Industrial Relations Commission of New South Wales CITATION : Katherine Searl v CRSIC Pty Ltd T/as Charlestown Remedial Sports Injuries Clinic [2004] NSWIRComm 36 APPLICANT PARTIES : Katherine Searl RESPONDENT CRSIC Pty Ltd T/as Charlestown Remedial Sports Injuries Clinic FILE NUMBER: IRC 5422 of 2003 CORAM: Harrison DP CATCHWORDS : Application re unfair dismissal pursuant to s84 of the Act - Business restructure - failure to provide reasonable notice - failure to consult - termination harsh, unreasonable and unjust - compensation ordered. LEGISLATION CITED : Industrial Relations Act 1996 HEARING DATES: 02/09/2004 DATE OF JUDGMENT: 03/11/2004 APPLICANT COUNSEL Mr J Wormington LEGAL REPRESENTATIVES: RESPONDENT SOLICITOR Mr G Hanrahan Turnbull Hill Solicitors JUDGMENT: - 2 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Thursday, 11 March 2004 MATTER NO IRC 5422 OF 2003 KATHERINE SEARL AND CRSIC PTY LTD T/AS CHARLESTOWN REMEDIAL SPORTS INJURIES CLINIC Application re unfair dismissal pursuant to s 84 of the Industrial Relations Act 1996 DECISION [2004] NSWIRComm 36 1 The application in this matter was filed on 30 September 2003 and subject to proceedings for the purpose of conciliation and directions on 20 October 2003. These proceedings established that the matter could not be settled by agreement between the parties and directions issued to bring the matter to hearing on 8 December 2003, subsequently rescheduled at the request of the applicant to 9 February 2004. 2 On hearing Mr J Wormington of Counsel appeared on behalf of Ms Katherine Searl, the applicant and brought evidence from the applicant. 3 Mr G Hanrahan, solicitor of Turnbull Hill Solicitors, appeared on behalf of CRSIC Pty Ltd trading as Charlestown Remedial Sport Injuries Clinic, the respondent, and brought evidence from Mr P Muller, owner of the respondent. THE EVIDENCE 4 The applicant holds a diploma in remedial massage and certificates in therapeutic massage, deep tissue massage and sports medicine. 5 The evidence established that the applicant had been in an employment and personal relationship with Mr Muller for many years. There is significant dispute between them as to the starting date of the employment arrangement, the applicant contending that she commenced in his employment in 1988 or 1989, initially working as a receptionist/therapist. The applicant's evidence is that she initially worked between 10 and 20 hours per week, sixty percent of her time on reception duties and forty percent on massage therapy. The applicant moved from Singleton to Newcastle in 1991 and her working hours were increased and the proportion divided equally between massage therapist and reception duties. 6 In 1992 the applicant became a full time therapist involved in reception in a supervisory capacity only. 7 In his affidavit of evidence (Exhibit 4) Mr Muller deposed that the applicant commenced employment on 23 December 1994, working approximately 38 hours per week as a trainee therapist assistant/masseuse. 8 Exhibit 7 is a group certificate issued by the respondent to the applicant detailing earnings from that entity from 5 March 1993 to 30 June 1993. For present purposes it is sufficient to regard the evidence as establishing the employment relationship having existed in excess of 10 years. 9 There is dispute between the parties as to the level of responsibility taken in the business by the applicant when Mr Muller suffered a heart attack and when he was involved in a motor vehicle accident. The applicant contends that at Mr Muller's request she undertook management of the business for a period of some 18 months subsequent to the motor vehicle accident, and during the course of recovery from the heart attack in 1995. Mr Muller denies these assertions, deposing that management of the business is an exaggeration by the applicant who was required to do no more than hand out pre-written wages cheques. 10 The evidence suggests that the personal relationship commenced in 1987, both parties maintaining separate residences and remaining short of a commitment to each other. 11 The applicant's evidence is that the personal relationship, and in her deposition the employment relationship, soured when she refused to exaggerate the severity of symptoms suffered by Mr Muller as a consequence of the motor vehicle accident in treatment records. The applicant deposed that the relationship was finally broken off when Mr Muller sought to instruct her as to evidence to be given in court proceedings arising from the motor vehicle accident. 12 Mr Muller denies these assertions, deposing that the personal relationship has no bearing or relevance to the present proceedings. Mr Muller denies that he sought the applicant to do anything other than "tell the truth" during the course of court proceedings and ultimately she was not required for that matter. 13 I accept the argument advanced by Mr Muller that the personal relationship and any associated issues are irrelevant to the instant proceedings. 14 The employment relationship concluded on 26 September 2003 on which occasion the applicant deposed she was summarily dismissed. The applicant's version of events are set out in paragraph 18 of her affidavit of evidence (exhibit 1) in the following terms: 18. On the 26 of September 2003 as I was leaving about 6.20 PM I observed Mr Muller standing at the front desk. The following conversation took place: He said, " Can I see you in the office for a minute" I said " yes". He said, "Can you sign this." I said, "Not til I read it. What is it?" He said, "It is your termination pay." I said, " You are kidding. You are sacking me". He said, "No I am terminating you". I said, "That means the same thing". He said, "I am closing the clinic as such on Monday. I am opening serviced rooms." I said, "That's not very professional." He said, "I am offering you the same deal as another casual." I said, "You are kidding. I am worth more than a two-year employee. I ran the business." He said, "This is what I am offering you. If you don't want it that's it." I said, "I don't want to lose my entitlements." He said, " Give me the office keys back." I gave him the keys and walked out the door. 15 The applicant deposed that she remained unemployed until 28 October 2003 when she commenced her own business earning an average of $400 per week. 16 Mr Muller deposed that the change of employment relationship was as a result of professional advice to the effect that the business required restructure in order to remain solvent. Mr Muller further deposed that he closed the business as an operating entity, retained the facilities, and made space rental arrangements with service providers. 17 Mr Muller deposed that he offered the same arrangement to the applicant which, had she taken it up, would have increased her earnings from $800 per week to $1,000 per week. 18 Mr Muller's evidence is that he contracted with a Mr Grahame White and Ms Rhonda Mullard to commence such arrangements from 29 September 2003, a copy of the Deed of Licence and contract for the provision of services is tendered in respect to Mr White (exhibit 10) and Ms Mullard (exhibit 11). Subsequently arrangements were made with a Jacinta Brown and Aaron Parsons. The arrangement with Ms Brown commenced on 1 December 2003 (exhibit 5) and with Mr Parsons on the same date (exhibit 6). 19 During the course of cross examination Mr Muller deposed that he had discussed the arrangements with Mr White and Ms Mullard in the week prior to 23 September 2003. The applicant was not privy to such discussions and was provided with "the information" of the restructure and the alternative to her at the time of the termination of her employment in the manner described by her. APPLICABLE AWARD 20 There is a further dispute between the parties concerning the applicable award. 21 The applicant contends that she is award free. The respondent contends that the Health, Fitness and Indoor Sports Centres (State) Award 324 IG 497 ("the Award") applies. 22 Exhibit 3 is a folder of information purporting to be a NSW Department of Industrial Relations Award Subscription Service upon which Mr Hanrahan relies as evidence that this is the applicable award. Exhibit 3 contains the Award, as reviewed by his Honour Justice Marks in 2001, together with information advising of subsequent wage movements. 23 Clause 3 of the Award provides for the classifications of Level 3A Manager with less than 12 months experience; and Level 4 Manager with more than 12 months experience. 24 Clause 33, Area Incidence And Duration defines the application of the Award in the following terms: 33. Area, Incidence And Duration (a) (i) This award shall apply to all employees engaged in the classifications detailed in Clause 2, Rates of Pay and clause 3, Classifications by any organisation, whether run for profit or not, whose operation is substantially one or more of the following: Weight Loss Centres; Gymnasiums; Squash Courts; Indoor Cricket and/or Sports Centres; Ten Pin Bowling Allies; Aquatic Centres; Golf Driving Ranges; Dance Schools Including Jazzercise; Martial Arts School; Tennis Centres; and/or other like Health and Fitness Centres; or (ii) Or individuals who predominantly carry out one or more of the following activities: Aerobics Instructor, Gym Instructor, Dance Instructor, Health Counsellor, Pool Attendant, Sports Instructor and/or any other like Health Attendant work; where such work is performed in an organisation where no other award or registered enterprise agreement covers such persons; and (iii) shall be binding upon the Australian Workers' Union, New South Wales, its officers and members, the Australian Liquor, Hospitality and Miscellaneous Workers Union, NSW Branch, its officers and members and employees, whether they are members of the union or not. (b) This award shall not apply to employees of: (i) contract companies who may provide cleaning, security, catering and child care to any organisation that this award would normally apply. (ii) Registered Clubs, Hotels, Motels, Resorts which are already covered by awards. (iii) Outdoor sports stadiums (other than those persons in clause 33 (a) (ii) above,) (iv) Entertainment Venues. (c) This Award is made following a review under section 19 of the Industrial Relations Act 1996 and rescinds and replaces the Health, Fitness and Indoor Sports Centres (State) Award published 4 June 1999 (309 I.G. 561) and the Health, Physical Culture and Weight Loss Centres, &c. (State) Superannuation Award published 13 March 1992 (268 I.G. 666). (d) This award shall take effect on and from 2 March 2001 and shall remain in force for a period of 12 months. 25 Clause 32 of the Award provides for Redundancy, the application thereof defined by clause 32(i) in the following terms: 32. Redundancy (i) Application - (a) This clause shall apply in respect of full-time and part-time employees. (b) This clause shall only apply to employers who employ 15 or more employees immediately prior to the termination of employment of employees. (c) Notwithstanding anything contained elsewhere in this clause, this clause shall not apply to employees with less than one year's continuous service and the general obligation on employers shall be no more than to give such employees an indication of the impending redundancy at the first reasonable opportunity, and to take such steps as may be reasonable to facilitate the obtaining by the employees of suitable alternative employment. (d) Notwithstanding anything contained elsewhere in this clause, this clause shall not apply where employment is terminated as a consequence of conduct that justifies instant dismissal, including malingering, inefficiency or neglect, of duty, or in the case of casual employees, apprentices or employees engaged for a specific period of time or for a specified task or tasks or where employment is terminated due to the ordinary, and customary turnover of labour. 26 The Award then sets out detailed requirement for consultation, notice and severance pay. 27 On the evidence before me I am compelled to the conclusion that the Award applied to the instant employment relationship and that the respondent is exempt from the provision of cl 32 Redundancy pursuant to cl 32(i)(b) as it employed less than 15 employees at the relevant time. SUBMISSIONS 28 Mr Wormington submitted that the respondent's offer to the applicant to take up an agreement similar to that of Mr White and Ms Mullard was not genuine and part of a ruse designed to remove her from employment and sever all contact between the applicant, Mr Muller and the business. Mr Wormington submitted that this was motivated by the breakdown in the personal and employment relationship founded on the refusal of the applicant to exaggerate symptoms arising from the motor vehicle accident. 29 Mr Hanrahan submitted that the conclusion of the applicant's employment was the consequent of a legitimate business restructure founded on necessity and that the refusal by the applicant to take up the opportunity offered removed the respondent from all responsibility. CONSIDERATION 30 There is insufficient evidence to come to the conclusions advanced by Mr Wormington. 31 On the evidence before me I accept the submissions of Mr Hanrahan that the termination of the applicant's employment involved no sinister or ulterior motive and was, in itself, a consequence of a genuine business restructure. 32 In the circumstances of such business restructure, the lack of consultation and the pre-emptory means of termination of employment and offer of alternative arrangement without any notice at all, and in particular notice inferior to that offered to Mr White and Ms Mullard, at the time "strangers" to the business, constitutes harsh and unreasonable treatment. 33 On these grounds I find the termination of the applicant's employment to be harsh, unreasonable and unjust. I find neither reinstatement nor re-employment to be practical and assess compensation at 10 weeks wages at $800.00 per week and accordingly order the respondent to pay to the applicant an amount of $8,000.00 (eight thousand dollars). Orders issue herewith. INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Thursday, 11 March 2004 MATTER NO IRC 5422 OF 2003 KATHERINE SEARL AND CHARLESTOWN REMEDIAL SPORTS INJURIES CLINIC Application re unfair dismissal pursuant to s 84 of the Industrial Relations Act 1996 ORDERS Pursuant to s89(6) of the Industrial Relations Act 1996 Charlestown Remedial Sports Injuries Clinic is ordered to pay to Ms Katherine Searl the sum of eight weeks wages assessed at $800 per week, an amount of $8,000.00 (eight thousand dollars) within 21 days of the date of this decision. I so order. The Hon R W Harrison Deputy President 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.