Industrial Court of New South Wales CITATION: Tranter v Shaan Holdings Pty Ltd t-as Shaan Eyeworks and another [2006] NSWIRComm 245 Applicant: Mark Tranter PARTIES: First respondent: Shaan Holdings Pty Ltd t/as Shaan Eyeworks ABN: 57 806 086 393 Second respondent: Neil McColl FILE NUMBER(S): IRC 2453 of 2004 CORAM: Backman J CATCHWORDS: Unfair contract - s 106 of the Industrial Relations Act 1996 - whether contract became unfair by reason of what it permitted and what it failed to specify - whether circumstances of termination properly characterised as breach of contract and therefore outside the jurisdictional reach of s 106 - whether allegations of unfairness where they rely on conduct referable to the terms of the contract - whether applicant's termination of employment at the instigation of the employer - contract held to be unfair within s 106 by reason of unilateral variations to applicant's salary package and circumstances of termination - money orders considered in terms of one global payment taking into account payment in lieu of notice and severance payment - principle of mitigation considered and not applied - liability of non-party under the principles of Brown v Rezitis considered - held: first and second respondents jointly and severally liable to pay monetary orders under s 106(5) - interest - orders - costs. Civil Procedure Act 2005 LEGISLATION CITED: Industrial Arbitration Act 1940 - 1967 Industrial Relations Act 1996 AFMEPKIU New South Wales Branch v David & Ors [2006] NSWIRComm 206 Allison v Bega Valley Council (1995) 63 IR 68 Brown and Others v Rezitis and Others (1970) 127 CLR 157 Gala v State Bank of New South Wales t/a Colonial State Bank (No 2) (1998) 84 IR 216 CASES CITED: Keycorp Limited v Thomes (2004) 141 IR 116 Ross v GN Comtext (Australia) Pty Limited (2000) 107 IR 1 Sydney Water Corporation Ltd and Another v Industrial Relations Commission of NSW and Another (2004) 61 NSWLR 661; 141 IR 14 Tokyo Network Computing Pty Ltd and Anor v Tanaka [2004] NSWCA 263 (2 August 2004) Truelove v Sydney Water Corporation Ltd (2005) 146 IR 253 Walker v Industrial Court of New South Wales & Anor (1994) 53 IR 121 HEARING DATES: 31/10/05, 07/11/05 DATE OF JUDGMENT: 07/31/2006 Applicant: Mr R de Meyrick, of counsel Solicitor: Paris J Carr & Assoc. LEGAL REPRESENTATIVES: First and second respondents: Mr S Gardiner, of counsel Solicitor: Freehills JUDGMENT: - 13 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Backman J Monday, 31 July 2006 Matter No IRC 2453 of 2004 Mark Tranter v Shaan Holdings Pty Ltd t/as Shaan Eyeworks and anor Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 245 1 The applicant, Mark Tranter, has commenced proceedings against the first and second respondents seeking relief under s 106 of the Industrial Relations Act 1996 (the Act) arising out of the circumstances of his termination of employment. 2 The application which has proceeded by way of amended summons for relief seeks orders in addition to certain consequential orders in the following terms: (1) An order declaring that the contract of employment between the Applicant and the First Respondent was an Unfair Contract within the meaning of s.106 of the Industrial Relations Act 1996 (NSW). (2) An order declaring that the said contract of employment became an Unfair Contract because of the conduct of the Respondent, through its managers, servants and agents, including the Second Respondent. (3) An order declaring the contract, its collateral conditions, variations and arrangements partly void to the extent that they constitute an unfair contract. (4) Further, or in the alternative, an order varying the contract of employment ab initio, or from some other time, to include terms that: (a) Termination of the employment shall not be harsh unjust, unfair, unreasonable or unconscionable, whether it is with or without notice. (b) Upon termination of the Contract of employment for any reason (other than serious and willful misconduct) the employer shall give the employee twelve (12) months notice of termination, or make payment in lieu thereof. (c) The Contract of Employment shall not be terminated (nor shall the remuneration package of the employee be substantially reduced) by the employer, by way of retrenchment for economic, technical or structural reasons, unless the employer provides to the employee; (i) An opportunity, as early as possible, for consultation on measures to be taken to avert the termination and/or mitigate the adverse effects of any termination. (ii) Retrenchment benefits and redundancy pay, commensurate with the employee's position, tenure, age and re-employment prospects, as follows ; 1. Six (6) weeks pay for each year of service or part thereof with the employer; 2. Outplacement services for a period of six (6) months; 3. financial counselling; and 4. an employment reference or statement of employment. (d) The Contract of Employment shall not be shall not be terminated (nor shall the remuneration package of the employee be reduced) by the employer in consideration of any alleged misconduct or unsatisfactory performance by the employee, unless: (i) The employer has a valid reason. (ii) The employer gives the employee an opportunity to respond to any allegations of unsatisfactory performance or misconduct. (iii) The employer gives the employee proper warning in respect to any alleged unsatisfactory performance or misconduct, and in respect to any disciplinary steps, or changes to remuneration contemplated as a result. (iv) The employer gives the employee an opportunity to remedy any alleged unsatisfactory performance or misconduct prior to the determination of any disciplinary steps or changes to remuneration. (e) The employer will not alter or purport to alter the manner or method of the employee's remuneration without the express and informed agreement of the employee. In particular, the employer will not: (i) Alter the percentage of the employee's agreed remuneration package that is expected to be earned by way of commissions. (ii) Directly or indirectly require the employee to take on andditional (sic) sales areas in order to earn the same or less remuneration than offered and/or agreed upon at the commencement of the Contract, or as amended by mutual agreement from time to time. (iii) Directly or indirectly require the employee to take work longer hours in order to earn the same or less remuneration than offered and/or agreed upon at the commencement of the Contract, or as amended by mutual agreement from time to time. Background 3 The applicant is a qualified optical mechanic with a number of years experience in the eyewear and optical products industry. Before his employment commenced with the first respondent the applicant was in full-time employment with a competitor eyewear company known as Mod-Style. He described his employment with that business in his affidavit as secure and stable. In about October 2000 the applicant was approached directly by the second respondent to work for the first respondent. The applicant initially refused the offer but later accepted an offer of employment at a base salary of $10,000 per month inclusive of superannuation. The applicant's total salary package also included a fully maintained car, mobile telephone and business tools, as well as a commission of $500 payable on the sale of each "smart mirror". Also included in his salary package were certain sales incentives in the form of fully paid overseas holidays conditional upon sales targets being met. 4 The applicant commenced work for the first respondent on 1 December 2000. The first respondent at that time was a wholesale supplier of ophthalmic products including spectacle frames, lenses, sunglasses, video imaging systems and electronic rimless drills. Its customers included optometrists and optical dispensaries throughout Australia as well as overseas. Responsibility for the sales and service of the first respondent's customers was divided among five area sales managers. Approximately 15 to 20 percent of the first respondent's sales volume was generated from sales in New South Wales (except for the Northern Rivers region) and the Australian Capital Territory. Approximately 50 to 55 percent was generated in Queensland and the Northern Rivers region in New South Wales. When the applicant commenced work for the first respondent he was appointed to the position of area sales manager for New South Wales (excluding the Northern Rivers region). He was based in Sydney and travelled extensively as the first respondent's sales representative. Shortly after the applicant commenced work for the first respondent he travelled once to Western Australia. In late 2003-2004 the applicant also travelled to South Australia about three to four times visiting customers of the first respondent. 5 During the next few years the applicant continued to work for the first respondent. For the year ended 30 June 2003 the applicant's sales exceeded his budget by some 9 percent. On October 6 2003 he received a congratulatory email from Mr Aaron McColl, the first respondent's commercial manager, for achieving his budget for the first quarter of the 2003-2004 financial year. In the previous year, on 4 March 2003 the applicant took part in a performance review conducted by Aaron McColl. His work was assessed over a wide range of criteria and he received a positive rating to the effect that he met job requirements and often exceeded them. Comments on the performance review document encouraged the applicant to "keep up the good work". For the financial year ending 30 June 2003 the applicant received an award from the first respondent for "Sales person of the year". The award, bestowed yearly, was won by the salesperson who accumulated the most points. The points were based on four key performance measures, namely: sales budgets performance, productivity call rate, administration activity timelines, and personal evaluation and appraisal. The applicant actually accumulated the second most number of points during the year but won the award after the winner left the first respondent's employ in March 2003. 6 In mid-February 2004 the second respondent telephoned the applicant and asked him to attend a meeting in Brisbane at the first respondent's head office on 17 February 2004. No details were given to the applicant concerning the likely content of the meeting. According to the second respondent at about the same time the first respondent received a report from its financial advisor. The report (which was not in evidence) advised that the first respondent should pay its salespersons salaries commensurate with sales generated. This had not been the basis upon which payments of salaries had been adopted by the first respondent at that time. The second respondent intended to discuss that fact with the applicant and advise him that in his view, sales made by the applicant for the previous year had been, "well below expectations" and that the sales figures could not justify the salary he was being paid. 7 On 17 February the applicant was driven to the first respondent's head office by Aaron McColl. According to the accounts of both the applicant and Aaron McColl, the applicant asked Aaron McColl what the meeting was about. Aaron McColl replied that it was about the applicant's future with the company. The only attendees at the meeting that day were the applicant and the second respondent. 8 Both parties have recorded their respective recollections of the conversation which occurred during the meeting in their affidavits. According to the applicant the conversation proceeded along the following lines: . . . . . [14] Neil McColl said: I've been disappointed with recent sales figures. Your sales figures for January were $28,000. That's very dissapointing (sic). I said: Those figures are wrong Neil. I have received a different set of figures from Aaron in a pdf. File. I believe my January figure was closer to $50,000. The figure you just quoted doesn't include an $18,000 order that Aaron has included. [15] Mr McColl did not challenge me any further on this matter. He tried to buzz through to Aaron's office but Aaron was not available. The conversation then continued as follows; Neil McColl said: I'm going to make a lot of changes to the lab down stairs, including knocking out walls, building new walls and air-conditioning the laboratory. I'm also planning on buying another Spectacle lens generator. The cost of all of this will be huge. He continued "Your salary package is great by industry standards" I said: "I'd have to agree with that". Neil said: "After 3 years your sales figures have not brought me the return I'd hoped". I said: It's been a tough road, but I think my sales territories are in much better shape now that (sic) when I took them on. It doesn't help my job when we are losing customers like Kays Optical, Budget Eyewear and The Optical Shops. I also said: Things would be better if we had been accepted into a buying group like Eyecare Plus or Provision." [16] Neil pointed to a document on his desk and said: "This is a business review I've recently received. It states that major changes need to be made. I'm very disappointed with recent sales figures. Due to financial pressure upon the business, your remuneration package can't be maintained." [17] Neil pulled out a piece of paper and wrote upon it as he spoke. Annexed hereto and marked "A" is a copy of that note. The conversation continued as follows: Neil said "Your new deal will be $48,000.00 per year as a base salary plus commissions on a sliding scale of 3%, 4%, 5% of sales, depending on sales quantum in a given month, plus superannuation contributions, plus the existing car allowance. I'm putting this in place from the beginning of next month." I was shocked and surprised by these announcements. I said : "Is this set in stone?". Neil said: "Yes. I'm doing it tough at the moment. I only paid myself $40,000 personally for the year so far." I said: "What about all the money your (sic) spending on the lab downstairs?" He said: "The lab pays for itself." Neil said: "I'm going to offer you a larger territory. If you want, you can have all of South Australia at the expense of Erica Pullen. You can take over the remainder of the ranges that Mrs Pullen had carried while you had visited South Australia in 2003. You can also have the North Coast of NSW and the New England Area." [18] The North Coast and New England territories were being serviced by Stephen O'Keefe who had been with Mr McColl's company for 12 years or more. This was a major concern for me. I said "What about Stephen. He's got a wife and 4 children". Neil said: "I'll take care of Stephen. It's not your concern. I'm going to put Stephen on a similar new deal to yours. If you both accept the new deal I will have a win. But if you both decline I will also have had a win." I said: "Why would that be a win?" Neil said: "If you both decline and leave I will save $330,000 per year. It's a win-win situation. You think about it and let me know". [19] I was upset and shocked. I felt almost physically sick. As I got up to leave I pointed to Neil's handwritten note (annexure "A") and said: "You can forget about a sliding scale commission. There's no way I'd agree to that. I'd want 5% straight away." Neil drew a line through the figures of 3% and 4% on the note and wrote "5% of sales (Not lab)" I said "I'll need time to think about this", and then left. 9 The second respondent's recollection of the conversation is as follows: Me: "I'm concerned with the sales in your territory. We are paying you a lot of dough, and we're not happy with the results and the sales figures that are being generated from your territory. Especially given the money we're paying you. We've been doing this for two years. We keep asking you what we can do to help, but nothing seems to change. There's been no improvement, and we need to do something about it. You've got a large territory in population terms and we're not seeing corresponding sales figures. I've got a business report from my accountant and financial adviser which says that we need to have our salespeople earning commensurate with what they're selling. Your sales figures have been very disappointing." Applicant: "It's been tough in the territory." Me: "Well, your sales figures haven't bought the appropriate return and I think a change should be made. Your salary package at the moment is great, but your sales don't justify the amount we're paying you. We want to offer you a new salary package, which will be $48,000 per year base salary plus commissions on a sliding scale of 3%, 4% and 5% of sales, contributions, and the existing car allowance. This is in line with what we currently pay Stephen O'Keeffe and he earns in excess of $100,000 with thirty percent less population base." Applicant: "I'd want a straight 5%, not the sliding scale. I might be interested then." Me: "Ok, I can do that, I'd like it to start from May if you agree. I can also offer you a larger sales territory to increase your commissions under the proposed package. That will maximise your income. You could sell in the Northern Rivers area." Applicant: "What about Stephen O'Keeffe?" Me: "Don't worry about Stephen. It's not your concern. If you accept the new package, I'll have a win. But if you don't I'll also have a win." Applicant: "Why would it be a win? What if Stephen doesn't like it?" Me: "If you both left, I would save $330,000 per year." Applicant: "I'm going home now. I want to go to the airport now." Me: "Can't you stay and we can talk about it?" Applicant: "No. I want to go home. I'm disappointed with the way things are heading. I'll need a week or two to think about it." Me: "Well, why don't you think about it and let me know by the beginning of next month?" Applicant: "Ok." 10 The second respondent said in his affidavit that in his view he was engaged in negotiations with the applicant during the meeting in relation to the applicant's remuneration package. During cross-examination the second respondent said he was "close to" a "concluded decision" that he was going to change, quite substantially, the applicant's remuneration package. The second respondent also said it was his understanding that the negotiations during the meeting took place on the basis that an agreed remuneration package would take effect from 1 May 2004. The piece of paper handed to the applicant by the second respondent during the meeting tends to confirm the intention to impose a substantial reduction on the applicant's salary package as proposed by the second respondent. Handwritten notations on the document indicate that the applicant's new salary package was to be reduced to a base salary of $48,000 per year, including superannuation at $4,320, plus car ($18,000), telephone ($3,600) and commission based on 5 percent of sales, excluding "lab". Further notations, presumably relating to anticipated commission payments, record: Sales of $600K = $30,000 ($2,500 p/mos) Likely ------> 720K = $36,000 ($3,000 p/mos) 800K = $40,000 900K = $45,000 etc. 11 The applicant says, that following the meeting, he took some time to consider his position and decided that he could not afford the significant drop in earnings that would inevitably follow if he accepted the new salary package. In relation to possible commission earned on sales the applicant described the suggestion in the handwritten document that sales figures of $720,000 were "likely" as, "totally unrealistic". 12 On 17 February 2004, after the meeting the second respondent forwarded an email to the applicant which said: Mark hi, I know you will be disappointed with today's meeting. Whatever you think or choose to do I personally hope you stay with us. You do a great job and are a delight to work with... I enjoy working with you. Best regards Neil McColl 13 The applicant on 27 February wrote to the second respondent in the following terms: Dear Neil, I refer to our meeting on 17 February 2004 at Brisbane, during which you purported to reduce my base salary from $120,000 (including super) to $48,000 (plus super), without any prior warning. In so far as you suggested a new commission structure which would off-set this reduction, it appears obvious to me that earning any such commissions would be unobtainable in the current circumstances of the company. As I stated then, and reiterate now, I do not accept this proposed change to my contract of employment, and I expect you to continue to remunerate me in accordance with our existing agreement until any variation can be mutually agreed. I consider that the proposed variation to my employment conditions would be sufficiently dramatic to constitute a termination of my employment and an offer of a new position. I do not wish to be re-employed in such a lowly paid position. I note that you cited financial pressures on the company as a justification for your proposal. If you cannot afford to continue to employ me within the terms and conditions of my current contract of employment, then my termination would constitute a redundancy, and I would request that you make an offer of redundancy package commensurate with my status, age and remuneration level. I ask that you give your urgent attention to these matters and advise me with 7 days of your proposal. 14 On 29 February the second respondent sent a reply by email to the applicant in the following terms: Dear Mark Thank you for the email letter. Firstly this is not and was not personal it is about Shaans' survival. How do I give you a warning? Or am I supposed to give you a warning about the warning... and how would I do that? You were invited to Brisbane so that my decision and your options were given to you face to face. In effect warning you of changes. You were given 2 weeks. Decisions were made after consultation with my accountant and a financial adviser, both of whom agreed that your current remuneration package is unsustainable in its current form and that any sales package should be sales performance based. This is standard policy in our industry and other sales based organisations. When you started with Shaan you were hired with the idea that Shaan would (because of your expertise, experience and knowledge of the NSW market) "buy" a sales base in NSW. It has now been 3 years and you have not reached the sales required to sustain your remuneration level. You must be aware of this. I am not unhappy with your performance just the amount paid vs cost. During our meeting in Brisbane I did not purport anything. What I did was give you the message (after you had ruled out a straight 15% Agency fee) that effectively on March 1st 2004 your package would be changed to $48,000 plus Super, Commissions, Car allowance and phone allowance etc., I did not say the new commission structure would off-set the reduction in base salary. I pointed out what you would make if your sales were to remain the same and the effect of increased sales increasing income. We discussed increasing your Territory to facilitate increasing your sales/customer base. When in Brisbane you advised me that under the changing circumstances you may choose to seek employment elsewhere and that you wanted 2 weeks to make a decision. You are not under contract. There will be no redundancy "proposal". Your new financial income arrangements hardly constitute a "Poverty Pack". I have talked to 3 other Reps who have been in the business for longer than 10 years. None of them make the kind of money you do. The changed employment package is still a very good package and far in excess of Industry Standards. As you would imagine I have talked to thee (sic) appropriate Government Department and Shaan is quite within its rights to officiate change. Personally I hope we can work through this and you choose to stay with Shaan. In my opinion we have looked after you exceptionally well for 3 years, and the first time we get into tough times and we expect you to actually earn income commensurate with industry standards on sales you whimp (sic) out, cry foul, send me a self effacing letter and try for the golden handshake. It is not going to happen. I thought you had more character than what you are showing right now. I re-iterate. This is not personal it is about ensuring the survival of Shaan. If you think you are hard done by, can't rise to the challenge and have got a better job elsewhere then quit. If you have some character and believe you can rise to the challenge then stay. Don't send me whimpy (sic) bullshit, I don't need it. 15 On 4 March 2004 the second respondent received a reply to his email of 29 February from the applicant. It said: Dear Neil, I note your e-mail dated 29th February where you don't propose to make any offers of redundancy to me. Please be advised that I now consider that you have terminated my employment. I hereby give you 2 weeks notice. Please let me know whether you wish me to work out this 2 week notice period or whether you would be prepared to pay me in lieu thereof. 16 On the same day the second respondent sent a reply: Dear Mark, I have not terminated your employment. I made it very clear in my last correspondence to you that I hoped you would stay on with Shaan. You have terminated your own employment by giving me 2 weeks notice. On that basis I accept your resignation. Regarding payment in lieu of work: We are prepared to pay you all entitlements (based on $120,000 pa income which includes Superannuation) directly to your bank account upon receipt of all goods in your possession owned by Shaan, including scheduled appointments and other arrangements made with our customers for future business and or negotiations for business and an in-depth discussion (exit interview) on the state of the NSW territory you managed. Any missing goods or products will be charged back to you at wholesale rate. This is a sad time and I cannot believe you have made this decision. Aaron will be in touch with you tomorrow to establish a time for your exit interview and retrieve our property. 17 On 8 March 2004, Aaron McColl sent a letter of offer to the applicant on behalf of the first respondent. The letter of offer which represented the applicant's proposed new remuneration package presented to him by the second respondent at the 17 February meeting was set out as follows: Letter of Offer Position: Sales Area Manager NSW/ACT/SA Employment: Full Time _________________________________________________________________ Shaan Holdings Pty Ltd is pleased to offer you the following remuneration package: Base Salary $48,000 per annum Superannuation 9% P / A Car Allowance $18,000 P / A Mobile Phone Allowance $3600 P/ A SALARY PACKAGE $73,920 + Commission + Travel Expenses On Target Earnings Estimate $103,920.00 - $108,920.00 P / A Commission: Frames / Equipment (Smart Look & Rimless Drill) Sales: Commission will be paid for the total monthly frame sales, Smart Look sales and Rimless Drill sales combined. This also includes any phone based sales. The commission will be payable one month in arrears and the structure is: Sales Value per Month Commission (percentage of sales paid) $20,000 to $30,000 5% $30,001 - $40,000 5% $40,001 - $50,000 5% $50,001 - $999,999 5% LAB: There will be no commission payable on lens sales or lab related services (such as a fitting fee). All frame sales derived from lab sales will however be included as per the above structure. Based on your previous sales history with Shaan Holdings Pty Ltd to date in your existing sales areas only , commission payable year to date would have been: Financial Year 03-04 (YTD FEB 04) $18,926.00 As indicated to you in our meeting in Brisbane and outlined below, your sales areas will be expanded from what they currently are, to a significantly larger area, thereby further increasing the scope for higher commissions payable to you. It is estimated (given your past sales history and the sales histories of the additional sales areas) that On Target Earnings (commission) will be approximately: $30,000 to $35,000 ( + ) per annum. Territory You will be responsible for managing the following States & Territories: New South Wales Coast (From the Victoria border north to Coffs Harbour) New South Wales Country (From Tamworth down and across to the ACT border) South Australia Australian Capital Territory All customers that fall within these areas will be coded to MT, no house accounts will exit. Travel Expenses All travel related expenses such as (but not limited to) motel accommodation, hire car, airfares, excess baggage will be either paid directly by Shaan Holding's Pty Ltd or paid by the employee and reimbursed in full. No value is set for any particular travel expenses and is simply classified as "being within a reasonable amount". Further clarification can be sought through your manager. Meals Allowance A meals allowance is payable by Shaan Holdings Pty Ltd should the employee be required to stay away from home for greater than one night. In such an instance, the meals allowance is as follows: $35 per day Should you wish to accept this offer, please sign and date this letter of offer and return it by post or fax to the office within 2 working days. MARK TRANTER SIGNED: __________________ DATE: __________________ 18 On 10 March 2004 Aaron McColl wrote to the applicant noting that the deadline for acceptance of the letter of offer had passed and arranging to retreive company property from the applicant on 15 March 2004. 19 On 31 March 2004 the second respondent wrote another letter to the applicant in which he said: This is my last time to try (sic) contact you direct so bear with me. I would still like you to work for Shaan and your position is still open to you. I have not advertised or sought a replacement for you as I still believe that you will reconsider your position. Originally I wanted you to accept the change in remuneration from Salary Only, to a more realistic Base Salary plus Commission which would reflect a sales oriented position. You have all the relevant details. Originally we were going to make the change on May 1st 2004. But because we have been back and forth on this I would be prepared to change this date to June 1st 2004 should you reconsider your position. We started negotiating with you in good faith when you were in Brisbane. With a serious desire for you to stay with us. You know this as part of the negotiating we even increased your commission to a flat 5% at your request and offered you a significantly larger territory which at the time you indicated was a good idea. I still don't know where the wheals (sic) fell off all this. Mark we still want you with us. There is no reason to leave. Even the new total package at over $100,000 in June is still an excellent package by any standards. Please reconsider. Contract under which work performed by the applicant 20 Between 1 December 2000 and 17 February 2004 the applicant worked full time for the first respondent in the position of area sales manager for New South Wales (excluding the Northern Rivers region) and the A.C.T. His contract of employment consisted of one document, namely the letter dated 7 November 2000 which confirmed the offer of employment made to the applicant by the second respondent on behalf of the first respondent and set out his terms of remuneration. The letter which was sent on the first respondent's letterhead is set out in full below: Dear Mark, This is to confirm our employment offer to you. Remuneration $10,000 per month, including your Super contribution. Calculated on a Weekly basis it is $2,307.69 of which $170.94 is paid into your Super fund tax free leaving you with $2,136.75 gross before tax. We will also supply a vehicle, mobile phone, lap top, phone/fax and all business expenses. Incentives. For each Smart Mirror sold and paid for, $500 commission. For sales reached of $685,000 in one calendar year (Jan-Dec) a 10 day Holiday for your family. Sales do not include sales for Smart Mirror, as they have their own incentive scheme. For Total Company Sales exceeding $3,000,000 in one calendar year, a trip to Mido in Milan with a stop off in Rome. I anticipate a lot of what happens will really be a evolution between us as we progress. If you feel there are other issues please do not hesitate to call me. It is a very exciting time for all of us, and we are all looking forward to you joining Shaan. Please confirm this when you are able. Was the contract unfair? 21 The applicant contends that his contract was or became unfair because of the conduct of the first and second respondents at the 17 February 2004 meeting and following that meeting. The unfairness is said to arise essentially from what the contract permitted and from what it failed to provide. The applicant's principal contentions in this regard may be set out as follows: (i) the contract permitted the respondents to terminate the applicant's employment for economic, technical or structural reasons without acknowledging that the cessation of his employment amounted to a redundancy; (ii) the contract permitted the respondents to terminate the applicant's contract of employment without paying him a proper redundancy or severance payment; (iii) the lack of a formal written contract enabled the respondents to deny the terms and conditions which would otherwise prevent them from unilaterally changing the applicant's base salary, his working conditions and the commission component of his remuneration; (iv) the contract permitted the respondents to vary the applicant's remuneration package and/or terminate the applicant's employment based wholly or partly upon considerations of unsatisfactory performance and misconduct without giving the applicant any or adequate opportunity to respond; (v) the contract failed to specify the means of remuneration or work to be performed; it failed to specify or limit the sales areas which the applicant was expected to service; and it failed to specify or limit the hours of work to be performed. 22 The respondents rely on three reasons why the Court would not be satisfied that any award under s 106 should be made in the applicant's favour. These three reasons simply stated are: (i) the Court lacks jurisdiction because on the applicant's case the circumstances support only one conclusion namely, that the respondents' conduct was in breach of the contract of employment: see Sydney Water Corporation Ltd and Another v Industrial Relations Commission of NSW and Another (2004) 61 NSWLR 661; 141 IR 14; (ii) if the Court has jurisdiction to decide the matter then the Court would be satisfied that the applicant resigned from his position of his own accord; (iii) the applicant was, on the evidence, offered the position he occupied prior to 17 February 2004 on the same terms which governed the position prior to that date. 23 The respondents' "reasons" substantially overlap and it is therefore convenient that they be dealt with together in assessing whether the applicant's case has demonstrated any relevant unfairness under s 106 of the Act. 24 In contending that the Court lacks jurisdiction by reason of the circumstances of termination being properly characterised as a breach of contract, the respondent relies on an unreported decision of the Court of Appeal of Tokyo Network Computing Pty Ltd and Anor v Tanaka [2004] NSWCA 263 (2 August 2004). In that decision the Full Court had before it an appeal from a decision of Bryson J who awarded damages for wrongful dismissal against the first appellant and specific performance against the second appellant. At first instance Bryson J had concluded that a company resolution of the first appellant to reduce the respondent's salary amounted to an anticipatory breach of his contract of employment. Handley JA with whom Mason P and Tobias JA agreed, confirmed Bryson J's conclusion. Handley JA added (at [11]): (The respondent) promptly accepted that repudiation, as he was entitled to do, prior to the employer's attempt to withdraw it. His acceptance of the repudiation brought the contract to an end because of the anticipatory breach. 25 The respondents here contend that the applicant's version of events may be described, in the absence of any unfair contractual terms, as a breach of the contract. The present claim is therefore the same as the respondent's claim in Tokyo Network Computing. Support for this construction of the applicant's case by the respondents and the corresponding limits on the operation of s 106 is sought to be found in Sydney Water Corporation with particular reliance being placed on certain comments made by Mason P at [35], [40] and [49] of that decision. 26 It should be stated at the outset, that allegations of unfairness, where they rely on the conduct of a respondent party, must be in some way referable to the terms or operation of the impugned contract or arrangement in order to fall within s 106. But this is not a novel proposition. In Truelove v Sydney Water Corporation Ltd (2005) 146 IR 253 the Full Bench of the Industrial Relations Commission in Court Session (now Industrial Court) in commenting on the findings of the Court of Appeal in Sydney Water Corporation confirmed the relationship between conduct and the terms of a contract of employment within the scheme of s 106 of the Act. At [21]-[22] of the decision the Full Bench said: [21] The reaction to Reich appears to be a reaction to the conclusion in that case that conduct in breach of a contract may render a contract unfair. There is a perception that the true remedy (or the only remedy) in such a case should be for breach of contract at common law. However, the conclusion in Reich is inescapable given the broad terms of the section and was explicitly acknowledged to be so by Mason P at [28] in Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) (2004) 61 NSWLR 661; 141 IR 14. As Kirby P (as he then was) observed in Walker v Industrial Court (NSW) (1994) 53 IR 121 at 134-135, it is not unusual in our legal system for one set of circumstances to give rise to a number of remedies, but the existence of alternatives has never excluded a person from pursuing rights expressly conferred by statute. The existence of other remedies in this context (such as statutory claims for redundancy payments or common law claims for breach of contract) does not control or limit the ample language of the section (in Walker , Kirby P considered a predecessor to s 106, s 88F(1) of the Industrial Arbitration Act 1940 (NSW) (Repealed)). Notably, not one of those who seeks to impugn Reich has attempted to reconcile their argument with the clear words in ss 105 and 106. In our view, it cannot be done. [22] It may also be a reaction to the idea that any conduct in breach of a contract will necessarily, without more, render the contract (or arrangement, related condition or collateral arrangement) unfair. This appears to be at the heart of Mason P's critique in Sydney Water Corporation Ltd . But this is not the case: as the decision in Origin Energy Ltd v Smith (2001) 111 IR 476 (which we discuss later) makes clear, nothing in the decision of the majority in Reich substantiates such a principle. and, later at [30]: [30] We note that the Court of Appeal, in determining what Reich stood for, did not have before it the decision of a Full Bench of the Commission in Court Session in Origin Energy Ltd v Smith (2001) 111 IR 476 where the Full Bench observed at [19]-[20]: 19 We would add one final observation. It was undoubtedly open to her Honour to deal with the matter in the way she did; that is as a "conduct" case. It may be that she had little alternative to doing so in view of the way in which the respondent framed his case. Nevertheless applicants, in framing their proceedings, and judges in hearing and deciding them, should not overlook the consideration that s 106 is directed to the fairness, etc of contracts and arrangements and with the fairness, etc of their terms, either in themselves as to what they actually provide or fail to provide. There is nothing in the Full Bench judgment in Reich that should lead to any different approach. It would have been preferable for the case before her Honour to have been framed and dealt with in that way. 20 Although conduct of a party which renders a contract or arrangement unfair or otherwise actionable under s 106 of the Industrial Relations Act may well provide jurisdiction for relief under that provision, the primary focus of the exercise of the Court's jurisdiction should be, where relevant and available, the contract or arrangement and its respective terms or omitted terms as to the effect thereon of the impugned conduct. This approach will usually lead to orders (where orders are made) more certainly well-founded jurisdictionally and will be less likely to result in appeals which, whilst superficially thought to be available, upon examination on appeal are soon shown to lack substance. 27 The foregoing passages in Truelove also emphasise that it is by no means unusual for one set of circumstances to give rise to more than one remedy which may be found in either the statutes or at common law. Nor is it impermissible, where this occurs, for an applicant to pursue a remedy for unfair contract under s 106 even though the same set of circumstances may disclose a breach of contract. So much was also made clear in Sydney Water Corporation at [40] where Mason P observed: Section 106 is available to a party whether or not in breach of contract, and whether before or after termination has been effected. Walker makes this clear in the reference (at 149) to a contract being unfair because of the limited or discriminatory rights conferred in the particular case on an employee at the stage of his or her dismissal. (See also per Kirby P at 134 and Incitec v Industrial Court of New South Wales (1992) 45 IR 155 at 156-7 per Gleeson CJ.) But it simply does not follow that a contract of employment is unfair because or whenever it leaves the employee to remedies under the general law. There would need to be a finding that those remedies were relevantly "unfair" generally or in regard to the contract at hand before the Commission's remedial jurisdiction would be enlivened, assuming that such a finding is within the contemplation of the section. I doubt that it is, although it is unnecessary to resolve that matter finally. 28 In the present application the respondents contend that their conduct as characterised and relied upon by the applicant is not referable to any terms of the contract of employment, and, that if the Court were to find otherwise the Court would fall into error. 29 The applicant's case that the contract was, or became, unfair at the meeting of 17 February 2004 and following must be examined by reference to how the applicant has pleaded his case in the summons. I have earlier attempted to summarise those pleadings. They rely quite plainly not on what the contract expressly provided but on what it failed to specify (or provide), and also, what it permitted. The context in which the word "permitted" is used I take to mean that which the contract did not proscribe. In other words, the contract of employment in the absence of any terms or conditions dealing with procedures to be adopted on termination, failed to proscribe the creation and implementation of termination procedures that the applicant contends were unfair or operated unfairly against him. It also failed to proscribe variations to the applicant's remuneration package which the applicant also contends were unfair. The construction of the word "permitted" where used for example to describe conduct referable to, and which may render a contract of employment unfair, was referred to by Mason P in Sydney Water Corporation when examining Sheller JA's use of the term in the Court of Appeal decision of Walker v Industrial Court of New South Wales & Anor (1994) 53 IR 121 at 149. In Sydney Water Corporation at [32] - [33] Mason P said: [32] A contract of employment may be found unfair because, in the words of Sheller JA (with whom Meagher JA agreed) in Walker (at 149): [it] permitted termination which, in the circumstances, was unfair and discriminatory. By so permitting the contract was or became unfair. [33] Sheller JA was using the term "permitted" in the sense of that which the contract did not proscribe. Absence of proscription in the relevant particular meant that a party was at liberty to act unfairly without the general law's sanctions for breach of contract. A contract may "permit" certain conduct either by sanctioning it expressly or by failing to prohibit it. In either circumstance the other party has no contractual remedy to prevent that conduct. Either type of "permission" may properly lead to an appropriate remedy in the Commission, if the Commission finds that the contract is unfair. If that finding is made, the remedies open to the Commission extend to declaring the contract wholly void or partly void, or varying the contract, with appropriate accompanying orders for the payment of money (s106(3) and (5)). 30 The Court of Appeal decision of Walker was relied upon by both the Full Bench in Truelove and by Mason P in Sydney Water Corporation principally for its findings concerning the relationship between conduct and contracts alleged to be unfair within the meaning of s 106. In Sydney Water Corporation for example Mason P found (at [26]): [26] The Commission may examine not merely the terms of the contract (or arrangement) as originally negotiated, but also the manner in which it has ultimately "worked out and operates as between the parties to it" ( Walker v Industrial Court of New South Wales (1994) 53 IR 121 at 133-4 per Kirby P. See generally Walker at 145-9, Rothmans Distributions Services Ltd v Full Court of the Industrial Court of New South Wales (1994) 53 IR 157 at 160). 31 The decision in Walker concerned a contract described as an unexceptional, normal contract which contained no express terms governing notice and which was not alleged to be unfair at its inception but rather to become unfair by reason of certain conduct engaged in by the respondent in dismissing the applicant from employment. 32 In Walker at 132, 133 Kirby P described the applicant's case in the following way: The case of Mr Walker, both before Hungerford J and before the Full Industrial Court, was that the contract or arrangement that he had with Hussmann was unfair, because it did not contain a provision whereby severance payments would be made in the circumstances applicable to his case. Hussmann's defence asserted that it was perfectly entitled to dismiss the claimant as it did, for cause. Much of its evidence was addressed to the justification of its actions. Its cross-claim involved an assertion that, far from the contract being unfair, harsh or unconscionable, or any conduct on the part of Hussmann rendering it so, Mr Walker had actually been overpaid, and was liable to account to Hussmann. These, then, were the issues tendered to the primary judge. Mr Walker sought a variation to his contract of employment, to provide, in his case, for the provision of a termination package, such as had been afforded to the other employees of Hussmann. On appeal before the Full Industrial Court, Mr Walker made it plain that he did not present a case for wrongful dismissal, but rather a case, under s 88F, for a variation of the payments received by him, pursuant to the contract or arrangement by which he worked for Hussmann. 33 Sheller JA in the same decision found at 149 that the contract there under review was or became unfair not simply because of the respondent's conduct but also because it permitted unfair treatment of the employee (claimant) and discrimination against him on termination. 34 Similarly, in the present circumstances the applicant pleads his case as one where, by reason of certain conduct engaged in by the respondents, the contract became unfair because it "permitted" the respondents in the absence of provisions to the contrary to vary his terms of remuneration by reducing his salary to an unacceptable level and to terminate his employment. Such an approach to s 106 is permissible in order to determine whether the impugned contract is or became unfair. 35 I should add for completeness that where the applicant relies on what the contract has failed to specify (which I take to mean the same as "failed to provide") this approach is also within the jurisdictional reach of s 106 and therefore falls within its terms for consideration as to whether or not the contract as pleaded is or became unfair: see Walker at 143 (per Kirby P); Truelove at [30]. 36 Having found that the applicant's approach, as pleaded in the summons is consistent with and therefore falls within the provisions of s 106 of the Act the next matter to consider is whether the termination of his employment was at his initiative or at the initiative of the respondents. 37 The applicant contends that the termination of his contract of employment was at the initiative of his employer. This is because the second respondent knew that the amended salary package announced to the applicant on 17 February 2004 was likely to be unsatisfactory to the applicant, and, the second respondent foresaw the possibility of the applicant wishing to leave. The basis in the evidence for this latter assertion is apparent from the words of the second respondent when he told the applicant, "if you accept the new package, I'll have a win. But if you don't I'll also have a win". The applicant also contends that the new salary package was imposed for economic and structural reasons. Under the new package the applicant was expected to take on additional sales areas at a greatly reduced salary. In addition his salary structure was changed so that the base salary was substantially reduced with a corresponding shift to a largely commission based structure. The new package also no longer offered the incentives that were in the original contract. Given the magnitude of the reduction in salary and the expanded sales role which subsumed other sales roles, the new remuneration package should properly be characterised as a redundancy of the applicant's old position and an offer of a different position. In the alternative, the applicant contends it matters not whether his termination of employment is characterised as a dismissal, a redundancy or a "resignation" since a remedy should be provided based on the conduct of the respondents which resulted in the contract becoming unfair. 38 The respondents' position is that the termination of the applicant's employment was not at their initiative. The meeting of 17 February 2004 was conducted in the spirit of negotiation and in the context of good working relations. The proposed reduction to the applicant's remuneration reflected the need to bring the applicant's remuneration into line with industry standards and with other employees' sales. Despite the respondents' proposal and their opening negotiations the applicant chose to leave of his own accord. Moreover the second respondent tried to contact the applicant with a view to conducting further negotiations but the applicant rejected all further advances. The respondents also join issue with the applicant's submissions that he was constructively dismissed by the respondents. The meeting of 17 February, say the respondents, represented the start of negotiations, the applicant was happy to increase his territory and the respondents' request for him to cover a greater sales territory in order to achieve higher sales was reasonable. In addition, neither the second respondent nor Aaron McColl wished the applicant to leave the employ of the first respondent. 39 In Allison v Bega Valley Council (1995) 63 IR 68 the Full Bench of the Industrial Relations Commission acknowledged the existence of cases where an employee has resigned thereby bringing about the termination of his contract of employment but in reality it is the conduct of the employer that, "...has compelled or unduly influenced the employee to resign". The most common example of this, the Full Bench said, was where the employer tells an employee that he or she must resign or be dismissed. The Full Bench also emphasised that an enquiry into which party initiated the termination should involve an analysis into what happened by carefully examining the facts, rather than attempting to formulate general principles. The Full Bench also said (at 73): Where an employee initiates the termination of the contract of employment it is necessary to consider whether that ostensible act of termination was given freely and without any undue pressure. If the ostensible resignation is, in effect, a response to and consistent with a desire by an employer that such resignation be forthcoming, then what has occurred may be that the termination has been brought about by the employer and that in this way the employee has been dismissed. 40 The approach set out in Allison v Bega Valley Council, I consider a useful guide when examining whether the applicant's resignation was, in reality, compelled by the respondents or not freely given or given by the applicant under pressure so that it may be construed as having been brought about by or at the initiative of the respondents. 41 The issue of whether an employee's actions in terminating his or her employment is in reality done at the initiative or instigation of the employer (so as to constitute a repudiation of the contract of employment) was explored in the Full Bench decision of Keycorp Limited v Thomes (2004) 141 IR 116. In that decision, which involved an application under s 106 of the Act, the applicant, at first instance, terminated his own employment following the employer/respondent's refusal to pay him a bonus on the basis of alleged unsatisfactory performance even though no parameters had been established or agreed by which the applicant's performance might be assessed. The finding by the first instance judge, that the respondent's failure to establish performance parameters (in order to assess whether a bonus was payable) constituted a repudiation of the contract of employment, was upheld by the Full Bench. As a result, the respondent's failure to establish and agree on the performance parameters in the context of findings of unsatisfactory work performance entitled the applicant to treat himself as discharged from any further performance. The Full Bench also upheld the findings at first instance that the contract of employment was unfair within the terms of s 106 of the Act, and that the applicant was therefore entitled to monetary orders under the section. 42 In upholding the trial judge's findings, the Full Bench examined a number of authorities which considered circumstances where employees had terminated their own employment, in the context of whether the employer's conduct had, in reality, resulted in a repudiation of the contract of employment. The authorities are useful, in my opinion, to consider whether, in an application under s 106 of the Act, the termination of employment by an employee is, in reality, at the initiative or instigation of the employer. 43 The first of these authorities is Western Excavating (ECC) Ltd v Sharp [1978] 1 QB 761 at 769 where Lord Denning MR observed: If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or ... he may give notice and say that he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind as soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract. 44 The second authority is Police Service (NSW) v Batton (2000) 98 IR 154 where the Full Bench cited Woods v WM Car Services (Peterborough) Ltd [1981] ICR 666, a decision dealing with repudiation. At 670-672 of that latter decision, it was said: In our view, it is clearly established that there is implied in a contract of employment a term that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee: Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84. To constitute a breach of this implied term it is not necessary to show that the employer intended any repudiation of the contract: the tribunal's function is to look at the employer's conduct as a whole and determine whether it is such that its effect, judged reasonably and sensibly, is such that the employee cannot be expected to put up with it: see British Aircraft Corporation v Austin [1978] IRLR 332 and Post Office v Roberts [1980] IRLR 347. The conduct of the parties has to be looked at as a whole and its cumulative impact assessed: Post Office v Roberts . 45 Tokyo Network, the decision earlier cited in this judgment, was the third authority considered in Keycorp Ltd. In that decision, it was held that a unilateral reduction by an employer of an agreed salary payable to an employee, was a repudiation of the contract of employment. At [6], Handley JA said: Mr Simpkins did not dispute that as a general rule a unilateral reduction by employer of the agreed salary payable to an employee is a repudiation of the contract of employment. The Judge quoted authority in support of this proposition including a statement by Lord Oliver, albeit dicta, in Rigby v Ferodo Ltd [[1987] IRLR 516] [1988] ICR 29 HL at 33. There is other authority which supports the same proposition. This includes Stratton v Illawarra County Council [1978] 2 NSWLR 494, reversed on other grounds not affecting the present proposition, Stratton v Illawarra County Council [1979] 2 NSWLR 701, and Marriott v Oxford and District Co-Operative Society Ltd [1970] 1 QB 186 CA, at 191. 46 Tobias JA, in the same decision, who agreed with Handley JA, said at [17]-[18]: This is therefore a case of Tokyo Net saying that it does not take seriously its obligation to pay Mr Tanaka's salary in full and that it would not in fact pay his full salary unless, in the particular circumstances, it suited it to do so: see Carr v JA Berryman Pty Ltd [1953] 89 CLR 327 at 351 per Fullagher J, cited with approval by Mason CJ in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] 116 CLR 623 at 633. Accordingly in terms of the question posed by the Chief Justice in Laurinda at 648, namely, would a reasonable person in the shoes of Mr Tanaka clearly infer that Tokyo Net would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with its obligations and in no other way, in my opinion the clear answer is in the affirmative. There was, therefore, an anticipatory breach by Tokyo Net of Mr Tanaka's employment contract which entitled him to treat that anticipatory breach as a repudiation capable of acceptance by his terminating the contract. This he did. I therefore agree with the orders proposed by Handley JA. 47 During the meeting of 17 February 2004, the applicant was told by the second respondent that his sales figures were disappointing and that because of this and other factors his current remuneration package could not be maintained. The second respondent then produced a piece of paper containing handwritten notations made by the second respondent which showed a substantially reduced and altered salary package. The applicant's base salary up until that point had been $120,000 per annum. The second respondent proposed a new base salary of $48,000 per annum plus commissions in the order of 5%. His superannuation contributions and his car allowance were to be maintained. In addition, the applicant was offered a larger sales territory in which to operate. This "offer" included South Australia as well as the North Coast and New England territories. The latter two areas at that time were being serviced by Stephen O'Keefe. When the applicant asked what would happen to Mr O'Keefe if the applicant took over his sales areas, the second respondent replied: Don't worry about Stephen. It's not your concern. If you accept the new package, I'll have a win. But if you don't, I'll also have a win. 48 When the applicant queried why it would be a win if he took over Mr O'Keefe's sales areas, the second respondent replied: If you both left, I would save $330,000 per year. (The reference to $330,000 I take to be a reference to the combined remuneration of both employees at that time.) 49 According to the second respondent, at the end of the meeting, he told the applicant to think about it and let him know by the beginning of next month. This effectively gave the applicant about two weeks (that is, until the beginning of March 2004) to "think about it". 50 The parties have joined issue in relation to whether the new salary package offered to the applicant during the meeting of 17 February 2004 was final or open for further negotiation. According to the applicant, there was little evidence that the respondents were prepared to negotiate upwards from the offer made on 17 February 2004, but even if they were so prepared, the fact that the initial offer was a low offer was itself unfair. 51 In my opinion, the evidence suggests that the new salary package was presented to the applicant at the meeting of 17 February 2004 on the basis that it was final and not open to further negotiations. There is nothing in the subject matter of the 17 February meeting on either the applicant's version or the second respondent's version which might provide a reasonable basis for concluding that the offer was not final. The records of the correspondence exchanged between the parties following the meeting provide an insight, in my view, into the respondents' real intentions. On the same day of the meeting, the second respondent sent an email to the applicant. It said, "Whatever you think or choose to do, I personally hope you stay with us." It would be difficult to elevate such a neutral statement into an expectation on the part of the second respondent that it was open to the applicant to put a counter offer. According to the second respondent's recollection of the conversation which occurred during the 17 February meeting, he told the applicant that he would like the new salary package to commence from May and he gave the applicant until the beginning of March 2004 to decide whether or not to accept. He also told the applicant that whatever he chose to do, it would be a "win-win situation" for the respondents. Such statements in my view are not capable of providing a foundation from which an inference may be drawn that it was the intention of the speaker to engage in negotiations. 52 On 27 February 2004, the applicant wrote a lengthy letter to the second respondent. In the letter the applicant said to the second respondent that he expected to be paid in accordance with his current salary package, "until any variation can be mutually agreed". This suggests that the applicant, at least, was willing to discuss his salary package to see if some mutually suitable arrangement could be agreed. The second respondent's reply by email of 29 February 2004 however was clearly not written in the spirit of negotiation. Instead, the applicant is reminded that at the meeting of 17 February 2004, he was told that, from 1 March 2004 his package would be reduced to $48,000 base salary, and that the new package hardly constituted a "poverty pack". The applicant was also told he had been looked after "exceptionally well", and that, "... if you think you are hard done by, can't rise to the challenge and have got a better job elsewhere then quit. If you have some character and believe you can rise to the challenge then stay". The second respondent, in cross-examination, said he regretted sending that email to the applicant. That may be so, in hindsight, but the applicant was the unfortunate recipient of the email, nonetheless, on the day before the deadline of 1 March 2004 at which time he was required to advise the second respondent whether or not he accepted the reduced salary package. The second respondent's email sent the day before would have given him little hope that the new package was open to negotiation. On 4 March 2004, the applicant responded to the second respondent's email of 29 February 2004 in which he stated that he considered that the second respondent had terminated his employment. The second respondent sent a reply by email the same day informing the applicant that his employment had not been terminated by the respondents, rather, the applicant had terminated his own employment. The email also contained various instructions concerning termination payments and the return of missing goods. 53 There was nothing in that latter email which might have suggested that the second respondent sought to change the applicant's mind. Instead, on 8 March, the first respondent, under the signature of Aaron McColl, sent the applicant a formal letter of offer which set out the terms of the applicant's new remuneration package which had been presented to him on 17 February. The letter of offer gave him two working days to accept the new package. Again, there was no indication that the matter was open to negotiation. The second respondent wrote a further letter to the applicant on 31 March 2004. Although the letter mentioned the word "negotiation" on two occasions, the clear inference available from the contents of the letter is that the applicant either accept the new salary package or leave the employ of the respondents. The only hint of compromise in the letter comes from the respondents' offer to increase the deadline for the proposed date for changing the package until 1 June 2004. On 14 April 2004, the respondents' solicitors sent a letter to the applicant's solicitors attaching a copy of the letter of 31 March. In relation to that item of correspondence, the respondent's solicitors asserted in their covering letter: As stated in that correspondence to Mr Tranter by my client, that (sic) his present position with Shaan Eyeworks is still open under the prevailing terms and conditions. If the words "present position" and "prevailing terms and conditions" are meant to refer to the applicant's salary package prior to 17 February 2004, then the contents of the letter of 31 March, as I have already concluded, do not support such a construction. 54 The meeting of 17 February and the exchange of correspondence which followed must also be considered together with other matters that emerged from the evidence adduced during the proceedings. First, the applicant was given no notice of the purpose or content of the 17 February 2004 meeting. Secondly, one of the reasons relied on by the second respondent to justify the new salary package was the "disappointing" sales figures generated by the applicant. There was, however, little, if any, basis on the evidence for such a justification. The applicant had consistently performed over budget during the financial year ending 30 June 2003 and in the first quarter of the financial year ending 30 June 2004. He won an award for salesperson of the year for the year ending 30 June 2003. His performance review conducted on 4 March 2003 was favourable and he was told to "keep up the good work". This evidence is hardly supportive of the respondents' position that the applicant's sales figures were disappointing or that the applicant had been performing below expectations. Thirdly, the respondents rely on a conversation said to have taken place between the applicant and the second respondent prior to his employment. During this conversation, which was denied by the applicant, the applicant is said to have informed the second respondent that at Mod-Style, his former employer, he had generated sales of between $900,000 and $1,000,000 per year. There was some attempt during the proceedings by the respondents to use this conversation as a basis for supporting the claim that the applicant was not generating sufficient sales. The documentary evidence tendered during the proceedings, however, supports the opposite conclusion, namely, that the applicant was performing well, and that his employer was satisfied with the results. 55 The respondents also claim that, contrary to seeking the applicant's termination, they wished him to remain in the employment of the first respondent. There were a number of statements made to this effect by the second respondent. If this were reflective of the true situation, however, then the statements can only have been made on the condition that the applicant accept the amended salary package. In other words, while the respondents may have desired to retain the services of the applicant, it was only on their terms. As I have found, the new salary package was not open to negotiation, but was imposed, unilaterally on, and without consultation with, the applicant, and, it was unfavourable to him. Given the lack of any reasonable basis, on the evidence, for changing the applicant's salary, such as unsatisfactory sales performance, he was, in my opinion, not obliged to accept the package. In such circumstances the conclusion is available that the applicant's termination of employment was initiated by the respondents: see Keycorp Ltd at [135]. 56 For the same reasons on which I base my findings that the applicant's termination of employment was initiated by the respondents I reject the respondent's contention that the applicant was twice offered his pre-17 February 2004 position with the first respondent. As the exchange of correspondence following the 17 February meeting indicates, the respondents had no intention of leaving open the new salary package for negotiation. Instead it was presented to the applicant as a final offer leaving the applicant with the choice of either accepting it or terminating his own employment. Where this documentary evidence diverges from any oral evidence given by the second respondent or Aaron McColl during the proceedings I prefer the documentary evidence. It is a contemporaneous account of the facts in issue and inherently more reliable than any oral accounts given several months later. 57 The evidence upon which I have based my finding that the applicant's employment was terminated at the initiative of the respondent's, also supports, on balance of probabilities, the conclusion that the applicant's contract of employment with the first respondent was unfair under s 106. The respondents' conduct in unilaterally varying the terms of the applicant's salary package as set out in his contract, leaving him with no choice but to accept a substantially reduced, amended and ultimately unfavourable salary package, was unfair. The contract which contained little detail apart from setting out the applicant's salary package contained no terms in relation to fair procedures to be adopted on termination. It therefore unfairly permitted the respondents to unilaterally impose the salary variation without any prior consultation with the applicant. It also unfairly permitted the respondents to attempt to justify the changes by relying on unsatisfactory performance without giving the applicant any opportunity to respond to such allegations. It also permitted the respondents in the absence of any contractual provisions to initiate the applicant's termination without paying him any severance payment. Orders sought 58 The applicant seeks twelve months remuneration as a "retrenchment" payment in the sum of $140,000. In written submissions the applicant submitted that any monetary compensation awarded should be along the lines of a severance payment with components for notice and redundancy, and, that the applicant's age, tenure and status with the first respondent as well as the magnitude of the unfairness visited upon him and the fact that he was "head-hunted" from secure employment are all factors that should be taken into account on quantum. In relation to the second respondent the applicant submitted that he was directly engaged in conduct which caused or contributed to the contract and should therefore be held equally responsible for any money order the Court may make. 59 Although not strictly necessary at this juncture, I should state for completeness, that in my opinion the applicant's termination did not take place in the context of a redundancy. The nature of his position upon his termination did not substantially change although it seems there was some alteration to the job description. Following the applicant's departure the second respondent said in evidence that the applicant was replaced by Ms Wendy James who was employed on a salary less than what the applicant had been offered at the meeting of 17 February 2004. According to the second respondent's affidavit, Ms James, who replaced the applicant "almost immediately" after he left, assumed responsibility for New South Wales (excluding the Northern Rivers) and Australian Capital Territory sales regions. This was the same territory for which the applicant had had responsibility immediately prior to his termination of employment. The only change therefore to the applicant's position appears to have been to his salary. On this basis it could not reasonably be said that the applicant's position became redundant. 60 This finding would not however preclude the Court from awarding a payment, or part of a payment in the nature of a redundancy: see Ross v GN Comtext (Australia) Pty Limited (2000) 107 IR 1 at [39]. 61 In Ross v GN Comtext Walton J, Vice-President analysed the distinct rationales for a payment in lieu of notice and a severance or redundancy payment. The distinction was explained in a case relied upon by Walton J in Ross v GN Comtext, namely, Fryar v Systems Services Pty Ltd (1996) 137 ALR 321, where at 331 von Doussa J explained that the nature and purpose of a period of notice or payment in lieu is to give an employee the opportunity to adjust to the change in circumstances while seeking other employment. A severance payment on the other hand has as its purpose compensation for the loss of non-transferable credits and entitlements which have been built up through length of service (such as long service leave, sick leave) as well as for inconvenience and hardship imposed by the termination of employment through no fault of the employee. 62 Walton J in Ross v GN Comtext nevertheless concluded that the nature of a payment ordered by the Court following a finding of unfairness under s 106 of the Act is a matter for the discretion of the Court: at [45]. The Court may therefore, in its discretion assess separate sums having regard to a period of notice and a redundancy payment, or, make one order for payment which takes into account the inadequate notice given and the failure to provide for adequate redundancy benefits. 63 I propose to adopt Walton J's latter approach to the making of a monetary order in the exercise of my discretion, and award, one monetary order which takes into account aspects of a reasonable payment in lieu of notice and an adequate payment in the nature of a redundancy payment. 64 In Gala v State Bank of New South Wales t/a Colonial State Bank (No 2) (1998) 84 IR 216 the applicant at first instance had been employed by the respondent for eleven years as an auditor when she was advised that following an amalgamation between the respondent, (a financial institution) and another financial institution her position would be abolished. On appeal, the Full Bench upheld the applicant's application that certain conduct on the part of the respondent in directing the applicant to immediately take up a new position and perform the specified duties of that position was not a reasonable requirement and that that conduct rendered the contract of employment unfair. In assessing monetary orders the Full Bench calculated a global amount based on a lack of notice and a failure by the respondent to extend benefits which would normally be expected upon a termination on account of redundancy. The applicant was awarded an amount equating to nine months salary based on her annual salary. 65 In the present circumstances the applicant worked for the first respondent for about 39 months. His services were actively sought by the respondents and he accepted the offer of employment at the agreed salary as an enticement to leave secure and stable employment with Mod-Style. He worked for the first respondent in a relatively senior position for the duration of his employment consistently achieving above-budget sales results, and otherwise performing his role satisfactorily. 66 The respondents submit, that the Court if satisfied that it has jurisdiction to decide this matter, should not make any monetary order, but, in the alternative, if such an order is to be entertained and a component for payment of notice considered, then the monetary order should be substantially discounted to reflect the actual period of notice received by the applicant from the date of the 27 February 2004 meeting until 1 May 2004 when the new salary package was destined to take effect. In addition, the fact that the applicant was re-offered the position he occupied prior to 17 February should also be reflected in any monetary order. 67 As regards the first submission, it contradicts in my opinion a central plank of the respondents' case, namely, that the offer of the amended salary package made on 17 February was not final but was open to negotiation. So characterised, there is no basis for accepting that a period of notice effectively commenced on 17 February and continued until 1 May 2004. As regards the second submission I have earlier rejected the respondents' contention that the applicant was offered his pre-17 February 2004 position on two occasions after that date. 68 The respondents also submit that the applicant has failed to mitigate his loss. The submission is advanced on two bases; first that the applicant rejected the respondents' overtures to further discuss "outstanding issues"; and, secondly because he was offered his pre-17 February position which he declined. If the reference to "outstanding issues" is meant as a reference to an alleged failure to discuss his salary package with the respondents following the 17 February meeting then this in my opinion has little support in the evidence. As the exchange of correspondence has disclosed, following that meeting the applicant notified the respondents at an early stage of his reaction to the amended package. I have already dealt with the second basis. 69 As a preliminary proposition the principle of mitigation although it must be taken into account in some circumstances as required by s 106(6) of the Act need not be applied strictly in all cases. The application of the principle has been qualified for example in a number of cases by considerations as to whether an applicant has behaved unreasonably in seeking alternative employment: see Ross v GN Comtext at [57]. The Court Bundle of Documents, tendered in these proceedings contains material which indicates that the applicant from 27 April 2004 made several unsuccessful attempts to obtain other employment. The material in my opinion shows that the applicant made reasonable attempts to mitigate his loss. I do not therefore consider it appropriate to reduce any payment order made on the basis of the principle of mitigation. 70 Taking all these matters into account I consider they justify a payment being made to the applicant of five months at $10,000 per month which represents his base salary inclusive of superannuation prior to 17 February 2004. This results in a total of $50,000. Interest should also be payable from the date of the original application, 23 April 2004, until the date of judgment. 71 The applicant has also made a monetary claim based on "anxiety and distress". I decline to make any money order in relation to this head of claim for two reasons. First, such orders are not commonly made in this jurisdiction following successful applications under s 106. Secondly, the applicant has provided little or no material from which I can properly assess whether such an order may be warranted in the circumstances. 72 It remains to consider whether one or both respondents against whom the applicant is proceeding may be found liable either jointly or severally, or both, for moneys payable to the applicant consequent upon the findings of unfairness which I have made. 73 The first respondent as the applicant's employer for the duration of his employment should be liable for the payment of monetary orders. In relation to the second respondent he was instrumental in imposing on the applicant the variations made to the contract and in the circumstances of the applicant's termination. The evidence which establishes these findings has already been canvassed in detail. Brown and Others v Rezitis and Others (1970) 127 CLR 157 is the authority commonly relied upon in this jurisdiction in assessing whether non-parties to an impugned contract may be held liable for the payment of money orders consequent upon findings of unfairness under s 106. That authority considered the operation of s 88F(2) of the Industrial Arbitration Act 1940 - 1967, a predecessor provision to s 106(5). Barwick CJ at 165 held that the power conferred by s 88F(2) was limited to the making of orders, "connected with the making, performance ... variation or avoidance of the contract or arrangement". The requisite connection according to Barwick CJ must be a "real" or "close" connection between the orders made and the impugned contract (at 168). Further, non-parties to the impugned contract may be held liable for monetary orders on the basis that they had, "received the proceeds of the contract or arrangement or were in some way culpably associated with its making or operation"; see also AFMEPKIU New South Wales Branch v David & Ors [2006] NSWIRComm 206. 74 The analysis of the facts in the present circumstances disclose the second respondent's central involvement in the variations to the applicant's salary package and in the circumstances of his termination, both activities which, as I have found, rendered the contract of employment unfair. The second respondent in my view must therefore jointly, with the first respondent, bear responsibility for the unfairness of the contract. 75 The applicant seeks in the first instance that the contract be voided. Bearing in mind that the contract has come to an end this seems the appropriate course except to the extent of any monies paid to the applicant. Orders 76 I make the following orders consequent upon the findings of unfairness which I have made: 1. The contract of employment between the applicant and the first respondent dated 7 November 2000 is declared wholly void from its inception except to the extent of any monies paid to the applicant; 2. The first and second respondents shall jointly and severally pay to the applicant the sum of $50,000 in connection with the contract dated 7 November 2000; 3. The first and second respondents shall pay to the applicant interest on the sum directed to be paid in Order (2) above in accordance with the provisions of s 100 of the Civil Procedure Act 2005 from 23 April 2004 until 31 July 2006; 4. The first and second respondents shall pay the applicant's costs of the proceedings as agreed or as assessed. _____________________ 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.