Industrial Relations Commission of New South Wales CITATION : Erduran and the Menzies Group of Companies t/as Allcorp Pty Limited [2003] NSWIRComm 175 APPLICANT: PARTIES : Nurhayat Erduran RESPONDENT: The Menzies Group of Companies t/as Allcorp Pty Ltd FILE NUMBER: 4215 of 2002 CORAM: Sams DP CATCHWORDS : Termination of employment - unfair dismissal - allegations of poor performance - applicant dismissed without warning - no notice - allegations of poor performance not sustained - applicant denied procedural fairness - dismissal substantively and procedurally harsh, unreasonable and unjust - no impediment to reinstatement - reinstatement not impractical - orders made - costs reserved. LEGISLATION CITED : Industrial Relations Act 1996 Industrial Relations (General) Regulations 2001 Bankstown City Council v Paris (1999) 93 IR 209 Byrne & Anor v Australian Airlines (1995) 61 IR 32 Antonakopoulos v State Bank of New South Wales (1999) CASES CITED : 91 IR 385 D & R Commercial v Flood [2002] NSWIRComm 88 Wilson v Department of Education and Training [2000] NSWIRComm 20 Outboard World v Muir (1993) 51 IR 167 Western Suburbs District Ambulance Committee v Tipping (1957) AR (NSW) 273 HEARING DATES: 05/23/2003 DATE OF JUDGMENT: 07/04/2003 APPLICANT: Mr C Stomo of counsel SOLICITOR: LEGAL REPRESENTATIVES: Ms K Klonis (Klonis & Co Lawyers) RESPONDENT: Mr T Kennedy, Human Resources Manager Menzies Group of Companies JUDGMENT: - 16 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: SAMS DP 4 July 2003 Matter No IRC02/4215 NURHAYAT ERDURAN AND THE MENZIES GROUP OF COMPANIES T/AS ALLCORP PTY LIMITED Application by Nurhayat Erduran re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2003] NSWIRComm 175 1 On the 7 February 2003 the Commission published a decision in this matter on whether the applicant, Nurhayat Erduran was prevented from bringing a claim of unfair dismissal against the respondent, Allcorp Pty Ltd ([2003] IRComm 11). Shortly put, the Commission rejected the respondent's argument that the applicant was on probation and therefore prevented from bringing a claim of alleged unfair dismissal pursuant to Reg 6(1)(c) of the Industrial Relations (General) Regulations 2001. This decision now deals with the substantive merits of the applicant's claim. Applicant's evidence 2 The applicant provided affidavit evidence translated from the Turkish language and gave oral evidence with the assistance of an accredited Turkish interpreter, Mr Mustafa Ozcan. 3 The applicant had worked, first as a cleaner then as a tea lady at the St George Bank, Kogarah for eleven years. She was not employed directly by the Bank, but by a cleaning contractor. The respondent took over the cleaning contract on 1 June 2002. The contract continued to include the requirement to provide tea and coffee services for employees of the Bank (said to number over one thousand). 4 In my earlier decision, I canvassed the circumstances surrounding the offering of employment contracts to employees when the respondent took over the contract. It is unnecessary to repeat that evidence here. 5 The applicant was employed for one month by the respondent before she was dismissed without notice on 28 June 2002. At the time of her dismissal the applicant worked 20 hours a week at $15.30 per hour - $310 a week. 6 The applicant said her pay was always paid directly into her bank account. She had never complained to anyone about her pay details. 7 The applicant's evidence was that she had never received any complaints about the carrying out of her duties. However, on 17 June 2002 the applicant's hours were reduced to 3.5 hours per day and she said her workload increased. Mr Topic (her direct supervisor) had told her she was required to meet the work deadline. She had complained to various supervisors that there were not enough hours in the day to complete her duties. She had also complained to another bank employee, a Mr Nahi, who she had become friendly with. Apparently he passed on her complaint to Mr Topic - although she had not asked him to do so. The applicant said she was never told that she could not complain to Bank staff. 8 The applicant said that the purchase of stock for the kitchen was at Mr Topic's discretion. She would fax an order to him at Head Office. At no time, she said, had anyone complained to her about a lack of biscuits or tea. On one occasion, when an order did not arrive, she had phoned Mr Topic. However, the order did not turn up. 9 The applicant said she was dismissed by Mr Topic on 28 June 2002 after being called to the basement to meet him. He asked for her keys and told her she was no longer employed and to leave the building. She said that as she was scared of Mr Topic, she had left the building. 10 The applicant has been registered with Centrelink, but has been unable to find employment since her dismissal. She would accept a position back with the respondent. Respondent's evidence 11 Mr Valentino Topic was the applicant's direct supervisor and is now the respondent's area manager. He provided an affidavit with attached diary entries and gave oral evidence. 12 Mr Topic deposed that he first received a complaint from the Bank's management on 13 June 2002 that coffee and teaspoons had not been ordered. When he raised the complaint with the applicant, she said she didn't have time to stock the kitchen. He had told her not to let it happen again and noted the incident in his diary. Mr Topic accepted that Bank staff could access the kitchen over twenty four hours and make their own tea and coffee. 13 Mr Topic deposed that the applicant filled in the order forms and faxed them to the office. Mr Topic conceded that the applicant wouldn't wait until the last minute before ordering, as the stock sometimes took one or two days to arrive. The Head Office receptionist had authority to order the stock from Corporate Express. He said on one occasion the faxed order didn't arrive. 14 Mr Topic said on 19 June he took a call from the St George Bank receptionist in which she told him the applicant was complaining to her about a cut in her hours of work. Mr Topic told the applicant it was Company policy not to discuss such matters with people at St George. He had no objection to her talking to Bank employees about other matters. He warned her about Company policy and made a note in his diary. Mr Topic deposed that the details of Company policy were given to the applicant in a folder when she was first employed. Although Mr Topic conceded the document was important, the policy was not tendered in evidence. 15 On 21 June 2002, Mr Topic said he received a call from Mr Ron Oliver, the Bank's Building Services Manager, regarding a shortage of kitchen stock. Mr Oliver was annoyed. The same day the St George receptionist rang again to say the applicant was complaining about her pay. Mr Topic said he warned the applicant again and noted the incident in his diary. 16 On 24 June, Mr Oliver complained again about stock shortages and Mr Topic spoke to the applicant. The next day, the receptionist phoned him again about the applicant's pay. 17 Mr Topic said he then discussed the applicant's poor performance with Walter Rafin, General Manager, Carmel Lynch, Business Development Manager and Dale Washington, Operations Manager. It was decided to dismiss the applicant during the probation period. 18 On 28 June 2002, Mr Topic asked a cleaner, Peter Josevski, to find the applicant and tell her he wanted to see her in the basement. He asked Mr Josevski to stay for the meeting. Mr Topic said he told the applicant of the many complaints he had received and, as a result her employment was to be terminated during the one month probation. Mr Topic said the applicant merely smiled and said nothing. Mr Topic asked for the keys and handed her a termination form. She went to Level 2 to collect some belongings. Before leaving the building she had spoken to the St George receptionist and Mr Oliver. SUBMISSIONS For the applicant 19 Mr Stomo of counsel, submitted that the applicant's dismissal was over two insignificant incidents. The first concerned the applicant's complaint to a Bank employee. It was unclear how this incident impinged on her capacity to perform her job. There was no policy preventing the applicant from speaking to anyone at the Bank. Even if there was such a policy, Mr Stomo said it was ludicrous to insist she could not speak to anyone at the Bank. 20 The second issue concerned complaints relating to stock shortages in the kitchen. The respondent agreed that it was not the applicant's responsibility to order the stock and she had in fact sent through the faxed orders. The applicant had therefore fulfilled her duties. The respondent had no system in place to check whether its contractual arrangements with the Bank were being complied with. This failure had nothing to do with the applicant. 21 Mr Stomo said the applicant had never complained about her pay not being in her account. In fact it was paid in a week before the 21 June. Her complaint was about a cut in her hours of work. 22 Mr Stomo pointed out that Mr Topic was quite prepared to re-employ the applicant. Accordingly, re-instatement was sought and the applicant would accept cleaning work. 23 Mr Stomo sought costs against the respondent. For the respondent 24 Mr Kennedy submitted that the applicant was dismissed for poor performance. The kitchen was not sufficiently stocked and there were complaints from the respondent's client. Mr Topic had made notes of the complaints in his diary. 25 Mr Kennedy said the applicant had complained to Bank employees about her hours being reduced. Mr Topic's evidence was that such complaints should have been directed to him. Mr Kennedy conceded there was no written policy on this matter, but an "expectation" that employees not talk to Bank employees about their conditions of employment. 26 Mr Kennedy acknowledged that he had not been personally involved in the decision to dismiss the applicant and that Head Office Human Resources should have been consulted. CONSIDERATION 27 Neither party referred the Commission to any authorities on the principles to be applied in this case. However, it is as well that I restate the relevant principles applying to unfair dismissal cases so the parties understand the basis on which the Commission's decision has been reached. The meaning of harsh, unreasonable and unjust 28 It is, of course, incumbent on the applicant to discharge the onus of satisfying the Commission that her dismissal was harsh, unreasonable or unjust within the meaning of Pt 6 ch 2 of the Act (see Western Suburbs District Ambulance Committee v Tipping (1957) AR (NSW) 273). 29 It is now well settled industrial law that each of the words, harsh, unreasonable and unjust, have their own discrete meaning and not all three descriptions of a dismissal are necessary for a finding of unfairness. In other words, a particular dismissal might be found to be "harsh" but not "unreasonable" or "unjust". This principle arises from the oft quoted authority in Byrne & Anor v Australian Airlines (1995) 61 IR 32 where the expression "harsh, unreasonable or unjust" was considered in an Award clause. In their joint judgment McHugh and Gummow JJ said at p72: It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted. 30 The principle was further discussed in Outboard World v Muir (1993) 51 IR 167 where a Full Commission said: First we deal with the argument for the appellant that the Commission erred by applying the wrong test in connection with the dismissal: 'unfair' rather than 'harsh, unreasonable or unjust' dismissal. We agree with Mr Reitano's submission in this respect that the reference by the Commissioner to "unfairness" did not represent any misunderstanding of the correct test but was merely the use of a shortened form of expression intended to embrace the three relevant words. Whilst we recognise that there may be a natural tendency (recognised in the use even by the advocate for the Company before the Commissioner of the term 'unfair') to use the shortened form, we consider that it is preferable that a member of the Commission utilise the precise words provided by s246, rather than the catch-all heading, particularly when expressing the basis for a finding that a dismissal is within one or more of the heads provided by the section. We take this view because, even though there may be some circularity in the full phrase 'harsh, unreasonable or unjust', we detect scope for variation of meaning which may be critical to the determination of a particular matter and may be obscured by the use of the substitute term "unfair". Different but not wholly dissimilar words, "unfair", "harsh", and "unconscionable", are used in s275, power of the Industrial Court to Declare Certain Contracts Void, of the 1991 Act. In relation to those words, then appearing in s88F of the 1940 Act, the Commission in Court Session ( Perrignon , Cahill and Dey JJ) in A & M Thompson Pty Ltd v Total Australia Ltd [1980] AR (NSW) 399 at 418 Cahill J (delivering a separate judgment) said: The duty of the Commission is to reach a conclusion on the issues of whether the subject transaction is 'unfair', or 'harsh' or 'unconscionable'. It has been said that those words are a 'tautological trinity' ( Davis v General Transport Development Pty Ltd ) [1967] AR 371) but we prefer to take the view that there is a perceptible difference between the meaning of the term 'unfair' and that of the terms 'harsh' and 'unconscionable'. What is unfair may not be so unfair as to be 'harsh'. But, whether this view be correct or not, once the transaction is found to be unfair the Commission may proceed to exercise its very wide power. In much the same way, we consider that, while strict definitions of 'harsh', 'unreasonable' and 'unjust' may produce a degree of circularity of meaning, turning on the notion of 'fairness', it may be in a given case that a dismissal may be viewed as coming within the ambit of one of the three adjectives but not the others. To avoid the possibility of misunderstanding or error, the tribunal, when making that primary finding, should state explicitly the basis on which it is made. 31 A more recent authority reaffirming the distinction between the three words and requiring a positive and specific finding is found in Bankstown City Council v Paris (1999) 93 IR 209: The Commissioner found that the dismissal by the Council of Mr Paris was 'harsh, unreasonable or unjust'. This phrase, contained within s84, is an important key to jurisdiction and does require some specificity of finding. As has been observed by the Commission on numerous occasions, a dismissal may be capable of being unreasonable but not harsh, or harsh but not unjust, other permutations may apply. In the present case, however, it seems to us that the dismissal of Mr Paris was capable of meeting not one or the other of those descriptions but each of them. Therefore, nothing turns upon the expression adopted by the Commissioner. We would observe that in a case where the conduct of the employer might satisfy one but not all of those heads, a positive and specific finding should be made. 32 It is trite to observe that no two cases will be exactly alike. Hence, the Commission is required to examine the facts and circumstances of each case and decide whether one or more of the words harsh, unreasonable or unjust can be applied to a particular dismissal. Procedural fairness 33 There is abundant authority for the proposition that unfairness may be visited upon a dismissed employee, both as to the substance or merits of the dismissal and the process leading to dismissal. Put another way, it may be that dismissal was reasonably open to the employer, but the employer went about it in an unfair way. 34 For the relevant authorities on this subject, I refer again to Byrne & Anor v Australian Airlines at p72: The distinction between procedure and substance is elusive. This is so even in those fields of private international law, the statute law dealing with limitations of actions and the effect of repeal upon accrued rights, and the Statute of Frauds, where it has an entrenched operation (217). In our view, it is unhelpful and contrary to the tenor of the Award to introduce it into cl.11(a). That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable (218). But the question under cl.11(a) is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking at the first issue before there is seen to be any need to enter upon the second . Brennan CJ, Dawson and Toohey JJ concluded at p43: Save for the prescription of periods of notice, cl 11 does not require the adoption of any particular procedure for the dismissal of an employee. However, it is clear that the use of an unfair procedure may result in a dismissal being harsh, unjust or unreasonable. For example, the failure to afford an employee the opportunity to explain apparent misconduct where there is an innocent explanation available would result in the dismissal of the employee being in breach of cl 11(a). 35 Two passages from Antonakopoulos v State Bank of New South Wales (1999) 91 IR 385 are also apposite. The Full Bench said at p389: We agree with the conclusion of Hill J that procedural issues, that is failure to deal with the matter in a procedurally fair way, may, in certain cases, of themselves, constitute the basis for a determination that a dismissal is harsh, unjust or unreasonable. A failure to adopt a procedure which constitutes a breach of 'an essential prerequisite to, or inviolable limitation on, the exercise of the employer's right to dismiss' or a failure to afford procedural fairness which causes a 'substantial and irrevocable prejudice to the employee' will often vitiate the decision of an employer and warrant, in itself, a determination that the dismissal was harsh, unreasonable or unjust (and hence, establish the basis for a remedy under the Act). Further, a decision to dismiss made upon the basis of procedures which are unfair and where an innocent explanation or other appropriate explanation is reasonably available will normally constitute a firm basis for a determination that a dismissal, so effected, is harsh, unreasonable or unjust. and later, at page 390: While the findings of the Commission in Buckman focus on the issue of warnings, the observations apply also to broader tenets of procedural fairness contemplated in s88 and to matters such as those raised in these proceedings. We agree that there is no obligation in the Act to follow any particular procedure when effecting a dismissal. However, a failure by an employer to adopt appropriate procedures when effecting a dismissal, or a failure to follow procedures prescribed in an industrial instrument, or in procedures laid down administratively by an employer, may be properly taken into account by the Commission as part of the consideration of an application brought under s84. Further, as we have noted, where procedures are specified in an industrial instrument or by administrative action, a failure by an employer to apply, or to properly apply, those procedures may in appropriate cases, of itself, support a finding that the dismissal was harsh, unreasonable or unjust . See also D & R Commercial v Flood [2002] NSWIRComm 88 and Wilson v Department of Education and Training [2000] NSWIRComm 20. 36 As mentioned in the above passage, the Commission's statutory basis for considering procedural issues is found in s88 of the Act: In determining the applicant's claim, the Commission may, if appropriate take into account: a) whether a reason for the dismissal was given to the applicant and, if the applicant sought but was refused reinstatement or re-employment with the employer, whether a reason was given for the refusal to reinstate or re-employ, and b) if any such reason was given - its nature, whether it had a basis in fact, and whether the applicant was given an opportunity to make out a defence or give an explanation for his or her behavior or to justify his or her reinstatement or re-employment, and c) whether a warning of unsatisfactory performance was given before the dismissal, and d) the nature of the duties of the applicant immediately before the dismissal and, if the applicant sought but was refused reinstatement or re-employment, the likely nature of those duties if the applicant were to be reinstated or re-employed, and e) whether or not the applicant requested reinstatement or re-employment with the employer, and f) such other matters as the Commission considers relevant. 37 I turn then to the facts and circumstances of this case. Reasons for dismissal 38 This was not a case of any particular complexity. Nor was it a case requiring findings on contested evidence. Indeed, I hazard a guess that neither party will be surprised by the outcome. This is so because, on any view of it, this dismissal could only be regarded as at the high end of the unfairness scale. In my judgement, the applicant's dismissal was both substantially and procedurally unfair such as to attract a finding of harsh, unreasonable and unjust within the meaning of Pt 6 ch 2 of the Act. I intend to make such a finding for the following reasons. 39 The respondent argued that the applicant was dismissed for poor performance. It raised two matters which were said to justify its decision. The first was that the applicant did not keep the kitchen stocks of tea, coffee etc. up to date and there were complaints about the kitchen stocks running out. The evidence on this matter invites a number of conclusions which, I should say, do not reflect favourably on the respondent. 40 Firstly, it was not the applicant's responsibility to order the kitchen stock. Her task was to advise Mr Topic at Head Office of stock requirements by faxing an order through to him. The receptionist at Head Office would order the stock on the authority of Mr Topic. The applicant could neither order, nor purchase the stock herself. Mr Topic's evidence was that the applicant would not wait to the last minute before ordering (T.p9). 41 Secondly, apart from Mr Topic's diary entries, there was no direct evidence of any complaints to Mr Topic. Even if one fax order had gone astray, it was his responsibility to follow it up - not the applicant's. It follows that I regard this allegation of poor performance as having no basis in fact. 42 Similarly, the second allegation of poor performance was without any substance. It was said that the applicant complained to employees of the Bank about her pay and a cut in her hours of work. It was put that it was Company policy that any complaints should be directed to Mr Topic. The implication was that the applicant had breached Company policy by complaining to persons other than her direct employer. During the proceedings, Mr Kennedy was asked to produce the policy. He could not do so and conceded that there was no written policy at all; merely an "expectation" that employees wouldn't discuss employment matters with anyone other than their employer. 43 This candid admission leads to one obvious conclusion. How could the applicant have breached Company policy when it did not exist? In any event, I have serious doubts that a policy of this kind would survive objective scrutiny. In my opinion, such a demand would be struck down as oppressive and/or an infringement on an employee's basic rights. Moreover, what was so unusual about the applicant confiding in someone whom she regarded as a friend and with whom she had worked for many years? She was doing no more than lobbying on her own behalf in view of the fact her hours had been reduced. It follows that I find this allegation as having no credibility. It cannot possibly be sustained. 44 Accordingly, I am satisfied there was no basis for the two allegations of poor performance levelled against the applicant. That being so, her dismissal based on false allegations must be held to be unfair. Procedural matters 45 It is incontrovertible that the applicant was dismissed without warning or notice (see s88 of the Act). In other words, she was treated as if she was summarily dismissed for misconduct. This was manifestly unfair. Even if the allegations of poor work performance were true (which they were not) such complaints would not even warrant dismissal with notice, let alone summary dismissal. 46 While I accept Mr Topic may have spoken to the applicant about the above issues, it could not in any way have been construed as warnings that her employment was in danger of being terminated. 47 I have particularly noted Mr Kennedy's acknowledgement that there should have been consultation with the respondent's Human Resources Department concerning the applicant's dismissal. This was an understatement. The applicant's dismissal was appallingly handled and, as a result, was hopelessly flawed and unfair. 48 In view of these conclusions, I am comfortably satisfied that the applicant's dismissal was substantively and procedurally harsh, unreasonable and unjust within the meaning of Pt 6 ch 2 of the Act. I find accordingly. Appropriate relief 49 I turn now to consider what relief should be ordered by the Commission in view of the above finding. 50 The Commission must restate that the statutory emphasis and policy intent of Pt 6 ch 2 of the Act is directed towards the reinstatement of an unfairly dismissed employee. It is only if the Commission makes a finding of the impracticality of reinstatement that consideration may be given to awarding compensation pursuant to s 89(5) of the Act. 51 The applicant seeks re-employment and would accept cleaning work. She had previously performed cleaning work. The respondent is a relatively large employer. I am confident that it would not be too difficult for it to offer the applicant work at her previous worksite or some other mutually convenient location. 52 There was no evidence put as to the impracticality of reinstatement. On the contrary, Mr Topic's evidence was that he would be prepared to re-employ the applicant as a cleaner (T.p11). This being so I need not state the principles which apply to the practicality of reinstatement. 53 Having regard for these circumstances, I have no hesitation in ordering the respondent to re-employ the applicant on terms no less favourable than she would have otherwise enjoyed had she not been dismissed on 28 June 2002. 54 Having regard to the applicant's age, skills and English language difficulties, I am satisfied that since her dismissal the applicant would have found securing alternative employment very difficult. Therefore, pursuant to s89(3) and (4) of the Act, I intend to order that the applicant be paid an amount of remuneration that she would have otherwise received had she not been dismissed. Orders 55 Pursuant to s89 of the Industrial Relations Act 1996 the Commission orders that: 1. The respondent, Allcorp Pty Ltd, shall re-employ the applicant, Nurhayat Erduran, to the position of cleaner on terms no less favourable than those that would have been applicable if the applicant had not been dismissed on 28 June 2002. 2. The respondent, Allcorp Pty Ltd, shall pay to the applicant an amount of remuneration the applicant would, but for being dismissed, have received. 3. The applicant's period of employment is taken not to have been broken by the dismissal. 4. This order shall take effect no later than 14 days from today. 5. Any application for costs must be made by notice of motion within 21 days of today. Peter Sams 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.