Industrial Relations Commission of New South Wales CITATION: Glenn McDonald and The Grumpy Baker Australia Pty Ltd [2006] NSWIRComm 1150 APPLICANT PARTIES: Glenn McDonald RESPONDENT The Grumpy Baker Australia Pty Ltd FILE NUMBER(S): 5988 of 2005 CORAM: Patterson C Unfair dismissal Applicant alleged summary dismissal without valid reason Respondent alleged the Applicant resigned or abandoned employment Irreconcilably contested facts on key issues CATCHWORDS: Evidence in Applicant's case preferred and accepted to the extent of relevant inconsistencies Question of remuneration a contentious issue Determining compensation based on weekly remuneration problematic given (potentially undeclared) cash-in-hand payments Compensation amount determined on official remuneration If Applicant was receiving (potentially undeclared) cash-in-hand payments, the compensation order should not, as a matter of discretion, take such payments into account – Therefore unnecessary and inappropriate to determine the extent, if any, of (potentially undeclared) cash payments Compensation order with respect to the finding of harsh, unreasonable and unjust dismissal - Industrial Registrar directed to forward a copy of the file and decision to the Australian Taxation Office and NSW Office for State Revenue LEGISLATION CITED: Industrial Relations Act 1996 - s84 HEARING DATES: 09/03/2006 DATE OF JUDGMENT: 10/09/2006 APPLICANT Mr S Hurley-Smith of counsel John D Bingham, Solicitor & Attorney LEGAL REPRESENTATIVES: RESPONDENT Mr J Stanton, solicitor Australian Business Lawyers DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES PATTERSON C 9 October 2006 Matter No IRC 5988 of 2005 GLENN McDONALD AND THE GRUMPY BAKER AUSTRALIA PTY LTD Application by Glenn McDonald re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2006] NSWIRComm 1150 1 This application for relief was filed on behalf of Glenn McDonald who alleges he was harshly, unreasonably or unjustly dismissed by "The Grumpy Baker Australia Pty Limited" ("the Respondent"). 2 Having commenced employment with the Respondent in April 2004, the Applicant was employed on a full-time basis as the "Head Pastry Chef" for about a year and eight months. According to the claim, his employment was summarily terminated by the Respondent on 18 November 2005 without any prior notice or warning. According to the Respondent, the Applicant "left of his own accord and, in so doing, either resigned or abandoned his employment". Applicant's account of events 3 During October-November 2005, Mr McDonald had a number of discussions with one of the principals of the company, Michael Cthurmer. Those discussions focussed on a dispute about the tasks being assigned to the Applicant (e.g. forklift duties) and about the conditions at work (e.g. the absence of an exhaust fan). Things started to come to a head in mid-November 2005. In a discussion on 15 November 2005, the Applicant informed Mr Cthurmer that he was "intending" to resign in the New Year. The Applicant recounted the conversations as follows: "McDonald: Michael, I have decided to change jobs and leave the company. I am looking at around February next year. I wanted to give you enough notice. I intend to be looking for another job in January and I'll give you a month's notice. Cthurmer: What's the problem? McDonald: I don't want to drive the forklift any more and you won't install a goods lift." 4 On 18 November 2005, a further discussion with a similar theme ensued: "McDonald: Michael, what's happening about the exhaust fan and when is it going to be installed. And what about the goods lift? I cannot drive the fork lift after working 14 hours. Cthurmer: Fuck off. Don't ask me that again. There is no money and you are not getting an exhaust fan or a goods lift." 5 The Applicant deposed that as he had worked more than 14 hours a day that week (and frequently over the preceding month) and felt tired, he then decided to finish work for the day and to go home at about 5.00pm. Before leaving, he made the necessary arrangements with staff for the continuation of the preparation of Christmas puddings according to the production schedule. 6 Mr McDonald stated that, at about 5.30pm, Mr Cthurmer called him on his mobile telephone and the ensuring conversation culminated in dismissal. He recounted the conversation as follows: "Cthurmer: Why have you gone home? McDonald: I've had a huge week and I am absolutely exhausted. I've set everything in place and shown Allan where everything is. I've left him with three staff members and a kitchen hand to do the Christmas puddings. Cthurmer: I couldn't believe you'd gone home. Obviously you don't care about the business any more. Where's Ben [the third year apprentice]? McDonald: Ben went home because he was exhausted as he had also been working long hours this week. I asked Ben if he would like to stay back but he said he'd prefer to go home. I said he could as he's under 18. Cthurmer: You don't care any more. You know what I am going to say next? McDonald: How can you say that I don't care any more about the business when I've just worked more than 60 hours this week. Cthurmer: Well, don't come back." According to the Applicant, the telephone line then went dead; he assumed Mr Cthurmer had hung up. 7 Later that evening, the Applicant made arrangements to collect his recipe book and knife case. Although he half-expected to receive a call from Mr Cthurmer with, for example, an apology, no call was forthcoming. For his own part, Mr McDonald considered that he was dismissed and was not prepared to ask for his job back. The following day, he saw his position advertised on the internet. Evidence of Jone Isaako 8 Jone Isaako was formerly employed as a kitchen hand with the Respondent. On 18 November 2005, when she arrived at work, she soon heard from another employee that the Applicant had been dismissed (although this was clearly hearsay). Among other events that unfolded that evening, Ms Isaako agreed to collect certain items at the workplace for the Applicant and to deliver them to him later that night. 9 The following day, Mr Cthurmer chastised Ms Isaako about her actions; apparently there was some issue about an apprentice employee's missing knives together with the Applicant's belongings some of the Respondent's recipes. Quite unsatisfactorily on the Applicant's part, he did not return the recipes until the day of the hearing. Later still, Mr Cthurmer instructed Ms Isaako that she was not to take any further items from the workplace for Mr McDonald, and nor was she to let him enter the premises. 10 From 27 November 2005, Mr Cthurmer began requesting that Ms Isaako prepare a statement for the Respondent's case. In particular, Ms Isaako deposed that Mr Cthurmer said the following words to her: Cthurmer: Don't forget to do the statement. I need it done as soon as possible. And don't forget to mention that Glenn said he's not coming back. 11 Ms Isaako deposed she replied that she would tell only the truth concerning the Applicant, and she did not provide a statement for the Respondent. In late-December 2005, Mr Cthurmer terminated Ms Isaako's employment on the ground that business was "dead". Ms Isaako also deposed that on 1 February 2006, that she received a telephone call from Mr Cthurmer concerning her participation as a witness in these proceedings. Mr Cthurmer said of the variously alleged conversations that they were joking in nature, or that he did not recall them, or that he otherwise emphatically denied matters raised by Ms Isaako. Respondent's account of events 12 This is a case involving sets of irreconcilably contested matters. An overview of selected aspects of the Applicant's evidence is recounted above. What follows is a selected overview of the Respondent's evidence in support of the contention that the Applicant simply resigned or abandoned his employment. On Mr Cthurmer's version of events, as supported in the Respondent's submissions, he had a "good" working relationship with the Applicant – even after the Applicant had informed him that he was looking for a new job; and the discussions about duties and the exhaust fan were fielded in a business-like way, based on the factory's needs. Mr Cthurmer also disputed Mr McDonald's contention that he typically worked days of 14 hours. He indicated that the Applicant typically worked 9-5 and there were some periods where he did no significant work at all. 13 Mr Cthurmer stated that he arrived at the workplace on 18 November 2005 at approximately 6.00pm only to discover that Mr McDonald was not at work. Mr Cthurmer then had a discussion with Peter Cserepanyi, the Head Baker, which was as follows: "Cthurmer: Where's Glenn? Cserepanyi: He said he was going home and not coming back. Cthurmer: What about the puddings? Cserepanyi: He said Allan could make them." 14 Mr Cthurmer then checked on the status of production, and found that things were not going well. In particular, he states that 300kg of mixed preserved fruit had been ruined – which was at least $2,500 in raw product alone, putting aside the value of the cancelled orders. According to Mr Cthurmer, he then telephoned Mr McDonald and the following conversation ensued, which allegedly culminated in the response that he would not be returning to work: "Cthurmer: Did you know that they've ruined the mixed preserved fruit? McDonald: Yes. Cthurmer: Where's Ben? McDonald: I said he could go home. Cthurmer: Why'd you leave with the problem unresolved? Why didn't you tell me about it? You know we're on a tight deadline. McDonald: If you're not happy with me then sack me. Cthurmer: That's not why I'm ringing. I would have expected you to oversee the first stages of a new product to its successful conclusion. They've wasted 300 kilos of product mix. McDonald: Well I can't do anything about that. I've worked too many hours and I've had enough." According to Mr Cthurmer, the telephone call then terminated and he assumed that the Applicant had hung-up. 15 Later that evening, Mr Cthurmer instructed an apprentice to telephone the Applicant about the location of some breadcrumbs, but the call was not answered. 16 The following day, Mr Cthurmer noticed that the Applicant's tools and other personal items were gone, together with a recipe book including the Respondent's own, "confidential" recipes. Mr Cthurmer considered that the missing items, coupled with the lack of telephone calls from the Applicant, to be an obvious indication that the Applicant would not be returning to work. Mr Cthurmer considered that he was now "stuck" without a Pastry Chef. In evidence, Mr Cthurmer stated he would never have dismissed the Applicant at that busy time of year or at any time for that matter, as the Respondent was happy with his work – and would have been happy to have him back. Mr Cthurmer is not surprised that the Applicant left his employment, because he was aware the Applicant had been "browsing" for new jobs. 17 In any event, on 19 November 2005, Mr Cthurmer had asked Ms Isaako if she knew about the missing items. Ms Isaako stated to Mr Cthurmer that she had collected and delivered certain items for Mr McDonald at his request. After further unsuccessful attempts to contact the Applicant, including those by a director of the Respondent, Angus Suttie, Mr Cthurmer advertised on the internet for a replacement for the Applicant. On 24 November 2005, Mr Cthurmer was successful. Evidence of Mr Cserepanyi 18 The Respondent also adduced evidence from Mr Cserepanyi who deposed that the Applicant had spoken to him, from time to time, about his intended resignation - before the telephone conversation between the Applicant and Mr Cthurmer on 18 November 2005. Significantly, Mr Cserepanyi confirmed he had a conversation on 18 November 2005 in which words to the following effect were said by the Applicant: "McDonald: I think I've worked enough hours this week and I've had enough of this place. I am going home and I am not coming back. Cserepanyi: What about the puddings? McDonald: Allan can make the puddings." 19 Mr Cserepanyi's cross-examination indicated he did not put much store in what had been said by the Applicant; he had heard these types of comments from others before. Nonetheless, Mr Cserepanyi's evidence also confirmed that he had relayed to Mr Cthurmer the import of this conversation when he arrived at the factory on 18 November 2005, as was also adverted to in Mr Cthurmer's own evidence. (In cross-examination, Mr Cthurmer said that he "thought nothing" of the reports from Mr Cserepanyi that the Applicant was not returning; he did not think he had resigned before leaving work.) Mr Cserepanyi subsequently saw Mr Cthurmer on the telephone. There were some internal evidentiary contradictions concerning what Mr Cserepanyi may have seen or heard in relation to the telephone conversation and some other matters. 20 Later that night, Mr Cthurmer explained to Mr Cserepanyi that he was concerned Mr McDonald would not be attending work the following day, and asked him if he could work on his day off. (cf The Applicant's evidence was that he was not scheduled to work on Saturday 19 November 2005; and that his next scheduled shift was the following Monday). Consideration 21 The evidentiary cases presented by the parties are almost irreconcilable in terms of the scenarios presented to this Commission. Such cases, of necessity, turn on whose version of events is to be preferred. I am bound to say that, on balance, I preferred the scenario presented in the Applicant's case to that of the Respondent, and, to the extent of relevant inconsistencies, also generally preferred the evidence of the witnesses called in the Applicant's case. I should note, however, that the contested evidence as to the Applicant's level of remuneration is dealt with as a discrete consideration later in the decision. 22 The following matters, among other issues, lead me to find in favour of the Applicant's claim that he was dismissed. There was a suggestion, derived from the evidence of Mr Cserepanyi, that Mr McDonald may have left the workplace on 18 November 2005 stating he would not return. That is, the evidence of Mr Cserepanyi was that the Applicant stated that he was so dissatisfied with his job that he left the workplace stating, "I'm going home and I'm not coming back". Hence, part of the evidence in the Respondent's case suggested that the Applicant may have indicated an intention to resign or abandon his employment before even leaving work on 18 November 2005 – and that Mr Cthurmer was well-aware of this having already been informed of the alleged comments before telephoning the Applicant. (I should note, in this respect, that the evidence as to the Applicant stating he was "not coming back" goes somewhat further than a statement originally prepared by Mr Cserepanyi.) 23 The Respondent's case would next presuppose that Mr McDonald, having already stated to Mr Cserepanyi that he was not coming back, then invited Mr Cthurmer to "sack me". According to Mr Cthurmer's evidence, he disavowed any suggestion that his purpose of the telephone call was to effect a dismissal – whereupon Mr McDonald stated that he had "had enough". 24 It seems to me that the suggestion the Applicant had intended to resign or abandon his employment on 18 November 2005 can be discounted by one glaring and undisputed fact: Mr McDonald's personal belongings were still at the workplace when he left work that day. Traditionally, employees do not voluntarily separate from their employment and simultaneously leave behind their tools of trade at the former workplace. 25 In circumstances where his knife case - his tools of trade accumulated over 20 years - and other personal belongings were still at the workplace, I consider it highly unlikely that the Applicant had left the factory with an intention never to return to work. I accept the Applicant's evidence that he indicated he would be returning "on Monday" to deal with things. 26 In my view, Mr Cthurmer very likely peremptorily dismissed the Applicant in circumstances where he was annoyed to find that Mr McDonald had left work at about 5pm and also "angry" that the remaining employees had allegedly spoiled a batch of product on a new recipe - when the Applicant, if still there, could have "fixed it". Given that the Mr Cthurmer knew Mr McDonald was looking for another job, he almost certainly viewed his attitude and actions as indicating that he did not care about the business any more – and that would have formed part of the backdrop to the dismissal. 27 My conclusions that there was a dismissal are reinforced by the fact that Mr McDonald promptly made arrangements to retrieve his belongings with the assistance of Ms Isaako – explaining in evidence that he did not want to "face a confrontation" with Mr Cthurmer. 28 In concluding that the termination of employment was brought about by a dismissal at the initiative of Mr Cthurmer, I have taken note of the evidence adduced in each party's case that the Applicant was dissatisfied with his conditions of employment and was seeking alternative employment. That it was common ground that Mr McDonald had expressed disquiet about his job, that he was seeking alternative employment, and that he intended to effect a resignation some time around January 2006, do not lead me to the view that he made a rash resignation, or abandoned his employment, earlier than he had otherwise planned. 29 On the contrary, the evidence leads me to the view that the Applicant, although dissatisfied with aspects of his employment, had decided, as described in his evidence, to wait until the Christmas/New Year period had passed before resigning – which would seem a sensible approach in most workplaces given seasonal patterns in hiring practices. (Equally, however, it could be said that the Respondent was "stuck" without a Pastry Chef at a busy time of the year – a matter adverted to the Respondent's submissions. However, I consider that Mr Cthurmer's annoyance at the Applicant put that consideration into the background.) 30 Despite the submissions by Mr J Stanton, solicitor for the Respondent, that there was no dismissal involved in this matter, I am satisfied that Mr McDonald was summarily dismissed by Mr Cthurmer. I am further satisfied that the Applicant had worked long hours in the week ending 18 November 2005 (particularly given the contradictory responses in Mr Cthurmer's evidence on this issue). In the circumstances, he was reasonably entitled to leave work when he did, where everything appeared to "be under control" and where he made delegated arrangements for production to continue. As his barrister, Mr S Hurley-Smith, submitted: "He was summarily terminated on that day by telephone. There was no valid reason for the termination, there was no serious or wilful misconduct. In fact, there was no misconduct of any kind. No warning had been given, he had done nothing wrong. His performance had never been called into question and he was not given an opportunity to respond. The only reason given for the termination was that he supposedly did not care any more, whatever that means." Conclusion 31 I am satisfied that the Applicant has established a case that he was harshly, unreasonably and unjustly dismissed such as to warrant an order for statutory compensation in his favour. As to mitigation of losses the evidence indicated that Mr McDonald found alternative employment on 2 February 2006, some eleven weeks after his dismissal. According to his evidence he now earns $45,000pa, plus overtime. Had it not been for the dismissal, he had otherwise considered ceasing employment with the Respondent around January 2006. 32 Determining an amount of compensation based on weekly remuneration is problematic. As I noted at the outset of the proceedings on 9 March 2006, the evidence adduced in the Applicant's case as to remuneration indicated that wages involved "so-called cash payments". I had advised the parties they could "rest assured" that any such matter would be mentioned in my decision. 33 Against that background, I note that the weekly amount of remuneration was a contentious issue between the parties – as follows: (a) In the application form at Q23, the Applicant declared that his normal pay every week was $1,100 gross. (b) In the application form at Q28, the Applicant declared that that he was earning $1,100 a week after tax and that he was seeking 6 months' remuneration calculated at $28,600. (c) In his affidavit filed on 31 January 2006, the Applicant deposed that he " was paid each week $500 in salary plus an additional $400 in cash, totalling $900 each week ". (d) In his affidavit filed on 31 January 2006, the Applicant also annexed a wages reconciliation summary indicating that his weekly payments during the period 01.07.05 – 30.09.05 were: Gross wages ($615); Tax withheld ($115); Net payment ($500); Super 9% ($55.35). (e) In evidence-in-chief, the Applicant testified that he received a cash payment of $300 a week until August 2005; after that time the amount increased to $400 a week. (f) An undated letter, generated for the purposes of obtaining a loan, was adduced into evidence by the Applicant, which was signed by a Marianne Sofokleous – General Manager, indicating that the Applicant was earning " $800 net " per week. (g) Mr Cthurmer denied that the Respondent was paying the Applicant any additional cash payments; he deposed that the Applicant was paid $615 gross per week. (h) Mr Cthurmer disputed the reliability of the letter prepared by Ms Sofokleous, which indicated that the Applicant earned $800 net. He deposed that Ms Sofokleous was a short-term secretary who never had any responsibilities concerning payments to staff. (i) When asked about the actual payment made to the Applicant, Mr Cthurmer indicated, that the agreement involved the Applicant getting a net figure of $500, but that the accountant looked after what the grossed-up figure would be. 34 Mr Hurley-Smith submitted, "[I]t should be inferred that the Respondent did and does make cash payments and it is likely the Applicant received the payments claimed" (namely those outlined in Annexure 1 to his submissions as an amended wages schedule). He subsequently submitted that the contrary evidence of Mr Cthurmer "should not be believed". Mr Stanton submitted that although the question of remuneration was a contentious issue in the proceedings, there is no proper basis on the evidence to conclude that the Applicant's remuneration included an additional cash payment. 35 Mr Stanton submitted that "there is no proper basis to conclude that the Applicant was looking for employment for the entire period following 18 November 2005", albeit I have also noted in this respect the submissions of Mr Hurley-Smith concerning the reasonableness of his job-seeking. I also note that, ordinarily in lead-up to Christmas and the New Year celebrations, there is a very high demand for skilled workers in the hospitality trades, even if only on a casual basis and, as such, I have considered whether the Applicant made a reasonable attempt to find alternative employment in my assessment of compensation. 36 The Applicant was unemployed for about eleven weeks, but I accept Mr Stanton's submission that the Applicant does not appear to have done all that he could to mitigate remuneration losses in the period following the dismissal. He seems to have sat on his laurels. If the applicant was earning $615 gross per week (or $500 net per week), as submitted by the Respondent, then a compensation amount of $3,690 (or 6 weeks' remuneration based on $615pw) would seem appropriate in all the circumstances. 37 If the Applicant and the Respondent were, as alleged by the Applicant, engaged in remuneration arrangements whereby he was receiving (potentially undeclared) cash-in-hand payments, they have to share the burden of responsibility. I would not be in the least inclined, in the exercise of my discretion, to take such payments into account in increasing the assessment of any compensation order in favour of the applicant. As such, it is unnecessary - and inappropriate - for me to determine the extent, if any, of (potentially undeclared) cash payments of up to $400 a week for the purpose of determining compensation. To do so would, in someway, compound the apparent dishonesty which has occurred to date. 38 In all the circumstances, it is appropriate to order the Respondent to pay to the Applicant within 21 days an amount of $3,690 with respect to the finding that he was harshly, unreasonably and unjustly dismissed. Accordingly, I make such order and that it take effect forthwith. 39 I also direct the Industrial Registrar to forward a copy of the file and this decision to the Australian Taxation Office and the NSW Office for State Revenue for their further consideration of the matters sworn in these proceedings as to methods of payment of wages and related issues. R J Patterson 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.