Industrial Court of New South Wales CITATION: Irving v Jones Lang LaSalle Australia Limited and another [2006] NSWIRComm 305 Applicant: Oliver Desmond Irving PARTIES: First respondent: Jones Lang LaSalle Australia Limited Second respondent: Jones Lang LaSalle (NSW) Pty Limited FILE NUMBER(S): IRC 7758 of 2001 CORAM: Backman J CATCHWORDS: Unfair contract - s 106 of the Industrial Relations Act 1996 - termination of employment on ground of redundancy - whether a restraint clause in applicant's contract of employment was one indicia of alleged unfairness referable to a claim that the period of notice was "unfairly low" - whether applicant's payment in lieu of notice of 6 months was unfair - whether failure to provide bonus payment in lieu of notice unfair - whether failure to provide pro-rata bonus unfair - whether failure to provide for severance payment was unfair - whether failure to pay part bonus in shares upon termination of employment by reason of redundancy unfair - whether failure to include superannuation contributions in termination payment unfair - mitigation considered - orders - costs LEGISLATION CITED: Industrial Relations Act 1996 Restraints of Trade Act 1976 Abboud v NSW (Department of School Education) (No. 2) (2000) 99 IR 299 Brown & Ors v Rezitis & Ors (1970) 127 CLR 159 Cukeric v David Jones Limited (1997) 78 IR 430 Darrow v FreshFood Management Services Pty Ltd [2003] NSWIRComm 264 English v Aradley Insurance Brokers Pty Ltd [2005] NSWIRComm 253 Gala v State Bank of New South Wales Ltd t/a Colonial State Bank (No 2) (1998) 84 IR 216 Harding v Harding (1928) 29 SR (NSW) 96 Henshaw v Sqribe Technologies Pty Ltd [2000] NSWIRComm 279 Keycorp Ltd v Thomes (2004) 141 IR 116 CASES CITED: Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 McDonalds Australian Holdings Ltd v Industrial Relations Commission of NSW (2005) 144 IR 219 Munro v Chubb Security Holdings Australia Ltd [2000] NSWIRComm 215 Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Company Limited [1899] AC 535 Rick Lloyd v Commonwealth Bank of Australia Limited [2006] NSWIRComm 129 Solution 6 Holdings Ltd v Industrial Relations Commission of NSW (2004) 60 NSWLR 558 Stephen Douglas Martin v National Textiles Limited [2000] NSWIRComm 1131 Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) (2004) 61 NSWLR 661 Truelove v Sydney Water Corporation Ltd (2005) 146 IR 253 Westfield Holdings v Adams (2001) 114 IR 241 Wong v State Street Global Advisors Australia Limited & Anor [2004] NSWIRComm 212 HEARING DATES: 04/08/2005, 05/08/2005, 11/08/2005, 12/08/2005, 14/12/2005 DATE OF JUDGMENT: 09/21/2006 Applicant: Mr R F Crow of counsel Solicitors: Henry Davis York LEGAL REPRESENTATIVES: Respondents: Mr J L Trew, QC Mr A R Moses of counsel Solicitors: Hunt & Hunt JUDGMENT: - 60 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Backman J Thursday, 21 September 2006 Matter No IRC 7758 of 2001 OLIVER DESMOND IRVING V JONES LANG LASALLE AUSTRALIA LIMITED Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2006] NSWIRComm 305 1 The applicant, Oliver Desmond Irving, 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 summons for relief seeks orders in addition to certain consequential orders in the following terms: 1. An order declaring that the Senior Executive Service Agreement ("the Contract") whereby the Applicant performed work in an industry was unfair, unjust, harsh, unconscionable and against the public interest. 2. An order varying the Contract from its commencement or some other time so as to: (a) delete any term restraining the Applicant from undertaking certain activities following the termination of his employment, to the extent that any such term may restrain the Applicant from performing work in New South Wales or elsewhere; (b) include a term that, prior to terminating the Applicant's employment for reason of redundancy, the Respondent will give twenty-four months written notice to the Applicant; (c) including a term that, if the Respondent fails to provide twenty-four months notice of termination, it will make a payment in lieu equivalent to all amounts which the Applicant would have earned had he worked out the notice, including: (i) base fixed remuneration (including any salary sacrifice benefits provided to the Applicant); (ii) likely bonus (including guaranteed bonus); and (iii) employer superannuation contributions; (d) in the alternative to (b) and (c), include a term that, on termination for reason of redundancy, the Respondent will (in addition to any entitlement to notice, or pay in lieu, under the Contract) make a severance payment to the Applicant equivalent to three weeks remuneration for each year of service, or part thereof, calculated by reference to: (i) base fixed remuneration (including any salary sacrifice benefits provided to the Applicant); (ii) likely bonus (including guaranteed bonus); and (iii) employer superannuation contributions; (e) include a term that, on termination for any reason other that serious misconduct, the Respondent will pay to the Applicant for any pro rata bonus for the year up to the date of termination, calculated by reference to the likely bonus which the Applicant would have earned for the year in question; (f) include a term that, on termination for reason of redundancy, the Respondent will waive any vesting period imposed in respect of the grant of any shares granted in lieu of partial bonus; (g) in the alternative to (f), include a term that, on termination for reason of redundancy, the Respondent will pay the Applicant the current market value of any shares granted in lieu of partial bonus which are forfeited as a result of termination. Background 3 The applicant commenced his professional career in January 1979 as a manager for a business known as the Jones Lang Wootton partnership. In his role he specialised in the letting of high-rise office developments in the central business district of Sydney, and, the leasing of commercial space throughout greater Sydney. 4 On 1 January 1985 the partnership was restructured as a group of companies (the JLW group). For present purposes it is necessary to refer to only four members of the group. J.L.W. Australia Pty Limited (JLW Australia) was the principal operating company in Australia for the group. On 12 March 1999 it changed its name to Jones Lang LaSalle Australia Pty Limited (the first respondent). (I note at this juncture that the name of the first respondent is misdescribed in the summons for relief although the ACN accords with the relevant ASIC extract for Jones Lang LaSalle Australia Pty Limited. As the matter was not raised as an issue by the parties, I therefore proceed on the basis that the entity described in the summons for relief is the same entity as that described in the ASIC extract). 5 J.L.W. (NSW) Pty Limited (JLW (NSW)), another member of the group, was a wholly owned subsidiary of JLW Australia. On 12 March 1999 it changed its name to Jones Lang LaSalle (NSW) Pty Limited (the second respondent). 6 A third member of the group, Benbridge Pty Limited (Benbridge) held the shares in the principal holding company of the group, JLW Holdings Pty Limited, (JLW Holdings), (subsequently renamed Murlarli Holdings Pty Limited) as trustee for persons described as Australian proprietors of the JLW Group (Australian proprietors were also called national directors within the group). 7 On about 13 May 1985 the applicant was appointed as a director of JLW (NSW). In 1986 he was promoted to the position of divisional head - commercial leasing New South Wales. In early 1987 he became an Australian proprietor. In this position he was entitled to a share in the profits of the companies in the JLW group. Australian proprietors were responsible for the JLW group operations in Australia. They were appointed to the board of directors of both JLW Holdings and JLW Australia. The former company held a majority of voting shares ("A" class shares) in JLW Australia. Each Australian proprietor was allocated an "A" class share which entitled him or her to vote in the affairs of JLW Holdings and JLW Australia. Australian proprietors were also entitled to dividend shares ("B" class shares). Tristoni Pty Limited (Tristoni), a company controlled by the applicant and which acted as a trustee for the Irving Family trust was the beneficiary of the "B" class shares in JLW Holdings (as well as other shares described as "C" class and "D" class) under arrangements with Benbridge. The effect of this was that the applicant as an Australian proprietor owned, together with the other Australian proprietors, JLW Holdings and JLW Australia. This ownership was described within the group as a partnership. The Australian proprietors, according to the evidence, regarded themselves as a commercial partnership. 8 During each year in which the partnership operated, all profits of the group, after revenue was received, expenses deducted, and any bonuses paid to staff, were distributed to the Australia proprietors through their income-earning shareholdings. In addition, an executive board elected by the Australian proprietors met annually to determine their salary structure. 9 During the financial years 1 July 1996 until 30 June 2000 the JLW group made the following payments either directly to the applicant or to Tristoni: Financial Year Income (Gross) (including superannuation and salary sacrifice benefits) Distribution from JLW Trust to Tristoni 36c Franking credits attached to JLW Trust distribution (Year ended) $ 30 June 1997 285,000.00 80,873.62 45,491.41 30 June 1998 300,000.00 266,311.84 149,800.41 30 June 1999 359,931.00 644,481.00 362,520.56 30 June 2000 371,082.00 229,419.00 129,048.19 10 In addition to annual remuneration received from base salary and the distribution of profits, the applicant in his capacity as an Australian proprietor was also paid various allowances and expenses by the JLW group. The various allowances and expenses paid to the applicant or on the applicant's behalf included lease payments and other associated costs including registration, insurance, petrol fringe benefits tax and repairs on three of the applicant's motor vehicles. Private health care, private insurance, club subscriptions, some private travel expenses, the applicant's children's private education and credit card expenses were also paid for by the JLW group. 11 On or about 1 August 1988 the applicant was appointed as a director of JLW Property Research Pty Limited (JLW Advisory), another company within the JLW group. Sometime in 1989 he was promoted to the position of national divisional head-commercial leasing. In 1991 he was moved to the position of divisional head-sales and investment. In about 1992 the applicant was placed in charge of the North Sydney office of the business and in about 1993 he was appointed managing director - New South Wales. In this latter position he was appointed "Pacific proprietor". This entitled him to a share in the profits of companies in the JLW group in the Asian and Pacific regions. The position of New South Wales managing director was rotated among the senior directors on a three to four year basis. After the applicant had completed his three to four years he returned to the position of divisional head - sales and investment. The merger 12 Sometime in 1997 the JLW group commenced negotiations with an American company, LaSalle Partners Inc., in contemplation of a global merger. 13 In about March or April 1997 a meeting was held in Zurich, Switzerland to discuss integration of the various JLW corporate groups worldwide. It was envisaged that the process of integration would result in the Australian Pacific group (the JLW group to which the applicant belonged) becoming part of the international JLW group, as a preliminary step towards merging with a larger group. It emerged during the meeting, which lasted two days, that a general preference amongst the proprietors was to merge with LaSalle partners, a United States corporate group. Certain members of the JLW group were elected and authorised to pursue the relationship with the LaSalle group. In addition legal advisors were retained on behalf of the Australian proprietors to give legal advice and to guide them in relation to the integration and the later proposed merger. Chartered accountants were also retained in order to provide advice to the Australian proprietors on relevant financial, taxation, and accounting issues. In about December 1997 Adrienne Helen Revai was engaged by JLW Australia as a consultant, in order to assist in the integration of the JLW groups. Her role was to manage the taxation, financial and legal advisors, to provide legal advice on integration issues generally, as well as specifically, in relation to Australasian legal requirements and considerations. On or about 14 April 1998 Ms Revai was employed by JLW Australia as General Counsel. The effect of the new position was an expansion of her earlier role. In her expanded role Ms Revai managed advisors and provided advice in relation to merger related issues. 14 After the Zurich meeting the proprietors were kept informed of progress by memoranda circulated by the Australian executive board or by legal advisors. In addition, the proprietors attended monthly meetings at which details of the integration and proposed merger with the LaSalle group were discussed. It was agreed between the proprietors at some point that each would receive the same number of shares in the LaSalle group in exchange for giving up their ownership of the JLW companies within the JLW group in Australia. It was also agreed that the role of the Australian proprietors would change from being proprietors of the business to employees of the merged business and that new employment contracts, to be known as "Senior Executive Service Agreements" (SESA) would be executed by all senior executives including the proprietors. 15 On 11 October 1998 a meeting of international directors of the JLW group met in Munich, Germany to discuss the details of the proposed merger with the LaSalle group. The applicant as a proprietor attended the meeting. At the meeting the participants discussed the valuation of the JLW business and the number of shares to be allocated by the LaSalle group. 16 Following the meeting in Munich a paper was presented at a meeting in Sydney attended by the applicant and others, on the financial benefits and taxation consequences of the proposed merger and distribution of shares within the merged entity. The paper contained a summary of the transactions which would affect the JLW Australasian group following the merger with the LaSalle group. The paper records that the JLW Australasian group agreed to sell all shares to the LaSalle group in exchange for cash and convertible notes. 17 At the meeting senior executives were urged to seek their own independent legal advice and make their own independent enquiries before signing any documentation. The proprietors' personal legal, tax, and accounting advisors were also invited to directly contact the JLW group's legal and financial advisor, for advice. 18 Another topic discussed during the various meetings was what remuneration the Australian proprietors and Pacific proprietors (the applicant at this stage was both) might receive following the merger. The applicant recalls one such meeting in either 1998 or 1999 where attendees were told: Your remuneration will be increased so that it is more comparable with market rates. By selling your shares as a result of the merger, you will no longer receive tax effective dividend distributions, so your remuneration should be more in line with market rates. 19 On about 10 August 1998 the applicant was sent a memorandum which attached a form of SESA and an escrow agreement. The memorandum advised: I have attached the Senior Executive Agreement which all JLW Partners, Proprietors and Senior Executives will be required to sign on integration/merger. This agreement is a standard agreement and it is intended that it will be used in the future for all senior appointments. In our case, for all those who are promoted to the equivalent of what is currently National Director or similar senior status. The agreement is in a standard format worldwide but has been reviewed by local lawyers, and where necessary tailored, to reflect local legal requirements and conditions. Operation of the agreement is retrospective to 1 January 1998 but it is conditional upon integration/merger taking place. For this reason, I have attached a short form of Escrow Agreement which acknowledges that you have signed the Senior Executive Service Agreement upon condition that the integration/merger takes place. Your current service agreement will continue to apply until integration/merger. At that time you will be required to sign a further short agreement terminating your current service agreement. You will notice that the amount of your basic salary and benefits (Schedule B) have been left blank. The relevant amounts will, however, be inserted in accordance with your TRP as set out in the memo of Ken Winterschladen to you dated 18 March 1998 (re: Allocation of Shares in JLW Global Holding Company). Would you please now sign the attached Senior Executive Service Agreement and Escrow Agreement and return them to me by 19 August 1998. If you have any queries regarding either agreement please call Adrienne Revai in North Sydney office on Ext. 214. 20 On 17 August 1998 the applicant sent back a copy of the memorandum with the SESA and escrow agreement both signed by him. The SESA which was backdated to 1 January 1998 was made between the applicant ("the executive") and JLW (NSW) ("the company"). Relevant parts of the SESA provided: 2. TERM OF EMPLOYMENT (A) The Executive shall be employed by the Company as National Director or in such other capacity of a like status as the Company may require on the terms set out in this Agreement and in the Schedules and shall also be appointed, or remain (as the case may be) as a director of the Company, subject at all times to the articles of association of the Company and the provisions of the Corporations Law. This agreement shall take effect from 1st January 1998 and shall continue unless and until determined by either party giving to the other notice in accordance with the terms set out in Schedule (A). (B) During employment under this Agreement the Executive shall perform the duties and provide the services outlined herein for the Company and for the Business. 3. REMUNERATION (A) The Executive shall be paid by the Company by way of remuneration for services during employment a basic salary at the rate of $A130,000 per annum for the first 12 months of this Agreement and thereafter $A430,000 per annum. (B) The basic salary referred to in (A) above shall be paid monthly in arrears on the last working day of each month during employment and in accordance with the payment arrangement terms (if any) specified in Schedule (A). (C) The Company will review the remuneration payable under this Agreement once in every twelve months, but subject to the terms (if any) specified in Schedule (A) shall not be obliged to increase such remuneration. Any such increase will be notified to the Executive in writing. (D) The Executive may participate in the Company's Bonus Scheme, the terms of which are set out in Schedule (A). (E) In addition, the Executives shall be entitled to the other benefits (if any) set out in Schedule (B) and in accordance with any terms conditions or provisos of that Schedule as amended or varied at any time and from time to time by mutual agreement between the Company and the Executive. . . . . . The Executive acknowledges that he has a reasonable opportunity to seek independent legal advice on the terms and conditions of this Agreement and their significance for his particular circumstances, whether or not such advice has in fact been taken. 21 Schedule A to the SESA contained the following provisions applicable to termination of employment: (5) NOTICE Either party may terminate this Agreement by giving the other not less than six months notice in writing. . . . . . (7) TERMINATION (A) If the executive: (i) shall be or become incapacitated from any cause whatsoever from efficiently performing his duties hereunder for four consecutive months or for ninety working days in aggregate in any period of twelve consecutive months; or (ii) shall be or become of unsound mind or be or become a patient for any purpose or any statute (or any part thereof) relating to mental health; or (iii) shall be or becomes bankrupt or compounds with his creditors; or (iv) shall be convicted of an indictable criminal offence (other than minor traffic offences or any minor issue of health and safety); or (v) shall be guilty of serious misconduct or commit any serious or persistent breach of any of his obligations to the Company (whether under this Agreement or otherwise); or (vi) shall refuse or wilfully neglect to comply with any lawful instructions given to him by the Company; or (vii) fail in the professional standards required of him such that his conduct or activities bring either himself, his profession or the Company into disrepute; then the Company shall be entitled by notice in writing to the Executive to determine forthwith his employment under this Agreement. The Executive shall have no claim against the Company by reason of such determination. . . . . . 22 In addition, clause 8 (the restraint of trade clause) of Schedule A imposed restrictions on the applicant in the event of his termination from engaging in certain specified activities within a geographical area encompassing Australia, New Zealand, and most Asian countries including Japan and the People's Republic of China for periods of either 6 months or 12 months. The restricted specified activities, which were said to be separate and independent (and therefore capable of severability if applicable), consisted of the following: (i) solicit or endeavour to entice away from the Company or any associated company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with the Restricted Business; (ii) provide good or services to or otherwise have any business dealings with any Restricted Customer in the course of any business concern which is in competition with the Restricted Business; (iii) in the course of any business concern which is in competition with the Restricted Business offer employment to or otherwise endeavour to entice away from the Company or any associated company any Restricted Employee; (iv) be engaged in or concerned in any capacity in any business concern which is in competition with the Restricted Business. This clause shall not restrain the Executive from being engaged or concerned in any business concern in so far as the Executive's duties or work shall relate solely:- (a) to Geographical Areas where the business concern is not in competition with the Restricted Business; or (b) to services or activities of a kind with which the Executive was not concerned to a material extent. 23 The restrictions moreover, according to the agreement, extended to the applicant acting for himself on behalf of any other business or person on whose behalf the applicant might act either directly or indirectly. 24 Clause 14 of Schedule A provided further details of the Company's bonus scheme as follows: 14. BONUS ARRANGEMENT The Executive is eligible for consideration under the bonus scheme adopted by the Company from time to time and at any time. The Company agrees to inform the Executive clearly and in writing of the specified terms of the bonus scheme (and of any variations and amendments in later years). Participation in profit distribution under the bonus scheme will depend upon and be related to: (A) The performance of the Executive against pre-determined and agreed objectives; and (B) The financial performance of the business (for the time being Australia and New Zealand) as determined by the Australian Executive Board in its absolute discretion. Bonuses will be calculated annually and the fact that the Executive does or does not receive a bonus in any one financial year must not be construed as a conclusive indication that he or she will or will not participate in bonuses distributed in subsequent years. The Executive expressly acknowledges that he has no right to receive a bonus even though he has received one or more discretionary bonus payments during his prior employment and that he has merely a right to be considered for participation in the bonus scheme. 25 Under the terms of the SESA the company also agreed to pay superannuation to a complying superannuation fund for the benefit of the executive and to satisfy its minimum obligations as an employer under the relevant legislation. 26 Under the terms of the escrow agreement the applicant agreed that the SESA would be held in escrow until, it was released, to the Company simultaneously with the payment of cash either directly to the applicant or to an associated entity, such payment to occur contemporaneously with the closing of the merger between the JLW group and the JLL group. 27 In October 1998 the LaSalle group requested that all proprietors participating in the merger sign their SESA a second time in order to confirm their agreement with the new employment conditions in the context of knowledge gained about the merger subsequent to signing SESA and escrow agreements the first time. The applicant duly signed the SESA on 26 November 1998. Ms Revai received it the same day. 28 On 12 March 1999 the JLW group merged with the LaSalle group. On the same day, JLW Australia changed its name to the first respondent and JLW (NSW) changed its name to the second respondent. All proprietors including the applicant acquired shares (consideration shares) in the newly merged entity. The applicant's family company, Tristoni received 111,262 shares in the newly merged group (the JLL group) for the sale of the applicant's interest in the JLW group. These shares were acquired for $US24.75 each. The exchange rate at the time of the acquisition was 63.94c. This meant that the total value of the shares received was $A4,306,747.73. 29 The applicant's employment status following the merger was explored in the following passage extracted from the applicant's cross examination: Q: And after the merger, all of the senior executives who had operated the JLW business remained in their positions more or less, didn't they? A: You mean as in job? Q: In jobs, yes. A: Yes Q: There was a difference though, those of them that were proprietors were previously operating the business for themselves, weren't they? A: Yes. Q: After the merger they were operating not their own business but the LaSalle business? A: The Jones Lang LaSalle business, yes. Q: Yes, I'm sorry. The Jones Lang LaSalle business. A: Yes. Q: All of those who remained in the same jobs, after they were answering to Jones Lang LaSalle weren't they? A: Yes. Q: And all of those senior executives who remained in their same jobs, they signed the Senior Executive Service Agreement, didn't they? A: Yes. Q: Although you or your family received shares in Jones Lang LaSalle in exchange for the sale of your shares in JLW Australia, you had a very small holding in Jones Lang LaSalle compared to the size of the holding you had in Jones Lang & Wootton Australia? A: Yes. Q: There were many, many thousands, perhaps millions of shareholders in the Jones Lang LaSalle weren't there? A: I'm not sure about millions. Q: I may be overstating it -- A: Yes. Q: -- but a very large number? A: Yes. Q: And holding the shares in Jones Lang LaSalle didn't entitle you or your family to any representation on the board of any Jones Lang Lasalle company, did it? A: No. Q: Did they? A: No. Q: And after the merger, those executives of Jones Lang & Wootton who held their same jobs were answerable to people in New York or Chicago or wherever the headquarters that Jones Lang LaSalle business was? A: I don't think that's absolutely correct because it was a tiered structure, a regional structure flowing back into international structure. Q: But at the end of the day -- A: But at the end of the day it was back to the chairman and/or the CEO who at the time was Stuart Scott. He was based in America. And Chris Peacock was based in England. And from memory Stuart Scott relocated to England. Q: And at the end of the day the Australian executives were answerable to those executives? A: Yes. Q: Who were in turn answerable, no doubt, to the board of the Jones Lang LaSalle company? A: Yes. Q: So, the overseas company after the merger called the shots? A: Yes. Q: Before the merger, the national or proprietors of Jones Lang & Wootton called the shots? A: Yes. Post merger 30 Between the years 2000 until 2005 the applicant sold the JLL group shares in the following amounts: 2000 sale of shares $954,823.01 2001 sale of shares $867,916.75 2003 sale of shares $791,948.90 2004 sale of shares $312,926.41 2005 sale of shares $102,764.67 Total $3,030,379.74 31 In or about June 1999 the Sales and Investment Division in New South Wales underwent a restructure. The applicant was promoted to the position of senior commercial agency director. The position entailed greater operational responsibilities, an emphasis on a sales and leasing role, and, a significant reduction of administrative duties. John Henderson, a director of the first respondent and then managing director, sales and investment Australasia, sent a memorandum to the applicant congratulating him on receiving the new position. The memorandum stated: I would like to congratulate you on the manner in which you have undertaken the role of Divisional Director for Sales & Investments in NSW. You have turned around a division which previously had a track record of losses, established and developed the Residential Project Marketing Team which is now beginning to generate significant profits not only in NSW, but nationally and in creating a situation in 1999 where all departments should be able to generate profits. 32 On 11 June 1999, Craig Williams, the managing director of the second respondent sent an email to all New South Wales based staff which praised the applicant's contribution as head of the sales and investment division: Effective July 1st Oliver Irving will assume the role of senior commercial director in New South Wales. Given Oliver's already considerable commitment to two major leasing projects in the CBD it is now timely and appropriate for Oliver to focus upon expanding our presence across the whole commercial arena in the state. Oliver's seniority in the marketplace and long standing relationships with many of our major clients will be invaluable in further strengthening and developing our commercial activities here. I would like to thank Oliver for his substantial contribution as head of Sales and Investments division over the last two and a half years. Under his leadership, the division is performing well and has successfully initiated new ventures such as Residential Project Marketing which is now recognised as a market leader. Bonuses 33 During 1999 bonuses were awarded to senior executives in accordance with the 1999 Incentive Scheme. The scheme envisaged that recipients of a bonus for the year would take 25 percent in the form of shares. This component was uplifted by 20 percent before being converted into shares at the current market price. Half the shares were to vest after 18 months and the remainder after 30 months. The applicant on 3 November 1999 was informed of the plan by memorandum. In the memorandum under the subheading "Why are we doing it?" appeared the following words: The part bonus replacement programme will be an important part of the overall Compensation strategy that Jones Lang LaSalle will implement throughout the company in 2000. The programme shifts a portion of the total compensation of the senior executives of the company from short-term cash base to medium term share base. This has the advantage of better lining up the compensation of those most responsible for the results of the company with the interests of the shareholders. It also rewards people who make a long term-contribution to the company, as over time a significant shareholding can be built up and thus the individual can share in the growth and success of the company. As the shareholding builds and hopefully the shares gain in value, both the individual and shareholders benefit. In addition, individuals will be incentivised to remain with the firm as any unvested shares will be forfeited in the event that an individual leaves, other than through retirement programmes or enforced redundancy. 34 It may be inferred from the last sentence of the above extract that the policy of retention of employees through the imposition of a condition of forfeiture of unvested shares did not include enforced redundancies. 35 A briefing note in relation to the scheme (referred to as the PB-S (Part Bonus in Shares) plan) circulated on 16 December 1999, contained the following information in relation to vesting conditions: The only conditions which apply to vesting are that the individual must be in employment with the firm at the stipulated vesting dates. There will be special exceptions made for programmed retirement or redundancy. . . . . . In addition, individuals will be incentivised to remain with the firm as any unvested shares will be forfeited in the event that an individual leaves, other than through retirement programmes or enforced redundancy. 36 According to the terms of the SESA, participation in a bonus scheme depended upon the executive's performance against pre-determined and agreed objectives and, the financial performance of the business in Australia and New Zealand as determined by the Australian executive board, in its absolute discretion. 37 A memorandum dated 15 November 1999 directed to international and regional directors attached information on a revised points system to be implemented as the basis for anticipated incentive payments for 2000. Points were allocated across three measurable areas, namely: · absolute gross profit margin delivery (maximum 40 points) · gross margin percentage delivery (maximum 30 points) · growth in revenue (maximum 10 points) 38 On 21 February 2000 the applicant was advised that he would receive a bonus in the amount of $150,000 for the 1999 year. The figure was derived from various performance measurement criteria for which points were allocated and then applied against the total pool. This bonus was distributed in the following manner: 25% PB-S 37,500 Net 1999 Cash Bonus 112,500 20% Uplift 7,500 Total PB-S 45,000 Shares awarded as at 3 January 2000 2,618 On 1 July 2001, 1,309 shares vested (leaving 1,309 shares unvested because of the applicant's termination). 39 Also on 21 February 2000 the applicant was advised that his salary package effective from 1 January 2000 would be $315,000 per annum (a significant reduction from his earlier base salary of salary of $430,000p.a.). The applicant's total remuneration for the year was to therefore comprise his revised salary package ($315,000) and his target bonus ($150,000). 40 On about 1 January 2000 the applicant was appointed an international director - sales and leasing services and client services. In this role the applicant reported to the managing director - client services, Steve Wakeham, who was based in New South Wales. 41 On about 28 February 2001 the applicant was advised that his 2000 bonus entitlement was $126,764 gross. (That amount had been calculated by reference to the performance measures introduced for the awarding of bonuses in the 2000 financial year). At the same time the applicant was informed that his salary package for 2001 would be $300,000 gross effective from 1 January 2001. The applicant's bonus allocation (not including the net 2000 cash bonus amount) for 2000 was distributed in the following manner: 25% PB-S 25,353 25% Uplift 6,338 Total PB-S 31,691 Shares awarded as at 2 January 2001 1,313 Fifty percent of the shares were to vest on 1 July 2002 and the remainder on 1 July 2003. According to a memorandum sent to the applicant on 22 June 2001 it was a condition of vesting of the 1,313 shares issued for the year 2000 that the applicant was employed by the JLL group at the vesting dates. The memorandum was silent on the subject of vesting of shares in the event of a redundancy. 42 On 12 April 2001 the applicant was advised in a memorandum that his target bonus for 2001 was $125,000. The memorandum also advised the applicant on the method of calculation of the 2001 bonus by reference to individual performance measures set for the applicant in the "IPMP system" and the overall level of profitability of the company (Australasian performance rating). 43 The Individual Performance Management Plan (IPMP system) was introduced in 2001 in order to assess the personal rating component of any bonus calculation. The actual bonus to which the applicant may be entitled for 2001 depended upon the assessment of his performance. A number of criteria (called "weightings") to be used in the assessment were set out in the applicant's IPMP Performance Agreement for 2001 as follows: Provision of superior customer service (10%) Superior employee management (10%) Sourcing and developing new business opportunities (10%) Contribution to the growth of the company (10%) Enhancing professional and personal skills (5%) Meeting assigned financial targets (55%) 44 A document presented at a meeting of senior executives of the JLL group in about April 2002 entitled "2001 Bonus Overview" indicated that the bonus pool for 2001 had been reduced globally. A project entitled "Project November" was designed to identify individuals that were included in the "global reduction head count". These were the international and regional directors (which included the applicant as an international director). A number of emails sent between 17 and 19 January by the JLL group in Singapore identified the need to finalise the international and regional directors list with original 2001 target bonuses. An analysis was prepared which included a list of international and regional directors indicating the available bonus pool and allocating a target bonus. The applicant's name appeared on the list of some forty six international and regional directors nominated for bonuses in 2001. Presumably the applicant's target bonus of $125,000 for 2001 was derived from this document. 45 Sometime in early 2001 the applicant recalled a conversation with Mr Wakeham during which the applicant said: I've won some major leasing appointments. I can go from sales to leasing to client services - having this flexibility is working really well. Mr Wakeham replied: We're happy with what you're doing. 46 At about the same time the applicant recalled a conversation with Craig Williams who told the applicant: You're doing an excellent job. We hope you stay with the company for years to come. There are others about whom I can't say the same. 47 Mr Williams recalled the conversation in different terms. According to him he met with those affected staff to deliver to them their new salary packages and explain to them why there had been a reduction. He recalled saying to the applicant in about February 2001 words to the following effect: Oliver, what I want most of all is to see you performing. I don't get pleasure in reducing your package, but you and your area of the business are simply not meeting financial targets. You are a senior guy, you have the ability. I want to see you deliver what we both know you're capable of. I know that you can do it, you've done it before. 48 From about early 2001 the applicant began hearing rumours that the respondents' business groups were to undergo a restructure. He spoke to Mr Williams about this who assured him that it was "unlikely" that he would be affected. According to the applicant, after inquiring of Mr Williams as to whether a proposed restructure would affect his position in the company, Mr Williams said: No, there will be no effect on you. The applicant's termination of employment 49 In or about September 2001 Chris Peacock the Chief Executive Officer of the JLL group decided to reduce the number of employees employed by JLL globally by 9 percent. According to Mr Williams this was a coordinated global reduction which was prompted by a reduction in global revenues and the need to maintain operating margins by reducing costs. 50 On about 16 October 2001 the applicant was called to Mr Williams' office where he was told: The company is going through a rough time. You're an expensive resource. We've got to do some restructuring and your position will be made redundant. There are others who will be affected in the same way. 51 The applicant was then handed a letter advising him that his termination of employment took effect from 16 October 2001. The letter under the heading "Redundancy Package" explained: In addition to the normal statutory entitlements you will be paid a redundancy package of 6 months of pay in lieu of notice pursuant to clause 5 of Schedule A of your Senior Executive Service Agreement dated 1 January 1998 and reviewed on 17 November 1998 (SESA) with 5 working days of receipt of a signed copy of this letter by the Company Secretary. 52 Details of the applicant's redundancy package were sent to him by letter dated 25 October 2001. On 9 January 2002 the applicant was informed by letter that $10,862.07 had been inadvertently credited to his bank account. The applicant was asked to return the amount. A redundancy payment reconciliation schedule set out the details of the applicant's termination payment as follows: Redundancy Payment Reconciliation Oliver Irving Pay Element Redundancy Element Actual Payment Difference Base Salary $0.00 -$6,936.16 -$6,936.16 Post 78 Long Service Leave $70,323.71 $70,335.91 $12.20 Post 93 Long Service Leave $43,604.40 $43,574.10 -$30.30 Annual Leave $18,720.43 $18,719.82 -$0.61 Tax Free Redundancy Payment $63,551.00 $63,551,00 0.00 Balance of Redundancy Payment (ETP) $86,449.00 $31,215.76 -$55,233.24 Salary Package Adjustment $0.00 $0.00 $0.00 Tax -$69,015.73 -$49,946.00 $19,069.73 Nett Payment $213,632.81 $170,514.43 -$43,118.38 Rollover to Superannuation $0.00 $55,233.24 $55,233.24 Total Payment $213,632.81 $225,747.67 $12,114.86 Overpayment from 14/12/01 still to be recovered -$10,862.64 Contract under which work performed by the applicant 53 Between 12 March 1999 and 16 October 2001 the applicant worked full-time for the JLL group employed by the second respondent in a number of senior executive positions. On 1 January 2000 the applicant was appointed an international director in the area of sales and leasing and client services, the position he occupied at his termination. The contract under which the applicant performed the work was the SESA. This document, first signed by the applicant on 17 August 1998 and again on 26 November 1998 was backdated to 1 January 1998 although it did not take effect until the day of the merger 12 March 1999. Was the contract unfair? 54 The applicant contends that the contract was unfair, harsh, unjust and unconscionable on the following bases:- (i) the provision for a cascading restraint of up to twelve months was uncertain in its operation, unreasonable having regard to general community standards and expectations; and will seriously limit the applicant's ability to find alternative employment (summons B49 (a) (b)); (ii) the provision for six months notice of termination was unfairly low, and allowed termination by reason of redundancy without reasonable notice having regard to the applicant's experience, age, length of employment, the restraint clause, difficulty in finding future employment, general community standards and the fact that no distinction was made between termination for reasons of redundancy and termination for reasons relating to performance and conduct (summons B49 (c) (d)); (iii) it failed to provide payments in lieu of notice which included likely bonus payments/allowed payments in lieu of notice which did not include likely bonus payments (summons B49 (e) (f)); (iv) it failed to provide for fair severance payments/allowed the respondents to terminate employment without payment of a fair severance payment having regard to the applicant's experience, age, length of employment, the restraint clause, general community standards and the fact that no distinction was made between termination for reasons of redundancy and termination for reasons related to performance or conduct (summons B 49(g) (h)); (v) it failed to provide payment of pro rata performance bonus/allowed respondents to terminate employment without payment of a pro rata performance bonus (Summons B49 (i) (j)); (vi) failed to provide for vesting of PB-S (shares) in the event of termination by reason of redundancy/allowed respondents not to grant PB-S (shares) in the event of termination by reason of redundancy (Summons B49(k) (l)). 55 I propose to separately address each head of alleged unfairness. Post-employment restraint clause 56 The claim in relation to the post-employment restraint clause in the SESA is relied upon by the applicant as an incident of the alleged unfairness which is referable to the claim that the period of notice provided in the contract was "unfairly low". The existence of the restraint clause in the applicant's contract, along with several other indicia, such as the applicant's age, experience, length of service, justify, according to the applicant a payment in lieu of notice in the order of 24 months. Implicit in this approach is an acknowledgment by the applicant that the variation sought in the summons in relation to the restraint clause is no longer necessary (because of the passage of time) except as an ancillary basis for an order for the payment of money. Such an order is warranted because of the lost opportunity to earn income in his field of expertise by reason of the restraint. The loss is however subsumed by his claim for 24 months payment in lieu of notice. 57 The applicant contends that the restraint prevented him for a period of 12 months from engaging in any of the proscribed activities specified in the contract. These activities have been set out earlier in this judgment. The applicant also contends that the restraint was not reasonably necessary and that the respondent has produced no evidence from which it may be inferred that the restraint was reasonable. 58 The respondents contend that the restraint clause had no effect on the applicant who, upon termination did not approach the Supreme Court to seek relief during the twelve months in which the restraint operated. The evidence suggests that the applicant did not perform similar work after his termination not because he could not, by reason of the restraint, but because he did not want to. His business in 2002 in fact was unaffected by the restraint and after the period in which the restraint operated had expired the applicant did not seek to re-enter the business in which he had worked while in the employment of the JLL group. The restraint in any event was reasonable because the former proprietors, including the applicant had sold their business to a foreign company which then employed the proprietors to manage it. The JLL group was entitled to protect itself from the possibility that the former proprietors, now employees of the JLL group, might leave their employ, entice away customers and set up in competition with the business they had sold. The respondents also questioned whether the Court has jurisdiction to review a restraint clause under s 106. In this regard the respondents contend first, that s 106 is not to be construed so that it effectively repeals the Restraints of Trade Act 1976 or casts away the general law developed by the Courts in relation to restraints of trade. Secondly, the Court's jurisdiction to grant relief under s 106 must be related in some reasonably direct manner to the performance of work under the contract: Solution 6 Holdings Ltd v Industrial Relations Commission of NSW (2004) 60 NSWLR 558, [73] [83] [95]; McDonalds Australian Holdings Ltd v Industrial Relations Commission of NSW (2005) 144 IR 219, at [66] [83]. According to the respondent the restraint clause did not have a sufficiently close connection with the work the applicant was required to do under the contract. The clause restricts what the applicant may do after his employment was terminated, not what he was to do while performing work under it. 59 The evidence reveals that during the period of his employment with the JLW group and later with the JLL group the applicant had purchased a number of properties. His long term plan in relation to these properties was to earn sufficient income in order to maintain his then current lifestyle. Following his termination the applicant was paid his base salary in the amount of 6 months in lieu of notice as well as his statutory entitlements. In mid-2000 he invested in a large waterfront property in Hayes Street, Neutral Bay. The evidence also suggested that the applicant had, following the merger commenced reorganising his affairs with a view to becoming financially independent. In cross-examination the applicant gave the following evidence in relation to arrangements he had made concerning his future business operations while still employed by the JLL group: Q: When Jones Lang Wootton merged with JLL you began seriously reviewing your options for the future, didn't you? A: Yes Q: Part of what prompted that was the change of circumstances in working then for JLL and also receiving a lot of money? A: Yes. Q: You were also starting to consider cutting down fulltime employment? A: It was a nice idea at some stage in the future to be working on a part-time basis. Q: You discussed this with your financial advisors? A: Yes. Q: One of the options you were starting to think about was investing in property syndication? A: Yes. Q: And in property development? A: Yes. Q: You started to organise your affairs after the merger so that you were independent and could pursue your own business investments and interests according to your own timetable? A: Yes. Q: This is exactly what you did when you left Jones Lang LaSalle, isn't it? A: Yes. Q: You were very intensely, you told us earlier, involved in getting things set up during 2002? A: I'm not sure what you mean by the word "intensely". I had the time available. Q: And you used it? A: And used it. I'm not a person to sit at home with my feet on a stool doing nothing. Q: You set about reorganising your affairs to the greatest possible financial advantage to you and your family? A: I don't think it took much reorganizing. Q: You spent 2002 doing it? A: As I say, I had the time available. If you have the time available, you use it as you see fit. Q: And that is how you saw fit? A: Yes. Q: And you continued to do that in 2003? A: Yes. Q: And you have continued doing that ever since? A: Yes. Q: You did not make any application at any stage to the Supreme Court to get relieved from the restraint in your contract of employment, did you? A: I don't believe so, no. Q: That is because your business in 2002 was quite unaffected by the restraint wasn't it? A: Yes. 60 The applicant had considerable financial resources at his disposal upon his termination. During 2002 he utilised the services of a financial advisor and directed his attention to managing his investment property portfolio which included the maintenance, management and redevelopment of a block of flats in Bent St, Neutral Bay which he had purchased at the end of 1999. He also had in excess of one million dollars in a superannuation fund. He had also set up a unit trust with nine others in 1997 in a 220 to 240 acre property in the Hunter Valley which was in the process of being subdivided in 2002, although eventually the sub-division did not proceed. The applicant also purchased a motor vehicle after he left the employ of the JLL group for which he claimed 94 percent for business use in his 2002 tax return. He also throughout 2002 inspected a number of properties with a view to assessing their suitability for purchase and possible development. In June 2002 the rental income from the Bent St property was about $92,000 and the income from the Hayes St property about $109,000 per year. The applicant also received $A3,030,379 from the sales of his shares following the merger with the JLL group. 61 The effect of this evidence is that the applicant throughout the first year following his termination (the period of the restraint) and after, was, on the evidence, actively and successfully pursuing his interests in property development. He also had considerable funds at his disposal to facilitate those activities, which he had gained from the sales of his interests in the JLW business, and other sources. I have no doubt however that the restraint clause in the applicant's SESA constituted, in its terms, a contractual restraint against employment by a competitor. It also prevented him for a period of twelve months after termination from being engaged in, or concerned in any capacity, in any business within the specified areas that were in competition with any business of the respondents in which he had been involved to a material extent. 62 The common law test for the validity of a restraint provision was referred to some time ago by Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Company Limited [1899] AC 535 at 565: The true view at the present time I think, is this: The public have an interest in every person's carrying on his trade freely: so has the individual. All interference with individual liberty of action of trading, and all restraints of trade themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with personal liberty may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public. That I think, is the result of all the authorities. 63 In Darrow v FreshFood Management Services Pty Ltd [2003] NSWIRComm 264, Peterson J made the following comment on the passage in Nordenfelt extracted above: [42] So it is that the general rule is that a restraint of trade provision of the type identified in this case as the non-competition clause is at common law void as being contrary to public policy unless it can be demonstrated that the clause is justified by the special circumstances of a particular case such that the restriction is "reasonable". 64 The issue I have to decide, however, is not whether the restraint clause is valid in accordance with the common law tests of reasonableness but whether on a much broader basis the restraint was unfair under s 106 in the particular context in which the applicant alleges, namely, as an incident of unfairness in relation to the notice period: see Darrow at [36] - [38]. 65 Given that the applicant's employment was terminated, without notice and by means of an enforced redundancy, the existence of the restraint clause which prohibited him from working in his field of expertise in competition with the JLL group for 12 months was clearly unfair. The circumstances in which the restraint operated in practice must also be considered. 66 An assessment of the whole of the applicant's circumstances following his termination allows me to conclude, on the one hand, that the restraint did not in fact operate unfairly against the applicant, but only to the extent that he was not precluded from successfully pursuing his business interests during that period. In his evidence the applicant conceded that he was unaffected by the restraint clause. Upon termination he pursued his own interests successfully and profitably. Had the applicant been at all burdened by the restraint it was open to him at any time within the restraint period to commence appropriate action in the Supreme Court to have his restraint clause declared invalid. He chose not to pursue this option. 67 On the other hand these matters do not in my opinion in any way detract from the respondents' actions which on any reasonable analysis resulted in the circumstances in the unfair imposition of the restraint clause. The fact that the applicant was capable, notwithstanding the existence of the restraint, to pursue his business endeavours successfully, invokes entirely separate considerations from those which arise from the respondents' failure to observe their obligations to ensure that the circumstances of the applicant's termination of his employment under the contract were fair as contemplated by s 106. The issue going to the applicant's attempts to successfully pursue other employment following termination is one I must take into account, if relevant, in considering what steps the applicant took to find other employment. I will address this issue at a later stage in this judgment. 68 As to the Court's jurisdiction to grant relief under s 106 consequent upon a finding that the restraint clause was unfair I consider that an employee recently terminated and subject to a restraint clause which prohibits him from working in his area of expertise would, following a finding of unfairness, necessarily impact on considerations under s 106(5) if warranted. In the Court of Appeal decision of Solution 6 Holdings, Spigelman CJ, (at [83]) considered that the power to declare contracts void or varied under s 106(1) extends only "to such aspects (of a contract) as closely related to the performance of work in an industry". Later at [87] his Honour observed in relation to s 106: A purpose construction of the power to declare void or vary would limit that power to aspects of the contract or arrangement which relate to some reasonably direct manner to the performance of work. 69 The issue was again addressed by Spigelman CJ in McDonalds Australia (at [66]) where his Honour referred to the observations earlier made in Solution 6 Holdings. Later, in the former judgment (at [78]), his Honour said: Plainly it cannot be said in the light of the authorities to which I have referred above, which hold that the requisite jurisdictional element is made out in the case of franchise agreements, that it is essential there be in existence something analogous to a payment by one party to a contract or arrangement in exchange for the performance of work for or on behalf of that party by the other party to the contact or arrangement. Nevertheless, on the authority of Solution 6 , there must be at least some, indeed a close, connection between relief sought and the performance of work. 70 It could not be disputed that a term in a contract of employment with regard to notice consequent upon termination of employment is "closely related" or related in "some reasonable direct manner" or closely connected to the performance of work. A restraint clause which directly impacts on the Court's assessment of whether relief may be obtained by way of a payment in lieu of notice is also relevant to that assessment and therefore in my opinion may be construed as closely related or closely connected to the performance of work. The notice provision 71 The applicant's employment was terminated without notice and he was paid 6 months base salary in lieu of notice. The applicant submits that the payment was "unfairly low" given a number of factors which, expressed in summary form, comprise his age; the restraint clause; and, the fact that no distinction was made between termination by reason of the redundancy and termination for reasons related to performance or conduct. 72 The respondents have argued a number of threshold points in relation to this particular head of alleged unfairness. First, the respondents contend that the applicant's complaint concerning the way in which he was terminated was wrongful, was only raised for the first time in final submissions. In addition, it is contended that the complaint also goes to the issue of breach of contract which does not confer jurisdiction on the Court, and, the failure of the applicant to give the respondents notice that reliance would be placed on this complaint should prohibit the applicant placing reliance upon it as a basis for unfairness. Secondly, the respondents contend that the applicant's complaint that the notice period was "unfairly low" was made in the absence of any reliance on alleged unfair aspects of his redundancy and because of this he should not now be permitted in final submissions to rely upon that ground. Thirdly, the respondents contend that the applicant's reliance on general law requirements concerning reasonable notice is impermissible since the contract expressly provided for a period of 6 months. 73 These threshold contentions may be disposed of shortly. Although the contract did not expressly provide for a payment in lieu of notice, I understand the applicant's complaint to be directed towards the respondent's failure to provide a fair and reasonable payment. In other words the applicant does not contend that the way in which his employment was terminated was "wrongful", but rather, that the payment in lieu of notice was neither fair nor reasonable under s 106. Nor is the Court limited to considerations concerning the reasons for the applicant's dismissal, here, because of his redundancy. The summons for example alleges that the contract was unfair because it provided for inadequate notice in the event of a termination on the ground of a redundancy and operated in practice to allow the respondents to terminate the applicant's employment on the ground of redundancy without providing for a notice period which was reasonable. 74 A similar set of circumstances arose in Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247. The applicant's position in that case had been made redundant following a restructure of the business. One of the principal allegations of unfairness under s 106 was that the contract of employment failed to make provision for notice of termination but did not make provision for payment in lieu. Hill J in finding that the termination provision was unfair, having regard to its operation in practice and the circumstances of redundancy as well as the manner in which it was applied, said ( at 253 – 254): It seems undoubted on the authorities that the failure by an employer to make fair and reasonable provision for notice and severance benefits to an employee on termination for redundancy reasons can, notwithstanding its provisions governing notice on termination, render the contract of employment unfair: see Hutton v ICI Australia Operations Pty Ltd t/a Dulux Australia (1991) 48 IR 340, ICI Australia Operations Pty Ltd v Hutton (1993) 47 IR 288 and Baker v National Distribution Services Ltd (1993) 50 IR 254. In Hutton , while the finding at first instance of "unfairness" of the contract because of the failure to provide redundancy benefits was not challenged on appeal, the Full Court dealt with the matter of the characterisation of provisions in contracts of employment for termination thereof in normal or traditional circumstances and provisions in such contracts in respect of benefits to be paid to employees on termination for "redundancy" reasons. The Court said (at 296): In the context of modern sociological situations dismissals are frequently effected in circumstances of redundancy parallel to those of this case, not only with notice of termination or payment in lieu in accordance with the contract of employment and/or any applicable award but payments are also made to take account of the element of redundancy; and not infrequently the period of notice or payment in lieu is also increased over and above that provided in the relevant contracts and/or awards. In other words there has evolved a new concept or sociological event known as redundancy and which would in the usual industrial context attract redundancy payments. Such payments are now commonplace; they may be negotiated and/or may appear in awards or collateral agreements or arrangements. Indeed recent industrial legislation has made mandatory the insertion, on application, into awards of what are described as `Employment protection provisions'. For example the 1940 Act was amended in 1987 so to provide, and the 1991 Act also contains similar provisions. 75 In relation to the respondents' third threshold contention, the relevance of an assessment of reasonable notice at common law to the adequacy of the notice provision is just one of many factors relied upon by the applicant to make out his case that the 6 months notice of termination was unfair. 76 The critical issue that the Court has to decide in relation to the alleged unfairness of the notice provision is whether the payment of 6 months that the applicant received on termination should be assessed by reference to his period of employment with the JLW group prior to the merger as well as following the merger with the JLL group or by reference to his employment with the JLL group from the date of the merger until termination. 77 The evidence suggests that the applicant's period of employment with both the JLW group and the JLL group spanned some 24 years. His period of employment with the JLL group commenced on 12 March 1999, the date of the merger, and ended on 16 October 2001, a period of some 31 months. His contract of employment with the JLL group was treated as having commenced on 1 January 1998, a period of 45.5 months until termination. A consideration as to which of these periods should apply to an assessment of the unfairness or otherwise of the notice period entails an examination of his employment relationship with the JLW group and later with the JLL group. 78 In early 1987 the applicant became an Australian proprietor and became eligible to share in the profits of the JLW group. In that capacity he was also responsible, along with the other Australian proprietors for the JLW group operations in Australia. He was allocated an "A" class share which entitled him to vote in the affairs of both JLW Holdings and JLW Australia. In addition he was entitled to dividend shares which were paid into Tristoni, the applicant's family company. As I have earlier observed the effect of this was that the applicant achieved ownership status in JLW Holdings and JLW Australia. Australian proprietors regarded themselves as a commercial partnership. Later, for a period of about 3 to 4 years, the applicant became a Pacific proprietor which entitled him to a share in the profits of companies in the JLW group in Australia as well as in the Asian and Pacific regions. In his capacity as a proprietor the applicant also received substantial yearly dividend payments from his shares. 79 As a proprietor he was, with the other proprietors, closely involved in the integration and the merger proposals. He agreed to give up his ownership of the JLW companies within the JLW group in exchange for shares in the JLL group. At the time of the merger his status changed from being an owner or proprietor of the business to an employee of the merged business under an employment contract. Although the applicant as a senior executive retained substantially the same position after the merger that he had earlier occupied, the nature of his relationship with the new group fundamentally changed. Prior to the merger he was one of the group of proprietor/owners operating the JLW group business for themselves. After the merger he became one of a number of employees, although a senior employee answerable to JLL executives of what was a much larger corporate group. As the applicant agreed in cross examination, the JLL board of directors of the JLL group based overseas "called the shots" whereas before the merger the applicant and his fellow proprietors had "called the shots". 80 This evidence leads me to conclude that the applicant's employment within the JLL group was not continuous from a period sometime in 1979 until his termination on 16 October 2001. Instead, it commenced when he relinquished his ownership of the JLW group for a substantial sum of money realised from the sale of his shares. (At the time of the merger those shares were valued at $A4,306,747.73. The applicant sold them between 2000 and 2005 for $A3,030,379.74). Those events took place as a result of the merger which was an initiative instigated and sanctioned by the applicant as an Australian proprietor. 81 In reaching this conclusion I have also considered the cases relied upon by the applicant to support his submission that a payment in lieu of 24 months notice is fair having regard to his period of employment of some 24 years, as well as other factors. In my view those cases are easily distinguishable from the present applicant's circumstances. 82 In Cukeric v David Jones Limited (1997) 78 IR 430 the applicant was continuously employed for 35 years before being dismissed from employment following an organisational restructure. In Munro v Chubb Security Holdings Australia Ltd [2000] NSWIRComm 215 the applicant had been in continuous employment for nearly 13 years when his employment was terminated because of performance concerns in relation to the applicant's performance as well as the financial performance of his corporate employer. No issue was taken in either of these two cases that each applicant's employment with their respective employers had continued, uninterrupted, until termination. There were no intervening events such as occurred with the present applicant following the merger when he effectively sold his ownership in the JLW group for a considerable sum of money, to the new merged entity. 83 In Stephen Douglas Martin v National Textiles Limited [2000] NSWIRComm 1131 the applicant was a continuous long term employee who was made redundant. He was also a substantial shareholder in the corporation which employed him. Nevertheless, despite his shareholder status, his relationship with his corporate employer did not substantially change during his period of employment. No issue was taken in the proceedings that his employment was other than continuous. The real issue in the case was whether, when the applicant was made redundant, a redundancy policy which was applied to his circumstances resulted in his termination becoming unfair because his termination payment was far less that what the policy provided. 84 The applicant's submission that his notice should be assessed by reference to a continuous period of employment of some 24 years relied in part that under the escrow agreement his statutory entitlements were preserved and carried forward into the SESA. I do not find this submission persuasive. The fact that the applicant and his employer agreed that his accrued statutory entitlements would be preserved is not, on its own, indicative of some recognition by the parties that the applicant's employment would continue uninterrupted following the merger so as to entitle him to greater termination benefits if such an event were to occur. The provision in relation to his accrued statutory entitlements is simply reflective of an agreement between the parties to preserve those entitlements and nothing more. 85 It remains to consider whether the applicant's notice payment made subsequent upon his redundancy was unfair by reference to his employment with the JLL group under the SESA. The appropriate starting point for consideration in my view is the backdated commencement of the SESA, that is 1 January 1998. From that date until the applicant's termination he was employed for 45.5 months. He received 6 months notice in lieu of payment calculated upon his base salary at that time. On any reasonable view this amount constituted a reasonable and fair payment taking into account that period of employment as well as other factors relied upon by the applicant including his age, seniority and experience. It is an entirely separate issue, and one to which I shall come shortly, as to whether the method of calculation, by reference to his base salary alone was unfair in the circumstances. 86 I therefore find that the payment in lieu of notice received by the applicant consequent upon his redundancy taking into account his length of employment, his age at termination, his new position, and the restraint clause, was not unfair. This finding does not take into account the basis upon which the applicant's payment in lieu was calculated by the respondents, namely by reference to his base salary alone. The applicant has separately claimed that failures by the respondents to include a bonus component and superannuation contributions in the notice payment also renders the contract unfair. These issues will be discussed below. Bonus payment in lieu of notice 87 The 6 months payment in lieu of notice was, as earlier mentioned, calculated on the applicant's base salary. It did not take into account any likely bonus payment or component of any likely bonus payment for 2001. The applicant had worked 9.5 months of the 2001 year. He had been advised that his target bonus for that year was $125,000. Because his employment was terminated in the last quarter of 2001 the applicant did not receive any bonus payment. 88 The applicant claims that the respondents' failure to provide a payment in lieu of notice which included a likely bonus payment was unfair. The claim is advanced on the basis that the applicant's employment was terminated without notice, on 16 October 2001. No individual performance rating was assessed for the applicant in respect of 2001. Nevertheless it appears that other international directors received an actual bonus entitlement for 2001. Documentation reveals that Mr Williams for example received a bonus for 2001 in the amount of US$70,000. His target bonus for the year was US$201,000. Mr Wakeham also received a bonus for 2001 in the amount of US$35,000. His target bonus for the year was US$102,000. Had the applicant been given the opportunity to work out his period of notice, which is what his contract provided, he would have continued working for another 6 months. He would therefore have been in employment at the end of 2001 and would have received a bonus for that year. The respondents should not be allowed to avoid a bonus payment to the applicant in these circumstances. 89 It appears from the available evidence that for 2001 some 46 regional and international directors were nominated for a bonus. The applicant was one of those. Eligibility for a bonus in 2001 was assessed in light of an available bonus pool. The payment of a bonus was of course linked to the applicant's performance. In my view however the evidence does not enable an inference to be drawn that the applicant's performance was not at least satisfactory. In 2001 the applicant received positive feedback in relation to his work in leasing sales and client services from Mr Wakeham. The only note of discord comes from the evidence of Mr Williams who recalled a conversation in different terms from the applicant said to have taken place in early 2001. The conversation insofar as Mr Williams recalled was directed towards the applicant's business area not meeting its financial targets. According to Mr Williams' account of the conversation he recalls telling the applicant that he had, "…the ability … to deliver what we both know you are capable of". At the same time the JLL group at least in the Australian and Pacific region was experiencing some financial problems. As a result, the bonus pool for 2001 had been reduced globally. Any problems with the applicant's business area meeting its financial targets may have been symptomatic of this larger trend. If so it should not impart adversely on the applicant's individual performance. The applicant had achieved one of the most senior positions in the organisation as international director responsible for sales, leasing and client services, a position to which he was appointed on 1 January 2000. 90 Mr Williams does not dispute the applicant's account of a conversation the applicant says occurred between them when Mr Williams provided the applicant with his letter of termination on 16 October 2001. In that conversation Mr Williams told the applicant that the company was, "going through a rough time", and that a restructure was imminent. Nothing was said during the conversation to suggest that the applicant's work performance was in any way a factor in the decision to make his position redundant. 91 I therefore find that the applicant's eligibility for a bonus payment in 2001 would not have been affected by individual performance issues. The bonus component of the applicant's salary package, moreover had, between 1999 and 2000 significantly increased in proportion to the applicant's base salary which had successively been reduced on a yearly basis. The conclusion is inescapable that had the applicant not been deprived of the opportunity to work out his period of notice completely within the organisation and continued in employment for the whole of 2001 and for the first 3 months of 2002, he would have been entitled to an actual bonus for 2001. The applicant had already been advised in February 2001 that his target bonus for 2001 was $125,000. 92 In Wong v State Street Global Advisors Australia Limited & Anor [2004] NSWIRComm 212, Schmidt J considered whether a bonus payment in respect of a notice period should be payable. The applicant in that case was eligible to receive a bonus at the time of his termination. The bonus scheme was similar to the scheme implemented by the present applicant's employer. That is, it was a discretionary scheme that rewarded employees annually having regard to the performance achieved by both the employer and the company. Her Honour decided that that applicant should not receive a bonus payment in respect of the notice period because he did not during that period perform any work for the respondent but was successful in finding alternative employment elsewhere. In that new employment the applicant had the opportunity to receive a bonus. In those circumstances her Honour found, "justice (did not require) an order for bonus… for the notice period" (at [216]). 93 In my opinion the present applicant's circumstances are distinguishable. The restraint clause prevented the applicant from seeking work during the 6 month notice period (and for a further 6 months) in his field of expertise. He was denied the opportunity to work in a comparable position to the one he occupied immediately before his termination and one where he could have participated in a bonus scheme. The opportunity to participate in such a scheme had he been able to pursue other employment in the same area, would seem likely given the seniority of his pre-termination position, his considerable experience and the nature of the industry in which the applicant had worked where bonus schemes were set up to reward valued employees for satisfactory work performance. Discretionary bonus schemes are now commonplace within many industries which employ senior executives such as the applicant who have the ability to generate considerable sums of money for the benefit of their respective employers. In Wong v State Street Global, Schmidt J made the following observations in relation to discretionary bonus schemes (at [212]): Consistent with my observations in Diver , I am well satisfied that there is nothing inherently unfair in a bonus system which rewards employees annually, having regard to the performance achieved by the employee and the company. Such discretionary schemes are commonplace and give employees access to benefits, which would otherwise not be available to them. Companies such as the respondents use such schemes in order to attract and retain staff, as well as rewarding them for their work when it achieves measurable success for the employer. (See also Keycorp Ltd v Thomes (2004) 141 IR 116 at [136]). 94 While there is nothing to suggest that the bonus scheme in which the present applicant participated was "inherently unfair", the failure of the respondents to include in his termination payment for the period from 16 October 2001 (the termination date) until the end of the calendar year 2001 resulted in all the circumstances in the termination clause in the applicant's contract operating unfairly against him by failing to make provision for such a payment. 95 An entirely different set of considerations apply to the question of whether the failure to provide a bonus payment in the first three months of the 2002 calendar year rendered the contract unfair. The documentation received into evidence suggests that any calculation of a 2002 target bonus for the applicant would not have been done until at least some time in early 2002 at which time the applicant would have been serving out his notice period with some 3 months to go if the respondents had permitted him to do so after his position had been made redundant. It is hardly likely that the respondents, having made the applicant's position redundant some months earlier would have assessed the applicant as eligible for a target bonus for 2002. Given this likely state of affairs it was not in my opinion incumbent upon the respondents to include, as a matter of fairness in his notice period from the first three months of the 2002 calendar year a component for bonus payment. I therefore find no unfairness in the notice clause of the applicant's contract in relation to the failure to make provision for a bonus payment as part of his payment in lieu of notice consequent upon the redundancy for the 3.5 months commencing 1 January 2002 until 15 April 2002. Pro-rata bonus 96 The applicant also claims that his contract was unfair because it fails to provide payment for a pro-rata bonus, and, because it allowed the respondents to terminate his employment without payment of a pro-rata performance bonus. 97 In Wong v State Street Global, Schmidt J also considered whether the applicant in that case should receive payment of bonus on a pro-rata basis. Her Honour held that the applicant should receive a bonus payment up to the time of his termination. At [214] [215] her Honour said: [214] The scheme did not provide for pro rata bonus for partial years of employment, or during any notice period. On the evidence, bonus formed a substantial part of the applicant's remuneration. Bonuses paid to ongoing senior employees for the 2001 year was also substantial, although much lower than that paid for the 2000 year. The respondents argued that fairness did not require any order in respect of bonus, given that the applicant had not participated in the work which led to the basis upon which bonus was later assessed for ongoing employees, for the 2001 year. [215] I am satisfied that in the circumstances of this case, some allowance must be made for bonus up to the time of termination. The evidence showed that the applicant was attracted to his employment by representations made as to bonus. Letters of offer to other employees stated expected bonus ranges. Like in Merryl Lynch , in this industry, bonus played a very significant part of employees' remuneration for their work. Like the circumstances which arose for consideration in Diver , the applicant did not seek to be removed from his position. That resulted from a concern on the respondents' part, that it would be in their commercial interests to remove him. They were obliged to give him one month's notice of termination under his contract, and indeed more, because of the provisions of the redundancy policy. They gave him none and even made no payment in lieu to him. Thereby they removed from him the opportunity to earn the bonus which would have flowed to him from continued employment in the position in which he had been so successful. This was a serious disadvantage from the applicant's point of view. By way of contrast, the respondents' position was quite different, particularly given that the applicant was plainly involved in work of a kind from which the respondents continued to derive significant benefits, well after the termination of his employment. This, no doubt, impacted on the ability of other employees later to achieve bonus and the respondents to pay it. 98 The present applicant's circumstances are not dissimilar to the circumstances in Wong v State Street Global. The bonus scheme in which the applicant participated provided a significant portion of his salary package in 2001. The decision to terminate the applicant's employment arose, as I have found, not from the individual work performance issues but from commercial interests which precipitated the termination. By terminating his employment before the end of the 2001 calendar year the respondents deprived the applicant of the opportunity to continue in employment until the end of that year when he would undoubtedly have earned an actual bonus amount to which he became entitled for the preceding 9.5 months of 2001 in which he worked. 99 For all of these reasons, and, in the context in which I have considered the evidence in relation to the applicant's claim for a component of bonus payment during his notice period, which analysis I adopt here, I find that the applicant's contract was unfair in failing to provide for a pro-rata payment of bonus for the period 1 January 2001 until 16 October 2001. Severance payment 100 The applicant has also claimed that his contract was unfair in failing to provide fair severance payments and allowing the respondents to terminate his employment without payment of a fair severance payment having regard to his experience, age, length of employment, the restraint clause, general community standards and the fact that no distinction was made between termination for reasons of redundancy and termination for reasons relating to performance or conduct. 101 Most of the evidence which is relevant to this head of alleged unfairness I have already considered in relation to the head of alleged unfairness concerning the applicant's notice period and his bonus entitlements during the time of his employment in 2001 up to 16 October 2001, and, during his 6 month notice period. I adopt my analysis of that evidence in my consideration here of whether the circumstances in relation to the alleged failure to pay a fair severance payment give rise to any unfairness under the applicant's contract. 102 As I have already found, the applicant at the time of his termination was a very experienced and senior employee working competitively within the JLL group. He was aged 51 years when his employment was terminated. I have also found that any unfairness in relation to the amount of payment in lieu of notice must be assessed by reference to the effective date of commencement of the applicant's SESA, that is, 1 January 1998 giving a total period of employment of 45.5 months. For the same reasons I consider that any alleged unfairness flowing from the failure to make fair provision for a severance payment must be assessed by reference to the period of employment, that is, a period of 45.5 months. 103 The payment in lieu of notice operated effectively as a redundancy payment. This was certainly the intention of the respondents, which is not surprising considering the restraint clause operated to prevent the applicant from seeking work in his field of expertise during the notice period and for a period of 6 months thereafter. The evidence also tends to confirm that the applicant's position was in fact made redundant. 104 The applicant's contract made no provision for termination payments in the event of a redundancy. A similar situation arose in Henshaw v Sqribe Technologies Pty Ltd [2000] NSWIRComm 279 where Peterson J found that the failure of an employer to make reasonable provision for redundancy benefits upon termination rendered the contract unfair. At [33] of the judgment his Honour said: [33] What, however, this contract did not do was make any particular provision for redundancy. Notice provisions agreed to operate in circumstances justifying termination, such as the failure to meet expectations of performance or suitability, are to be distinguished from the concept, now generally accepted in this State, that the loss of employment by reason of redundancy attracts special considerations which tend to redound to the benefit of the employee. There is, in the evidence, no hint of those special circumstances having been considered; I find that they were not. 105 The rationale behind the granting of redundancy or severance payments as a separate and distinct consideration from a decision to extend payments in lieu of notice was explained in English v Aradley Insurance Brokers Pty Ltd [2005] NSWIRComm 253 (at [73]), where the Full Bench followed the reasoning in Westfield Holdings v Adams (2001) 114 IR 241: As was pointed out by the Full Bench in Westfield Holdings v Adams , the terms of the Termination Change and Redundancy Case identify the purpose of severance pay and the different role performed by periods of notice. In Westfield Holdings the Full Bench at [144] stated that the numerous authorities referred to established that the focus of redundancy or severance pay was to compensate an employee for the loss of non-transferable benefits and for the inconvenience and hardship imposed by the termination. Those authorities identified some of the hardship flowing from redundancy, including the loss of secure employment, the hardships necessarily inherent in retrenchment and the competitive disability of the long term employee as a result of opportunities foregone, whether in the continuous service of the employer and the loss of legitimate employment expectations through no fault of the employee. 106 The applicant contends that the same considerations are applicable to him. The contention however proceeds upon the basis that severance payments consequent upon findings of unfairness should be assessed on the basis that the applicant was employed by the second respondent for some 24 years. This period of employment according to the applicant entitles him to a severance payment in addition to the 6 months payment in lieu of notice of 75 weeks. As I have already found however any assessment must be made by reference to the applicant's period of employment commencing from 1 January 1998 until 16 October 2001, a period of 45.5 weeks. 107 At the time of the applicant's termination of employment the respondents had in place a redundancy policy. The respondents contend that this policy was fairly applied to the applicant. The payment of 6 months in lieu of notice in fact exceeded the amount provided for by the policy for an employee in the applicant's circumstances employed for a period of between 3 –4 years. 108 The policy which was tendered into evidence discloses that for an employee employed between a 3 to 4 year period and aged over 45 years at the time of termination of employment is entitled to 12.5 weeks redundancy payment, as well as a minimum notice period of 4 weeks. This gives a total of 16.5 weeks which is approximately two thirds of the amount the applicant was actually paid in lieu of notice, being 6 months or 26 weeks. 109 The applicant's termination payment, therefore, does not suggest by reference to the respondents' redundancy policy that a fair and reasonable payment to the applicant was not made when his employment was terminated. Nor, in my opinion, does the applicant's termination payment suggest in the context of numerous authorities decided in this jurisdiction that it was not fair and reasonable. In Wong v State Street Global for example, a case which I have found bore a number of similarities to the present applicant's circumstances, the applicant was employed for some 8 years. Schmidt J considered a fair payment period was 7 months and a fair redundancy payment was 20 weeks, or 5 months, a total of twelve months. In comparison, the present applicant's termination payment of 6 months for a period of employment somewhat less than 4 years may be construed as fair and reasonable. (See also Gala v State Bank of New South Wales Ltd t/a Colonial State Bank (No 2) (1998) 84 IR 216. 110 I therefore find, taking into account all of the applicant's particular circumstances, that the failure to make provision for a fair severance payment and the termination of his employment without payment of a fair severance payment did not render the contract of employment to that extent unfair. Part bonus in shares plan 111 The applicant also contends that his contract of employment was unfair because it failed to provide for the vesting of the PB-S (Shares) in the event of termination by reason of redundancy, and, it allowed the respondents not to grant the shares upon termination by reason of redundancy. 112 The PB-S scheme was introduced by the respondents in 1999 and provided for a component of any actual bonus to be received by way of shares. The vesting of these shares was deferred upon receipt. Half were to vest after 18 months and the remainder after 30 months. The applicant was awarded 2,618 shares as part of his 1999 bonus. Half of those shares vested on 1 July 2001, leaving 1,309, which did not vest because of his termination prior to the vesting date. As part of his 2000 bonus, the applicant was awarded 1,313 shares, none of which vested because of the intervening termination of employment. This left a total of 2,622 unvested shares at the time of termination of employment. 113 The scheme had a number of purposes. One purpose was to reward those employees who make a long-term contribution to the corporate group. Another purpose was to retain valued employees through the mechanism of forfeiture of unvested shares in the event of termination of employment. 114 When the scheme was first introduced, a memorandum advised that the mechanism of forfeiture of unvested shares by reason of termination of employment would operate, [I]n the event that an individual leaves, other than through retirement programmes or enforced redundancy. A briefing note on the scheme which was circulated at about the same time confirmed that exceptions to the condition of forfeiture of the shares were termination of employment through retirement programmes or enforced redundancy. 115 Clearly, if this policy had been applied to the applicant he would have received all his unvested shares. The applicant's termination of employment was by way of an enforced redundancy. On 22 June 2001, however, the applicant was sent a memorandum in relation to his 2000 bonus entitlement which included 1,313 shares and which advised him that a condition of vesting of the shares issued for 2000 was that the applicant continued in employment with the JLL group at the vesting dates. The memorandum made no provision for the vesting of shares in the event of termination of employment by reason of a redundancy. The exception was, however, reinstated in 2002 following a review conducted by the JLL group in 2001 of the PB-S scheme. The group introduced a new revised plan. In relation to annual bonus awarded in deferred shares and vesting rights the revised plan provided: [C]onditions to vesting rights are that the individual must be employed with the Company at the stipulated vesting dates. These conditions do not apply to those retiring in the normal course of business, to the estates of those deceased, or indeed to any who have been made redundant. Those who are dismissed for cause will, however, forfeit. 116 Bonus schemes in which a proportion of the bonus is granted in shares, the vesting of which is in turn deferred and contingent upon continuing employment are a common feature of many modern workplaces. In Rick Lloyd v Commonwealth Bank of Australia Limited [2006] NSWIRComm 129, the applicant, a senior employee with the respondent bank, was a participant in a bonus scheme similar in many respects to the PB-S scheme. He resigned and in accordance with the bank's policy, he forfeited a number of deferred unvested shares which had been earned by him through the granting of bonuses over previous years. At [78], I found: The applicant operated in a workplace where the receipt of deferred performance based bonuses contingent upon continuing employment was commonplace. It was also commonplace that banking and finance institutions dealing with large amounts of money such as the respondent would take some steps to retain the services of valued employees. The respondent's actions therefore in deferring a sizeable component of the performance-based bonuses was in accordance with the rationale and in accordance with industry practice. Another rationale common to the banking and financial sector was the withholding of funds by the respondent as a means of protecting itself in the event a particular trade did not yield expected results because of, for example, improper trading (Mr Cupper's "skin of the game"). The applicant was aware of and understood all of these workplace practices as part of the work environment or the employment culture within which he operated. The applicant chose to continue to work for some years under a regime where forfeiture of the unvested portion of his performance based bonuses was the consequence if he resigned. While these industry practices alone may not be sufficient to negate findings of unfairness there are a number of other factors outlined above which taken together would militate against such a finding. 117 A fundamental point of distinction between Lloyd v CBA and the present circumstances is that the present applicant's employment did not come to an end because he resigned, but because the respondents made his position redundant. 118 The PB-S plans for 1999 and 2000 expressly provided for an exception in the case of a redundancy. The PB-S plan for 2001 did not, but the 2002 plan revived the exception. The policy of retention, one of the key purposes of the plan, obviously did not apply to the applicant at the time of his termination of employment. He was an unwilling participant in an enforced redundancy programme. Another key purpose of the plan, namely to reward valued employees for work performed, was applicable to the applicant. He had already met the criteria for 1999 and 2000 and been awarded bonuses and shares for work satisfactorily completed. 119 The respondents argue that the applicant has no entitlement to the shares. The argument is advanced on four bases. First, it is contended that the owner of the shares is not a party to the proceedings and therefore relief cannot be granted. Secondly, it is contended that the PB-S plans, to the extent that they provide for the allotment of shares, stand outside the contract of employment and that the relief sought in relation to them is not sufficiently closely connected to the performance of work. Both these matters operate to deny the applicant his claim. Thirdly, to the extent that the claim depends upon a breach of contract, it is outside this Court's jurisdiction to determine. Fourthly, the applicant was not likely to reach his revenue target for 2001. He therefore has not established a basis for a bonus payment which he had been told he could expect if he satisfied the conditions for its payment. 120 These matters may be disposed of shortly. First, the fact that the unvested shares lost by the applicant when his employment came to an end were owned by an entity not a party to the proceedings would not prevent the applicant from pursuing his claim under s106 against the respondents. The claim in the summons seeks a variation to the contract which would require the respondents to pay the applicant the value of those shares. Relief is not sought against the entity which owned the shares. Those shares were granted to the applicant by the respondents upon his satisfactory completion of work for the 1999 and 2000 calendar years. 121 Secondly, the PB-S plans were the mechanism whereby the applicant was rewarded for work already completed. The plans did not function therefore merely to allot shares to an employee. Only those employees who had performed their work satisfactorily during a given year stood to benefit from the plans, through the receipt of a bonus, a component of which was shares. This relationship between the receipt of shares and the performance of work brings the claim within jurisdiction. 122 Thirdly, the claims is not characterised in the summons as a breach of contract, but as a head of alleged unfairness of the contract under s106 for which a variation is sought. 123 In Truelove v Sydney Water Corporation Ltd (2005) 146 IR 253, the Full Bench in commenting on the existence of alternative remedies to the unfair contracts regime under s 106 said (at [21]): [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 [29] 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 ss105 and 106. In our view, it cannot be done. 124 The foregoing passage in Truelove emphasises 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 s106 even though the same set of circumstances may disclose a breach of contract. So much was made clear in Sydney Water Corporation Ltd v Industrial Relations Commission (NSW) (2004) 61 NSWLR 661 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. 125 Fourthly, the claim for shares, unvested at the time of termination of the applicant's employment, relies upon work he performed during 1999 and 2000. Any entitlement to shares for work done during 2001 is a separate consideration. Moreover, the applicant makes no claim for any shares that might have been earned for work satisfactorily performed during that latter period. 126 The PB-S plan contained express exceptions during the 1999, 2000 and 2002 calendar years for the termination of employment on the ground of redundancy. The fact that the memorandum forwarded to the applicant on 22 June 2001 was silent on whether a redundancy constituted an exception to the condition of continued employment for the vesting of shares, should not, in my opinion, have prevented the shares from vesting at the time of the applicant's termination of employment. The exception operated for all years, except 2001. In any event, the stated rationale in the plan for the vesting of shares contingent upon continuing employment, that is, the retention of valued employees, does not, as a matter of logic, apply to those employees who are made redundant. Finally, the applicant had met the necessary criteria which, had his employment continued, would have resulted in the vesting of the shares upon completion of his work satisfactorily for the years 1999 and 2000. In all these circumstances, fairness dictates that the applicant should have received the value of those shares when he was made redundant. I therefore find that the failure of the contract to provide for the vesting of the shares in the event of termination of employment on the ground of redundancy was unfair. Superannuation 127 The summons seeks a variation to the contract that any payment in lieu of notice made to the applicant should include employer superannuation contributions in addition to his base salary as well as an amount equivalent to likely bonuses. The respondents contend that this claim is incompetent on the basis that the summons does not allege that the applicant's contract was unfair because it lacked a term in relation superannuation. In my opinion, however, it is implicit in the variation sought that the applicant alleges that his contract of employment was unfair because it failed to make provision for such a term. I intend to consider this claim on that basis. 128 The respondents contend further that the claim should fail because the respondents' obligations to pay the applicant superannuation contributions extend only in respect of the applicant as an employee. Following his termination of employment, the applicant took over control of his superannuation by procuring the transfer to his own fund of the benefits the subject of the funds to which his employer had contributed. This also impacted on the failure on his part of the applicant to mitigate his loss since following termination the applicant had the opportunity to obtain alternative employment in respect of which his new employer would be required under statute to make superannuation contributions on his behalf. 129 As I have already found, the payment of six months in lieu of notice to the applicant was fair and reasonable, taking into account several factors including his length of service which I assessed as 45.5 months. I also found that the respondents' failure to include for the first three months of the notice period, a component for likely bonus payable operated unfairly against the applicant. One of the factors which I took into account in forming this conclusion was the existence of the restraint clause which prevented the applicant from, for example, seeking work with another employer in his field of expertise. Similarly, the applicant, being constrained by the terms of his contract, from obtaining comparable work with another employer, was therefore denied the opportunity to seek employment and receive a salary that would have included employer superannuation contributions. In these circumstances, it is my opinion that, having been prevented by the respondents by reason of the restraint clause, from seeking employment in his chosen field and receiving a salary including superannuation contributions, that the payment to the applicant of six months in lieu of notice should have fairly included employer superannuation contributions. 130 I therefore find that the term of the applicant's contract, which required the parties to that contract to give the other six months notice in writing in the event of termination, was unfair in that it did not provide for employer superannuation contributions to be paid as part of the payment to the applicant of six months in lieu of notice. Mitigation 131 The issue of mitigation, given my findings in relation to the various alleged heads of unfairness, only assumes significance in relation to those findings concerning the failure of the respondents to make fair provision for a bonus payment and superannuation contributions during the notice period: see English v Aradlay Insurance Brokers at [38]. 132 Although s 106(6), which deals with an applicant's efforts to mitigate loss, did not come into effect until 24 June 2002 (that is, after the applicant filed the summons), no issue has been taken in these proceedings as to its application. I therefore intend to consider whether the sub-section applies to the applicant's circumstances. I also note in this regard that in any event the Court would not be precluded from a consideration of the circumstances in the light of general principles of mitigation: English v Aradlay Insurance Brokers at [38]. 133 The respondents contend that after the applicant left the employ of the second respondent, he took no steps to mitigate his loss. Reliance is placed upon a decision of the Full Court of the Supreme Court in Harding v Harding (1928) 29 SR (NSW) 96 to suggest that because the applicant here has failed to mitigate his loss he should not be entitled to any monetary orders consequent upon findings of unfairness. 134 In the decision, Campbell J found that the plaintiff, instead of pursuing comparable employment with another employer had attempted to establish his own business, apparently without success. The decision makes it plain that there was otherwise no impediment which prevented the plaintiff from seeking gainful employment. At 105-106, Campbell J observed: I recognise that generally the onus is on the defendant to show that the dismissed servant might have obtained equivalent or at least suitable employment within the period of notice, but where the dismissed servant himself proves that he sat by for the full period of the omitted notice, and occupied himself unremuneratively on some concern of his own, without making any enquiry or effort about other employment, and the evidence supplies no reason for thinking that such employment could not be obtained, or that it would be even difficult to obtain, and the jury, after proper direction, then gives full wages for the full period of the required notice, I think the verdict would be open to the inference that the jury must either have misapprehended their duty or have acted on a wrong principle. 135 In contrast, the present applicant was restrained from pursuing employment or other work in competition with the respondents for a period of 12 months after he was made redundant. It is no satisfactory answer to this burden upon the applicant's capacity to seek competitive and comparable employment elsewhere, to assert that the applicant could have, at any time, sought to have the restraint clause declared invalid by making appropriate application to the Supreme Court. In my opinion, the sub-section applies in a context where an applicant's endeavours to seek comparable employment following termination are not fettered by a restraint clause imposed by a previous employer which operates to prevent or severely inhibit the applicant from mitigating his loss. 136 The available evidence suggests that the applicant actively pursued his own business interests in the field of property development, during the period in which the restraint clause operated. He earned $1,550. Given this very modest amount, I disregard the amount in the exercise of my discretion to make any money orders: see English v Aradlay Insurance Brokers at [36]. Orders sought 137 In my opinion, the applicant is entitled to orders under s 106(5) in his favour in relation to the following items: (i) a monetary amount equivalent to a bonus payment to the applicant for the first 2.5 months immediately following his termination of employment, that is, from 17 October 2001 until 31 December 2001; (ii) a monetary amount equivalent to a bonus payment to the applicant for the period 1 January 2001 until 16 October 2001; (iii) a monetary amount equivalent to the current market value of the 2,662 shares granted under the PB-S plan to the applicant in lieu of partial bonus which were forfeited as a result of his termination of employment on 16 October 2001; (iv) a monetary amount equivalent to 9% of the applicant's salary immediately prior to his termination of employment as required by the federal Superannuation Guarantee legislation payable for the notice period of six months commencing from 17 October 2001 until 16 March 2002; 138 Interest should also be payable on these amounts from the date of the application, that is, from 26 November 2001 until the date of judgment: Abboud v NSW (Department of School Education) (No. 2) (2000) 99 IR 299. 139 In relation to the first two items, the amount of likely bonus payable should be calculated by reference to the applicant's target bonus for the calendar year 2001, namely, $125,000, as well as by reference to what other international directors in the same period received by way of actual bonuses. The documentary evidence in this regard shows that those international directors who were eligible to receive actual bonuses for 2001 were all eligible for amounts less than their target bonuses. This accords with the evidence of Stephen William Conry, an international director employed by the second respondent. According to Mr Conry, he attended a bonus presentation in about April 2002 during which he was advised that due to the performance of the business, bonuses for the 2001 calendar year would be significantly lower than that which was budgeted for. The amount payable to the applicant by way of likely bonus for 2001 should reflect this. The amount to the applicant should also take into account whether the value of any shares allocated under the PB-S plan for 2001 has been included as a percentage component of the gross bonus entitlement payable. If so, the value of those shares assessed at the current market value should be included in the gross amount in order to arrive at a final figure. Respondents' liability to pay monetary amounts 140 It remains to consider the liability of the respondent's against whom the applicant is proceeding, either jointly or severally, for monies payable to the applicant consequent upon the findings of unfairness which I have made. 141 The parties made no submissions on this issue. In my opinion, both respondents should be held jointly and severally liable to pay the monetary amounts ordered to be paid under s 106(5). The second respondent was the applicant's employer throughout the period of his employment with the JLL group. The first respondent was the principal operating company in Australia for the group. By virtue of their respective statuses within the corporate group, a sufficient foundation exists for the requirement under s 106(5) that a monetary order contemplated against a part must be "in connection with" a contract or arrangement etc to be voided or varied. The first respondent, as the principal operating company, although a non-party to the contract, also arguably stood to benefit, or, benefited, either directly or indirectly, from the receipt of monies from the applicant to which the applicant was otherwise entitled, had fair and reasonable payments been made to him following his termination of employment: see Brown & Ors v Rezitis & Ors (1970) 127 CLR 159 at 164-166 per Barwick CJ and at 170 per Menzies J. Orders 142 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 second respondent is varied from its inception to include a term that the respondents will make a payment in lieu to the applicant equivalent to all amounts which the applicant would have earned had he worked out his six months notice period including: (i) base fixed remuneration (including any salary sacrifice benefits provided to the applicant); (ii) likely bonus (including guaranteed bonus) for the period 17 October 2001 until 31 December 2001; and, (iii) employer superannuation contributions at 9% of the applicant's base salary immediately prior to his termination of employment. 2. The contract of employment between the applicant and the second respondent is further varied from its inception to include a term that, on termination, for any reason other than serious misconduct, the respondents will pay the applicant for any pro rata bonus for the year 2001 up to the date of termination, calculated by reference to the likely bonus which the applicant would have earned for the calendar year 2001. 3. The contract of employment between the applicant and the second respondent is further varied to include a term that on termination, for reason of redundancy, the respondents will pay the applicant the current market value of 2,622 shares granted in lieu of partial bonus for the calendar years 1999 and 2000. 4. The respondents are to pay the applicant the sum equivalent to: (i) likely bonus (including guaranteed bonus) for the period 17 October 2001 until 31 December 2001; (ii) employment superannuation contributions for six months commencing from 17 October 2001 until 16 April 2002 at 9% of the applicant's base salary immediately prior to his termination; (iii) likely pro rata bonus from 1 January 2001 until 16 October 2001 calculated by reference to the likely bonus the applicant would have earned for the calendar year 2001; (iv) the current market value of 2,622 shares granted in lieu of partial bonus for the calendar years 1999 and 2000. 5. The respondents are to pay interest on the amounts specified in Order 4 above in accordance with Schedule 5 of the Uniform Civil Procedure Rules 2005. The interest shall be payable from the date of the filing of the summons for relief on 26 November 2001 until the date of this judgment. 6. The respondents shall pay the applicant's costs of the proceedings in an amount as agreed or assessed. 7. In the absence of any agreement as to the amounts ordered to be paid in accordance with 4, 5 and 6 above, the parties have liberty to approach. That liberty should be exercised within 28 days. ___________________ 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.