Industrial Relations Commission of New South Wales CITATION: Smith v. Karl Azzi Australia Pty Limited [2004] NSWIRComm 1106 APPLICANT Michael Bruce Smith PARTIES: RESPONDENT Karl Azzi Australia Pty Limited FILE NUMBER: IRC 3869 of 2004 CORAM: Connor C CATCHWORDS: unfair dismissal - changes to employment contract - part time work - application for adjournment refused LEGISLATION CITED: Industrial Relations Act 1996 Schuck v. Ipec Transport Group (1994) 36 AILR Rep.41 Zubrinich v. Pasminco Metals BHAS Pty Limited (1994) 61 SAIR 154 Russian v. Woolworths (South Australia) Pty Limited (1995) 62 SAIR 806 CASES CITED: Re Loty and Holloway and the Australian Workers' Union (1971) AR 95 Outboard World Pty Limited v. Muir (1993) 51 IR 167 Busways v. Johnson (1994) 55 IR 255 Macleay Valley Health Service v. Jeffree (1994) 58 IR 187 D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 HEARING DATES: 11/23/2004 DECISION DATE: 12/09/2004 APPLICANT Ramy Bdeir REPRESENTATIVES: RESPONDENT Neil Sullivan DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: CONNOR C Thursday, 9 December, 2004 Matter No IRC 3869 of 2004 Michael Bruce Smith and Karl Azzi Australia Pty Limited Application under S.84 of the Industrial Relations Act, 1996 DECISION [2004] NSWIRComm 1106 Introduction 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 M B Smith has lodged an application concerning the termination of his services as a hairdresser with Karl Azzi Australia Pty Limited. Mr Smith commenced employment on Monday, 21 July, 2003. At that time his employer was Eddie Azzi Australia Pty Limited but some three months after he commenced employment the name of the business was changed to Karl Azzi. Mr Smith's services were terminated on Thursday, 10 June, 2004. In his Part 6 application Mr Smith has claimed that the termination of his services was unfair and he has sought monetary compensation over it. 2 The matter was allocated to me by Registry staff and set down by them for conciliation and directions on Friday, 23 July, 2004. It has proven difficult to proceed in this matter. According to Mr Steve Bazaj, the floor manager of Karl Azzi, Mr Eddie Azzi, the director of the hairdressing salon, is the only person with authority to negotiate a settlement of the matter and he is at present incarcerated in Long Bay Gaol. I directed the parties into further discussions, however - with not much chance of success, I would think - but listed the matter for a mention on Thursday, 12 August, 2004. There was no appearance by Karl Azzi at that time. I adjourned the proceedings for a further mention on Friday, 10 September, 2004 and wrote to it to inform it of the adjournment. It responded by facsimile transmission (at the foot of the notice I gave it) that Mr Bazaj: "...will be on holidays and requests that the matter be rescheduled any time after Wednesday, 22 September, 2004..." That further adjournment was opposed by the advocate of Employment Help Services (Ms Alameddine ), who represented Mr Smith in the proceedings. Initially, there was no appearance for and on behalf of Karl Azzi on Friday, 10 September, 2004 and I programmed the matter for hearing on Tuesday, 23 November, 2004 but subsequently Mr DiGregorio attended the hearing room and, whilst he had not filed a notice of appearance, announced his appearance for Karl Azzi. He had nothing to advance to settle Mr Smith's claim and I informed him of the hearing date. 3 Directions were made for the filing of evidentiary material - Mr Smith was to provide such evidentiary material no later than Friday, 8 October, 2004 and the response from Karl Azzi was to be no later than Wednesday, 10 November, 2004. Mr Smith had, in fact, filed a witness statement on Monday, 13 September, 2004. No comparable material was file on behalf of Karl Azzi. In its formal response to the Part 6 application, it has recorded that Mr Smith: "…was given lots of verbal notice. He never reached his targets. He occasionally produced doctor's certificate when he was sick. He didn't agree to work part-time when he was asked..." But there has been nothing before me from Karl Azzi to support such allegations and Mr Smith claims that he had received no warnings over his work performance. Nor over his failure to reach his targets. Mr Smith had refused to work part-time, however, and I am satisfied on the basis of the evidence adduced in this hearing (and to which I will refer later in this decision) that Mr Smith's refusal to work part-time was the reason for his dismissal. 4 Mr Bdeir represented Mr Smith in the hearing, calling him to give evidence. Mr Sullivan represented Karl Azzi in the hearing. Mr Sullivan had only recently been briefed to appear in the proceedings. He claimed not to have received the evidentiary material filed on behalf of Mr Smith, although Mr Bdeir insisted that it had been provided to Karl Azzi. Mr Sullivan sought an adjournment of the proceedings which I refused. In view of the history of this matter, I did not believe that a further adjournment was appropriate. Karl Azzi was certainly aware that the matter would proceed to hearing on Tuesday, 23 November, 2004. In my opinion, it would constitute an injustice to Mr Smith if it did not proceed on that date. The Evidence 5 The evidence in this matter from Mr Smith is relatively uncomplicated. According to Mr Smith, on Thursday, 10 June, 2004 Mr Bazaj spoke to him following a conversation he allegedly had over the telephone from Mr Azzi in gaol, viz: "Eddie wants you to work part time, starting right now." Mr Smith asked Mr Bazaj the reason for the change in his working conditions and was informed: "Things are quiet." Mr Smith responded: "You can't do that. You're interviewing new staff. I'm employed full time here. I am not accepting that." An argument ensued between Mr Smith and Mr Bazaj. Mr Smith conceded that he had told Mr Bazaj: "Look at me in the face when you are talking to me." And: "This is a fucking joke, especially since you have employed newer people while I have been here longer and because you are (now) employing new staff." 6 Mr Azzi again contacted Mr Bazaj from goal approximately fifteen minutes later and Mr Bazaj spoke to Mr Smith in the following terms: "Pack your things. You are sacked for not accepting the changes in working conditions." Mr Smith asked to speak to Mr Azzi and was told by Mr Bazaj that Mr Azzi did not wish to speak to him. Mr Smith packed up his personal property and left the premises. 7 Mr Sullivan claimed that Mr Smith was not meeting targets. Mr Smith concedes that to be the case but claimed that no employee in the hairdressing salon was, in fact, meeting those targets - which suggests to me that unreasonable expectations were being placed on the staff in that respect. Of course, it is far from unusual in any employment situation for targets to be set and for an employee's work performance to be measured against them. But those targets must be realistic and I would think that a hairdresser's targets would be dependent upon the clients actually available. Moreover, there is nothing before me to confirm the reasonableness of the targets set. Mr Smith denied that he had received any warnings over his alleged lack of performance and there is nothing in evidence before me to suggest otherwise. 8 Mr Sullivan also highlighted the number of occasions when Mr Smith was absent from work over the eleven months of his employment - 15 full days and 5½ half days paid leave due to illness, 2 weeks absence to attend a friend's funeral in New Zealand (unpaid), 2 weeks annual leave and 3 other days absence (also unpaid). Many, but not all, of Mr Smith's absences due to ill health were supported by medical certificates. Mr Smith claimed that at the time he commenced employment in the hairdressing salon he informed Mr Bazaj of an injury he had sustained when he had been assaulted and which would necessitate him taking time off work on occasions. The absences which Mr Smith took were all apparently with permission or accepted without comment by Mr Bazaj. 9 Finally, Mr Sullivan submitted that Mr Smith had abandoned his employment. That would take Mr Smith's Part 6 application outside of jurisdiction. S.84(1) applies only to cases where: "…an employer dismisses an employee and the employee claims the dismissal is harsh, unreasonable or unjust…" An abandonment of employment is tantamount to a resignation. Mr Smith is emphatic in his evidence that Mr Bazaj had dismissed him - "...pack your things: you are sacked for not accepting the changes in working conditions..." - and I accept his evidence in that respect. Moreover, in my opinion, even if Mr Smith had abandoned his employment with Karl Azzi, the fact that his full time employment was being altered unilaterally to his detriment as part-time work constitutes to my mind such a fundamental change in his contract of employment as to represent a dismissal [ Schuck v. Ipec Transport Group (1994) 36 AILR Rep. 41, Zubrinich v. Pasminco Metals BHAS Pty Limited (1994) 61 SAIR 154 and Russian v. Woolworths (South Australia) Pty Limited (1995) 62 SAIR 806]. Mr Sullivan appeared to be suggesting in his cross-examination of Mr Smith that there may not necessarily have been a reduction in wages flowing from a reduction in working hours from full-time to part-time work. If Mr Sullivan was suggesting that to have been the position, I reject it. I do not believe that a reduction in working hours would have been contemplated by Karl Azzi without a commensurate reduction in wages. Conclusion 10 My task in this hearing falls under two headings, viz: (i) to determine whether or not, in terms of S.84(1), the dismissal was "harsh", "unreasonable" or "unjust"; and (ii) if so, to determine whether reinstatement, re-employment or monetary compensation is the appropriate remedy, with preference being given to reinstatement and re-employment. The traditional approach, flowing from the decision of Sheldon J of the former State Industrial Commission in Re Loty and Holloway and the Australian Workers' Union (1971) AR 95 at p.99, was to identify whether there had been "...a fair go all round...". More accurately, it is the words of S.84(1) - "harsh", "unreasonable" or "unjust" on which such claims under Part 6 are properly based [ Outboard World Pty Limited v. Muir (1993) 51 IR 167 at pp.182 and 183, Busways v. Johnson (1994) 55 IR 255 at p.261 and Macleay Valley Health Service v. Jeffree (1994) 58 IR 187 at p.192]. 11 I am satisfied that the termination of Mr Smith's services was unfair in that context. It constitutes a summary dismissal since Mr Smith did not receive one week's pay in lieu of notice which I would have expected would have been his entitlement. A downturn in work in the hairdressing salon may have occurred and that may have meant that the employees engaged in it may face adverse changes to their hours of work. But the manner in which that was done in this case - without consultation with Mr Smith or notice being given to him - was certainly unfair. Mr Smith was not even given a chance to discuss the matter with Mr Azzi who, while he was incarcerated in gaol, was still the author of the decision to substantially change Mr Smith's contract of employment. And, on the basis of Mr Smith's evidence, that unilateral change to his working hours was to have occurred immediately and at a time when Karl Azzi was recruiting new staff. 12 Mr Sullivan suggested in his cross-examination of Mr Smith that an offer of reinstatement had been conveyed to Mr Smith's representatives during the conciliation phase of this matter. I have no recollection of such an offer being made during the proceedings and I doubt that was, in fact, the case. Mr Smith does not believe that such an offer was actually made and I share his view. In any event, in the circumstances of this case I am convinced that reinstatement would not be practicable. Mr Smith's claim in his Part 6 application is for monetary compensation under S.89(5) and I am convinced that is the appropriate remedy for him. 13 Mr Smith has found alternative employment 12 weeks after his dismissal and it appears to me that his remuneration is now roughly comparable with what he received when working for Karl Azzi. He received a weekly wage of $650.00 when he worked for Karl Azzi. He now receives $600.00 plus commissions. Mr Smith's claim for monetary compensation must be considered bearing in mind the provisions of S.89(6), 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." In D and R Commercial Pty Limited v. Flood (2002) 113 IR 344 the Full Bench of the Commission (Wright J - President, Walton J - Vice President and Tabbaa C) commented (at p.363) that: "…the power in the Commission to make a money order, subject to the limitation on the quantum of compensation and the matters required to be taken into account by S.89(6), is nevertheless within the Commission's discretion. Whilst the Commission is required to take into consideration the matters identified in S.89(6), those matters are not necessarily to be reflected in any particular, arithmetic or definitive way in the money order for compensation made…" Therefore, S.89(6) does not provide for a simple mathematical formula in the assessment of monetary compensation - a sum representing the amount of income over the period of six months immediately prior to the dismissal, compared and contrasted with the remuneration received in the alternative employment and considered against the length of time that an employee was out of work. But the task is one of identifying Mr Smith's loss of earnings - not any question of assessing damages. 14 In the circumstances, I propose to order that Karl Azzi pay to Mr Smith the sum of $7,500.00. I reserve Mr Bdeir the right to seek an order for costs as he had foreshadowed during the hearing. O R D E R 1. Karl Azzi Australia Pty Limited shall pay the sum of $7,500.00 to Mr Michael Bruce Smith within 21 days. 2. This order shall take effect on and from Thursday, 9 December, 2004. 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.