matter for the applicant to determine whether he wished to terminate the employment or, alternatively, continue in employment with the respondent, perhaps on revised terms. 93 I find that the respondent's failure to follow this course resulted in unfairness against the applicant. 94 The applicant claimed another ground of unfairness and that was that the applicant was the only person employed on probation and that the probationary period of six months was excessive. In light of the fact that it was the applicant who proposed the six-month probationary period and that, in any event, the contract required a month's notice of termination or payment in lieu of the applicant's employment, I do not regard the period of probation as being unfair. Conclusions 95 I have concluded that the contract of employment between the respondent and the applicant was unfair in four respects, namely: 1) That the respondent failed to fairly and adequately convey the terms of the employment offer to the applicant. 2) That the respondent required the applicant to perform work outside the terms of the contract of employment. 3) That the respondent failed to take reasonable and timely action to address the applicant's concerns that he was being required to perform work outside his contract of employment. 4) That to the extent the respondent terminated the applicant's employment for reasons related to the applicant's conduct or work performance, it was unfair. Alternatively, if there was substance in the respondent's contentions relating to the applicant's conduct and work performance and these contentions constituted a reason for terminating the applicant's employment, the applicant was not accorded procedural fairness. 96 In light of these findings the question is whether the Court should exercise its discretion to avoid or vary the contract of employment. In my opinion it is appropriate to do so. I propose to vary the contract of employment to provide that termination of the applicant's employment shall not be harsh, unjust or unreasonable. I propose to further vary the contract to provide that the applicant shall not be required to undertake work in respect of which there is no obligation to perform under the terms of the contract of employment unless the applicant is consulted beforehand about the nature of such work and its duration and that he has consented to undertake the work on terms that are agreed. 97 In his amended summons for relief, the applicant sought an amount of $11,100 representing the value of the work performed by the applicant for the respondent, less the amount received by the applicant. The applicant also sought payment in lieu of a notice period of 12 months. Insofar as the claim for $11,100 is concerned there is simply no proper basis on which I could make such an order. The fact that the applicant may have received a salary of $80,000 per annum in his previous employment cannot mean that he should automatically receive the same amount in the employ of the respondent. There was no comparison made of the work the applicant undertook with Shell (his previous employer) or with Lend Lease (the applicant's subsequent employer). Nor were there any other relevant comparisons made that would allow me to come to any proper conclusions about whether or not the level of salary paid by the respondent was inappropriate having regard to the work done. The claim is, therefore, refused. 98 The other claim was for 12 months' pay in lieu of notice. In this respect I note that the applicant was a reasonably young man earning $60,000 per annum who had been employed by the respondent for only four months. If one were to apply the usual tests as to what might be an appropriate notice period, it is clear that the applicant could not justify a payment of 12 months in lieu of notice. However, as a consequence of the respondent's failure to make a realistic assessment of whether a project manager's position was or would become available to the applicant in a reasonable space of time and to advise the applicant accordingly, the applicant continued in the employ of the respondent hoping that the project manager's position would materialise. The applicant was also concerned that if he resigned from his employment with the respondent he would incur a loss because he had agreed to accept a rate of pay lower than that he would have received elsewhere in the market in the belief he would eventually be placed in a project manager's position on a salary of between $70,000 and $80,000 per annum. By remaining with the respondent, the applicant's employment was terminated at a time of the year that would have made it most difficult to find other employment in the construction industry. Moreover, the reasons relied upon by the respondent in terminating the applicant's employment included reasons that were either not supported by the evidence or, alternatively, if there was some substance in the allegations relating to the applicant's work performance and conduct towards other staff and clients, the applicant was not accorded procedural fairness. 99 Section 106(5) of the Act provides that any money order made in connection with any contract declared wholly or partly void, or varied, shall be what the Commission considers just in the circumstances of the case. It is my considered view that the applicant should receive three months' notice or three months' pay in lieu of notice. Given that the respondent has already received one month's payment in lieu of notice, the applicant shall receive a further payment of two months in lieu of notice. 100 The fact that I have determined that the applicant is entitled to an additional two months' pay in lieu of notice should not be regarded as an endorsement of a new standard of payment in lieu of notice for an employee with only a short period of employment, i.e., four months. The additional two months' pay is to remedy unfairness in this individual case. 101 I note that following endeavours to find new employment the applicant was able to do so in May 1998. The question of mitigation does not, therefore, arise. Orders 102 I make the following orders: 1) The Court declares that the contract of employment made on 14 July 1997 between the applicant and the respondent as evidenced by the letter of offer of the same date is an unfair contract within the meaning of s 105 of the Industrial Relations Act 1996. 2) The contract of employment made on 14 July 1997 between the applicant and the respondent as evidenced by the letter of offer of the same date from the respondent to the applicant is varied from its commencement by inserting the following provisions: a. Termination of employment shall not be harsh, unjust or unreasonable. b. Mr Ballard shall not be required to undertake work in respect of which there is no obligation to perform under the terms of the contract of employment unless he is consulted beforehand about the nature of such work and its duration and that he has consented to undertake the work on terms that are agreed. c. In the event that Mr Ballard is not placed in the role of project manager within four months of his commencement date in employment and his employment is terminated for reasons including redundancy, Mr Ballard shall be entitled to three months' notice or three months' pay in lieu of notice. 1) The respondent shall pay to the applicant an amount of $10,000 representing two month's pay in lieu of notice. 2) The respondent shall pay interest to the applicant on the amount stated in Order 3 hereof, in accordance with s 94 of the Supreme Court Act 1970 (NSW), such interest to run from the date of filing of the summons for relief under s 106 of the Act (i.e., 11 August 1998) to the date of this judgment. 103 The respondent has requested that I reserve the question of costs and I accede to that request. The question of costs is listed for mention on Wednesday 22 August, 2001 at 9.30am. 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