Industrial Relations Commission of New South Wales CITATION: Brennan v. DeVos [2005] NSWIRComm 1080 APPLICANT Michael John Brennan PARTIES: RESPONDENT Mitchell DeVos FILE NUMBER(S): 5697 of 2004 CORAM: Connor C termination of employment - claim of unfair dismissal - constructive dismissal - conflict in evidence - claim for underpayment of wages - monetary compensation CATCHWORDS: LEGISLATION CITED: Industrial Relations Act 1996 Allison v. Bega Valley Council (1995) 63 IR 68 Busways v. Johnson (1994) 55 IR 255 D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 Health and Building Surveyors' Association of New South Wales v. Strathfield Municipal Council (1998) 25 IR 359 Hollingsworth v Commissioner of Police (No.2) (1999) 88 IR 282 CASES CITED: Little v. Commissioner of Police (No.2) (2002) 112 IR 212 Maldoc Pty Limited v. Bollard (unreported) Mohazab v. Dick Smith Electronics Pty Limited (1995) 62 IR 200 Nettlefold v. Kym Smoker Pty Limited (1995) 64 IR 169 Russian v. Woolworths (South Australia) Pty Limited (1995) 64 IR 169 HEARING DATES: 05/11/2005; 05/24/2005 DATE OF JUDGMENT: 06/15/2005 APPLICANT Dave Kelly Construction, Forestry, Mining and Energy Union LEGAL REPRESENTATIVES: RESPONDENT Daniel Murray New South Wales Master Builders' Association DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Wednesday, 15 June, 2005 Matter No IRC 5697 of 2004 Michael John Brennan and Mitchell DeVos Application under S.84 of the Industrial Relations Act, 1996 DECISION [2005] NSWIRComm 1080 Preliminary 1 Pursuant to the provisions of Part 6, Unfair Dismissals, of Chapter 2, Employment [Ss.83 to 90] of the 1996 Industrial Relations Act, Mr Michael Brennan has lodged an application concerning the termination of his services as a floor sander and polisher with Mr Mitchell DeVos, trading in a partnership with his wife as Milton Ulladulla Floor Sanding and Polishing. Mr Brennan recorded in his Part 6 application that he commenced employment early in 1994. Mr DeVos asserts that his employment commenced two years later - early 1996. That is a major point of argument between Mr Brennan and Mr DeVos. There is no dispute that Mr Brennan's services terminated on Monday, 6 September, 2004, however. 2 The matter was allocated to me. I set it down for a preliminary hearing on Tuesday, 9 November, 2004 and a mention on Tuesday, 14 December, 2004. Conciliation failed to settle the matter. I programmed it for arbitration. I directed the parties to file appropriate evidentiary material and set the matter down for a mention and programming when that had been done on Monday, 28 February, 2005. Ultimately, I set the matter down for hearing on Wednesday, 11 May, 2005 and Tuesday, 24 May, 2005. Mr Kelly of the Construction, Forestry, Mining and Energy Union represented Mr Brennan in the proceedings. He called Mr Brennan and his father to give evidence. Mr Murray of the New South Wales Master Builders' Association represented Mr DeVos in the hearing. He called Mr DeVos and his wife as witnesses in the hearing. All proceedings were convened in the Commission's premises at 90 Crown Street, Wollongong. 3 Prior to the proceedings on Wednesday, 11 May, 2005 I attempted unsuccessfully to conciliate Mr Brennan's Part 6 application. There remained an outstanding issue of alleged underpayments between Mr Brennan and Mr DeVos which, for reasons I will outline later in this decision, is beyond the scope of an arbitration of Mr Brennan's Part 6 application. I believed that it was appropriate and certainly in the interests of both Mr Brennan and Mr DeVos to attempt to resolve all issues in dispute between them. However, I remained unable to bring the parties to an agreement, despite several attempts on my part to do so. 4 Mr Brennan has not found alterative employment since his services terminated with Mr DeVos. I recognise that there are limited opportunities for the skills which Mr Brennan possesses in floor sanding and polishing work in the Milton and Ulladulla region and, consequently, when I adjourned the first day of hearing on Wednesday, 11 May, 2005 I suggested that the parties may chose to reconsider their positions and reach some compromise which may centre on Mr Brennan's reinstatement under S.89(1) which remains the principle remedy in Part 6 proceedings [Hollingsworth v. Commissioner of Police (No.2) (1999) 88 IR 282 at pp.341 and 342, and Little v. Commissioner of Police (No.2) (2002) 112 IR 212 at p.243]. There has been some criticism made by Mr DeVos and his wife concerning Mr Brennan's reliability as an employee which emerged in their evidence in this hearing but Mr DeVos and Mr Brennan have worked together for some considerable time. It is a pity that the differences between the two men cannot be patched up. 5 But the substantial claim for underpayment of wages and entitlements has clearly soured the relationship between Mr DeVos and Mr Brennan. Mr Brennan has sought monetary compensation under S.89(5). I am satisfied that, in the circumstances, the Part 6 application is confined to that extent. This hearing has been conducted with a certain passion (between Mr Brennan and his father, on the one hand, and Mr DeVos and his wife, on the other hand) which clearly militates against the restoration of any constructive employment relationship between Mr DeVos and Mr Brennan. 6 That having been said, in his Part 6 application Mr Brennan claimed that the termination of his services arose solely from his insistence to be paid his entitlements. He was not prepared to compromise on that claim and was dismissed as a result. Mr Kelly argues that his dismissal was therefore unfair. Mr DeVos claims that Mr Brennan actually brought his employment to an end himself, ie he resigned. As such, he would fall outside jurisdiction under Part 6. In terms of S.84(1) Part 6, can apply only where: "…an employer dismisses an employee and the employee claims the dismissal is harsh, unreasonable or unjust…" A resignation is not a dismissal for the purposes of Part 6, except to the extent that it is forced by the employer, ie it is a constructive dismissal [ Health and Building Surveyors' Association of New South Wales v. Strathfield Municipal Council (1998) 25 IR 359 at pp.365 and 366]. The Issues in Dispute 7 Mr Brennan claimed that he has worked for Mr DeVos for over ten years and that Mr DeVos had, in fact, taught him his trade. Mr Brennan asserted that his work for Mr DeVos involved laying, sanding, polishing and staining floors and that he occasionally performed parquetry work and laying cork tiles as well. Mr DeVos and his wife suggested in their evidence that Mr Brennan's work was rather confined to routine cleaning and labouring duties. I do not believe that evidence to be credible, however. I expect that in the small business operation of Mr DeVos, Mr Brennan would have been called upon to be involved in a full range of duties and not just confined to routine cleaning and labouring work. That certainly is the evidence of Mr Brennan and his father who has observed him at work on occasions. 8 As I indicated earlier in this hearing, Mr Brennan claimed that he commenced employment with Mr DeVos in early 1994. He is supported in that assertion by his father. But that claim is disputed by Mr DeVos and his wife, whose evidence is that Mr Brennan's employment commenced in early 1996 - on a casual basis and, apparently not continuously. According to Mr DeVos' wife in the written statement she provided as evidence in the hearing, Mr Brennan: "...would come and go as required and as it suited him. For example, our records show him working 133 days (and not all full days) in 1996, 47 days in 1997 and 130 days in 1998. He worked a similar pattern until he finished with us...He did not ever work full-time, 5 days per week on an ongoing basis..." That claim is supported by Mr DeVos' time and wages records which Mr Murray made an exhibit in the proceedings. Mr Brennan disputes the accuracy of those time and wages records but, in the absence of any material from Mr Kelly which I would be prepared to accept as persuasive evidence to contradict them, I must accept them as a true reflection of Mr Brennan's employment record. (A brief note which Mr DeVos prepared for Mr Brennan to assist him in obtaining finance which suggested an earlier starting date by him is not something on which I would prepared to rely. That note may be either a mistake by Mr DeVos or, more likely, a simple attempt on his part to assist Mr Brennan in obtaining finance by giving the false impression that Mr Brennan's employment was longer and more permanent than it was in fact.) 9 Mr Brennan had formed the view that he was not being paid his correct wage. Nor, he claimed, was he receiving annual leave entitlements. He recorded in the written statement that formed the basis of his evidence that: "...in the last couple of years I would drop hints to (Mr DeVos) that I was not being paid properly. For example, I would raise the matter in a light-hearted way with everyone on site that I was due long service leave..." Mr Brennan claimed that he had argued for years for annual leave. He received two weeks unpaid leave at Christmas time each year. It is Mr Brennan's assertion that, when he asked Mr DeVos for paid holidays, Mr DeVos allegedly responded with a rhetoric question: "Do you want your job? If you don't work, you won't be paid." 10 In early 2004 Mr Brennan raised the question of long service leave with Mr DeVos, viz: "I've got ten years coming up, you've got to give me long service leave." Mr DeVos allegedly responded: "That's your department; it's got nothing to do with me. You are in the long service leave scheme now..." 11 According to Mr Brennan, those discussions often apparently became heated arguments and when Mr DeVos became hostile he would drop the matter. But Mr Brennan's father pressed him - "nagged" him, according to Mr Brennan's written statement - that he should be receiving his entitlements and that he should take the matter up with the appropriate authorities. Mr Brennan claimed that he was reluctant to do that at first, pointing out in his written statement that: "...Ulladulla is a small town and if (Mr DeVos) did get rid of me I'd never pick up another job, especially in the same trade..." But eventually, following his father's advice, he did take the matter up with the Department of Fair Trading who sent him material from which he estimated that he was owed $28,000.00. 12 Mr Brennan raised the matter with Mr DeVos, handing him a letter dated Friday, 20 August, 2004 in which he made a claim for his entitlements. Mr Brennan claimed that Mr DeVos looked shocked at the claim but did not respond at first. Mr Brennan then left for two weeks (unpaid) leave - a holiday in Queensland, apparently - and Mr DeVos told him that he would sort the matter out after Mr Brennan returned from his holidays. There was work to be performed at the time and, not unnaturally, Mr DeVos was concerned that, as he saw the situation, Mr Brennan was leaving him short of labour. 13 On Monday, 6 September, 2004, when Mr Brennan returned to work, he raised the issue again with Mr DeVos. The meeting appeared to start off casually. Mr DeVos got a beer for Mr Brennan and another employee. The other employee then left and the discussion between the two men continued whilst they drank the beer. There is a conflict in the evidence of Mr Brennan and Mr DeVos over what was actually said by the two men at that time. 14 Mr Brennan claimed in his written statement that he and Mr DeVos "...argued for a while..." and Mr DeVos then said: "I can give you $6,000.00 and you can keep on working for me a couple of days a week. That's the best I can do." Mr DeVos does not dispute saying words to that effect. He also claimed that he said: "This claim is way over the top." And he asserted that Mr Brennan goaded him, saying: "Why don't you sack me then. Go on and sack me! Sack me! Sack me!" 15 According to Mr DeVos, Mr Brennan became quite hostile and Mr DeVos said: "Well, I'm not to keen on working with you." Meaning, he claimed, that he was not content to work with an employee acting so aggressive. At which point Mr Brennan stormed out of the office. 16 Mr Brennan's version of the meeting conflicts with the version given by Mr DeVos, however. Mr Brennan continued to press for all of his entitlements and he claimed that Mr DeVos changed the subject, saying: "My missus doesn't even want you on the job because you haven't got a green card." That is occupational health and safety certification which is necessary to work on site. Mr DeVos denied that he had brought up that authorisation in his discussions with Mr Brennan. 17 Mr Brennan asserted that Mr DeVos then said words to the following effect: We can't work together like this." And Mr Brennan asked: "Well, what are you going to do?" Mr DeVos said: "It looks like I'm going to have to sack you." Mr Brennan asked for confirmation: "Well, are you?" Mr Devos responded: "Yeah, it looks like it." To which Mr Brennan pressed: "Just tell me." And Mr Brennan claimed that Mr DeVos dismissed him at that point: "Okay, you're sacked." Mr Brennan put down his beer and left the office. 18 In the morning of Tuesday, 7 September, 2004 Mr DeVos' wife telephoned Mr Brennan and told him that he had not been dismissed, that her husband only had "...50% of the business..." and that she would talk to him about the situation. Mr Brennan then visited the site. Mr DeVos asserted in his written statement that Mr Brennan worked for approximately an hour, although in his evidence in the hearing he conceded that "...this was a bit of a grey area..." and he could not be certain that Mr Brennan actually did work on the site on that day. Mr Brennan denied that he presented himself for work at that time or that he actually worked. 19 Mr Brennan informed Mr DeVos that he was going to see an accountant to discuss his situation and he would return later. He did not return, however. Mr Brennan - on advice from the accountant he claimed - continued to take the view that he had, in fact, already been dismissed. In his written statement, Mr Brennan recorded that: "...I didn't want to go back now anyway because I knew Mr DeVos and his wife would make my life miserable and, as he had said, I would not a get a full weeks' work anymore. He had told me earlier that because of the claim he could only keep me on for a couple of days per week. He would also be on my back about dropping my claim for back-pay which I now believe after speaking to the CFMEU may be up to $88,000.00. I then talked to the Department of Fair Trading and they also told me I'd been sacked and shouldn't go back to work..." Mr Brennan then contacted Mr DeVos' wife later to inform her that he would not be returning to work and she claimed that Mr Brennan spoke to her in the following terms: "I'm not going back. I don't have to. I don't give a shit about you or your business." 20 Mr DeVos and his wife continue to assert that Mr Brennan had actually resigned. They both signed a letter to Mr Brennan dated Tuesday, 7 September, 2004, viz: "...I wish to advise you that your current position with this business has not been terminated as you seem to think and you are required to return to work on Thursday, 9 September, 2004 at 7.30am. If you do not attend on Thursday, 9 September, 2004 we will accept that you have resigned your position with this business..." Conclusion 21 Much of the argument between Mr DeVos and Mr Brennan centres around alleged underpayments. That matter is not my concern. Pursuant to S.380(1): "An industrial organisation may, during any proceedings before the Commission, make an application for an order under this Part and for the application to be dealt with under S.379." That is a small claim for the recovery of entitlements due to an employee. As the Full Bench of the Commission (Glynn and Hungerford JJ and Connor C) confirmed in its unreported decision of Wednesday, 10 February, 1999 in Maldoc Pty Limited v. Bollard [Matter No. IRC 2710 of 1997], an individual dismissed employee in Part 6 proceedings is not competent to make such a small claim. Whilst Mr Kelly , an official of the CFMEU - an "...industrial organisation..." for the purposes of S.380(1) - who has represented Mr Brennan in the hearing would be authorised to mount a small claim on behalf of Mr Brennan, since Mr Brennan's claim is $28,000.00 (or more extravagantly $88,000.00) it clearly exceeds the maximum amount of any order for a small claim which I would be authorised to make. The maximum amount of a small claim presently stands at $10,000.00. 22 And to my mind, the only issue before me - whether Mr Brennan was unfairly dismissed - becomes something of a case of the tail wagging the dog. Mr Brennan's claim before me in this hearing is confined to the more modest level of what is available under Part 6 - monetary compensation under S.89(5), ie: "…an amount of compensation not exceeding six months' remuneration of the applicant at the average rate received over the period of six months immediately before being dismissed…" 23 For that remedy of monetary compensation under S.89(5) to be available to a Part 6 applicant, it is necessary to establish, firstly, whether Mr Brennan actually walked out on his job, ie resigned or, alternatively, whether he was dismissed by Mr DeVos or constructively dismissed. A constructive dismissal may arise from an ostensible resignation in the following three situations: (i) where the resignation is forced by duress [ Allison v. Bega Valley Council (1995) 63 IR 68 and Mohazab v. Dick Smith Electronics Pty Limited (1995) 62 IR 200; (ii) where the resignation constitutes a refusal of an employer to accept a unilateral decision of his employer to demote him or act to the detriment of his employment [ Russian v. Woolworths (South Australia) Pty Limited (1995) 64 IR 169]; or (iii) where the resignation is a "squeezing out, ie making an employer's position so intolerable that he is forced to resign [ Nettlefold v. Kym Smoker Pty Limited (1995) 64 IR 169]. Secondly, if I conclude that Mr DeVos actually or constructively dismissed Mr Brennan, it is necessary to establish whether that dismissal was unfair - "harsh", "unreasonable" or "unjust", to use the language of S.84(1) [ Busways v. Johnson (1994) 55 IR 255 at p.261]. 24 Mr Murray described the purported dismissal of Mr Brennan by Mr DeVos as an "...engineered situation...", meaning that, when Mr Brennan's substantial claim for underpayment of wages and other entitlements made against Mr DeVos fell on stony ground, it had been Mr Brennan's intention to bring his employment to an end. He was, to that extent, setting Mr DeVos up for an unfair dismissal claim. That certainly was the view of Mr DeVos' wife and, no doubt, her subsequent telephone call to Mr Mitchell informing him that he had not, in fact, been dismissed was made with that prospect in mind. I am satisfied that her offer of continued employment to Mr Brennan was simply to avoid the Part 6 application she saw coming from Mr Brennan. But that may have been too late. 25 Whilst the conversation between Mr Brennan and DeVos on Monday, 6 September, 2004 may have started amicably enough over a beer, I believe that it deteriorated into a heated exchange, despite the claims of both Mr Brennan and Mr DeVos to the contrary. Both men probably made comments in the heat of the moment which would have been better left unsaid. But it was open to Mr Brennan, as it is open to me in this hearing, to take the view that Mr DeVos did dismiss Mr Brennan at that time. Otherwise why would Mr DeVos's wife need to contact Mr Brennan and inform him that he had not actually been dismissed? 26 But once she had done so, Mr Brennan's dismissal lapsed and his ultimate decision not to resume work was his own decision, taken in spite of the letter dated Tuesday, 7 September, 2004 he received from Mr DeVos and his wife. Nevertheless, that "resignation" by Mr Brennan must be considered in the context of the conversation with Mr DeVos on Monday, 6 September, 2004. If Mr DeVos was offering Mr Brennan $6,000.00 in settlement of his claim (a substantial compromise if Mr Brennan's claim were to have any merit) and informing him that in future he would offer him work for "...a couple of days a week...", he was moving the goal posts in Mr Brennan's employment. 27 Mr DeVos does not deny making comments of that nature but he claimed that Mr Brennan only worked casually on that basis and that he was only offering Mr Brennan "...the same thing...". The evidence before me suggests otherwise. Mr DeVos' evidence was to the effect that, whilst there may have been a certain flexibility in the working arrangements he had with Mr Brennan, often he had full weeks of work at a time and Mr Brennan was employed on that basis. If Mr Brennan had already only been working for "...a couple of days a week..." for Mr DeVos, it would not have been necessary to reiterate that fact in the conversation between the two men. 28 In other words, Mr DeVos was unilaterally changing Mr Brennan's contract of employment to his detriment - one of the classic situations which fall under the concept of constructive dismissal - and that is one of Mr Kelly's claims in his submissions. I am satisfied that Mr DeVos constructively dismissed Mr Brennan. The termination of Mr Brennan's services flowed out of a claim which Mr Brennan made for what he perceived as wage justice and, whether his claim had merit or not, he was entitled to make it. It is unfair that his services were terminated in the circumstances described to me in the hearing and for his working hours to be changed to his detriment without further discussions between the parties. 29 S.89(6) gives me certain directions in considering any claims for monetary compensation for a Part 6 application, viz: "When assessing any compensation payable, the Commission is to take into account whether the applicant made a reasonable attempt to find alternative employment and the remuneration that would have been payable if the applicant had succeeded in obtaining alternative employment." I accept that Mr Brennan's dismissal must be considered against the background of the more limited employment opportunities which arise in the Milton and Ulladulla region where Mr Brennan presently resides. The amount of monetary remuneration I order remains a matter for my discretion, however - provided always that I do not exceed the six month ceiling in S.89(5) [ D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 at p.363]. 30 Mr Brennan recorded his average weekly earning in his Part 6 application as $700.00. In the circumstances, based on that figure, and having regard to the provisions of S.89(6), I propose to order that Mr DeVos pay to Mr Brennan the sum of $5,200.00. O R D E R 1. Mr Mitchell DeVos shall pay the sum of $5,200.00 to Mr Michael Brennan within 28 days. 2. This order shall take effect on and from Wednesday, 15 June, 2005. P J CONNOR Commissioner DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.