Atwell v Simon Transport Pty Ltd
[1996] IRCA 508
•18 October 1996
DECISION NO:508/96
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1725 of 1996
B E T W E E N:
Paul ATWELL
Applicant
A N D
SIMON TRANSPORT PTY LTD
Respondent
REASONS FOR DECISION
18 October 1996 PARKINSON JR
This is an application made pursuant to Section 170EA of the Industrial Relations Act 1988 (‘the Act’). The applicant was employed as a truck driver. He was initially employed in 1990 by a company known as Ambassador Transport Pty Ltd (‘the previous operator’). The business and assets of that company were purchased by the respondent in August 1994. This included various trucks and equipment and existing contracts with customers of the previous operator. The respondent was engaged in general delivery and interstate delivery. One significant component of its business was a contract for delivery of carpets with a major supplier. The applicant became an employee of the respondent at the purchase of the business by the respondent.
I am satisfied that he completed work for the previous operator on one day and on the following working day he presented at the same work place to commence work for the respondent. Upon presenting for work he performed the same work and his evidence is that save for a brief group discussion as to uniform requirements and other such matters there were no discussions as to terms of employment, nor was there an initial employment interview with the respondent. There is a dispute as to the period to be recognised as service for purposes such as termination payment having regard to the transmission of the business. The applicant contends that he is entitled to recognition of all service with the previous operator for such purposes. The respondent says that only the service in the employ of the respondent is relevant.
The respondent contends that the termination of the applicant’s employment was for valid reason, that reason being the operational requirements of the business, consequent upon a loss of a delivery contract. There is no dispute that the contract for delivery of carpet was lost to the respondent and that this contract did constitute a significant component of the respondent’s carpet delivery business.
The applicant contends that the applicant was wrongly selected, in that he was not a driver working on the carpet delivery contract which had been lost. That the employment of another driver shortly after the termination of the applicant’s employment identifies that there was no operational requirement and that the selection criteria applied was flawed. It is further contended that he was not given an opportunity to be heard in relation to the performance issues that were relied upon as the basis for selecting him for redundancy.
On 2 May 1996 the applicant was advised by a Mr Lewis, the operations manager of the respondent, that the applicant was no longer required and was being given a weeks notice. The applicant worked out this notice period and on Wednesday 4 May 1996 the applicant was called into the office wherein he was offered his employment back. His evidence was that he declined the offer advising: “I’m sorry, I’ve lost all faith in the company.”
His evidence was that he was told by a Mr David Smith that: “there had been a big mistake and that I’d like you to stay.” The applicant then sought a guarantee of ongoing employment, which guarantee was not forthcoming. He declined to accept the offer of re-employment. The persons with whom the applicant had the conversation referred to above were not called to give evidence. I accept the applicant’s evidence as to the conversations which were held.
The evidence of Mr Simon, the respondent’s Chairman of Directors, was that it was he who decided that the applicant ought be selected for redundancy. His evidence was that he made this decision having regard to the applicant’s work performance and in particular the failure of the applicant to attend a drivers training course in Toowoomba, Queensland as expected. His evidence was that he did not speak to the applicant’s supervisor to discuss his selection, nor did he take into account the fact that the applicant had been unable to attend at the training course due to the illness of his spouse at the time the first training course was scheduled. The applicant’s evidence was that he was never advised of a date for the next training course. This evidence is not contested.
It is my view that the decision to terminate the applicant’s employment for the reason of redundancy was not a decision which could be supported as being sound and defensible at the time it was made. The applicant was not employed in the area or performing the work which was the subject of the loss of contract. The evidence of the applicant is that the respondent hired an additional employee at or around the same time it says there was an operational requirement to reduce the number of employees and that there remains an employee performing his duties and functions. The conduct of the respondent of informing the applicant that it had made a terrible mistake, during the course of the notice period, also identifies that the decision which was taken to terminate the applicant’s employment was taken without full and proper analysis or appreciation of the operational requirements of the business. I am not satisfied that on 2 May, 1996 the respondent had valid reason for the termination of the employment of the applicant.
In so finding I have considered the submissions of the parties in relation to the recent High Court decision in The State of Victoria v The Commonwealth of Australia (1996) 138 ALR 129 and the decision of Lee J in Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, Lee J, 4 October 1996) wherein his Honour Justice Lee considers the operation of s170DE(1) and observes:
( at page 6 )
“ Neither counsel made any submissions on the question whether the phrase "valid reason" used in sub-s170DE(1) of the Act imposed a requirement that in all the circumstances a termination of employment at the initiative of an employer not be unjust or unfair. The terms of the Act suggest that such a construction is arguable. Section 170CA of the Act states that the object of Div 3 of Pt VIA is to give further effect to the Termination of Employment Convention ("the Convention") the text of which is set out in Schedule 10 of the Act. Art 8 of the Convention requires a contracting party to the Convention to ensure that a worker who has been dismissed is entitled to challenge that dismissal in an appropriate tribunal if the worker considers that his or her "employment has been unjustifiably terminated" and pursuant to Art 9 of the Convention that tribunal is to be empowered "to examine the reasons given for the termination and the other circumstances relating to the case and to render a decision on whether the termination was justified".
The following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1996) 62 IR 371 at 373 on the meaning of the expression "valid reason" are pertinent:
(at page 373 )
"Section 170DE(1) refers to a 'valid reason, or valid reasons', but the Act does not give a meaning to those phrases or the adjective 'valid'. A reference to dictionaries shows that the word 'valid' has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: '2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.' In the Macquarie Dictionary the relevant meaning is 'sound, just or well founded; a valid reason.'
In its context in s 170DE(1), the adjective 'valid' should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must 'be applied in a practical, commonsense way to ensure that' the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s 170DC."
As Ld Denning stated in Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 it is an implied term of an employment contract that an employer be "good and considerate" to its employees.
By giving effect to the Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer. ”
and Marshall J in Kerr v Jaroma Pty Ltd (unreported, IRCA, Marshall J, 7 October 1996) where his Honour observed:
( at page 20 )
“ As is clear from Kenefick, a reason which is based on the operational requirements of an undertaking does not thereby become “valid” because of it being so characterised from the subjective view of the employer. The question remains as to whether the employer has satisfied its onus of proof in showing that a reason it alleges to be based on its operational requirements, in fact, was justified or objectively defensible in the circumstances. The Court will in each case determine, in the particular circumstances prevailing, whether any termination alleged to have been taken due to operational requirements was nonetheless effected for a valid reason, i.e., one which is defensible or justifiable on an objective analysis of the relevant facts.”
In this case there was insufficient evidence of the financial circumstances of the respondent and no evidence to rebut the evidence of the applicant that the respondent had employed an additional employee at or around the time of the termination of the applicant’s employment, nor was there any financial documentation before the Court to substantiate the respondent’s contention that the termination of employment resulted from the operational requirements of the business. There must be at least some objective basis upon which such a conclusion is to be reached. In this case there is none.
I turn now to consider the application of s170DC to this proceeding. It is apparent that the applicant was selected for redundancy on the basis of criteria which was in part based upon the applicant’s work performance or conduct, that being his failure to attend a training course. The applicant was given no opportunity to be heard in relation to those matters touching upon his work capacity or conduct, which were taken into account by Mr Simon in making the decision to select him for redundancy. It is clear from the decision of the Full Court in Kenefick v Australian Submarine Corporation Pty Ltd (unreported, IRCA, Full Court, 26 March 1996) that where the selection criteria for redundancy involves a consideration of the applicant’s conduct or work performance, the applicant is entitled to an opportunity to be heard in relation to those matters. I am satisfied that the respondent contravened s170DC of the Act.
I turn now to consider the question of remedy. The applicant does not seek reinstatement. The respondent points to the applicant’s refusal of the offer of re-employment as a matter of relevance in determining whether in all the circumstances any Order for compensation ought be made. I agree that were the offer of re-employment one which was certain and unqualified the applicant’s refusal would be of relevant consideration. In this case however I am satisfied that the applicant was entitled to be concerned as to the genuineness of the offer. His evidence in this regard was that he was uncertain. The applicant declined the offer of re-employment as a result of his discussion with a government employment information inquiry service. His evidence was that as a result of this discussion and in light of the refusal to guarantee ongoing employment, he was concerned as to the genuiness of the offer and therefore declined the offer. I am satisfied that this concern on the part of the applicant was not an unreasonable one in the circumstances. There was no explanation given to the applicant by the respondent as to the basis for the ‘mistake’ made. There was no indication of any future security or employment and no expression by the respondent of any willingness to conduct itself differently in the future in respect of the applicant’s employment. I am satisfied that having regard to the circumstances an Order for compensation is appropriate to be made. I now turn to a consideration of the quantum of any compensation.
Notwithstanding the dispute between the parties as to the entitlements of the applicant to have his service with the previous operator recognised, a matter which I will consider in relation to s170DB of the Act, I am of the view that the length of service at the workplace, with previous operator or the business and with the respondent, is relevant and appropriate to take into account when considering the likely length of any future employment, for the purpose of considering the applicant’s compensible loss. In this case the applicant had established a lengthy employment period, since 1990 and a pattern of remaining in a particular employment for a substantial period of time. It may be concluded from the applicant’s history that, but for the termination of his employment by the respondent, he was unlikely to have left the respondent’s employ in the short term. I do so conclude. Having regard to the circumstances of the termination and my earlier findings as to operational requirement, I am not able to conclude that the applicant’s future employment would inevitably have ended as a consequence of redundancy.
The applicant was given one weeks notice and no payment of any severance entitlement. There was no evidence called in these proceedings as to what might be a generally applicable standard of severance payment in the transport industry. I am entitled therefore to have regard to the standard generally applied as a result of rulings of arbitral bodies. In this case the Australian Industrial Relations Commission has decided 8 weeks pay in addition to the notice period for termination of the employment is an appropriate amount of severance payment for an employee who has had a period of service of over 4 years with a particular employer or on transmission from one employer to another. See in this regard the Australian Industrial Relations Commission Full Bench Test Case decision in relation to Termination, Change and Redundancy Decision (1994) AILR 256 wherein the standard test case provisions provide for recognition of service upon transmission of business or assets. I am of the view that it is appropriate to take into account in any order for compensation, that period of time recognised as appropriate for severance payment pursuant to a national test case ruling of the principal arbitral body upon industrial standards in this country. It is also relevant in an Order for compensation pursuant to s170EE of the Act because an amount of severance payment is directed to compensating for all of the accrued and future entitlements the employee has lost as a consequence of the redundancy and the difficulty consequent upon having to obtain alternative employment. It is clear that the applicant has lost ongoing entitlements to accrue Long Service Leave. It is apparent by reference to the Employee Relations Act 1992 (Vic) that an entitlement to Long Service Leave was available to accrue to the applicant pursuant to Sections 58 to 60 of that Act. I am satisfied that the applicant is entitled in the compensation awarded to have included an amount in compensation for the above matters and in this regard I am satisfied that it is appropriate to recognise all of his employment in the business for the purposes of the quantum of compensation. I have taken these matters into account together with the likely future length of the employment in assessing the compensation to be paid.
The Applicant obtained alternative but casual employment by way of an employment agency on 13 May, 1996. In this employment he earned an amount of $ 2415.38. On 21 August 1996 he obtained alternative employment on a more permanent basis with another transport company, subject to the satisfactory completion of a 60 day trial period. His base rate of pay per week is $ 447.37. The applicant contends for the maximum amount of compensation available, that being a sum equivalent to the amount of remuneration he would have received in had he remained in the employ of the respondent for the ensuing 6 months. In this regard the applicant relies upon the reduction in his earnings in the new employment and the increased uncertainty of the future of that employment. Whilst I have taken into account this factor, this is to some extent offset by the potential for insecurity in the longer term in the respondent’s employ. I have had regard to this factor also. I have decided that an appropriate amount in compensation is the sum of $ 3,310.96. This amount represents a total of 14.4 weeks pay ($ 6,621.08) to the date of obtaining the alternative permanent employment, less a deduction for the amount of income earned in the interim ($ 2,415.38) and a deduction for the period of notice accorded on one weeks pay in lieu and a further deduction for an additional amount of one weeks notice discussed later in this decision. The amount also includes an account for severance payment, and also recognises the period for which, but for the termination of the employment, I am satisfied the employment could reasonably have been anticipated to continue. The wage losses to applicant are established by reference to the period between the date of the termination of the employment to the date of obtaining alternative and possibly permanent employment.
I turn now to consider the question of the minimum amount of notice payable pursuant to s170DB of the Act. I am not satisfied however that the applicant was entitled to a notice period beyond that which was payable to him for the actual service with the respondent. This is because I am not satisfied that there is any award or other legislative provision which operates in a similar manner as the Employee Relations Act to deem service as continuous upon defined transmission of business or assets. The notice period payable to the applicant notice pursuant to s170DB of the Act was 2 weeks pay. He was paid only one week. He is entitled to an additional weeks payment in lieu of notice. That is the sum of $ 447.37 and I will Order that such amount be payable in damages.
I certify that the preceding 10 pages
are a true copy of the reasons for decision of
Judicial Registrar Parkinson.
Associate : Paul Ferguson
Dated : 18 October 1996
APPEARANCES
Counsel appearing for the applicant : Ms. R. Doyle
Solicitors for the applicant : Mason Sier Turnbull
Counsel appearing for the respondent : Mr. D. Smith
Solicitors for the respondent : Damian J. Smith
Date of hearing : 3 September 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1725 of 1996
B E T W E E N:
Paul ATWELL
Applicant
A N D
SIMON TRANSPORT PTY LTD
Respondent
MINUTES OF ORDERS
18 October 1996 PARKINSON JR
THE COURT ORDERS THAT:
1. Pursuant to Section 170EE(3) of the Industrial Relations Act 1988 the respondent pay compensation to the applicant in the sum of $ 3,310.96
2. Pursuant to Section 170EE (5) of the Industrial Relations Act 1988 the respondent pay to the applicant damages in the sum of $ 447.37.
3. Time for compliance is 21 days from the date of this Order.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
CATCHWORDS
INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION -
VALID REASON - whether applicant properly selected for REDUNDANCY - whether applicant given OPPORTUNITY TO RESPOND - whether service with previous operator relevant to COMPENSATION -
Industrial Relations Act 1988, ss 170CA, 170DB, 170DC, 170DE, 170EA, 170EE
Victorian Employee Relations Act 1992 (Vic) ss 58, 60
Kenefick v Australian Submarine Corporation Pty Ltd
(unreported, IRCA Full Court, 1995 131 ALR 197
Kerr v Jaroma Pty Ltd (unreported, IRCA, Marshall J, 7 October 1996)
Nettlefold v Kym Smoker Pty Ltd (unreported, IRCA, Lee J, 4 October 1996)
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371
State of Victoria v Commonwealth of Australia (1996) 138 ALR 129
Termination Change and Redundancy (1984) AILR 256
Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693
ATWELL v SIMON TRANSPORT PTY LTD
VI 1725 of 1996
Before: PARKINSON JR
Place: MELBOURNE
Date: 18 October 1996
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