Industrial Relations Commission of New South Wales CITATION: Papaioannou -v- Singh [2004] NSWIRComm 1117 APPLICANT PARTIES: Maria Papaioannou RESPONDENT Tejinder Singh FILE NUMBER: IRC 2464 of 2004 CORAM: Cambridge C CATCHWORDS: Unfair Dismissal - Termination of Employment - redundancy alleged as reason for dismissal - reason for dismissal found to be false - basis for dismissal held to be improper - procedural errors in addition to false substantive basis - employer's conduct reprehensible - dismissal found to be harsh, unreasonable and unjust - compensation ordered LEGISLATION CITED: Industrial Relations Act 1996 HEARING DATES: 07/29/2004; 09/06/2004 DECISION DATE: 11/02/2004 APPLICANT Mr C Magee REPRESENTATIVES: RESPONDENT Respondent appeared in person DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES COMMISSIONER CAMBRIDGE 2 November 2004 Matter No IRC 2464 of 2004 Maria Papaioannou -V- Tejinder Singh Application by M Papaioannou re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 re alleged unfair dismissal. DECISION [2004] NSWIRComm 1117 1 On 23 April 2004, Maria Papaioannou, (the applicant), made a claim for Relief in relation to unfair dismissal. The claim was made by application taken pursuant to section 84 of the Industrial Relations Act 1996 [NSW], (the Act). The application named the respondent employer as Tejinder Singh (the employer). The respondent employer was also referred to as Tejinder Singh trading as AK Blockbuster (ACN 091 295 322). 2 After attempts at reaching a conciliated settlement failed, the matter proceeded to Arbitration that required two days of Hearing, 29 July 2004, and 6 September 2004. BACKGROUND 3 The applicant is a woman who was some twenty years of age at the time of her alleged unfair dismissal on 7 April 2004. 4 The employer was apparently the proprietor of a business that traded as Blockbuster Revesby. The employer purchased the business trading as Blockbuster Revesby on or about 25 July 2003. 5 The applicant had been engaged as Store Manager at the Blockbuster Revesby store prior to the purchase of that business by the employer. The employer engaged the applicant and continued her employment in the Store Manager position. The relevant period of employment of the applicant with the employer involved that period of approximately 9 months between 25 July 2003 up until dismissal on 7 April 2004. 6 On 7 April 2004, the applicant was given a letter of dismissal by the employer which indicated that the applicant's employment had been terminated "Due to the business not growing sales as anticipated". 7 The applicant has alleged that the stated basis for dismissal relating to the financial circumstances of the employer, did not represent the actual reason for dismissal. Rather the applicant has asserted that her dismissal arose from claims that were made by a number of employees relating to underpayment of wages, in particular, the failure of the employer to pay penalty rates applicable on public holidays. 8 The applicant has asserted that she was dismissed because she had supported other employees in their request to be paid penalty rates for time worked on public holidays. Consequently the applicant has asserted that her dismissal was unfair and has sought to be provided with monetary compensation as appropriate remedy. THE EVIDENCE 9 The most notable feature of the evidence presented in this case was the regrettable lack of veracity that emerged from the testimony of the employer's primary witnesses, being the employer himself, Tejinder Singh and his sister Ranjeeta Ahluwalia (aka Sinali). The employer's evidentiary case was simply unbelievable. 10 Strangely however, even if the employer's evidentiary position could be adopted, the claim would still succeed. It appeared that the employer's fundamental assertion regarding the reason for the applicant's dismissal was that the dismissal was based upon financial necessity. Despite there being little or no evidence to support the alleged financial necessity, the applicant was apparently selected for dismissal because she was the most senior employee. In addition, the decision to dismiss was implemented without any consultation or discussion with the applicant and other employees about alternatives that might avoid or mitigate any redundancy. 11 The employer provided evidence about other performance and conduct related matters which were apparently issues contributing to the selection of the applicant as the particular employee to be dismissed. The various alleged inadequacies of the applicant were matters that seemed to develop as the case proceeded. When one considers the totality of the employer's evidence, the picture that was created is one where all manner of issues appear to have been "thrown together" in the hope that some proper basis might be established for the dismissal of the applicant. The consequent incongruities and inconsistencies that were presented by the employer's evidentiary case are dealt with later in this Decision. 12 There were three witnesses including the applicant, who provided evidence in support of the claim. All of these witnesses were young women who worked for the employer at different times. All these witnesses presented as open, honest and believable individuals who were conscious of the requirement to provide truthful testimony. 13 There were five witnesses called to provide evidence on behalf of the employer. The substantial evidence for the employer came from the employer himself, Mr Tejinder Singh, and his sister Ranjeeta Ahluwalia. Regrettably, the Commission must record adverse findings in respect of both the presentation and content of the testimony provided by Tejinder Singh, and his sister, Ranjeeta Ahluwalia. During cross-examination Ms Ahluwalia in particular, provided unresponsive answers which in many instances became loquacious attempts to avoid any direct response to the question. In particular Ms Ahluwalia presented as an unconvincing witness whose testimony generally could not be relied upon. 14 The other witnesses called by the employer provided generally believable testimony about maters that were largely irrelevant to the primary determination required in this case. THE CASE FOR THE APPLICANT 15 During the Hearing of this matter the applicant was represented by Mr C Magee, a barrister. Mr Magee submitted that the applicant's dismissal was unfair and was not based upon the alleged issue of redundancy. 16 Mr Magee submitted that the applicant's dismissal arose from matters relating to the employer's failure to pay penalty rates in the past, and also the likelihood of those penalty rates not being paid in the future. Mr Magee submitted that prior to the date on which the applicant was dismissed there had been no discussion with her, or any of the other employees, about the alleged requirement for the business to reduce payroll costs by dismissing an employee. 17 Mr Magee submitted that the applicant's dismissal resulted from the applicant refusing to support the employer in opposing the other employees who had made claim regarding penalty rates and overtime payments. Mr Magee submitted that this was the true basis for the applicant's dismissal and the alleged parlous financial circumstances of the employer had no factual basis. 18 Mr Magee further submitted that the employer had taken steps to advertise for a replacement Store Manager at the time of the dismissal of the applicant. Although the employer subsequently did not pursue the recruitment of a direct replacement for the applicant, Mr Magee said that the initial endeavours to replace the applicant cast doubt upon the veracity of the alleged financial circumstances said to underpin the dismissal. 19 Mr Magee made further submissions that contemplated that if the financial reasons for dismissal were accepted, then the process that the employer adopted would still render the dismissal to be unfair. In these submissions Mr Magee said that the selection process which determined that the applicant would be chosen for dismissal, as opposed to any alternative arrangements or any other individual employee, would ensure that the dismissal of the applicant was unfair. In addition Mr Magee submitted that the procedures that the employer had adopted in implementing the dismissal of the applicant did not involve any consultation, particularly during the period after about 24 March 2004, which was the time at which the employer said the decision to dismiss the applicant had been taken. 20 Mr Magee also made submissions about the various performance and conduct issues which were included in the employer's evidence. Mr Magee said that although the employer appeared to suggest that these other performance and conduct matters were not directly connected to the decision to dismiss, they appeared to have some relevance to the employer's determination. Mr Magee submitted that this was entirely unfair as there was no evidence to establish that the applicant had been told about any of the alleged concerns of the employer. Therefore according to Mr Magee, it was unfair to have identified these various performance and conduct issues which may have some motivating factor in the mind of the employer regarding the decision to dismiss, but that the applicant had not been told about these particular issues so as to provide explanation or offer a defence. 21 Mr Magee advised that the applicant did not seek reinstatement or re-employment with the employer. Mr Magee said that the applicant had sought but had been unsuccessful in obtaining alternative employment following the dismissal. Mr Magee submitted that the applicant should be provided with monetary compensation as Relief for her unfair dismissal. THE CASE FOR THE EMPLOYER 22 Mr Tejinder Singh represented himself at the Hearing. Mr Singh said that he had given all sufficient warnings and strict warnings to the applicant about problems and the financial problems of the employer. 23 Mr Singh said that the business had incurred a $90,000 loss, and that the applicant was the only one who was on the big pay roll and therefore she would be dismissed or one or two casuals would be fired. Mr Singh submitted that the applicant was totally aware of the circumstances of the employer's business. 24 Mr Singh said that he would not be able to pay some of the penalty rates, and that he could work himself or have his sister work. Mr Singh submitted that the condition of his business was getting worse and that he could not afford double time. Mr Singh said that he had now settled all the back pay claims with the employees. 25 Mr Singh said that he tried to be helpful to everyone. CONSIDERATION 26 The Determination of this matter has not been difficult. Even upon the employer's best evidentiary case, the claim would succeed. 27 If, hypothetically, the Commission was to accept that the reason for the applicant's dismissal involved the difficult financial circumstances of the employer's business, the absence of any proper consultation with the applicant and other employees regarding the decision to dismiss, would render the applicant's dismissal as unreasonable. Having regard for certain aspects of the evidence, there could be no finding that the applicant's dismissal was based upon any financial deterioration of the employer's business such that the applicant's position would need to be made redundant. 28 There was considerable evidence particularly that provided by Ms Ahluwalia, that the applicant's dismissal was for reasons other than any financial imperative. For instance, the following extract from the cross-examination of Ms Ahluwalia identified an underlying concern regarding alleged performance or conduct issues with the applicant: "Q. Right so you had suggested to him at that time that he should terminate Maria's employment? A. The way she was I will not deny, I will say that yes. The customer service is so bad and everything, "I think you should terminate her employment." Q. So you thought she should be terminated for her customer service? A. Well I have actually said to him that I have worked for so many places. My first job was I worked there seven years and I know what customer service is and what is the difference between employer and employee. They don't - I have discussed with my brother and I have said, "I don't think things are right over there," but he said to me, "You have to learn from Maria." He never wanted to take that kind of a decision." Transcript of proceedings , (29/07/04), @ page 84. 29 It appeared therefore that at least in the mind of Ms Ahluwalia, the applicant should have been terminated for performance and or conduct reasons. The evidence also established that there had been no written warning made to the applicant about any aspect of her performance or work conduct that gave rise to concern or complaint by the employer. Consequently the potential arose for the stated reason for the applicant's dismissal regarding the financial position of the employer's business, to have been a deception aimed at concealing the real reason which may have related to the performance and or conduct issues that were expressed by Ms Ahluwalia. 30 There was further evidence which strongly supported the prospect that the stated reason for dismissal regarding the financial circumstances of the business, could not be substantiated. On the day of the applicant's dismissal Ms Ahluwalia advertised for a replacement for the applicant's position by way of internet recruitment services. Ms Ahluwalia was less than convincing when pressed for explanation as to why the applicant would be dismissed so as to save costs and then be immediately replaced. The following extracts from transcript of the cross-examination of Ms Ahluwalia are relevant: "Q. You were advertising for a store manager position to start as soon as possible because you had, or your brother had, terminated your then store manager on that very day? A. That happened after all this happened. It was never - he said to me "You got to work" and I thought he meant someone who knows - I don't know anything. I can't start the business the day Maria left. I don't even know the ABCD of the business at that time. So I thought he meant look for a person who knows everything, Video Minder, and we have a discussion and I just thought he meant look for a person who knows anything about Video Minder." Transcript of proceedings , (29/07/04), @ page 88. and "Q. So you took it off your own back that now that the store manager's employment has been terminated you would advertise for a new store manager? A. He was panicking and he goes to me - Maria was working there the day the shop was open and then after that the previous owner he hired Maria and nobody knows the staff and he was panicking and he goes to me, "You've got to work," and I just thought he meant there was a person who knows everything will be working for him because at that time I wasn't, like he didn't tell me that I'm going to be working there because I didn't know anything about the business, at that time I didn't know the inner details of the business." Transcript of proceedings , (29/07/04), @ page 89. 31 Mr Vikram Singh, a person who advised the employer on business matters, provided further, interesting evidence about the issue of any alleged redundancy of the applicant. The relevant evidence provided by Mr Vikram Singh conveniently summarises this particular aspect of the matter: "Q. So essentially Maria being terminated, she was replaced as store manager, effectively, by Sinali after a short period of time? A. Well someone had to do it, I couldn't, I don't get paid to do it." Transcript of proceedings , (29/07/04), @ pages 101-102. 32 When one has regard for the totality of the evidence there could be no finding made that there was some proper economic basis as valid reason for the applicant's dismissal. The evidence compels a finding that there must have been some reason other than economic considerations for the applicant's dismissal. Although the employer did not interview any replacement Store Manager following the internet recruitment advertisements, its initial actions were consistent with the need for the work of the applicant to continue to be performed on an ongoing basis. The evidence revealed that the work of the applicant was in large part, performed by Ms Ahluwalia after the applicant's dismissal. 33 In addition to the absence of evidence to support a finding to verify the alleged substantive basis for the applicant's dismissal, the procedures that the employer adopted was highly erroneous. The employer alleged that the decision to dismiss the applicant had been taken on or about 24 March, and not implemented until 7 April. There was no evidence of any consultation with either the applicant or any of the other employees about the alleged financial difficulties which required the pay roll reduction equivalent to the loss of the applicant's full time position. 34 Further, there was no evidence to establish any reasonable and objective selection process that would have underpinned the decision to dismiss the applicant as opposed to any of the other employees. The only basis that was advanced for the selection of the applicant involved her seniority and higher wage rate. There was no discussion with the applicant who was the Store Manager, about re-arrangement of her and other employees' hours which might provide for some reduction in wages costs without the need for dismissal of a full time position. The absence of these fundamental procedures would render the dismissal unfair, even if the substantive basis as alleged could be upheld. 35 The absence of any proper substantive basis combined with the procedural deficiencies ensures success of the applicant's claim. However there was a further disturbing aspect upon which the application was advanced. 36 The applicant strongly believed that the true reason for her dismissal involved her support for fellow employees to be correctly paid in accordance with the relevant industrial instrument. The findings that have emerged regarding the mendacious reason given for dismissal do not automatically translate into a finding that the applicant's asserted reason for the dismissal would be established. However upon careful review of the totality of evidence, it has emerged that the true reason for the applicant's dismissal was, as she believed, because of her involvement and active support for employees to be paid in accordance with entitlements existing under the relevant industrial instrument. 37 There was important, persuasive evidence to establish that it was no coincidence that the applicant was dismissed within days of her overt support for employees to be paid their correct entitlements. The applicant called one of her former fellow employees as a witness to provide evidence regarding the circumstances surrounding the applicant's dismissal, and in particular the employees' claim for payment of due entitlements. Evidence from this employee, Ms Simone Hunjak, who presented as an open, straightforward and entirely believable witness, was very disturbing. The following extract from transcript involving the cross-examination of Ms Hunjak by Mr Tejinder Singh, summarises the various points at which that witness's evidence touched upon this highly regrettable action on the part of the employer: "Q . Did I give you any threat if you want double time you may lose your job and I won't give you any hours after this or anything? A. You did say something along those lines on the 4th when we talked on the phone and you said you couldn't afford to pay the rates. I don't know whether I should go any further. Q. You can tell whether I - -? A. You were trying to turn us against each other and you said, "Everyone's going to go for their own and in the end you're just going to be sitting there and you will lose your job." Q. So I gave you that threat, is that what you are saying? A. Yes." Transcript of proceedings , (29/07/04), @ page 52. 38 Following a careful review of all of the evidence in this matter the Commission is persuaded to support the applicant's belief that the true basis for her dismissal involved her support for other employees who were seeking to be paid certain alleged entitlements. The stated basis for the applicant's dismissal was an attempt to conceal the actual reason relating to the applicant's support for the employees to be paid the alleged entitlements. 39 Immediately following the dismissal the actions of the employer in seeking to replace the applicant, exposed the ruse, and recognising the potential exposure the employer then ceased the recruitment activities and introduced various other alleged performance and conduct matters as further attempt to conceal the real reason for the applicant's dismissal. 40 The evidence disclosed that the employer had asked the applicant to "...back me up at the meeting tonight regarding not paying correct overtime, penalty and award wages. I am your employer and you should be looking out for me and not looking out for the other staff." Exhibit 1 - paragraph 18. Within hours of the applicant's refusal to side with the employer she was dismissed. 41 Although not a proposition directly advanced by the employer, by inference the applicant's conduct could be construed as disloyalty to the employer, and therefore capable of providing justification for dismissal. It is, I suppose, conceivable that an assessment of such conduct in terms of evolving neo-conservative standards, might establish that an employer is entitled to demand loyalty from an employee, particularly a manager, and it would not be unreasonable to dismiss a manager who sided with employees on any issue that may be contrary to the employer's business interests. Essentially the corollary of such a proposition may be expressed as that it would not be unfair to dismiss a manager if he or she refused to lie for the employer. 42 There is increasing prospect for assessment of reasonableness in unfair dismissal matters to provide primacy for protection of the employer's interests. It would seem that such primacy might even extend to the removal of any protection for employees in circumstances of a small business as in this case. In this instance the employer demanded loyalty from the manager/applicant by way of assistance in protecting the business interests by avoiding payment of overtime, penalty rates and other entitlements apparently payable under an industrial instrument. It would seem then that the employer's demand for loyalty involved complicity in breach of the Law. 43 Despite the potential for there to be no protection for an employee placed in circumstances such as revealed in this case, I believe that most reasonably minded, contemporary Australians would consider it unfair to dismiss an employee because they refused to assist the employer in unlawful conduct. Of course such a judgment may be wrong and the primacy of business interests would then prevail over compliance with the Law. CONCLUSIONS 44 In this instance the Determination of the applicant's claim could be made on a variety of different foundations. All such different approaches would provide for the applicant's success. 45 If the Commission were to hypothetically adopt the employer's evidentiary position, the dismissal of the applicant would be found to have been harsh, unreasonable and unjust on the basis of the significant procedural errors that were established. There was no proper consultation with the applicant about the alleged financial difficulties giving rise to her dismissal. Further there was no proper process for selection of the applicant to be dismissed, as opposed to either an alternative employee, or other measures to reduce the wages costs of the employer. 46 Additionally the reason proffered as the basis for the applicant's dismissal cannot be established in fact. Although there may have been some financial difficulties being experienced by the employer, the economic circumstances as offered as reason for dismissal, represented a deliberate attempt to conceal the true reason for dismissal. 47 The true reason for the applicant's dismissal was her active involvement with and support for employees seeking to obtain alleged entitlements to penalty rates, overtime, and other payments provided by an industrial instrument. The employer sought to combat what was perceived to be mutiny particularly on the part of the Store Manager, by moving quickly and decisively to dismiss her. The employer's conduct in dismissing the applicant was reprehensible. It follows that the dismissal of the applicant in such circumstances was harsh, unreasonable and unjust. 48 The applicant has not sought re-instatement or re-employment and the Commission has formed the view that any re-establishment of the employment relationship would be impracticable. Therefore the Commission has been prepared to provide monetary compensation to the applicant as appropriate Relief for her unfair dismissal. 49 In determining the amount of compensation to be paid to the applicant, the Commission has had regard for the applicant's attempts to find alternative employment, and the remuneration received in alternative employment since dismissal. I therefore propose to make Orders that provide for monetary compensation equating with approximately twenty six weeks of the applicant's pre-dismissal remuneration. ORDERS In this matter, for the reasons outlined herein, I have determined that the dismissal of the applicant was harsh, unreasonable and unjust and I hereby make the following Orders: 1. The Commission Orders that the employer pay to the applicant an amount of compensation of $14,500.00. This amount is a gross figure and appropriate taxation treatment is a matter for the Parties. 2. The amount of compensation specified in Order 1 above is to be paid by the employer to the applicant within twenty eight days from the date of this Decision. oooOOOooo 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.