Alfredo Romeo v the Distribution Group Ltd trading as Checkpoint Undercar Parts
[1994] IRCA 82
•11 Oct 1994
C A T C H W O R D S
INDUSTRIAL LAW - termination of employment - unlawful termination of employment in contravention of Division 3 of Part VIA of the Industrial Relations Act 1988 - reorganisation of employer's business - offer to employee of transfer to different branch not accepted - termination on basis of redundancy - procedural fairness - termination harsh, unjust or unreasonable - employee already adequately compensated for loss of income.
INDUSTRIAL RELATIONS ACT 1988, ss 170EE.
Byrne & Frew v. Australian Airlines (1994) 52 IR 10
ALFREDO ROMEO -v- THE DISTRIBUTION GROUP LTD trading as CHECKPOINT UNDERCAR PARTS NO. WI 149 OF 1994.
Before: Linkenbagh JR
Place: Perth
Date: 11 October 1994
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 149 of 1994
B E T W E E N:
ALFREDO ROMEO
- Applicant
and
THE DISTRIBUTION GROUP LTD trading as CHECKPOINT UNDERCAR PARTS
- Respondent
BEFORE: JUDICIAL REGISTRAR LINKENBAGH
PLACE: PERTH
DATE: 11 OCTOBER 994
REASONS FOR JUDGMENT
This is an application by Alfredo Romeo who was employed as a motor mechanic by the respondent between 15 May 1975 and 20 May 1994. The correct title of the respondent is The Distribution Group Limited, ACN 000 091 930, trading as Checkpoint Undercar Parts. It is common ground between the parties that in February of this year the respondent's business underwent a major restructuring and the respondent, having made decisions as to the reorganisation of its business, went to some lengths to notify its employees, including the applicant, of the proposed changes. At no time before 12 May 1994 did the respondent do or say anything which could have meant that the applicant felt that his job was in jeopardy.
On 12 May there was a conversation between the applicant and Mr Ellis on behalf of the respondent in which a precise proposal was put to the applicant for his future employment by the respondent, and that was that he was to transfer to the Osborne Park branch of the respondent's business where he would continue to be employed as a motor mechanic. The applicant chose not to accept that offer but countered with a proposal that because of the additional distance that he would have to travel and some inconvenience to him, the respondent should pay him extra money.
He suggested $50 per week and the respondent countered with an offer of $5 per week. There was then some discussion about the basis on which an increase might be awarded and whether it was applicable under the terms of the award. All that can be said about the state of mind of the two men at the conclusion of that conversation was that the applicant thought that Mr Ellis was going to get back to him and Mr Ellis was of the view that the applicant had rejected the transfer proposal.
Given that the respondent had gone to such great pains prior to this to ensure that its employees were well informed as to its proposals, it is very surprising that there was no further conversation with the applicant between 12 May and Friday 20 May, when Mr Ellis went to the applicant's work place looking for him and he was not there. Mr Ellis saw him on Monday 23 May and delivered to him a notice of redundancy, a statement of termination pay and a cheque. Mr Ellis did not allow the applicant the option to serve out his notice and the applicant left the premises on 23 May.
The first matter that I must determine is whether or not the termination was harsh, unjust or unreasonable and if I determine that then I must look at what remedy is appropriate.
On the question of whether it was harsh, unjust or unreasonable, there is no doubt that the organisational structure of the respondent required it to take drastic measures to reorganise its business so that it could continue to be viable and redundancies - particularly the redundancy of this applicant - can be seen to be a consequence of that.
The manner in which the respondent put the redundancy into effect is however of concern. The Full Court of the Federal Court in Byrne v Australian Airlines Limited and Frew v Australian Airlines Limited which are reported in (1994) 52 IR at page 10 considered the relation between procedural fairness and the concept of a harsh, unjust or unreasonable dismissal. At page 63 Gray J emphasises that there are both procedural and substantive requirements in the procedure for terminating employment. The Court in that case was considering a clause in an award which directed that terminations should not be harsh, unjust or unreasonable.
Relying on Gregory v Phillip Morris and Bostik Australia Pty Limited v Gorgevski, Gray J said:
"The use of the word "unjust" is intended to import the requirements of natural justice or procedural fairness into the process of terminating employment."
What the respondent did not do in this case was to consult the applicant about the possible consequences of his refusal to accept the transfer proposal. It is common ground between the parties that at no time was it brought home to him in any way, let alone in clear black and white unequivocal terms, that if he did not reduce his demands in relation to additional wages, he would be dismissed. I think the fact that that did not happen is a gross defect in the procedure in this instance and the reason that I take that view is because the respondent led the applicant to believe, because of the way in which it dealt with the restructuring since February of 1994, that his job was not at risk.
Observing the applicant in the witness box and looking at the consequences of the loss of his employment to him - he being a married man with three young children - I find it difficult to imagine that had he been told in clear terms what was likely to happen to him, he and Mr Ellis could not have come to an agreeable compromise and he would still have his job. Mr Ellis did not give him that opportunity. I find that the termination was harsh, unjust or unreasonable.
Turning to the question of what happens from then, the applicant is not seeking reinstatement but seeks compensation. There are numerous difficulties with his claim for compensation, not the least of which is that he concedes that he has received 15 weeks pay which the employer was not legally obliged to give him. The maximum that I could award him after the amendments to section 170EE is 26 weeks pay, and it is appropriate to be guided by the terms of those amendments although I am not bound by them in this instance. He has already had 15 of those 26 weeks leaving the maximum that I could reasonably award him at 11 weeks.
Mr Jones, for the respondent, argued that the applicant has a duty to mitigate his loss. The respondent set up two possible other jobs for the applicant at the time when he was made redundant and the applicant did not see fit to even make an appointment to go for interviews for those jobs or to make any inquiries about them. The reason he gave was that he saw an advertisement on television which said that those two prospective employers advertised themselves to the public as only employing qualified mechanics and that he, being not fully qualified, concluded that he would not be considered for employment with either of those employers. Now, for him to have taken that view indicates to me that there is some doubt as to his motivation to gain other employment at that time and that is a factor which is relevant in my assessment of whether or not he should receive any more compensation than the 15 weeks he has already had. Other factors that are relevant are the discussions which have taken place during the course of the hearing as to whether or not the 8 weeks redundancy payment and the 4 weeks in lieu of notice payment, which are paid pursuant to the terms of the Award, should be taken into account. If they are, then in effect the applicant has received 27 weeks pay since 20 May 1994.
There is also the question of the receipt by the applicant of Unemployment Benefits. The Court does not have any information before it as to what the consequences of an order for compensation of this kind are, as far as any obligation to reimburse the Department of Social Security for Unemployment Benefits exists, but it is in my view a factor which I cannot ignore. For the last 15 weeks the applicant has received Social Security Benefits at the rate of $260 per week and the gross figure of that equates to the same gross figure as 8½ weeks of his normal wage.
I do not propose to make any specific findings as to whether or not the two Award entitlements or the Social Security payments do or do not affect the entitlement to compensation, but in the exercise of the discretion which I have, I find that in my view the applicant has been adequately compensated for his loss of income as a result of this redundancy, particularly given what I have said about his attitude towards obtaining alternative employment. I exercise my discretion and order that no further moneys be paid by way of compensation.
The orders that I propose to make therefore: 1. That the termination contravenes Division 3 of Part VI(a) of the Industrial Relations Act 1988; and 2. That the moneys already paid to the applicant by the respondent constitute adequate compensation within the meaning of the Act and that no further moneys are payable by way of compensation.
I certify that this and the 5 preceding pages are a true copy of the reasons for judgment of Judicial Registrar Linkenbagh.
Associate:
Date:
Solicitors for the Applicant: Gibson & Gibson
Counsel appearing for Applicant: Mr M E Herron
Representative for the Respondent: Mr D M Jones
Chamber of Commerce
& Industry of W.A.
Date of hearing: 11 October 1994
Date of Judgment: 11 October 1994
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 149 of 1994
B E T W E E N:
ALFREDO ROMEO
- Applicant
and
THE DISTRIBUTION GROUP LTD
trading as CHECKPOINT UNDERCAR PARTS
- Respondent
MINUTES OF ORDER
BEFORE: JUDICIAL REGISTRAR LINKENBAGH
PLACE: PERTH
DATE: 11 OCTOBER 1994
THE COURT ORDERS THAT:
The termination contravenes Division 3 of Part VIA of the Industrial Relations Act 1988.
The moneys already paid to the applicant by the respondent constitute adequate compensation within the meaning of the Act and no further moneys are payable by way of compensation.
NOTE:Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
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