Andrews v Sterling Carpet Mills Ltd
[1996] IRCA 476
•21 August 1996
DECISION NO:476/96
CATCHWORDS
INDUSTRIAL LAW TERMINATION OF EMPLOYMENT - VALID REASON - HARSH UNJUST OR UNREASONABLE - REINSTATEMENT - Whether IMPRACTICABLE - Factors to be taken into account.
Industrial Relations Act 1988 ss: 170DC, 170DE(1), 170DE(2), 170EDA(1)(a), 170EE(1), 170EE(2).
Kenefick v Australian Submarine Corporation (1995) 62 IR 107 at 116
Herman Kozelj v Kellogg (Australia) Proprietary Limited, Industrial Relations Court of Australia, Wilcox CJ, NI2858 of 1995, unreported, 26 July 1996.
Quality Bakers of Australia Limited v Goulding (1995) 60 IR 327
Corkrey v General Motors Holden Limited (1986) AILR 429
Errol Lloyd v R.J. Gilberton (Queensland) Proprietary Limited, Industrial Relations Court of Australia, Magwick J, No NI2135 of 1995, unreported, 14 June 1996.
Nicolson v Heaven and Earth Gallery Pty Limited 1994 1 IRCR 199
Cox v South Australian Meat Corporation, Industrial Relations Court of Australia, Von Doussa J, No SI 229 of 1994, unreported, 13 June 1995.
Johns v Gunns Limited 1995 60 IR 258
Patterson v Newcrest Mining Limited, Industrial Relations Court of Australia, Marshall J, No WI 0595 R of 1994, unreported, 21 December 1995
ANDREWS -v- STERLING CARPET MILLS LTD
QI 4499 of 1995
Before: PATCH JR
Place: BRISBANE
Date/s of hearing: 19, 20 & 21 AUGUST 1996
Date of judgment: 21 AUGUST 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QI 4499 of 1995
BETWEEN:
WIN ANDREWS
Applicant
AND
STERLING CARPET MILLS LTD
Respondent
MINUTES OF ORDERS
21 August 1996 PATCH JR
THE COURT ORDERS THAT:
The respondent shall forthwith reinstate the applicant by appointing her to the position in which she was employed immediately before the termination of her employment by the respondent;
The employment of the applicant is, for all purposes apart from the payment of remuneration lost by the applicant as a result of the termination of her employment, deemed to have been continuous in the position in which she was employed before the termination of her employment;
The respondent is to pay to the applicant the amount of remuneration lost by the applicant as a result of the termination of her employment in accordance with the principles set out in the reasons for judgment;
If agreement is reached between the parties before 5 September 1996 on the questions of the gross amount of remuneration lost and the amount of PAYE tax to be deducted, consent orders may be filed pursuant to Order 35 Rule 10;
In the event of no such consent orders being filed by that date or, if filed, not being made by me in my discretion by that date, the matter is to be listed for telephone directions at 9.30 am on 11 September 1996 as a part-heard matter before me.
Within seven days of today the applicant provide the respondent with copies of all documents in her possession or control concerning any remuneration earned by her since 4 August 1995 and with the names, addresses and telephone numbers of all persons who have provided that remuneration.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QI 4499 of 1995
BETWEEN:
WIN ANDREWS
Applicant
AND
STERLING CARPET MILLS LTD
Respondent
REASONS FOR DECISION
Delivered ex tempore - revised from the transcript
21 August 1996 PATCH JR
The applicant claims that the termination of her employment was unlawful and seeks reinstatement. In lieu thereof she seeks compensation.
BACKGROUND FACTS
The respondent company is a carpet manufacturer. The applicant worked in the respondent's factory or mill as a "tufter", operating one of the machines involved in making carpet.
In 1994 the respondent decided to expand its production in order to obtain a greater market share and to profit from an expected good business cycle in late 1994 and 1995.
In the second half of 1994, as a result of that decision, the respondent increased production and increased its staffing levels. The peak of the staffing levels was reached at the end of 1994, but the "good year" in 1995 did not eventuate. Instead, sales stagnated.
From February 1995, in order to dispose of excess stock, attempts were made to increase sales by way of aggressive discounting. But the price the respondent company paid was very high. The company's margins on sales, at times when discounting was active, slumped to below a viable percentage. As the bulk of the discount sales were made outside of the traditional home base of Queensland, freight costs increased significantly. Debt levels rose. The company experienced liquidity problems.
By the middle of 1995, and probably earlier, the company's management knew the situation was serious. Sales were down and costs were up. In particular, employment levels were the same as they had been at the end of 1994 when the respondent was increasing its production.
On August 3 1995, a meeting was held involving the then two directors/owners of the company, the company's then financial controller, and Mr Nigel Amphlett, who, to date, has been the mill manager for the last seven years. The July sales figures were discussed at that meeting. They were significantly below expectation.
It was decided that the company's financial position necessitated a reduction in costs. A decision was made to make some staff redundant. Three of them were to be in the mill. The decision as to the identity of the employees whose employment would be terminated was left to Mr Amphlett. He decided that one of the employees who would be made redundant was the applicant.
WAS THERE A VALID REASON FOR THE TERMINATION OF THE APPLICANT'S EMPLOYMENT?
In relation to liability, the first issue that arises for determination is whether there was "a valid reason, or valid reasons, connected with the employee's capacity or conduct or based on the operational requirements of the undertaking, establishment or service". See section 170DE(1) of the Industrial Relations Act 1988 ("the Act").
The onus of establishing the existence of a valid reason or reasons lies on the employer. See section 170EDA(1)(a).
Some attempt was made by counsel for the applicant to contest the genuineness of the company's need to reduce costs by reducing staff. That attempt failed. I accept that the respondent's management made a genuine decision that the financial position of the company was such that three staff in the mill should be made redundant.
In Kenefick v Australian Submarine Corporation (1995) 62 IR 107 at 116 (in part of that judgment which remains unaffected by the subsequent Full Court decision in that case), his Honour Wilcox CJ said this:
“While the subsection [ie section 170DE(2)] requires the employer to establish that the termination was a logical way of dealing with the ... operational requirements that gave rise to it, it does not require proof that this was the only logical course. The subsection was designed to inhibit capricious terminations, not to put the Court in the employer's managerial chair.”
His Honour repeated that quote, reaffirming his position, in Herman Kozelj v Kellogg (Australia) Proprietary Limited, Industrial Relations Court of Australia, Wilcox CJ, Number NI 2858 of 1995, unreported, 26 July 1996, at page 13.
I find, therefore, that there was a valid reason for the termination of the applicant's employment.
Before leaving that topic, I note that a good deal of the evidence in the case involved an attempt by the applicant to prove that the real reason for the termination of her employment was because she had complained to her union, the Textile Clothing and Footwear Union of Australia (Queensland Branch), about offensive posters of naked and scantily-dressed women in the workplace. Her complaint was a legitimate one; her reaction - one of distaste and of offence - was quite justified and unexceptional. There were posters of this nature at various places throughout the factory and the warehouse (a separate building) throughout 1995, up to and including the time of the termination of the applicant's employment.
The ones in the warehouse were in what was called the “men's toilet”. This was not an accurate description, because it was the only unlocked toilet, and when women had to work at the warehouse toilet that was the toilet that they, too, had to use. The posters in the warehouse toilet were from what are euphemistically called "men's" magazines, and were posters of nude women in sexually suggestive and revealing poses. Women workers in the factory were regularly in the warehouse for work purposes and therefore regularly had to use that toilet. These women included the applicant.
The posters in the factory were mostly from "trade" calendars provided by the respondent's suppliers and consisted of women, sometimes in bikinis and sometimes topless.
Women in any workplace should not have to be confronted by such posters. It is demeaning and insulting to them. Such posters on display in their own workplace trivialise and stereotype them. They make it more difficult for them to work efficiently and more likely that they will leave that particular workplace.
However, the applicant's case goes further than a mere criticism of the existence of those posters in the workplace.
She alleges that she was dismissed because of her complaint to the union. I do not accept that as a matter of fact. There is no evidence that Mr Amphlett knew or realised, prior to the termination of the applicant's employment, that the applicant was the complainant. He denied it. The State Secretary of the union, Mr Jacques Morel (to whom the applicant had complained on 31 July 1995 and who had, the next day, visited the factory as a result) denied revealing her identity. Mr Amphlett did not know that the applicant was a member of the union, because she paid her dues directly to the union, and had kept her membership secret.
There is, therefore, no link between the termination of the applicant's employment and her complaint to the union about the offensive posters.
WAS THE TERMINATION OF THE APPLICANT'S EMPLOYMENT HARSH OR UNJUST OR UNREASONABLE?
As Beazley J said in Quality Bakers of Australia Limited v Goulding, (1995) 60 IR 327, at 334
“Even in the case of a genuine redundancy, the termination of employment of a particular employee may be harsh, unjust or unreasonable.”
Her Honour went on to say:
“A failure to consult with an employee or union about the issue of redundancy may mean a termination on that ground is harsh, unjust or unreasonable.”
Her Honour then cited the well known case of Corkrey v General Motors Holden Limited (1986) AILR 429, and went on to say:
“The need for consultation with employees and, if applicable, the employees' union in the case of workplace change or restructuring has consistently been recognised as an essential element of fairness in the relationship between employee and employer.”
In Errol Lloyd v R.J. Gilberton (Queensland) Proprietary Limited, Industrial Relations Court of Australia, Magwick J, No NI2135 of 1995, unreported 14 June 1996, His Honour said, at pages 7 and 8:
“Insofar as there was an element of redundancy in the termination, there was lacking that degree of reasonable and proper consultation duly respectful of the status of employees as other than industrial serfs which will ordinarily be required to save a termination on redundancy grounds from being harsh, unjust or unreasonable.”
His Honour went on to say at the bottom of page 8:
“The practical and statutory requirements for consultation are neither matters of mere procedural nitpicking nor a council of perfection.”
In this case, the applicant had no idea her employment was in jeopardy until the moment she was presented with a fait accompli when she was informed on 4 August 1995 that her employment had been terminated.
In deciding who would be made redundant, Mr Amphlett applied the following criteria:
The need to keep a balance between employees' skills;
The extent to which an employee was multi-skilled;
The ability of an employee to move between machines in the mill;
The ability of the employees to work together as a team, but in the sense that their skills and knowledge blended to make a team, not in the sense of personal interaction.
These criteria, although fairly general, were a reasonable basis upon which to make a choice in this particular workplace.
However, in applying those criteria, Mr Amphlett did not consult with the applicant. He therefore failed to accord the applicant that degree of fairness, that sufficient recognition of her status in the modern Australian community as an employee with rights and dignity, as to give her what Australians call "a fair go".
Had Mr Amphlett consulted with the applicant he probably would not have terminated her employment on 4 August 1995. If he had consulted with her, he would have been informed of two things: (1) She was a union member; (2) Ms Shirley Dewald (a casual employee whom Mr Amphlett thought mistakenly was on the permanent staff) was in fact a casual and still in the employment of the respondent.
Mr Amphlett believed at the time that union members were entitled to "preference" in employment. Union members, as he put his understanding, were to be "sacked last". This was his understanding of the relevant award.
Clause 45 of the Textile Industry Award 1994 reads as follows:
Preference of employment
As between members of the Amalgamated Footwear and Textile Workers Union of Australia and other persons offering or desiring service or employment at the same time, preference shall be given to such members at the time of engagement or retrenchment, other relevant things being equal.
Whether Mr Amphlett's understanding, as a matter of strict legal interpretation of the award, is correct is not really the point. As a matter of practicality, if Mr Amphlett had known prior to the termination of the applicant's employment that she was a union member, her employment would not have been terminated on 4 August 1995. He would have known that if he had consulted with her.
Furthermore, Ms Dewald's employment would have been terminated if Mr Amphlett had realised she was a casual - instead of one of the three mill workers who were terminated on 4 August 1995.
True it is that (putting aside for the moment the question of her union membership) the applicant might well have been one of the remaining two who lost their jobs, but that cannot be assumed. To assume so would, in any event, be artificial, in light of the fact that she was the only financially up-to-date union member in the workplace and Mr. Amphlett’s understanding of the effect of the “preference” clause in the Award.
On the facts of this case, therefore, consultation with the applicant would not have been a shallow formality, but would almost certainly, on the basis of her union membership at least, have resulted in her continued employment.
I am satisfied that, in the circumstances, there was an obligation on the respondent to consult the applicant after it had determined that three workers in the mill were to be made redundant, and that she might be one of them, in order to avoid the termination being “unjust” within the meaning of section 170DE(2) of the Act.
That obligation arose as a matter of fairness, as has been accepted in numerous decisions of industrial tribunals - see Quality Bakers of Australia Limited v Goulding (1995) 60 IR 327, which I have already quoted.
The termination of the applicant's employment was, for the above reasons, “unjust” within the meaning of section 170DE(2) of the Act, and therefore unlawful.
In the circumstances of this case, in the modern industrial framework, where employees have rights and dignity, a reasonable employer would have consulted with the applicant about the contemplated termination of her employment before a final decision was made.
The termination of her employment was, therefore, also "unreasonable" within the meaning of section 170DE(2) of the Act and unlawful.
Having reached these conclusions in respect of section 170DE(2) of the Act it is strictly unnecessary to consider whether the Full Court decision in Kenefick and Others v Australian Submarine Corporation Pty Ltd, (Industrial Relations Court of Australia, number SI 290, 292, 293, 294, and 295 of 1994, 26 March 1996, Full Court, unreported), also obliged the respondent, in accordance with section 170DC of the Act, to consult the applicant and/or to put to her the performance matters on which it was relying when it selected her for redundancy as against the other employees. Their performance, skill and ability were compared and, on the authority of Kenefick, the question of whether section 170DC is applicable to the facts of this case was one properly raised by the applicant. But it is not necessary to determine that question, and I decline, therefore, to do that.
REMEDY
Is the reinstatement of the applicant appropriate in all the circumstances of the case?
Section 170EE(1) of the Act reads as follows:
In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, the Court may make the following order:
(a) an order requiring the employer to reinstate the employee by:
(i) reappointing the employee to the position in which the employee was employed immediately before the termination; or
(ii) appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and
(b) If the Court makes an order under paragraph (a):
(i) any order that it thinks necessary to maintain the continuity of the employee’s employment; and
(ii) an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination.
Section 170EE(2) of the Act reads as follows:
If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.
In my opinion, reinstatement (putting aside for the moment the question of impracticability) would be an appropriate remedy in this case. The applicant was a loyal, competent and diligent worker. No complaints were made about her by her employer. Since the termination of her employment by the respondent she has principally been employed as a taxi driver, earning less money than in her previous employment, and at rates, which because of the nature of the industry, vary each week. As her employment was terminated unlawfully through no fault of her own, and as her losses (both directly economic and in terms of the security of steady income and a long-term full-time job) can best be remedied by an order for reinstatement, the justice of the case favours an order for reinstatement. I consider, therefore, that in all the circumstances of the case reinstatement is an appropriate remedy.
Is it impracticable to order the reinstatement of the applicant?
Having determined that reinstatement is an appropriate remedy, I move then to the question of the impracticability or otherwise of that remedy.
In Nicolson v Heaven and Earth Gallery Pty Limited 1994 1 IRCR 199, Wilcox CJ said, at page 210:
One of the amendments to Part VIA made in June 1994, was the substitution of a new section 170EE. Under the substituted section, the first task of the Court, in considering relief, is to consider whether reinstatement is practicable. Compensation for loss of the job (as distinct from lost remuneration) may be awarded only if reinstatement is "impracticable". It is important to note that parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word "impracticable" requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer's business, it may be "impracticable" to order reinstatement, notwithstanding that the job remains available.
His Honour's approach to the question of the impracticability or otherwise of reinstatement has been adopted by a number of judges of the Court. See the decision of Von Doussa J in Cox v South Australian Meat Corporation, IRCA No SI 229 of 1994, 13 June 1995, unreported. See also Johns v Gunns Limited, 1995 60 IR 258.
In Patterson v Newcrest Mining Limited, Industrial Relations Court of Australia, Marshall J, No WI 0595 R of 1994, 21 December 1995, unreported, his Honour expressed his agreement with the Chief Justice’s decision in Nicolson, interpreting the phrase "unacceptable problems or embarrassments", so that it be read distributively, so that the adjective "unacceptable" referred to both "problems" and "embarrassments".
The principles I extract from the cases and the legislation as it is now worded (effective 15 January 1996) are as follows:
The Court has a discretion as to the remedies it may grant.
That discretion is not absolute.
In exercising that discretion, the Court has to first determine the question of whether, in all the circumstances of the case, an order for reinstatement is an appropriate order.
The Court then has to consider whether the reinstatement of the employee would be impracticable.
Reinstatement is still the primary remedy under the Act. This follows from the necessity to consider the question of impracticability of reinstatement before considering the question of whether an order for compensation is appropriate.
Reinstatement should be ordered if the Court considers it an appropriate order, unless the Court finds it to be impracticable.
Impracticable means something less than impossible, but reinstatement will not be impracticable where it is merely inconvenient or difficult without causing an unacceptable problem, or unacceptable embarrassment, or seriously affecting productivity, or seriously affecting harmony within the employer's business.
In this case, the evidence establishes that the financial position of the respondent company has (under new owners, formerly the major supplier/creditors), been stabilised, the number of staff has been (to quote Mr Singh, the current financial controller) "trimmed to the bone", and a return to profitability in the very near future is expected. No evidence was led from which I could conclude that the reinstatement of the applicant would cause any unacceptable problem or unacceptable embarrassment or would seriously affect productivity or harmony within the employer's business.
In saying this I do not ignore the fact that a significant number of employees have in the meantime been made redundant in the respondent's factory. Perhaps, if this case had been heard in December 1995, or even January or February, a different result might have eventuated. But the Court has to consider all the circumstances, including the current circumstances, when determining the question of whether reinstatement is impracticable. I find that it is not impracticable to order the reinstatement of the applicant, and I will so order.
REMUNERATION LOST
As the evidence stands, the applicant has earned some income as a result of a short term job in a laboratory and as a taxi driver. As the evidence now stands, the Court would be able to, at best, make a rough estimate of the amount of income that she has earned since the termination of her employment by the respondent on 4 August 1995.
It is unfortunate that the evidence is in that state. It may well be that the applicant can readily quantify and prove what she has earned in a way that would be satisfactory to the respondent.
As the applicant has earned some income since the termination of her employment, the amount of any order to the respondent to pay the applicant the remuneration lost as a result of the unlawful termination of her employment should be reduced by the amount the applicant has earned.
The amount of remuneration lost by the applicant to be paid to her by the respondent should be calculated as follows:
Add up all amounts the applicant would have earned from her employment by the respondent if her employment had not been terminated on 4 August 1995 to date, taking into account all increases due to award variations since then.
Deduct from that amount the total amount earned by the applicant in all employment since 4 August 1995.
The resulting figure is the remuneration lost by the applicant as a result of the unlawful termination of her employment.
The Court expects the parties to act in good faith and to be able to reach agreement on this matter. If that cannot be done then the Court will resolve the question and the parties will bear the cost of the further proceedings in the normal way.
I note that I will remain part-heard in this matter until either I have signed consent orders resolving the questions of the gross amount of remuneration lost and the amount of PAYE tax to be deducted and the resulting sum to be paid to the applicant, or, in the alternative, I have resolved those questions in the absence of agreement between the parties in some other way.
The orders that the Court makes, therefore, are as follows:
The respondent shall forthwith reinstate the applicant by appointing her to the position in which she was employed immediately before the termination of her employment by the respondent;
The employment of the applicant is, for all purposes apart from the payment of remuneration lost by the applicant as a result of the termination of her employment, deemed to have been continuous in the position in which she was employed before the termination of her employment;
The respondent is to pay to the applicant the amount of remuneration lost by the applicant as a result of the termination of her employment in accordance with the principles set out in the reasons for judgment;
If agreement is reached between the parties before 5 September 1996 on the questions of the gross amount of remuneration lost and the amount of PAYE tax to be deducted, consent orders may be filed pursuant to Order 35 Rule 10;
In the event of no such consent orders being filed by that date or, if filed, not being made by me in my discretion by that date, the matter is to be listed for telephone directions at 9.30 am on 11 September 1996, as a part-heard matter before me.
Within seven days of today the applicant provide the respondent with copies of all documents in her possession or control concerning any remuneration earned by her since 4 August 1995 and with the names, addresses and telephone numbers of all persons who have provided that remuneration.
I certify that this and the preceding seventeen (17) pages
are a true copy of the reasons for decision of
Judicial Registrar Patch JR as recorded in the transcript
and revised by the Judicial Registrar.
Associate: Renee Cauchi
Dated: 9 October 1996
APPEARANCES
Counsel for the applicant: Ms P Sweetapple
Counsel for the respondent: Mrs A F Forbes
Dates of hearing: 19, 20 & 21 August 1996
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