Industrial Relations Commission of New South Wales CITATION : Knowles v Roffey [2001] NSWIRComm 180 PARTIES : Rebecca Gai Knowles Roffey Educational Pty Ltd T/as Bridal Collections FILE NUMBER: IRC 5561 of 2000 CORAM: Harrison DP CATCHWORDS : Application for relief from alleged unfair dismissal - held - lack of procedural and substantive fairness - compensation diminished by applicant's conduct - offer of reinstatement held not to be genuine - costs awarded against respondent. LEGISLATION CITED : Industrial Relations Act 1996 CASES CITED : Bounuoar v The Spanish Club (1999) 94 IR 166 HEARING DATES: 07/17/2001; 07/18/2001 DATE OF JUDGMENT: 08/13/2001 APPLICANT Ms Rebecca Gai Knowles LEGAL REPRESENTATIVES: on her own behalf RESPONDENT Mr R Stephen, Solicitor JUDGMENT: - 9 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Monday, 13 August 2001 Matter No IRC 5561 of 2000 REBECCA GAI KNOWLES AND ROFFEY EDUCATIONAL PTY LTD T/AS BRIDAL COLLECTIONS Application re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION 1 The application in this matter was filed on 16 November 2000 and first listed for conciliation proceedings before Mr Commissioner Patterson on 28 November 2000. These proceedings were vacated and the matter subject to conciliation proceedings on 19 and 20 December 2000 before Commission Patterson at Gosford Court House. 2 In those conciliation proceedings the applicant, Ms Rebecca Knowles, was represented by Mr P Moore, solicitor of Brazel Moore and Daley. Mr R Stephen, solicitor appeared on behalf of the respondent employer, Roffey Educational Pty Ltd trading as Bridal Collections. 3 An offer of reinstatement was made which was rejected by the applicant. The applicant sought compensation of an amount of six weeks pay at the rate of $41,000 per annum, plus $2,000.00, which was not accepted by the respondent. 4 The Commissioner adjourned proceedings on 19 December 2000 to allow the parties further time to consider the offers before them, resuming on 20 December 2000. Transcript of those proceedings reveals diligent efforts by the Commissioner in conciliation, which were ultimately unsuccessful. The applicant pressed the matter to determination, putting objection to further proceedings before Commissioner Patterson pursuant to s173 of the Industrial Relations Act 1996 ('the Act'). 5 Mr Stephen put a notice of motion to Commissioner Patterson on 20 December 2000 in the following terms: 1. Leave be granted for short service of this Motion. 2. The application herein be set aside. 3. Declare the Tribunal has no jurisdiction over the Respondent in respect of the subject matter of the proceedings. 4. Decline to exercise jurisdiction in the proceedings. 5. Such other Order or Orders as the Tribunal sees fit. 6 The Notice of Motion was not accepted by Commissioner Patterson. 7 The matter was referred to the President for re-allocation and by him to the Commission as presently constituted. 8 Proceedings took place on 6 February 2001 for the purpose of directions. Mr Baker, Solicitor as agent for Brazel Moore and Daly, appeared on behalf of the applicant. Mr Stephen maintained his appearance for the respondent. 9 Mr Stephen sought to present the Notice of Motion advanced to Mr Commissioner Patterson. The Notice of Motion was not properly filed and I declined to deal with it on 6 February on that basis. 10 Directions were issued that the Notice of Motion be formalised and filed with an outline of arguments in support thereof and such affidavits or statements of evidence to be relied upon by close of business on 16 February 2001. A further direction was issued that the applicant file and serve her outline of defence of the issues raised by the Notice of Motion and such affidavits or statements of evidence to be relied upon by close of business on 2 March 2001. The Notice of Motion was set down for hearing from 2.00 pm on 8 March 2001. 11 The Notice of Motion was subsequently formalised and filed on 16 February 2001 in the following terms: The Respondent will at 2.00pm on 8th March 2001 at Court 1, Level 3, 237 Wharf Road, Newcastle move the Commission for orders that: 1. The Application be set aside. 2. The exercise of jurisdiction in this matter be declined in future. 3. The Applicant pay the Respondent's costs of the Motion and the proceedings generally. 12 An outline of arguments made on 7 March 2001 by the applicant was received by facsimile on 3 May 2001 seeking the Notice of Motion be dismissed with costs. 13 The matter came on as scheduled on 8 March 2001. Mr Stephen appeared for the respondent. There was no appearance by or on behalf of the applicant, the Commission being informed she had been involved in a motor vehicle accident on the F3 Freeway on route to proceedings. The matter was stood over to 7 May 2001. 14 On that occasion Ms Knowles appeared on her own behalf. Mr Stephen continued his appearance. 15 Mr Stephen sought to press the Notice of Motion, relying on an affidavit of Ms Gabrielle Roffey sworn on 20 December 2000, an affidavit of Ms Christine Shipton sworn on 19 February 2001, and an affidavit sworn by himself on 15 February 2001. 16 Ms Knowles put that she had not received copies of these affidavits, they having been served on her former legal representative and not conveyed to her. 17 Mr Stephen had attended without the deponents of the affidavits to give evidence as he put he was unsure of the status of proceedings having regard to Ms Knowles non-appearance on the previous occasion and informal advice from Brazel Moore and Daley that they were no longer acting in the matter. A notice of ceasing to act had not been filed. 18 In these rather confused and unsatisfactory circumstances directions were issued that the matter would be heard in full, being the issues raised in the Notice of Motion and matters of substance as to merit on 17 and 18 July 2001. Directions were issued that Ms Knowles file and serve affidavits of evidence to be relied upon by 15 June 2001, and that the respondent file and serve in reply by 6 July 2001. The parties were provided with an extract of transcript inclusive of directions. 19 On hearing on 17 July 2001 Ms Knowles appeared on her own behalf assisted by her father-in-law. Mr Stephen continued his appearance for the respondent. 20 Ms Knowles relied upon an affidavit sworn by her on 2 July 2001, submitted by her former legal representative, and was subject to cross examination by Mr Stephens. 21 Mr Stephen presented a number of affidavits sworn on 16 July 2001, neither filed nor served upon the applicant. The affidavits sworn by Ms Roffey and Ms Shipton were accepted (exhibits 10 and 12 respectively). A draft affidavit sworn by Ms P Williams (ex 8) was allowed, however this evidence is minimal and of little or no relevance to the matter. Affidavits sworn by other employees of the respondent were refused on objections by Ms Knowles in accordance with the Spanish Club ruling (1999) 94 IR 166. THE FACTS 22 The applicant commenced employment with the respondent on 11 April 2000, working four days per week in the position of Retail Manager/Promotions Co-ordinator. 23 On or about 3 June 2000 the applicant proceeded on unpaid maternity leave for a period of approximately seven weeks. She returned to her employment on or about 3 August 2000, taking up duties as a full time employee. 24 These circumstances obtained to the mutual satisfaction of the parties until 19 October 2000. On that date Ms Roffey convened a regularly scheduled management meeting which included Ms Shipton, Ms Roffey's sister, personal assistant and director of the company; Mrs MacGregor (nee Shipton), a managerial employee, and Ms Knowles. 25 At the outset of the meeting Ms Knowles put that she was having difficulty coping with the full time work load and her family responsibilities and sought a return to a four day week. Discussion of alternatives to accommodate Ms Knowles occupied much of the meeting, the agenda being set aside. It would appear that the only aspects of the set agenda dealt with were those dealing with budgets and cash flow, discussed briefly once the discussion concerning the request by Ms Knowles had been exhausted. 26 The meeting concluded without finalisation of Ms Knowles' circumstances, though an intention had been formed that another employee, identified as Ms Sallianne Rath, would be transferred into the position vacated by Ms Knowles and a "suitable arrangement" would be developed. 27 A proposition was put to Ms Knowles by Ms Roffey by facsimile the following day, 20 October 2001. Ms Knowles was not happy with offer, conveying this by return transmission. Ms Roffey's offer and Ms Knowles reply were tendered (ex 7) and appear in the following terms: "Dear Rebecca, Following our meeting yesterday with Vicki and yourself, it was agreed, as per your request that you work on a permanent part-time or casual basis. Due to family commitments you felt you could not fulfill the role as manager of Bridal Collections Hire for Him, nor devote the hours this position requires. I fully understand this and appreciate your acknowledgment of the situation. However the store does need a full-time manager therefore I shall appoint someone to fulfill the role. While you kindly offered to continue till the end of the year, it would be better to place a new manager in this position as soon as possible. In the role of promotions I can offer you up to ten hours per week on the casual rate of $15.05. This would involve two days per week 10-3 (to accommodate school hours) and 9 hours retail Thursday 4-8 and Saturday 10-3. This would negate any past agreement. If you are happy with this arrangement it would take effect as of Thursday 26th October 2000. In the promotions role you would report to the Manager of Bridal Collections and retail to the new store manager. Please sign if you accept these terms for the position for part-time promotions and retail at the casual rate of $15.05. Yours faithfully Gabriel Roffey Managing Director" 28 The handwritten response by Mrs Knowles appears in the following terms: "I am not happy with this offer, quite insulted actually - considering I started on $28,000 - with 4 day's and two in store - the responsibility of marketing coordination role is a lot more than $15.05 rate of selling suits - I will take this home and talk to Scott before I make a .." 29 The evidence of Ms Knowles and Ms Roffey is that they had a further discussion on the afternoon of Saturday, 21 October 2000 in which both concluded that a satisfactory arrangement had been reached in respect to Ms Knowles' future employment. Ms Roffey then left the country on a scheduled overseas trip, giving instruction to Ms Shipton to formalise the arrangement with Ms Knowles. However, difficulty arose as Ms Roffey and Ms Knowles each held a different view of that arrangement. 30 Ms Knowles deposed that this arrangement was that she be engaged four days per week, two days in promotional work and two days in a retail capacity. Ms Roffey's evidence is that the proposition she had put to Ms Knowles was for employment three days per week, two days in promotions and a Saturday in retail work with additional employment to be subject to the needs of the business and cash flow adequate to fund additional hours. 31 On 24 October 2000 Ms Shipton presented an employment agreement to Ms Knowles providing for three days work per week. Ms Knowles rejected this, initiating a series of exchanges between Ms Knowles and Ms Shipton and, it is alleged, between Ms Knowles and other employees, resulting in a decision taken by Ms Shipton and Ms Roffey, who had remained in telephone contact, that the disturbance created by the inability to come to a mutually satisfactory arrangement with Ms Knowles was having a negative and disruptive effect on the business. 32 The evidence of Ms Roffey shed greater light on the basis of termination of employment. This evidence is found at p143 of transcript in the following terms: "ROFFEY: A: I had at least three phone calls with Mrs Shipton while I was overseas in that interim period, in which she told me that there was a lot of disruption within the - the workplace, that there'd been a lot of complaints, a lot of discussion by Ms Knowles and other staff members, discussion both with staff members upstairs and downstairs. So, I was told of disruption and increasing low staff morale as a result of the misunderstanding or discussions that were taking place. I cannot comment fully on exactly who or what. The second part there, was that my understanding with Mrs Shipton when she spoke with Rebecca with regard to working was that Ms Knowles had said she wanted four days and if she couldn't have four days, she would keep her old job. To that, she wanted four days permanent/part time. As I mentioned to Christine, we had already discussed Sallianne Rath coming down to take on the role of retail manager and I did not feel we could go back to that. Plus, as I kept coming back to, Mrs Shipton had said, the reason all of this originated was because Mrs Knowles said to me in a formal meeting that she wanted to reduce her hours. So, the essence of it was, it just was, we could not come to an agreement as to the hours and it was causing disruption amongst the workplace and it was impacting on the staff morale. … … Q: And did you personally take a decision to terminate Ms Knowles' employment, or did you leave it to Ms Shipton and the legal advice? A: I left it to those two. If - my understanding sir was I did not want to lose Ms Knowles, but we could not come to an agreement and she had admitted to me that she wasn't coping at this time, due to family commitments." 33 On Ms Roffey's instructions Ms Shipton took legal advice, ultimately received from Mr Stephens, and Ms Knowles employment was terminated on the grounds of redundancy. The advice of termination is found as attach. C to ex 1, the affidavit of Ms Knowles, in the following terms: Unfortunately due to the financial situation of the store the position of promotions and retail manager has been closed. As a consequence there is no longer a position available for you and you will sadly be required to leave. Your contract is silent as to termination pay but we feel in due fairness that payment in lieu of notice should be paid along customary lines and therefore Bridal Collections Hire For Him are prepared to offer you two weeks wages as well as accrued holiday pay. When you vacate position please leave all shop keys, security deactivator and any files that are the property of Bridal Collections Hire For Him. We wish you the best in the future and would be happy to write a reference for you if you so require. 34 Ms Shipton's evidence is that Ms Knowles sought the four day arrangement of employment, proposing that particular employees could be dismissed in order to provide her with employment. It is Ms Shipton's evidence that she refused this proposition. 35 Both Ms Roffey and Ms Shipton deposed that the termination of Ms Knowles employment was a genuine redundancy as the promotions work undertaken by Ms Knowles was not within the skills or abilities of other employees. 36 Ms Knowles contends that the redundancy was a sham and that in the circumstances, where mutually satisfactory arrangements could not be agreed upon, she should have continued in her employment as a full time employee, five days per week. 37 The evidence of Ms Knowles is that her request was no more than a casual conversation and that in the absence of suitable alternative arrangements she wished to continue in her previous arrangements. 38 This is contested by the evidence of Ms Roffey who put that Ms Knowles had been off sick for four days prior to the meeting of 19 October 2000 on which occasion Ms Knowles made a serious and determined request for a change in circumstances from which there was no retreat. 39 The evidence of Ms Shipton is that there were some difficulties with Ms Knowles' work performance. 40 The issues of performance were contested by Ms Knowles who relied upon a communication from Ms Roffey of 5 October 2000, (Annex. F to ex 1) commencing: Dear Rebecca, Congratulations 1) Service Providers are all happy working with you 2) Have had excellent feedback from customers. Christine (Shipton) tells me you're excellent with customers . 41 This communication then deals with 16 additional points of business operation in a manner complimentary to Ms Knowles. 42 Whilst there were some inconsistencies in evidence as to Ms Knowles' work performance, the termination of her employment did not arise due to conduct or performance issues of an operational nature. 43 The evidence of Ms Roffey is that Ms Knowles sought a change in her work arrangements and that this had progressed to the point where Ms Roffey was committed to another employee taking up the duties performed by Ms Knowles; and that there was an urgency to introduce the alternative employee into the role at the earliest opportunity in order that job knowledge and skills be acquired prior to the Christmas/New Year period. 44 There was some exchange between the parties concerning punctuality and timekeeping with an assertion that Ms Knowles would start late or finish early to meet, drop off, or pick up her children. I am satisfied on the evidence that to the extent this occurred it was with tacit, if not explicit, approval of the respondent. 45 The evidence established that subsequent to the termination of her employment, Ms Knowles proceeded to set up a "bridal hire" business in direct competition to the respondent. Ms Knowles deposed that she had taken a lease on premises and was in the process of entering arrangements with suppliers at the time of proceedings before Patterson C. 46 There is an issue between the parties in which it is contended that subsequent to the failure of settlement negotiations, Ms Knowles unlawfully took advertising material in computer readable form from the offices of a publishing company for her own benefit when that material was the property of the respondent and not available to her. This matter has been referred to the NSW Police Service. 47 The offer of reinstatement, rejected by Ms Knowles, is ex 11 in these proceedings. It provides for appointment as Store and Promotions Manager commencing on 20 December 2000 at a base salary of $32,000 per annum, plus $550 per month car allowance and $220 per month promotion allowance to be paid fortnightly on Thursdays. The offer of reinstatement contains provision for performance review, training and development, annual leave, work rules, legal, confidential information, termination of services, hours of work, sick leave, and "good will and restraint of trade". 48 Ms Roffey deposed that the offer of reinstatement was genuine and taken on a commercial basis having regard to not only these proceedings but the damage, potential and real, occasioned by Ms Knowles operating a business in opposition. Ms Knowles put that the offer of reinstatement was not genuine and designed only to impede the business to which she was now committed and restrain her in the future. In particular, Ms Knowles relied upon the following provisions, which she intimated allowed for subsequent conclusion of employment and restrain upon her for two years therefrom. Performance Review Performance reviews are conducted every three (3) months, and we seek your comments on the operation of the business and on your performance. At all times we are endeavouring to improve both your own performance and that of the store. We will provide you with written feedback on your performance on an ongoing basis as well as at formal interviews. All salary reviews are based on performance. Work Rules Various rules exist for the effective and safe operation of the business and the well being of those who work for it. Employees are subjected to particular rules of which you will be informed and you must act in accordance with these. Refer to the Operations manual for more detailed policies and procedures. Legal Any suspected misappropriation by an employee will result. in immediate dismissal and subsequent legal action. No goods may be taken from the store without prior consent. Confidential Information The contractual relationship between the company and its employees is founded on trust. Breach of this trust by an employee, such as the unauthorised disclosure to a third party of confidential information about matters connected with the business, is grounds for dismissal, All confidential records, documents and other papers, together with any copies or extracts made or acquired by you shall remain the property of the company. Termination of Service Either party can instigate termination of service. The company requests that you give at least four weeks notice of you intention to leave. The company can terminate your employment without notice if any of the company policies or procedures are not adhered to. Payment of outstanding monies will be made available on the last day of employment. Hours of Work Normal trading hours are from 9 - 5pm Tuesday and Wednesday 12 - 8pm Thursday 9 - 5pm Friday and 8.30 - 4.30pm Saturday. No negotiation will be entered into regarding hours of work. Sick Leave Sick leave accrues at the rate of two weeks per annum from the date of commencement. For periods of two days or more a Doctor's certificate is required. Goodwill and Restraint of Trade The employee will not act against the best interests of the company. Nor promote, canvass or approach in regard to any other wedding business other than Bridal Collections, Service Providers or other clients of Bridal Collections. The employees refrain from speaking in any adverse way whatsoever about the business of Bridal Collections. The employee is restrained from operating or participating in any business within a 20 km radius of any Bridal Collections promises, during the period of employment and for two (2) years thereafter. Would you please confirm your acceptance of this by signing and returning this copy dated 20 December 2000. 49 Ms Roffey deposed that she was unaware of the settlement proposal put by Mr Moore on behalf of Ms Knowles seeking six weeks pay plus $2,000.00. CONSIDERATION 50 I find the termination of Ms Knowles employment lacking in procedural fairness. 51 The termination of employment was effected in circumstances of confusion and poor communication between all concerned. This was exacerbated in my view by Ms Roffey's absence, resulting in her abdication of responsibility to Ms Shipton and legal advice. 52 Consideration of the substantive merit reveals that Ms Knowles was the motivator of events and contributed to the circumstances of confusion and conflict leading to the termination of her employment, which discounts heavily the culpability of the employer. 53 I am unconvinced on the evidence before me that the redundancy was genuine, a position supported by the, albeit conflicting, evidence as to performance and conduct. 54 I find the proposition of redundancy to be a refuge invented for the termination of an employee who Ms Shipton considered difficult to manage. The respondent's actions were unfairly precipitous. Ms Knowles was afforded no warning or alternative to termination of employment. 55 I find the termination of Ms Knowles' employment to be harsh, unreasonable and unjust. 56 I conclude that neither reinstatement nor re-employment are practical and that compensation should be minimal. I assess compensation at $500.00 (five hundred dollars). COSTS 57 The application by the respondent for an order of costs is refused. 58 I accept the submissions of Ms Knowles that the offer of reinstatement, with the unusual feature of restraint of trade, was neither genuine nor practical and advanced on a purely commercial basis. 59 I conclude that the respondent acted unreasonably in the conciliation process and award costs to the applicant for the amount claimed, being $652.30 (six hundred and fifty dollars and thirty cents). oo0oo INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HARRISON DP Monday, 13 August 2001 Matter No IRC 5561 of 2000 REBECCA GAI KNOWLES AND ROFFEY EDUCATIONAL PTY LTD T/AS BRIDAL COLLECTIONS Application re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 ORDERS 1. Pursuant to section 89(5) of the Industrial Relations Act 1996 Roffey Educational Pty Ltd, trading as Bridal Collections is ordered to pay Ms Rebecca Gai Knowles the sum of $500.00 (five hundred dollars) within 21 days of this decision. 2. Pursuant to section 181(2)(c) of the Industrial Relations Act 1996 Roffey Educational Pty Ltd, trading as Bridal Collections is ordered to pay Ms Rebecca Gai Knowles the sum of $652.30 (six hundred and fifty dollars and thirty cents) within 21 days 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.