Industrial Relations Commission of New South Wales CITATION: Ferguson v Inghams Enterprises Pty Ltd [2005] NSWIRComm 1213 APPLICANT: Mr. Richard Ferguson PARTIES: RESPONDENT: Inghams Enterprises Pty Ltd FILE NUMBER(S): 3545 of 2005 CORAM: Ritchie C Application for unfair dismissal Applicant's position contracted out Applicant's position made redundant. Applicant sought reinstatement to previous position or alternative position with the respondent. Applicant had previously suffered a substantive work injury -loss of right leg. Had accepted a lesser monetary amount in settlement of his injury claim on the basis that CATCHWORDS: Respondent had indicated that they would continue to employ him in an alternative position. Applicant's view was that he had a job indefinitely. Commission found that previous position no longer was available and applicant not capable of carrying out alternative positions with the respondent due to physical restrictions. Law of estoppel did not apply in this case. Commission found that termination harsh due to lack of action by respondent in assisting to find alternative employment through appropriate agency who deals in assiting persons with significant physical restrictions. Order for the payment of compensation made. LEGISLATION CITED: Industrial Relations Act 1996 Schwartz v Central Sydney Area Health Service & anor [2002] NSWIR Comm 79. CASES CITED: Cheshire and Fifoot's Law of Contract. HEARING DATES: 09/06/2005 DATE OF JUDGMENT: 12/02/2005 APPLICANT: Mr. P. Moorhouse of Counsel LEGAL REPRESENTATIVES: RESPONDENT: Mr. J. Jones Agent. DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: RITCHIE C. 2 December 2005 Matter No IRC 3545 of 2005 IN THE MATTER OF: Richard Ferguson and Inghams Enterprises Pty Ltd Application by Richard Ferguson re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996. DECISION [2005] NSWIRComm 1213 Background. 1 On 18 July 2005 I published an Interim Decision after hearing argument on 15 July 2005, concerning an application for interlocutory relief filed by Mr. Richard Ferguson (the applicant). The relief sought was for an order preventing termination. 2 In the interim decision I concluded on balance, that the orders as varied by the applicant should not be granted. 3 The applicant was subsequently terminated by Inghams Enterprises Pty Ltd (the respondent) on 19 July 2005. A hearing of the unfair dismissal claim was held on 6 September 2005 and at the end of proceedings I reserved my decision. Both parties accepted that evidence in the interlocutory application would form part of the proceedings in this matter. 4 As some of the facts of this case have already been expressed in the Interim Decision of 18 July 2005 I will not in detail repeat them save as to say the following. The applicant was born in 1954 and commenced with the respondent on 12 August 1987 as a foreman in their Badgerys Creek factory. He sustained an injury at the work place on 6 December 1992. The injury resulted in the applicant suffering a below knee amputation of his right leg. He eventually returned to work in about mid 1993 on light duties at reduced hours working up to full time work in restricted work activities. The Badgery's Creek factory is no longer in operation. 5 In 1995 he was transferred to the Hoxton Park factory where he was appointed to the position of weighbridge operator/gatekeeper at the gatehouse. The position was made available to the applicant so as to accommodate his physical limitations with regard to his right leg prothesis. He had remained in that position up to his termination. He worked Monday to Friday 6.00am to 2.00pm. The gatehouse was manned 24 hours a day seven days a week. Except for the day shift Monday to Friday only one employee was on duty. The applicant at all times worked with another employee who was a licensed security guard. The applicant did not hold a security license. He was under the supervision of the security guard who was the one rostered on duty with him. The applicant carried out only clerical duties. When he proceeded on annual leave or was on sick leave he was not replaced as the security guard on shift would do his work. 6 In early June 2005 the applicant was advised by the respondent that they were going to contract out the security function and therefore his position would be made redundant. This contracting out of the security function was to take place in other respondent factory sites. Thereafter discussions took place between the applicant, the respondent and an official from the applicant's union. 7 The other employees who were security guards based at Hoxton Park accepted redundancy payments and ceased working for the respondent. Applicant's Submission. 8 In the discussions that occurred between the applicant, his union and the respondent alternative positions were discussed but were not offered to the applicant. The applicant wished to remain and work for the respondent and would have accepted alternative employment. 9 Since his return to work in 1993 the applicant had provided the respondent on a six monthly basis, medical certificates stipulating the suitable duties. Those restrictions were no prolonged sitting, standing or walking and no walking on slippery or uneven surfaces. Those restrictions did not change over the nine years. 10 It was the applicant's view that he was not offered a job in the factory due to the wet slippery floor. Work in the label room was discussed but never offered. He was never offered any alternative clerical work nor any computer training. 11 On 30 June 2005 the applicant was advised by the respondent that his employment would be suspended on full pay pending him seeking legal advice with regard to his position with the respondent. 12 By reason of his injury the applicant can not perform work that requires agility and can not sit or stand for any length of time or walk long distances without developing severe pain. He has restrictions on his mobility and agility generally can only perform work that enables him to alternatively sit and stand and move about freely. He possess limited clerical skills. 13 On 12 July 2005 the applicant received correspondence from the respondent stating that during meetings between the parties on 2 and 29 June 2005 the respondent had sought to explore alternative employment but neither the respondent nor the applicant were able to identify other jobs that would be suitable. The correspondence went on to advise that the applicant would be ceasing with the respondent on 19 July 2005. 14 Due to his medical restrictions the applicant advised that he could not carry out all the duties of a security guard at the gatehouse at Hoxton Park. During examination in chief, the applicant was shown a document (Ex. H) that was the proposed contract between the respondent and the security company that had won the contract. The applicant went through the duties to be carried out for the client advising the Commission the ones he was capable of completing. The applicant stated that he could carry out 8 of the 24 dot points. There was also a requirement in the contract that security services were to be provided by employing properly trained and licensed security officers. 15 In 1994 legal proceedings were commenced on the applicant's behalf in the Supreme Court of New South Wales. 16 During those proceedings the applicant's legal representatives had cause to write (dated 29 May 1995) to the respondent's legal representatives (Ex.G). The thrust of the correspondence was to ascertain the respondent's view with respect to the continuation of the applicant's employment. Particular questions were relevant to the question of future economic loss. 17 Questions 4 and 5 of that correspondence were: 4. Subject to good behaviour, could the Plaintiff reasonably expect to remain in the employ of the Defendant indefinitely ? 5. Is there any current proposal to terminate the Plaintiff's employment at the conclusion of the subject litigation ? 18 In correspondence dated 20 June 1995, the respondent stated that they had had discussions with the applicant and "reassured him as to his continuing employment with Inghams Enterprises Pty Limited." It also advised that the applicant's new duties are primarily those of a Weighbridge Operator. In answering questions 4 and 5 the correspondence stated : "The company has no plans to terminate Mr. Ferguson. He has useable skills and is well motivated and it is our intention that we will continue to provide him with suitable employment, behaviour etc. not withstanding." 19 In further correspondence between the parties (dated 7 November 1996), the respondent stated to the applicant's solicitors : " Further to your letter of 6 November, 1996 we confirm that there is no change in the Company's attitude towards Mr. Ferguson's continued employment. We reiterate in part the contents of our letter of 20 June, 1995 that he has usable skills and is well motivated, and it is our intention that we will continue to provide him with suitable employment, behaviour etc notwithstanding." 20 In a document entitled terms of settlement before the Supreme Court of New South Wales(ExB annex.C) at point 6 the following was hand written: "It is agreed and acknowledged that the plaintiff relies upon the terms of a letter from the defendant dated 7/11/96 in settling his claims against the defendant." 21 It was the applicant's evidence that he relied on what was expressed in the two letters from the respondent to come to the settlement that he did. He stated that he had accepted a lesser amount in compensation ($400,000) then he would have, if it had not been for the letter from the respondent dated 7 November 1996. 22 Whilst the applicant agreed that the correspondence from the respondent did not promise a job for life, he took it as being a guarantee that he had a job as long as he behaved himself. 23 The applicant said he agreed to a lesser payout on the basis of a guarantee of a job. 24 Mr. Steve O'Halloran a solicitor from White Barnes also gave brief evidence to state the background to the correspondence dated ( 29 May 1995). Questions were asked as to the word "indefinitely" meaning that there was no predetermined date. Mr. O'Halloran accepted that it could be interpreted to mean no predetermined date. Respondent's Case. 25 Both a Mr. J. Jones and a Mr. S. Ruff of the respondent filed witness statements with only Mr. Ruff being required for cross examination. From the respondent's records he stated that the position of " Gatehouse/Weighbridge Assistant" was created for the applicant in 1995. He stated that on or around 30 May 2005 he was advised that the respondent had decided to engage a contractor to take over the security and weighbridge operations at Hoxton Park. At a meeting on 2 June 2005 he advised the three security guards of the respondent's decision that their jobs were to be made redundant. They were also advised that the respondent was examining alternative positions in either the factory or the distribution department. On the same day he attended a meeting with the applicant and a union official Ms. Fernandez. At that meeting the option of redeploying the applicant to other areas of Hoxton Park were discussed. The applicant made it plain that because of his medical restrictions he could not work in the factory or the distribution department. He also stated that he could not work in the maintenance department because of the requirement to go into the factory. He also stated that he was not comfortable with computers and had limited clerical skills. With respect to the label room he stated "that it would be demeaning to work there." Later Mr. Ruff still spoke with the Plant Manager about alternative positions for the applicant but were not successful in their search. He said that because of the applicant's medical restrictions he was not able to work within the factory due to the slippery floors and the requirement to wear particular type of boots for health reasons. Work in the label room was a part of a job that required the employee to rotate every two hours through that room. During that two hour period there was a requirement for the employee to go downstairs into the production plant or into the packing section or into some other area to gather and distribute work. To go into the factory you have to wear particular boots. 26 On 12 June 2005 he provided the applicant with an estimate of his termination payments. The applicant would receive a redundancy payment of 52 weeks. 27 He stated that the new security arrangements came into place from 1 July 2005 and with it changes to some of the work of the security guards. The weighbridge is now completely automated. At Hoxton Park there are now four people doing the job that was once done by five. Mr. Ruff stated that the duties shown in the draft contract have altered as the computerisation of the weighbridge has occurred. They will continue to change as weighbridge dockets and swipe cards for staff are introduced. 28 Mr. Ruff accepted that the applicant had not required a security license and if he still worked at the gatehouse he would still not need one. The work he used to do in weighing trucks was no longer required to be done as it is now automated. Once the truck drivers start swiping their registration card the work of the security guard will be halved. They will have more of a watching brief rather than an interactive brief. The respondent did not need anyone to assist the contract guards. 29 In the statement of evidence from Mr. Jones he made comment about a meeting that took place on 29 June 2005 with the applicant, Ms. Fernandez, Mr. Moody the Plant Manager and himself. He said that during that meeting there was further discussion regarding alternate employment options at Hoxton Park. No party could come up with alternate work. He therefore was advised that his last shift would be the next day. The applicant said that he wished to speak to his lawyers and a meeting was to occur on 4 July but then had to be changed to the following day. Considerations and Decision 30 In summary it was the applicant's submission that he sought reinstatement to his previous position or any alternative position that the respondent found for him or compensation to the maximum of six months based on $625 per week. The unfairness in the termination came from the representations made to him in correspondence dated 20 June 1995 and 7 November 1996. The applicant was advised by his lawyers that his likely entitlement would amount to $640,000 (Ex. C). This was based on his future earning capacity as if there had not been an accident and earning capacity as it is now. 31 He therefore had an assumption of employment of an indefinite duration, which was created by the respondent's conduct and its correspondence. There therefore existed a clear analogy with the law of estoppel (Schwartz v Central Sydney Area Health Service & Anor[2002] NSWIRComm79) . He also quoted from Cheshire and Fifoot's Law of Contract with respect to how the principle of estoppel operated. In this case the respondent represented to the applicant that it would provide employment of an indefinite duration "behaviour notwithstanding". This strengthened the applicant's assumption that he had a job as long as he did not misconduct himself. Because of the applicant's history he was in a different position than the other security guards. 32 The respondent gave a commitment nine years ago and therefore to now terminate the applicant was harsh, unjust and unreasonable. Nothing would prevent the applicant from continuing to work at the gatehouse. The respondent did not offer to retrain the applicant or place him in the label room. 33 It was the respondent's submission that the decision by the respondent to move to contract was made on or about 30 May 2005. A meeting with the applicant followed on 2 June when he was advised what was going to take place with respect to his position becoming redundant and what alternative positions were possible. Particular positions were discussed but on later examination none were appropriate taking into consideration the long standing restrictions of the applicant. Post the meeting held on 29 June the applicant did not return to the respondent with any alternative options. No alternative position was identified during the hearing of the matter. 34 The respondent stated that a valid reason for the termination existed and that was the decision to restructure the security section of the respondent's business. The applicant was afforded procedural fairness through the meetings that were held with him and his union representative. 35 In the correspondence that went between the parties in 1995 and 1996 concerning future employment, whilst the applicant's legal representative sought an undertaking for employment "indefinitely", the response did not express the word "indefinitely". Therefore there was no predefined date at the time as to when the employment would end and there was no guarantee given by the respondent to the applicant that in effect he would be employed forever. The respondent had never given a commitment that the job would be forever, therefore they had not "reneged" on any agreement. The applicant assumed that the employment would go on forever save for misbehaviour. There was no evidence to that effect. 36 In the respondent's submission it was not practical to reinstate the applicant to his former position (s.89(1)) of the Industrial Relations Act 1996 (the Act) as the position no longer existed. There was now no longer a requirement for any additional work to be done. For the Commission to order re-employment under s.89 (2) of the Act to another job, that would not be possible as there was no evidence that there were any positions available that the applicant could fill. 37 The decision made by the respondent on or around 30 May 2005 to contract out their security function at Hoxton Park resulted in the positions at the gatehouse no longer being required to be carried out by those employees located there, including the applicant. All employees (except the applicant) did not wish to be transferred to alternative positions within the respondent's workforce but accepted a redundancy payout and left the business. The applicant and his union representative had two meetings with the respondent (2 June and 30 June 2005) to discuss the situation and its ramifications. The respondent provided the applicant with correspondence, dated 12 June outlining his termination payout. I am satisfied that during both meetings alternative positions for the applicant were discussed. Having listened to the evidence I am also satisfied and I find that no suitable alternative position was found, due to the applicant's physical restrictions and the physical environment that exists in the factory. The work carried out in the labelling room is not in itself a position but work that is carried out by employees as part of their normal duties. Such work requires the employee to walk between the labelling room and other parts of the production and packing plant. Entry into these areas requires the wearing of particular footwear for health reasons. This the applicant can not comply with. 38 For this Commission to reinstate the applicant back to his previous position it must have to exist and that the employee be gainfully employed. With the introduction of a contractor now carrying out the security function the respondent no longer has employees carrying out this role. The advent of contractors has also brought change to the security role with the introduction of computerisation in the documentation and non physical requirement to weigh vehicles. The applicant stated that he could only do some of the tasks now carried out by the contractors. Even if the Commission did reinstate the applicant back to a position in the gatehouse I do not believe that he would be gainfully employed. Manning of the gatehouse only requires one security guard in attendance. It is my finding that there no longer exists a position at the gatehouse for the applicant. 39 After considering all the evidence, I do not accept that the applicant was offered a position of employment for an indefinite period by the respondent. 40 Whilst the correspondence by the applicant's legal representatives sought such an undertaking, it was not given by the respondent. I would find it difficult to accept that such a guarantee of continuing employment of an indefinite nature could ever be given. I therefore do not accept the submission that the application of estoppel is relevant in this case. 41 I do however recognise that the applicant was a long term employee of the respondent of nearly eighteen years. He had suffered a major work related accident which has reduced his future work opportunities and capabilities significantly. 42 By deciding to restructure their security department, the respondent would have recognised that its impact on the applicant would be far greater than any of the other affected employees. As expressed earlier in this Decision those employees did not seek alternative employment with the respondent but departed with their redundancy money. 43 I find in this case that there was an additional responsibility on the respondent. Once recognising that alternative employment within their business was not available, the respondent should have then taken such steps to provide structured support to the applicant to assist in the finding of alternative suitable employment outside the business. 44 I believe it would have been appropriate for the respondent to have engaged an employment agency that specialised in the assisting of people who have sustained an injury like the applicant and therefore been able to give direct assistance in the finding of gainful employment. 45 It is therefore my finding that the termination of the applicant in the circumstances was harsh. 46 I therefore make the following Order: ORDER 1. That in accordance with s.89 (5) of the Act that the respondent Inghams Enterprises Pty Limited pay to the applicant, Mr. Richard Ferguson the sum of $7,500. 2. Such payment to be made within 21 days of the date of this Decision. D. W. RITCHIE 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.