Attila Boros v ADI Ltd
[1997] IRCA 232
•11 July 1997
DECISION NO:232/97
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION -
VALID REASON - whether OPPORTUNITY TO RESPOND pursuant to the requirements of the AWARD - lost opportunities to gain re-employment - REMEDY - whether employee sought to MITIGATE loss of employment - attributed earnings regarding invovlement in business enterprise - COMPENSATION - consideration of the amount of severance paid and employee’s conduct after the termination of employment -
Workplace Relations Act 1996 ss170EA, 170EE
The ADI (Middle Management and Professional) Award 1989
The ADI Redundancy Agreement 1995
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371
BOROS -V- ADI LIMITED
VI 2759 of 1996
PARKINSON JR
MELBOURNE
11 JULY 1997
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA ) VI 2759 of 1996
VICTORIA DISTRICT REGISTRY )
B E T W E E N: Attila BOROS
Applicant
AND: ADI LIMITED
Respondent
JUDICIAL REGISTRAR : PARKINSON
PLACE : MELBOURNE
DATED : 11 JULY 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
Pursuant to Subsection 170EE(3) of the Workplace Relations Act 1996, the respondent pay to the applicant compensation in the sum of $6,796.27, within 21 days of the date of this Order.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules
IN THE INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA ) VI 2759 of 1996
VICTORIA DISTRICT REGISTRY )
B E T W E E N: Attila BOROS
Applicant
AND: ADI LIMITED
Respondent
JUDICIAL REGISTRAR : PARKINSON
PLACE : MELBOURNE
DATED : 11 JULY 1997
REASONS FOR JUDGMENT
This is a decision in relation to an application made pursuant to Section 170EA of the Workplace Relations Act 1996.(‘the Act’) The respondent, as part of its business operations, performs environmental consulting, site assessment and clean up services.
The applicant was employed by the respondent on 7 February, 1994 in the position of representative, within the business development branch. The position was identified as a middle management position and stated to be subject to the provisions of the ADI (Middle Management and Professional) Award, (‘the Award’), an Award of the Australian Industrial Relations Commission. The applicant was engaged in a marketing and sales capacity. His responsibilities were the development of the business by the expansion of its customer base. I accept that the applicant was clearly engaged in the consulting division of the respondent, as opposed to its operations or field division. His salary was increased over the period of the employment and at the time of the termination of employment he was paid $60,000.00 per annum.
The applicant contends that the respondent terminated his employment without valid reason. The respondent contends that it had valid reason for the termination based upon operational requirements of the business.
An extensive examination of the structural change was made in the proceedings. I am satisfied that the applicant’s position was abolished and that his duties were re-allocated to other employees. I am satisfied that the personnel changes which occurred resulted in a net decrease in the number of managerial positions in the workplace and in the relevant division. I am also satisfied that the structural change occurred as a consequence of Mr Mitchell’s view that there ought be a more streamlined management structure and a greater divesting of responsibility for sales and marketing to operational or technical employees. In this sense the basis for the decision was sound and defensible.
However, the respondent terminated the employment without consultation, as required by the Award. The applicant’s employment, whilst the subject of a written contract, was also governed by the operation of an Award of the Australian Industrial Relations Commission. The Award made provision, by Clause 29, for redundancy consultation. The redundancy provision required that there be consultation with the affected employees. It also required that there be advice in writing of the implications and consequences of the possible redundancy. As Counsel for the respondent properly conceded in opening, there was a failure by the respondent to consult with the applicant at any time, prior to the termination of his employment. It is apparent that the respondent failed to comply with its Award obligations in respect of the Applicant.
The applicant’s evidence was that his redundancy came as a shock to him, in circumstances where, whilst he knew there were redundancies in other areas, his department and in particular the sales area, had not been foreshadowed as areas likely to face cutbacks. I accept that this was the applicant’s impression and that in the circumstances there was nothing which would reasonably have led him to conclude otherwise. This is evidenced by the fact that the respondent went to great pains to ensure that details of the redundancy did not reach the public domain and to deal with the redundancy confidentially and separately from that of more general redundancies.
Whilst the respondent has established that it had a genuine operational reorganisation, which resulted in the applicant’s position being made redundant, it has not established that the consequent termination of the applicant’s employment was a necessary or operational requirement of the business, at the time the termination of employment took place.
This is because the respondent failed to comply with its obligations to discuss the proposed changes with the applicant, and failed to consult with him as to possible alternatives to termination of the employment or measures for adoption, by which the impact upon him of the redundancy may be minimised. All of these matters are provided for in Clause 5 of the ADI Redundancy Agreement 1995, (‘the Agreement’) and Clause 27 of the Award. This is not a case where the respondent was ignorant of the existence or application of the Award provisions. The respondent in this case was well aware of its obligations, in relation to the applicant, arising from the Award and it elected not to apply the provisions of the Award or to give the applicant the benefit of the provisions. No sound or defensible reason for this decision was given to the Court.
Counsel for the respondent submitted that the application of the Award provisions would have made no difference to the outcome and that the employment would have been terminated anyway. This was the nature of the evidence of Mr Bill Mitchell in the proceeding. However this approach entirely disregards the possibility that the applicant may have been better placed to canvass other employment options, whilst still in employment and further may have been able to suggest a different approach to the termination of his employment, which may have been more advantageous to his future employment or business prospects. However none of these matters were discussed and the Court is as ill equipped to venture upon a forecasting of possible outcomes, as the respondent is to venture to a conclusion that the process of consultation would have had no effect upon the outcome of the decision.
The evidence is that the respondent’s General Manager, Mr Bill Mitchell, had been considering the process of restructuring, including the redundancy of the applicant, for some months prior to the termination of the employment on 30 October, 1996. In that period of time, early September 1996, the applicant had been offered alternative employment with a major corporation, which he had rejected after some consideration and discussion with Mr Etheridge, a manager of the respondent, as to his future with the respondent. The applicant was entitled to assume from the contents of that discussion that his position was secure and that it was unlikely that his position would face redundancy in the short term. The evidence is also that Mr Mitchell was aware of the offer having been made to the applicant and his rejection of the offer in favour of remaining with the respondent and that this information was conveyed to Mr Mitchell by Mr Etheridge in about September, 1996. The offer of alternative employment remained open, however, by the time the applicant was informed about the redundancy decision and further enquiries made of the prospective employer, the alternative position had been filled. This matter is a matter relevant to the usefulness of the consultation process from the point of view of the applicant.
In the circumstances the decision of the respondent was implemented in a manner which was capricious in the sense discussed by his Honour Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. Having regard to the above matters, I am not satisfied that the respondent had valid reason for the termination of the applicant’s employment, on the date it terminated the employment.
I turn now to consider the question of remedy. I am satisfied that it would be impracticable for an order for reinstatement to be made, having regard to the re-organisation actually implemented by the respondent and in view of the preference of the applicant having regard to his involvement in a business venture of his own. The respondent contended that, having regard to the applicant’s conduct in relation to the return of the company motor vehicle and mobile phone and the failure by him to reimburse the respondent for personal expenditure on the respondent’s credit card account, in all the circumstances no compensation ought be ordered. In this regard it was also submitted that the applicant’s retention of confidential client lists was contrary to the terms of a confidentiality agreement signed by him at the commencement of the employment. It was further submitted that the applicant was paid a significant amount of severance pay at termination of the employment and consequently no further compensation could be justified.
As to the motor vehicle and mobile telephone, I am not satisfied that the applicant’s failure to return the vehicle to the Footscray site or to properly clean the vehicle is a matter of such significance that, in the overall circumstances of this case, the applicant’s entitlement to compensation ought be reduced or negated. Further, I am not satisfied that the minor damage to the motor vehicle did not occur in the course of the employment of the applicant whilst he was attending at various work sites and nor am I satisfied, in the context of the work performed and the nature of those sites, that the damage was not what might be described as fair wear and tear to the vehicle. As to the credit card accounting, I am satisfied that there are still outstanding matters between the parties, as to the amount of repayment required to be made by the applicant. However there is no evidence to suggest that the applicant’s private use of the card was prohibited by the respondent during the course of the employment, provided it was accounted for fully in the next billing period. The evidence is that there remains some disagreement between the parties as to the identification of those items which were private or personal expenditure. This is not a matter, which in the circumstances, I consider relevant to the quantum of compensation or the discretion as to whether any remedy ought lie. As to the confidentiality agreement, there is no suggestion that the applicant improperly used or intended to use the lists retained by him. There is evidence in the proceedings that, after the termination of the employment, some further communication occurred between the applicant and the respondent, as to the status of various tenders and matters associated with various clients. It was not suggested that, in the ordinary course of the employment, the applicant was not authorised to remove the lists from the respondent’s premises for the purpose of working at home. The applicant’s explanation as to the circumstances in which the lists came to be outside of the respondent’s premises is not seriously contested. I am not satisfied that this matter is relevant to the exercise of any discretion arising from s170EE(3)(a) of the Act.
I turn now to consider the issue of mitigation in relation to any damage suffered and the amount of compensation appropriate in such circumstances. There are aspects of the evidence, as to the applicant’s business interests, which were relied upon by the respondent to limit the amount of compensation which it said was payable to the applicant, on account of what it was submitted was a failure by the applicant to attempt to mitigate his loss.
The applicant’s evidence was that he was engaged in a continuance of private business activities immediately after the termination of his employment. The evidence was that he was in Sydney pursuing these interests within days of the termination. The applicant’s evidence was that he preferred to work for himself and to attempt to create his own opportunities, through the development of the business. His evidence was that, save for the enquiry as to the availability of the previous employment offer, he did not seek alternative full time employment and sought instead to pursue private business interests.
I accept that there is a duty to mitigate loss in proceedings such as these, where compensation is the remedy being sought. However, I am not satisfied that having lost the opportunity for alternative employment in September 1996, the applicant in deciding to attempt to revive or re-involve himself in an existing business, could be said to have entirely failed to take steps to mitigate his losses. I do accept however that the entering into the development of the business carries with it the usual uncertainties of such a step, together with a likelihood that the gains achieved in the short term, will only actually be realised some time down the track. This makes it difficult to calculate with any exactness the amount of earnings of the applicant in the period after the termination of the employment. Some account of a reasonable amount attributable to earnings in the period ought be made in the calculation of the quantum of the compensation and in this regard I have decided that it is appropriate to attribute earnings to the applicant for the period after the termination of the employment in the sum of $2,307.70. The amount of compensation ordered will be reduced to account for this amount.
Whilst the amount of the severance payment made by the respondent is relevant to take into account in assessing any compensation, the lost opportunities of the applicant in the circumstances of this case, brought about as a consequence of the conduct of the respondent in failing to consult, is also a relevant consideration. Whilst the outcome for the applicant of employment with the alternative company is not able to be determined, the effect of the applicant’s evidence was that had he known of the impending redundancy, he would have accepted the employment alternative and commenced with the alternative employer. That employment was offered on the same salary as he was being paid by the respondent. It is reasonable to assume for the purposes of calculating the compensation, having regard to the applicant’s length of employment with the respondent, that the applicant would have remained in any new employment for at least a period of six months. Having regard to these matters, I am satisfied that the applicant has suffered a compensable loss as a consequence of the termination of the employment.
I am satisfied that the applicant is entitled to an order for compensation in the sum of $6,796.27.The compensation is calculated by reference to the maximum amount able to be ordered pursuant to s170EE(3) of the Act, less the payments made on account of notice, severance and pro rata long service leave, together with the deduction for earnings discussed earlier herein. It is appropriate and fair in all the circumstances of this case to require there be an accounting for the notice, severance and pro-rata long service leave payments, because the majority of the compensation is directed towards lost opportunity in alternative employment and because those amounts, save for the notice entitlement, are amounts directed towards compensation to the applicant for ongoing losses, and would not have otherwise been payable in a circumstance of either resignation or termination of employment for cause. The amount of that compensation is $6,796. 27.This amount is calculated on the basis of 6 months salary of $30,000.10. With a deduction of $20,896.13 on account of the payments already made and a further deduction of $2,307.70 on account of attributed earnings. The amount of compensation is payable as a gross amount, the applicant being responsible for accounting for any PAYE or other taxation obligation.
I certify that the preceding eight (8) pages
are a true copy of the Reasons for Judgment of
Judicial Registrar Parkinson.
Associate :
Dated : 11 July 1997
APPEARANCES
Counsel for the Applicant : Mr. R. Cameron
Solicitors for the Applicant : Aroni Coleman
Counsel for the Respondent : Mr. J. Bourke
Solicitors for the Respondent : Minter Ellison
Dates of hearing : 5 & 6 May 1997
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