Baldwin v Greater Building Society Ltd
[2011] NSWWCCPD 18
•30 March 2011
| WORKERS COMPENSATION COMMISSION | |||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||||
| CITATION: | Baldwin v Greater Building Society Ltd [2011] NSWWCCPD 18 | ||||
| APPELLANT: | Jo-Anne Maree Baldwin | ||||
| RESPONDENT: | Greater Building Society Limited | ||||
| INSURER: | QBE Workers Compensation (NSW) Ltd | ||||
| FILE NUMBER: | A2-5136/10 | ||||
| ARBITRATOR: | Ms C Rimmer | ||||
| DATE OF ARBITRATOR’S DECISION: DATE OF APPEAL HEARING: | 17 September 2010 23 March 2011 | ||||
| DATE OF APPEAL DECISION: | 30 March 2011 | ||||
| SUBJECT MATTER OF DECISION: | Psychological injury; whether employer’s conduct with respect to performance appraisal and discipline was reasonable; non-compliance with s 74 of the Workplace Injury Management and Workers Compensation Act 1998; unsatisfactory pleadings | ||||
| PRESIDENTIAL MEMBER: | Deputy President Bill Roche | ||||
| HEARING: | Oral | ||||
| REPRESENTATION: | Appellant: | Mr W Carney, instructed by | |||
| Respondent: | Mr B Odling, instructed by Sparke Helmore Lawyers | ||||
ORDERS MADE ON APPEAL: | Time to appeal is extended until 12 November 2010. The Arbitrator’s determination of 17 September 2010 is revoked and the matter is remitted to a different Arbitrator for determination of the applicant worker’s entitlement to weekly and other compensation. The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed. Costs of the first arbitration are to follow the event of the second arbitration. | ||||
BACKGROUND
The appellant worker, Ms Baldwin, started work for the respondent, Greater Building Society Limited, as a branch supervisor on 3 September 2007. After an initial training period, she filled in at the Lake Haven branch for a worker on eight months’ maternity leave. At the end of her period at Lake Haven, the respondent transferred her to work as a branch supervisor at the Gosford branch.
Ms Baldwin failed to follow the respondent’s procedures on three occasions in March 2009. Her failures were:
(a) on Monday 9 March 2009, auditors found Ms Baldwin to have $638 above the permitted cash limit in her teller’s cash drawer;
(b) on Thursday 12 March 2009, she failed to process a “cash float transfer” on her terminal and did not count the “bulk coin”, which resulted in a “false balance”, and
(c) on Tuesday 17 March 2009, Ms Baldwin’s balance was short by $20. On 18 March 2009, she balanced her account by having another staff member transfer $20 from the worker’s account to the “terminal”.
Because of these failures, the respondent removed her as a branch supervisor on 30 March 2009 and told her that she would be placed as a member services officer (a teller) at another branch. Ms Baldwin said she felt “disgraced and humiliated” by the respondent’s actions. She stopped work immediately and has not returned to work since. She submitted a claim form on 8 April 2009 in which she said that she received a psychological injury “through harassment and victimisation at work”.
The respondent’s insurer, QBE Workers Compensation (NSW) Ltd, disputed liability in a s 74 notice dated 27 May 2010 on the grounds that:
(a) Ms Baldwin had not received an injury;
(b) if she had received an injury, employment had not been a substantial contributing factor to that injury, and
(c) no compensation was payable for a psychological injury caused by the reasonable actions of the employer under s 11A of the Workers Compensation Act 1987 (the 1987 Act).
The notice added that Ms Baldwin’s psychological injury had been wholly or predominantly caused by reasonable actions taken with respect to all seven of the grounds in s 11A. It attached several documents on which it relied. This notice was unacceptable and did not comply with s 74 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). The Commission has repeatedly held that, if insurers intend to rely on s 11A as a defence, they must properly particularise the ground upon which they rely as establishing that defence. In Gray v Busways Gosford EMP Pty Ltd [2009] NSWWCCPD 124 (Gray) (a case also involving QBE), I said (at [6]):
“Insurers are again reminded that section 74 notices must be properly prepared and must fully and clearly state in plain language the issues in dispute. The repeated failure of insurers to comply with the clear terms of section 74 is unacceptable. If an insurer seeks to rely upon section 11A(1) of the Workers Compensation Act 1987 (‘the 1987 Act’), full and proper particulars of the specific part of that section must be provided. There are seven different parts to section 11A(1) and a worker is entitled to know precisely which part the insurer relies upon. No proper particulars have ever been provided in the present case and the worker has been left to guess as to which part of section 11A(1) allegedly defeats her claim. That is a totally unsatisfactory situation that should not occur.” (emphasis included in original)
It is unacceptable that QBE has in the present case adopted the same approach to its s 74 notice that the Commission so strongly criticised in Gray. The deliberate flouting of the Commission’s decisions is unacceptable and the matter will be referred to the WorkCover Authority of NSW for investigation.
In her Application to Resolve a Dispute (the Application) registered in the Commission on 28 June 2010, Ms Baldwin originally alleged that she received a psychological injury between 1 September 2007 and 30 March 2009 as a result of many things, most of which have no connection with the claim made.
The pleadings are so rambling and discursive that it is appropriate to set out in full the allegation in Part 4 of the Application, which is (apparently) intended to indicate how the injury occurred:
“The Applicant suffered a Primary Psychological injury during the course of her employment from 1 September 2007 to 30 March 2009 as a result of her employment including humiliation, false accusations, belittling her in the presence of others, inappropriate work practices, not responding to and addressing work complaints, unfair work practices, unprofessional work practices, failure by management to deal with work complaints and work issues, management ignoring OH & S complaints and client’s risk hazards, mismanaged work issues by management, victimisation at work, undermined by work colleagues and management and treated by the Respondent and its representatives inappropriately whilst being at work, which has caused her to suffer a primary psychiatric injury during and in the course of her employment with the Respondent.”
These pleadings bear no relation to the evidence and should never have been filed. Pleadings in the Commission should briefly and succinctly state how the alleged injury occurred. Broadbrush allegations of the kind set out above are objectionable because they demonstrate a complete lack of consideration of the real cause of injury.
The respondent’s solicitors filed a Reply on 21 July 2010, in which they purported to rely on the issues in the s 74 notice and to raise additional issues, relating to incapacity, permanent impairment and entitlement to medical expenses that had not been raised in the notice. The Reply repeated the same error in the s 74 notice in that it purported to rely on s 11A without particularising the specific ground in that section. The Reply was unacceptable.
In response to a direction by the Arbitrator at a teleconference on 2 August 2010, the respondent’s solicitor, Mr Guest, filed on 5 August 2010 a document headed “Respondent’s Reasons for Disputing Liability” in which he disputed that Ms Baldwin had been bullied or harassed. He said that the s 11A defence was that Ms Baldwin’s injury had been caused by reasonable action with respect to discipline.
The Commission listed the matter for conciliation and arbitration on 27 August 2010. Counsel for Ms Baldwin amended the Application to delete from Part 4 the words “From 1 September 2007 to 30 March 2009” and insert the words “9 March 2009 to 30 March 2009”, but did not amend the alleged cause of injury. The Arbitrator permitted the respondent to rely on the document filed on 5 August 2010. Counsel for the respondent said, without objection, that in respect of the s 11A defence, his client relied on “performance appraisal and/or discipline” (T4.29).
The Arbitrator summarised the issues to be:
(a) whether Ms Baldwin sustained a psychological or psychiatric injury arising out of or in the course of her employment under s 11A of the 1987 Act;
(b) if so, whether the injury resulted from reasonable action with respect to discipline or performance appraisal;
(c) whether Ms Baldwin was incapacitated as a result of her injury;
(d) if so, what was her entitlement to compensation, and
(e) were Ms Baldwin’s medical expenses reasonably necessary as a result of her injury.
The Arbitrator heard lengthy submissions from counsel for both sides, but took no oral evidence. In a reserved decision delivered on 17 September 2010, the Arbitrator accepted that Ms Baldwin suffered a psychological injury in the nature of an adjustment disorder with anxious and depressed mood. She was satisfied that action taken by the respondent “with respect to discipline and performance appraisal” was the principal cause of Ms Baldwin’s injury (Statement of Reasons (Reasons) at [79]) and that those actions were reasonable. She made an award for the respondent.
The Commission issued a Certificate of Determination on 17 September 2010 in the following terms:
“The Commission determines:
1.Award for the Respondent in respect of the Applicant’s claim for weekly payments of compensation under the Workers Compensation Act 1987.
2.Award in favour of the Respondent in respect of the Applicant’s claim under s60 of the Workers Compensation Act 1987.
3.No order as to costs.”
Ms Baldwin seeks leave to appeal the Arbitrator’s determination that the respondent’s conduct in demoting Ms Baldwin was reasonable. The respondent has not challenged the Arbitrator’s finding that Ms Baldwin suffered a psychological injury.
LEAVE
Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of s 352 of the 1998 Act.
Monetary threshold
The monetary thresholds in s 352(2) are satisfied.
Time
Ms Baldwin’s solicitors originally lodged the appeal on 14 October 2010, within the 28-day time limit in s 352(4) of the 1998 Act. However, the Registrar rejected it in a letter dated 15 October 2010 because it failed to identify any grounds upon which the decision was appealed or present any arguments in support.
The appeal was lodged out of time on 12 November 2010 and Ms Baldwin seeks an extension of time in which to appeal and has submitted:
(a) the grounds of appeal could not be finalised until a copy of the transcript was obtained;
(b) the appeal raises issues that are arguable, and
(c) strict compliance with the time limits will work a substantial injustice to Ms Baldwin as she will lose the right to have her matter determined according to its substantial merits.
The respondent has properly conceded that there is no prejudice in the “application being dealt with on its merits” and that the delay in lodging the appeal was not significant.
An extension of time in which to appeal is governed by Pt 16.2 r 12 of the Workers Compensation Commission Rules 2010, which provides:
“(12) The Commission constituted by a Presidential member may, if a party satisfies the Presidential member, in exceptional circumstances, that to lose the right to seek leave to appeal would work demonstrable and substantial injustice, by order extend the time for making an appeal.”
The unavailability of a transcript provides no basis for not complying with the procedures in Practice Direction No 6, which sets out the steps parties are to follow on appeal. Appeals must properly identify the grounds of the appeal and the submissions in support of those grounds. The Commission’s practice is to give leave for the parties to make further submissions in support once the transcript is available.
The appeal was initially lodged within time, there is no prejudice to the respondent, and the appeal raises issues that are arguable. For these reasons, I am satisfied that exceptional circumstances exist in the present matter and that to lose the right to appeal would result in a substantial injustice. Time to appeal is extended until 12 November 2010.
I grant leave to appeal.
EVIDENCE
The respondent’s case
Ms Baldwin received a four-week training program going over systems, policies, procedures and product knowledge at the head office when she started work with the respondent in September 2007. She spent her second week in a branch getting to know the procedures. Her third week was at head office going over policies, procedures and getting familiar with the system and product knowledge. The fourth week was spent at a branch with a branch supervisor learning the role. She was then placed at Lake Haven.
Bianca Walls, the respondent’s human resources coordinator, said that there were initially a few problems with Ms Baldwin starting in the role and she was provided with one-on-one training on the job.
When Ms Baldwin started at Gosford, there were issues in relation to her “view of things being very black and white” (Ms Walls’s statement at [15]) and the branch manager worked through those issues with her.
The respondent has strict policies on the amount of cash tellers are permitted to keep in their drawers. An audit on 9 March 2009 revealed that Ms Baldwin had $638 above the permitted limit in her drawer on that day.
Ms Walls said that Ms Primmer, an officer with the respondent’s internal audit department, spoke with Ms Baldwin (presumably on 9 March 2009) and reminded her of the policies regarding the limit on cash to be held in a teller’s drawer and of the policies relating to false balancing (Ms Walls’s statement at [21]). Ms Primmer reinforced that the procedures had to be followed and, as a supervisor, Ms Baldwin was responsible for ensuring that the other tellers followed the procedures.
On 12 March 2009, Ms Baldwin failed to process a float transfer on her terminal and did not count the bulk coin, which resulted in a false balance.
On 13 March 2009, Mr Gilshenan, the respondent’s operations compliance officer, wrote the following email to several staff members, including Ms Mangovskiksi, the regional manager:
“Subject: Jo-Anne Baldwin – Supervisor Gosford
Unfortunately, I have had to issue a second caution letter to the above employee in less than a week.
The first related to exceeding her cash draw [sic] limit and the second occurred yesterday where she failed to process a float adjustment and false balanced. In recent weeks, I have generated 2 emails advising of this serious breach of policy and Maria Primmer has also advised that she discussed this very aspect with Gosford staff when conducting an audit this week.
The branch Manager had commented as follows:
‘This issue has been one of my major concerns here, I have constantly reminded people in meeting[s], when I am out in the branch, when I see people getting money and I have reinforced with memo’s and emails etc but it still seems to happen. I have put in their diary for the end of the day to remind them have they done their float adjustments.’
After discussions with the Operations Manager, it has been decided that the supervisor be removed from the position of Branch supervisor.
My thoughts are that we need to implement a performance review program with this employee.”
On Wednesday 18 March 2009, Lynn Mangovski spoke with Ms Baldwin about the incidents on 9 and 12 March 2009, and presented her with two letters from Mr Gilshenan both dated 13 March 2009. Ms Baldwin signed and dated the letters “19/3/09”. One said:
“As a result of the branch audit conducted on 9th March the following breach of security was detected:
Cash drawer exceeded limit by $638
This is a serious matter and impacts on the overall security of that branch. Your disregard of the process in place on this occasion has the potential capacity to place the safety of all staff at Gosford branch in jeopardy and, as such, is viewed as a serious breach of security.
The safety and security of all Greater Building Society staff and branches is a priority issue. As such, consider this letter an official caution regarding this breach of security, which will be placed on record. I trust that in the future no breaches of this nature will occur again.
Would you please acknowledge receipt of this letter on the duplicate attached and return to me.”
The second letter of 13 March 2009 said:
“Despite recent emails and advices from an internal Auditor as late as this week, I understand that on 12th March you failed to process a cash float transfer on your terminal and did not count the bulk coin resulting in a false balance.
This is once again a serious breach of GBS [Greater Building Society] policy and has occurred in the same week as another serious breach of policy where you exceeded the cash drawer limit on the day of the breach audit.
After the issuing of two letters within the same week, you need to understand that any further serious breaches of the Society’s policies and procedures could result in the termination of your employment.
Would you please acknowledge your receipt of this letter on the duplicate attached and return to me.”
Ms Walls described Ms Mangovski’s meeting with the worker on 18 March 2009 as “basically an informal coaching session with the Claimant and to speak to her about the two breaches in such a short period of time and also to find out if there was something going on inside or outside of work” (Ms Walls’s statement at [26]).
At 1:51 pm on 18 March, Ms Hodgson, the Gosford branch manager, sent Ms Mangovski an email in the following terms:
“Regarding Jo-Anne breaches
Refer: over draw [sic] limit.
I have regularly reminded staff on the importance of keeping their draw [sic] limits and drop safe limits below the Greater’s requirements. I perform random checks on Jo-Anne and fortnightly cash counts to monitor this.Refer: failure to complete transfers.
I have counselled and talked to Jo-Anne in the past on a number of occasions regarding this issue when she has not completed a transfer as per Greater’s requirements and has false balanced. I have stressed the importance of this action.
My policy has always been and has been known to all staff members. The transfer must be completed at the time of the transfer not when they feel like it. I have used the example of a customer withdrawal ‘Treat the transaction like a customer withdrawal, you do not give the customer the money then process the withdrawal a number of hours or a day later’.General Actions Taken:
Regularly reminded all staff, both verbally and in writing:
To make sure they have completed their transfers prior to balancing.
To count their money prior to balancing.
What false balancing is and the Greater’s policy regarding this.
Since August 2008 all staff in their diary have a reminder to check they have completed all money transfers prior to leaving. This is at the end of each staff member’s individual shift. I have confirmed with staff this reminder does come up on their screen at the end of the shift for that day, Jo-Anne inclusive.
Whenever I see staff members doing a transfer I reminded them to make sure this was completed on their system.
A transfer form is completed for all transfers at the time of transfer and a copy is given to each staff member that is involved. This form should be marked off when [the] transfer is completed.
All staff were forwarded Kevin’s emails with a note for them to read and take notice that the Greater takes this matter very seriously.
Marie the Auditor also discussed with the Staff and Jo-Anne that the Greater was treating this matter seriously, days prior to the latest failure to complete a transfer to her bulk cash.” (emphasis included in original)
After the meeting on 18 March 2009, Ms Mangovski sent an email to Ms Walls at 3:27 pm that day confirming that she had spoken to the worker about her breaches of security. The worker appeared to be “very concerned and visibly upset”. She was apologetic and Ms Mangovski believed that she was aware of the seriousness of the situation. Ms Mangovski recommended that a “performance management counselling document be prepared upon which time I will go back to Gosford to discuss with her”.
Ms Walls said that on 19 March 2009 a staff member advised Ms Hodgson that after Ms Mangovski left the branch on 18 March Ms Baldwin had approached her and asked her to transfer $20 from the worker’s personal account into the worker’s terminal at the branch because the worker’s terminal had been $20 short on 17 March. The respondent had procedures for handling a short fall (by use of the petty cash account), but the worker did not follow those procedures. Ms Walls’s statement was inconsistent with Ms Hodgson’s email of Saturday 21 March 2009 to Mr Gilshenan in which she said that a staff member brought to her attention that morning (21 March) that a “teller shortage procedure was not followed correctly”. The teller had been “short by $20.00” on Tuesday 17 March. The total was “done correctly and the shortage was recorded as per policy and [sic] the tellers [sic] balance grand total report”. However, the next day, instead of processing the shortage via the petty cash, the staff member withdrew the funds from her own account and paid the money back into “the terminal to balance”.
Ms Baldwin went on pre-arranged leave on Friday 20 March 2009 and returned to work on Monday 30 March.
Ms Walls said that “[a]t this stage it had become more of a serious offence due to the Claimant transferring personal funds” (Ms Walls’s statement at [32]). Ms Walls contacted the human resources manager and the operations manager.
Ms Walls said that a decision was made that Ms Mangovski would speak with Ms Baldwin on 30 March 2009. She added (at [34]) that “It was decided that we would step the Claimant down from the role of supervisor” with the intention that if she improved in her role, and with further development and training, she could apply for a supervisor role in the future.
Ms Mangovski spoke to Ms Baldwin at 2:30 pm on 30 March and told her that a further breach of procedure had occurred regarding a “failure to follow the procedure for the teller over’s [sic] and shortages”. She gave the worker a copy of the Performance Management Record and asked her to read it. She said that, as this was the third breach of policy and procedure in a very short time, the worker was being removed from her branch supervisor position and placed as a member services officer immediately. Ms Mangovski gave the worker emailed copies of the policy and procedures on all the performance issues and asked her to read them and acknowledge by return email that she had read them and understood the procedures on branch security, cash handling and cashier shortages.
The worker told Ms Mangovski that she felt she was being unfairly targeted. Ms Mangovski replied that that was not the case as all staff were required to conform to the respondent’s policies and procedures. Ms Mangovski gave the worker a hard copy of the Performance Management Record to sign (and an email copy) and advised her that she was required to complete the employee response section and return it with signed copies of the policies and procedures.
A document headed Performance Management Record is in evidence. It is not dated or signed, though has a meeting date of 18 March 2009 recorded on the first page. Under “Meeting Purpose” there are five entries listed as follows:
“Initial Discussion
Follow-up
Formal warning x
Second warning
Final warning”
Ms Walls said (at [41] to [45]):
“41. Situations of this nature are all treated on an individual basis.
42. The Insured take into consideration the length of service, past performance, amount of training within the role which has been provided, their position within the organization and of course the seriousness of the breach and the impact this has on [the] society.
43. We have had a couple of staff recently who have false balanced although there were different circumstances surrounding this breach and this staff member was provided with formal counselling, performance management.
44. There are so many circumstances surrounding breaches and these have to be assessed on an individual basis.
45. The Insured is a highly regulated industry and as part of the Enterprise Agreement clause 44.6 that [sic] termination can be made on the grounds of serious neglect of duties or misconduct.
46. Once it got from the cash being over and the false balancing it reached another level of breach in regards to the Claimant asking another teller to transfer money from her own account to her terminal.”
In relation to the management of the multiple breaches, Ms Walls believed that the respondent treated the worker fairly and considered her length of service and the training provided. The idea of “stepping the Claimant back in her role” was never going to be “a permanent thing”.
Ms Baldwin’s case
Ms Baldwin’s statement of 9 August 2010 referred to problems she had at the Lake Haven branch, and to a lack of support and guidance she received from the branch manager, Vicki Briggs. Despite those problems, the respondent offered Ms Baldwin a permanent position as branch supervisor at Gosford, which she started on 10 March 2008. Though Ms Baldwin said that she felt “betrayed” by Ms Briggs, her claim before the Arbitrator did not rely on the problems at Lake Haven, but relied instead on events that happened at the Gosford branch in March 2009.
In respect of the incident on 9 March, Ms Baldwin said that a staff member had phoned her earlier that morning to say she would not be at work that day. Ms Baldwin called human resources and left a message requesting a replacement. When Ms Baldwin arrived at work, she discovered that no replacement had been arranged and she filled in as a teller. As she would not usually have been working as a teller, she did not have time to count the cash in her drawer, but “experience” told her that her cash limit was below the maximum permissible.
After the branch opened for business, Ms Mangovski arrived to speak with staff. She spoke with the other teller (Yvonne) in the worker’s office, which left the worker at the counter on her own. To comply with the employer’s procedures (that there always be two staff members at the counter at all times), Ms Hodgson came out of her office and sat in the front area of the branch, but did not serve customers or assist with teller duties. As a result, all transactions went through Ms Baldwin’s terminal. After Ms Mangovski finished speaking with Yvonne, she spoke with Ms Baldwin and Yvonne returned to teller duties.
When the replacement staff member arrived, Ms Baldwin showed her which cash would be hers for the day and returned to the counter with Yvonne. At that time, the auditors arrived and, after Ms Baldwin finished serving a customer, they counted the cash in her drawer and found it to be $638 over the allowable limit. Ms Baldwin said that it was the first time she had been over the limit despite regular cash counts at both Gosford and Lake Haven. Nothing more was said to her. She expected her explanation would appear in the auditor’s report.
Other instances of this breach (excessive cash in a teller’s drawer) had been reported to head office, but, to her knowledge, no action had been taken. Ms Baldwin said that during the two-day audit, she overheard the auditors say, “We are looking to make an example of someone”.
On 12 March 2009, Ms Baldwin had taken deposits of coins during the day and recorded the transactions. Towards the end of the day, she placed the coins in the bulk coin cabinet and transferred that amount out of her cash. However, she acknowledged that, contrary to correct procedures, she failed to transfer that amount into the “branch bulk coin on the system”. As a result, there was too much “coin in the bulk” held by the branch (Ms Baldwin’s statement at [46]).
She said that this transfer was so regularly missed that there were procedures to ensure it was recognised and recorded the following day. All branches conduct an audit of the previous day’s transactions at the beginning of the day and “bulk coin and notes transfers are almost always found and rectified at this time” (Ms Baldwin’s statement at [47]). According to Ms Baldwin, her error “had not been considered a major breach of security in the past [and] it had been common practice at most branches” (Ms Baldwin’s statement at [48]).
Ms Baldwin acknowledged that Ms Mangovski spoke to her on 18 March and that she received the two letters dated 13 March. She started pre-arranged leave on Friday 20 March 2009. On her return to work on Monday 30 March 2009, Ms Mangovski spoke to her and told her that while she was on leave they found another “serious breach” in security relating to her having balanced her cash with money from her own account. Ms Mangovski gave her another letter (not in evidence) informing her that she had been removed from her position as branch supervisor and would be found another position as a teller in another branch. Ms Baldwin said she felt completely devastated. She could not believe what she heard or why she was being treated that way. She “was being made to feel like I was a criminal” and felt that she was being punished for being honest for admitting the mistake and correcting it.
Ms Baldwin did not dispute that she had balanced her account by asking another staff member to transfer $20 from Ms Baldwin’s account to the terminal account, though she did not say when she made that request. She remembered how the error occurred: she had given $20 too much to an intellectually impaired customer and knew that the customer would not realise the error and there was therefore no likelihood they would return the money. As it was her mistake, she used $20 of her own money to balance her cash.
She said that, prior to the commencement of an enterprise agreement (sometime in 2008), staff had been paid a separate allowance to balance their cash. If there were no discrepancies, staff could keep the allowance as part of their salary. If there were minor adjustments required, the respondent would take the money from the teller’s wage using the allowance. That had happened to Ms Baldwin at Lake Haven.
After the enterprise agreement, the allowance to cover shortfalls became part of the salary and was not shown separately. However, according to Ms Baldwin, there was nothing to say a teller could not replace a shortfall from his or her own money.
Ms Baldwin referred to the respondent having been audited by APRA in November 2008 and that she suspected that the audit would have shown a number of deficiencies. Shortly after that audit, the respondent created the position of compliance officer (presumably the position held by Mr Gilshenan) and “a barrage of emails” that were threatening and intimidating commenced from that officer. The emails contained new procedures and punishments for non-compliance. Ms Baldwin felt that this was a kneejerk reaction and that it explained the comment by the auditor that “we are going to make an example of someone”.
Ms Baldwin said the letter given to her by Ms Mangovski “which clearly showed it was an initial warning letter was used as warning 1, 2 and 3 all at once and I am sure they just expected me to move on to another branch without any fuss”. She felt “disgraced and humiliated” amongst her peers and felt “ashamed” and did not know if she could face her colleagues again. She suffered anxiety and depression as a result of being unfairly demoted.
Documentary evidence
Greater Federal Enterprise Agreement
The 2008 Greater Federal Enterprise Agreement (the Agreement) sets out the worker’s terms of employment and, among other things, the respondent’s mission statement and corporate objectives. Part 46 of the Agreement deals with Performance Counselling Procedure. At part 46.2, it notes that the respondent had “developed a mechanism of Performance Counselling to provide the parties the opportunity to address any areas of concern” that impeded the common objective that the work environment should operate in the “context of open communications, ensuring the continued maintenance of high quality employee and customer relations”. At 46.3, it provided that “the Line Manager should if appropriate take the opportunity to discuss the issue of concern with the employee on an informal basis to ensure both parties had a mutual understanding of the objectives to be achieved”.
Part 46.4 provides:
“Should an employee’s behaviour and/or actions in the first instance or the desired progress and related outcomes not be attained within an acceptable time frame, formal documented proceedings are to be commenced.”
Part 46.5 provides:
“The first documented account will contain the following points of information, which is to be forwarded to the Human Resources Manager and a copy to the employee:
· Date of discussion;
· Parties to the discussion;
· Issue of concern;
· Summary of discussion highlighting any possible alternatives or constraints in attaining the desired outcome;
· Details of specific action required, by whom and by when. A follow-up meeting is to be specified;
· The document is to be signed by both the Employee and Line Manager.”
Part 46.6 provides for a second formal meeting if it is required and at part 46.8 it is noted that if there is no improvement within a further specified period, the employee’s service can be terminated.
Part 46.9 provides:
“Should the behaviour and/or actions of the employee in the first instance be clearly of a serious nature, the Greater reserves the right to issue the employee with a first and final warning, at which time the employee may request the attendance of an independent representative. The employee may also avail themselves of the provisions afforded under the Dispute Settlement Clause of the Agreement.”
Respondent’s Code of Conduct and other documents
The respondent’s Code of Conduct provides under “Compliance with Legal, Regulatory and Policy Requirements”:
“Concealing errors and omissions or attempting to protect fellow employees who have breached the law, regulations, codes or our policies is not part of our culture and is viewed seriously. We notify our Manager or team leader about breaches of the law, regulations, codes and policy and the relevant compliance reporting officer will notify our compliance representative. Our policies and procedures have been designed to minimise the risk of fraud, corruption or dishonesty. We report immediately any possible fraudulent, corrupt or dishonest activity, including the theft of society property, to our Manager or team leader.”
A document headed “Cash Drawer and Cash Satchel Security” noted that the cash drawer limit was $x and lower limits should be maintained wherever possible. If the drawer limit exceeded $x, staff must place the excess cash in their individual drop safes or the main safe. The document provides that at least once a week each cash drawer is to be checked randomly by the manager or supervisor and, if the balance exceeds $x, the regional manager and operations compliance officer were to be informed immediately.
A document headed “Preparation for Teller Balance” provides that a teller must input the separate totals to the screen using the teller balance option, including total figures for each denomination of notes and coins. Under “Important”, it is noted that managers and/or senior branch staff must ensure that all of the above is adhered to.
In a document headed “Cashier Shortage or Over” the following appears:
· “A cash withdrawal for the amount of the shortage must be drawn out of the branch petty cash account …
· The withdrawal should be done the next working day after the error, to bring the current float up to the correct amount.
· Send the cashier shortage and over notification form (Folio 381) to Operations Department, which must be sent the next working day …
· Note the details of shortage next to withdrawal in the branch petty cash account for reconciliation purposes.
· Upon receipt of the notifications form, Operations Department will arrange reimbursement of the petty cash account.
· For shortages of $400 and over, the Branch Manager will immediately notify the Regional Manager by phone and the Operation Compliance Manager by email. …”
ARBITRATOR’S FINDINGS
After a detailed review of the evidence, the Arbitrator found that:
(a) Ms Baldwin suffered a psychological or psychiatric injury (adjustment disorder with mixed anxiety and depressed mood) in late March 2009 (Reasons at [64]);
(b) as a consequence of the three breaches in March 2009, Ms Baldwin was “disciplined by being given a number of warnings and by being demoted and placed on a performance appraisal plan” (Reasons at [79]). The consensus of the medical evidence was that her condition was mainly or principally caused by the performance issues, discipline and demotion. The Arbitrator was satisfied that the worker suffered an injury as a result of the actions taken by the employer with respect to discipline and performance appraisal and that those actions were the predominant cause of the injury;
(c) the respondent had commenced a process of performance appraisal by mid-March 2009. Mr Gilshenan said on 13 March that, after discussions with the operations manager, he thought that consideration should be given to implementing a performance review program with Ms Baldwin. After speaking with Ms Baldwin on 18 March, the regional manager said that she would like to set up a formal performance management document;
(d) the process set up by the respondent was a limited, discrete process, with a recognised procedure in which the parties were engaged (Irwin v Director General of Education unreported 18 June 1998, No 14068 of 1997 (Irwin));
(e) the issue was whether those actions were reasonable and, in particular, whether the warnings given to Ms Baldwin and her demotion on 30 March 2009 were reasonable in all the circumstances of her employment (Reasons at [83]). The question of reasonableness was objective and was attended by “questions of fairness” (Irwin). She had to “weigh the rights of the employees against the objective of the employment” (Irwin). Reasonableness was judged by having regard to fairness appropriate in the circumstances (Melder v Ausbowl Pty Ltd (1997) 15 NSWCCR 454). Only if the employer’s action in all the circumstances was fair could it be said to be reasonable (Jackson v Work Directions Australia Pty Ltd (1998) NSWCC 45);
(f) the respondent gave Ms Baldwin a “formal warning” at the meeting on 18 March and specific issues were identified, namely, “exceeded cash drawer limit of $638, intentional transfer of $20 from personal account to terminal, failure to process cash float transfer resulting in false balance, breach of Greater’s branch security policy and breach of Greater’s balancing cash policy” (Reasons at [87] quoting from the Performance Management Record). The respondent issued two caution letters and considered Ms Baldwin’s work history and the recent advices given to her by a representative of the audit department, which emphasised cash float procedure and the serious implications if the staff member did not follow correct procedures;
(g) despite Mr Gilshenan’s email of 13 March saying that the worker should be removed from the position of branch supervisor, Ms Baldwin was not told on 18 March that she was to be demoted, but only that “the performance review program was implemented” (Reasons at [88]). It was not until 30 March that Ms Baldwin was informed that she had been removed as branch supervisor;
(h) it was significant that Ms Baldwin was a supervisor. She committed three breaches of the respondent’s procedures in a very short period. Though there was no dishonesty by Ms Baldwin, her conduct was a matter of concern for the respondent because she was a supervisor and expected to not only be aware of the procedures but to ensure that the staff she supervised followed the correct procedures (Reasons at [94]);
(i) the respondent appeared to have adopted an approach of formal counselling and performance management with Ms Baldwin after the first two breaches and “it was only after the third breach that the decision was made to demote her” (Reasons at [95]). This indicated that the respondent’s approach in dealing with Ms Baldwin was “not unfair or unreasonable” (Reasons at [95]);
(j) as there was no reference to the auditor’s comment “we are looking to make an example of someone” in the notes from Ms Akins or Ms Issavi, psychologists, she did not place any significant weight on that part of the worker’s evidence (Reasons at [96]);
(k) she was satisfied that Ms Baldwin was not “being made an example of”. The worker breached the respondent’s policies on three separate occasions within 8–9 days. She had been warned after the first two breaches that any further serious breaches of the policies could result in termination of her employment. Despite those warnings, on 18 March Ms Baldwin asked another staff member to withdraw money from Ms Baldwin’s account and transfer it to her terminal to balance the previous day’s transactions. Ms Walls stated that this third breach was “more of a serious” offence due to the worker transferring her personal funds. Though the amount of the transfer was small, as the respondent is a bank, adherence to procedures and policies would be “of upmost importance”, especially adherence by supervisors (Reasons at [97]). In considering its actions after the third breach, the respondent did not terminate Ms Baldwin’s services, but decided to demote her, with the intention that, if she improved in her role, she could apply for supervisor roles in the future. A reasonable observer would not regard the process the respondent followed as either unfair or unreasonable (Buxton v Bi-Lo Pty Ltd [1998] NSWCC 13; 16 NSWCCR 234), and
(l) the Arbitrator accepted the evidence of Ms Walls concerning the performance appraisal process in March 2009 and the disciplinary action that followed. The respondent’s action was fair and reasonable action in relation to performance appraisal and/or discipline resulting in demotion under s 11A(1) of the 1987 Act.
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator erred in:
(a) her application of s 11A of the 1987 Act;
(b) finding that the respondent’s actions in respect of Ms Baldwin’s performance issues, discipline and promotion were fair and, in all the circumstances, reasonable, and
(c) failing to give proper reasons for finding that the respondent had established a defence under s 11A.
SUBMISSIONS
The submissions initially filed on behalf of Ms Baldwin in support of the substantive grounds for review consisted of only three paragraphs. They did not refer to the evidence or to any relevant authorities and did not assist me in conducting a review under s 352 of the 1998 Act. As a result, I held a teleconference on 2 February 2011, when Mr Carney, barrister, and Ms Tonga, solicitor, represented Ms Baldwin and Mr Guest, solicitor, represented the respondent. Following that teleconference, I set a timetable for further submissions and ultimately listed the matter for oral hearing.
It has now been submitted on behalf of Ms Baldwin that:
(a) because the respondent only articulated its s 11A defence at the arbitration, that issue was not properly in dispute and the Arbitrator did not have jurisdiction to hear the s 11A defence;
(b) the incident on 9 March 2009 was a one-off event in exceptional circumstances, namely, when a staff member had not come to work and Ms Baldwin was overworked;
(c) the incident on 12 March 2009 was fixed the next morning in accordance with accepted procedure. This “could not be seen in isolation as a systemic problem with the applicant”. There was no other complaint of this nature against Ms Baldwin during her employment;
(d) the incident on 17 March 2009 involved a discrepancy of $20. The cash handling manual states that only discrepancies over $400 had to be reported. Therefore, the respondent’s own manuals did not consider the matter serious enough to be reported and no dishonesty was involved;
(e) when there were performance problems, a procedure needed to be followed under the enterprise agreement, namely, that counselling take place and further training be provided, if necessary. This procedure should have been followed (Department of Education and Training v Sinclair [2005] NSWCA 465; 4 DDCR 206 (Sinclair));
(f) the respondent’s officers decided to act before any counselling or other actions and “so disregarded their own agreement on how staff performance issues were to be handled”. This in itself showed that the employer acted unreasonably because it wanted to make an example of someone. The evidence from Ms Walls was that other employees had breached cash handling procedures and that she and the human resources manager were worried about it, but these breaches were not articulated;
(g) the only evidence that the worker’s conduct involved “serious breaches” was from Ms Walls. The incidents were “isolated incidents and different to each other in that these breaches by themselves would not merit anything other than a warning or counselling”. There is nothing in any of the manuals or written procedures that elevated the breaches if they were by a supervisor or suggested that further action would be taken if a supervisor committed the breach. Without reference to anything, the Arbitrator considered that the worker’s role as a supervisor was critical in determining the reasonableness of the respondent’s actions. The role of a supervisor was not affected by three minor breaches of company procedure which were rectified within a short time. The breaches were unrelated “as far as a pattern of erroneous or deficient conduct is concerned”, and
(h) the Arbitrator failed to consider the worker’s length of service or the number of transactions and procedures she performed daily. Against this background, the breaches must be seen as “relatively insignificant”.
At the oral hearing of the appeal, Mr Carney submitted that the respondent’s actions in demoting Ms Baldwin were not reasonable given that:
(a) Ms Baldwin was an employee of long standing;
(b) the amounts involved were small;
(c) the respondent made no attempt to provide meaningful counselling;
(d) the respondent made no efforts under the enterprise agreement to address the worker’s perceived shortcomings;
(e) the worker had no opportunity to address her perceived shortcomings;
(f) there were no formal documented proceedings until the Performance Management Record, which was not prepared until 30 March 2009, that is, after the respondent decided to demote Ms Baldwin;
(g) the respondent has offered no reason for not following the procedures in the enterprise agreement, and
(h) Mr Gilshenan’s email of 13 March shows a breach of the enterprise agreement with regard to counselling and this added to Ms Baldwin’s impression that they set out to make an example of someone.
Mr Odling submitted that the respondent’s actions were reasonable in all the circumstances and it complied with the enterprise agreement. His arguments may be summarised as follows:
(a) Ms Baldwin received a formal caution in the letters of 13 March and was counselled by Ms Mangovski on 18 March;
(b) it was immediately after the counselling on 18 March that Ms Baldwin asked a teller to transfer money to make up for the shortfall that occurred the previous day. That added to the seriousness of the offence and the action that needed to be taken;
(c) the teller was aware of the seriousness of the matter (and that it was contrary to the usual practice for correcting a shortage) and brought it to the manager’s attention. The worker had the knowledge, but thought she would skate over it;
(d) the third mistake occurred on 17 March, but the worker did not bring it to Ms Mangovski’s attention at the meeting on 18 March. Instead, as soon as Ms Mangovski left the branch, Ms Baldwin asked a teller to effect the transfer. Ms Baldwin should have raised it at the meeting with Ms Mangovski;
(e) the way Ms Baldwin dealt with the shortfall gave the matter a more serious complexion;
(f) as a supervisor, Ms Baldwin had an obligation to set a good example. The respondent had to consider if it could leave the worker as a supervisor until she demonstrated she was familiar with the procedures. Her employment was not terminated, but she was merely demoted (to the position of teller at a different branch) with a view to re-establishing herself;
(g) the decision to demote the worker referred to in Mr Gilshenan’s email of 13 March had not been implemented at the meeting on 18 March and it can be inferred that the decision was not final;
(h) looking at the three errors together, they were significant because the respondent is a financial institution;
(i) because of the way the worker corrected the shortfall there were really four errors, the fourth error being the way the worker corrected the shortfall on 18 March;
(j) the steps taken by the respondent, which included counselling and retraining progression, were reasonable and responsible, and
(k) the Arbitrator turned her mind to the issues and her decision discloses no error.
DISCUSSION AND FINDINGS
There are two preliminary points that arise from the above submissions. First, there is Mr Carney’s submission that the respondent only articulated its s 11A defence at the arbitration, and secondly, Mr Odling’s submission that the Arbitrator made no error.
The submission that the respondent only articulated the s 11A defence at the arbitration was incorrect. The respondent’s solicitor clearly stated the issues in dispute in the document “Respondent’s Reasons for Disputing Liability” filed on 5 August 2010. Though that document only relied on “discipline”, Mr Carney did not object to Mr Odling’s statement at the arbitration (at T4.29) that his client relied on “performance appraisal and/or discipline” and the arbitration proceeded on that basis. Whilst the s 74 notice and the Reply were both unsatisfactory, the omissions in those documents were overcome (without any prejudice to or objection by Ms Baldwin) with the document filed on 5 August 2011.
Whether the Arbitrator’s decision involved an error does not define the task I have to perform on review. As the Arbitrator determined the matter before 1 February 2011, the appeal is not restricted to the identification and correction of error (s 352(5) of the 1998 Act), but is a review under the principles discussed in Sapina v Coles Myer Ltd [2009] NSWCA 71; 7 DDCR 54 (see cl 8 of Pt 19G of Sch 6 of the 1987 Act). On review, I am required to determine the true and correct position (State Transit Authority of New South Wales v Chemler [2007] NSWCA 249; 5 DDCR 286).
I accept that the error on 9 March was a “one-off” event and that it occurred in exceptional circumstances. Whether it even warranted the “official caution” in the letter of 13 March is doubtful. The mistake occurred when the respondent was understaffed and Ms Baldwin was effectively the only teller. The respondent has not disputed Ms Baldwin’s statement that she had never previously been over the cash drawer limit. Whether the extenuating circumstances of the incident appeared in the auditor’s report (as Ms Baldwin expected they would) is not known, because the report is not in evidence. Mr Gilshenan’s letter of 13 March made no reference to any of the (undisputed) mitigating circumstances.
The incident on 12 March (the failure to process a cash float resulting in a “false balance”) is more contentious. Ms Baldwin’s evidence that the transfer was so regularly missed that there were procedures to ensure that it was recognised and recorded the next day, and that all branches conducted audits of the previous day’s transactions to identify and correct bulk coin and note transfers, has not been challenged and I see no reasons not to accept it. Mr Gilshenan does not appear to have considered this matter in the second letter of 13 March 2009.
However, Ms Baldwin’s statement that it had not been regarded as “a major breach of security in the past” does not sit well with Ms Hodgson’s email of 18 March where she said that she had counselled Ms Baldwin “on a number of occasions” about the issue and that, just days prior to the 12 March error, the auditor had also discussed with staff and Ms Baldwin that “the [respondent] was treating this matter seriously”. This email is consistent with the evidence from Ms Walls that Maria Primmer spoke to the worker and “reminded her of the policies in place”, which included “false balancing”. Ms Baldwin has not challenged this evidence.
Given the evidence from Ms Hodgson and Ms Walls, I accept that the “false balance” issue was a significant breach of the respondent’s policies. I also accept that, prior to 12 March, Ms Hodgson and Ms Primmer had spoken to Ms Baldwin about the need to complete transfers prior to balancing, thus avoiding the possibility of a false balance. However, the respondent has not challenged Ms Baldwin’s evidence that the problem was a common one and that, as it often occurred, the respondent had a system in place to deal with it. This suggests that Ms Baldwin was not the only member of staff to have made this error. Nevertheless, the problem was one that the respondent was attempting to rectify and Ms Hodgson had told staff of the need to complete transfers prior to balancing. Ms Baldwin’s failure to do so on 12 March warranted action by the respondent and was an important issue for a financial institution.
Had the error on 9 March 2009 been the only issue, it seems clear that the matter would not have gone further. The second error occurred after specific instructions from Ms Hodgson and Ms Primmer concerning the policy about false balancing. Notwithstanding those instructions, Ms Baldwin false balanced on 12 March. In these circumstances, I am satisfied that the respondent was entitled to take action to rectify the problem.
At a meeting on 18 March 2009, Ms Mangovski gave Ms Baldwin the two letters dated 13 March. Whilst Ms Walls described that meeting as an “informal coaching session”, very little is known of what was said. Ms Mangovski’s email on 18 March said that she had spoken to the worker about her breaches of security and that the worker appeared “very concerned and visibly upset”. Ms Baldwin said in her unsigned statement that Ms Mangovski said she (Ms Baldwin) would always have a job with the respondent, no matter what. Ms Baldwin has not suggested that Ms Mangovski’s conduct at the meeting was unreasonable. However, there is no evidence from Ms Mangovski that she conducted a performance appraisal or anything like a performance appraisal. Nevertheless, Ms Baldwin could not have been in doubt that her performance had come under adverse notice.
The third error is more problematic. After the meeting with Ms Mangovski on 18 March 2009, the worker approached a teller and asked her to transfer $20 from the worker’s account into the worker’s terminal at the branch because she had been $20 short on 17 March 2009. This was a breach of the respondent’s policy for handling “shortages”, which requires a withdrawal from petty cash (see [68] above). Ms Baldwin said that, though she was aware that the procedure had changed with the commencement of the enterprise agreement, and there was no longer a separate allowance paid for “shortages”, “there was nothing to say you could not replace a shortfall due to an error from you own pocket”. This statement demonstrates a lack of understanding by Ms Baldwin that the new procedure had replaced the previous method of dealing with shortages.
I do not accept Mr Odling’s submission that the transfer on 18 March 2009 really involved a fourth error. The respondent has never relied on the mistake Ms Baldwin made on 17 March (giving a customer $20 too much change) as a ground for its actions and has always relied on the way she corrected her error (along with the first two errors) as the basis for its actions. Nor do I accept Mr Carney’s submission that workers only had to report discrepancies over $400. For all shortages, it was necessary to send “the Cashier Shortage & Over Notification form (folio 381) to [the] Operations Department” the next day. For shortages of $400 and over, the branch manager had to immediately notify the regional manager by phone and the operations compliance manager by email.
As I have said, the first error was a one-off error that occurred in exceptional circumstances. The second error was more significant, but related to something that occurred so often that the respondent had a procedure to deal with it. The third matter had the potential to be more significant. However, it involved a very modest amount and there was no question of dishonesty or loss of funds. I accept that the manner in which a shortage is corrected is obviously an important matter for a financial institution. On the other hand, Ms Baldwin openly disclosed her error and corrected it quickly in a manner that she believed was unexceptional. She was wrong about that and required further instruction and training.
I accept that, when viewed together, Ms Baldwin’s errors were matters of concern for a financial institution and that the respondent was entitled to take action with respect to her performance. The question is whether the action taken was reasonable in all the circumstances.
Mr Carney criticised the respondent for demoting the worker after the third error, before counselling or other actions, in disregard of the enterprise agreement on how staff performance issues were handled and without any explanation for failing to follow the steps in that agreement. This requires a careful examination of the terms of the enterprise agreement and a comparison of those requirements with the respondent’s conduct in this matter.
To ensure that the respondent’s objective of “open communications, ensuring the continued maintenance of high quality employee and customer relations” is maintained, the enterprise agreement has a “performance counselling procedure”. Mr Odling submitted that the respondent followed that procedure in that it gave Ms Baldwin warnings in the letters on 13 March 2009 and provided counselling. Notwithstanding those steps, Ms Baldwin breached the respondent’s policies (with respect to shortages) immediately after the meeting with Ms Mangovski on 18 March 2009. Mr Odling submitted that, given this history, and given that Ms Baldwin was a supervisor, it was reasonable for the respondent to demote her so she could have further training with a view to returning to the role of supervisor.
I do not accept that the respondent’s actions were consistent with the enterprise agreement.
The enterprise agreement provides that the line manager should take the opportunity to discuss the issue of concern with the employee on an informal basis to ensure that both parties have a mutual understanding of the objectives to be achieved. Should the employee’s actions “in the first instance or the desired progress and related outcomes not be attained within an acceptable timeframe, formal documented proceedings are to be commenced”.
I assume that the line manager in this case is the branch manager, Ms Hodgson. She regularly reminded staff about the need to keep drawer limits below the amount set by the respondent. She randomly checked the worker’s cash counts, but did not say they were in breach. She also counselled Ms Baldwin about the failure to complete transfers as required, but did not set a time limit within which Ms Baldwin had to improve. She had no formal meetings about that problem. The error on 12 March 2009 demonstrated that it remained a problem. In Ms Baldwin’s opinion, it was such a common problem that the respondent had a procedure to deal with it. The respondent has not disputed that evidence.
As counselling had not achieved the desired outcome concerning the “false balances”, the enterprise agreement requires “formal documented proceedings” to be commenced. Part 46.5 of the enterprise agreement requires a document setting out the date of the discussion, the parties to the discussion, the issue of concern, a summary of the discussion highlighting any possible alternatives or constraints to the desired outcomes, details of specific action required and a time for that action, the setting of a follow up meeting, and that the document be signed by the employee and the line manager. The letters of 13 March did not come close to complying with documentation required by the enterprise agreement.
In the event that the desired outcome is not achieved, a second meeting is to take place, when the employee may request the attendance of an independent representative. Should there be no significant improvement by the employee after the second meeting, the respondent will require the employee’s performance to improve to the required standard within a “further specified period”. Should there be no improvement within “this period”, the employee’s services can be terminated. If the meeting on 18 March 2009 is regarded as the first meeting, it set no action required or timeframe for action. It was an informal discussion. If the meeting on 30 March 2009 is regarded as the “second meeting”, it did not require Ms Baldwin’s performance to improve within a specified period, but immediately demoted her without asking for her explanation about the incident.
The enterprise agreement provides an exception to the above procedure where the actions of the employee in the first instance are “clearly of a serious nature”. In that situation, the respondent reserves the right to issue a first and final warning, and the employee may request the attendance of an independent representative and may avail themselves of the provisions afforded under the dispute settlement clause of the enterprise agreement. That did not happen in this case. If the letter of 13 March 2009 dealing with the false balancing is regarded as a final warning (though it was not expressed in those terms), I do not accept that it was reasonable for such a warning to be issued in circumstances where the error was a common one and there were exceptional circumstances surrounding the first error. In any event, even if the respondent issues a “first and final warning”, that merely triggers the dispute settlement clause in the enterprise agreement. It does not entitle the employer to dismiss or demote a worker without following appropriate procedures. Essentially, those procedures are in place to ensure compliance with general principles of reasonableness and fairness.
The Arbitrator rightly said that the test of whether an employer acted reasonably is an objective one (Jeffery v Lintipal Pty Ltd [2008] NSWCA 138 (Jeffery)). It is necessary to have regard to all relevant circumstances. These include the seriousness of the conduct that has led to the disciplinary action, the nature of the employer’s business, and the worker’s position in that business. The Arbitrator had regard to the fact that Ms Baldwin was a supervisor and that it was her job to ensure that the respondent’s tellers followed the correct procedures. I agree that that is a relevant factor to consider in assessing whether the respondent’s actions were reasonable.
However, I do not agree that the respondent had commenced a process of performance appraisal by mid-March, as the Arbitrator found. There was no discrete process on that date that could be described as performance appraisal. A performance appraisal requires an assessment or evaluation of a worker’s performance. Ms Mangovski merely gave the worker the two letters of 13 March 2009 and spoke to her about her breaches of security. Ms Walls described the meeting on 18 March 2009 as “an informal coaching session”. The respondent may have intended setting up a process of performance appraisal for Ms Baldwin, but had not done so by mid-March 2009.
After Ms Mangovski returned from the meeting on 18 March 2009, she recommended that a “performance management counselling document be prepared” at which time she would return to Gosford to speak with the worker. The respondent prepared no such document. The only document prepared after 18 March 2009 was the Performance Management Record. Though this document is undated, it was clearly prepared after the meeting on 30 March 2009 (Ms Baldwin’s first day back from holidays), and after the respondent had demoted Ms Baldwin. The respondent gave Ms Baldwin no opportunity on 30 March 2009 to explain her conduct or address her perceived shortcomings.
The respondent’s actions on 30 March 2009 were consistent with Mr Gilshenan’s email of 13 March, where he said that, after discussions with the operations manager, it had been decided to remove Ms Baldwin from the position of branch supervisor. Whilst the respondent had not acted on that decision until 30 March, the email demonstrates that management had made up its mind before any performance management counselling took place. This gives support to Ms Baldwin’s statement, which I accept, that she heard one of the auditors say that they were looking to make an example of someone.
The haste with which the respondent acted to demote Ms Baldwin strongly suggests that, because it had made up its mind to make an example of someone, it did not view Ms Baldwin’s case objectively or fairly. It failed to follow the procedures in the enterprise agreement. Applying an objective test, it was not reasonable for the respondent to demote Ms Baldwin without offering performance management counselling in accordance with the enterprise agreement, as recommended by Ms Mangovski after the meeting on 18 March 2009, and then giving her time to deal with the “areas of concern”.
The Performance Management Record acknowledges an escalating five-step process that involves an initial discussion, a follow-up, a formal warning, a second warning and a final warning. The respondent went from a formal warning in the letters of 13 March to demotion on 30 March 2009. That was unreasonable.
Contrary to the Arbitrator’s conclusion, I do not believe the respondent had adopted an approach of formal counselling and performance management after the first two incidents and only decided to demote her after the third breach. Ms Mangovski did not provide formal counselling on 18 March 2009, but had an “informal coaching session” to speak to the worker about her two errors to find out if there was something going on inside or outside work. Though she recommended performance management counselling, that was not prepared or implemented. Instead, the respondent decided to demote Ms Baldwin after the second error, a decision that the respondent implemented after the third error, but, contrary to the enterprise agreement, without any counselling, opportunity to explain, or chance for Ms Baldwin to fix the perceived problem.
I do not consider that the demotion was reasonable because the respondent did not terminate the worker’s employment. Unreasonable conduct does not become reasonable because the employer did not take action that would have been even more unreasonable. The test of reasonableness is an objective one based on all the evidence. For the reasons stated, I am not satisfied that the respondent’s actions with respect to the performance appraisal and discipline (demotion) of Ms Baldwin in March 2009 were reasonable, and the respondent’s s 11A defence fails.
Whilst I have placed some weight on the respondent’s failure to follow the steps in the enterprise agreement, because the test of reasonableness is an objective one, the mere compliance with a set procedure that the employer believes is reasonable will not necessarily mean that an employer’s conduct is in fact reasonable in all the circumstances (Basten JA in Jeffery at [50]). The question of whether the respondent’s conduct would have been reasonable if it had demoted Ms Baldwin after complying with the enterprise agreement does not arise in the circumstances of this case.
Finally, relying on Sinclair, Mr Odling submitted that a course of conduct might still be “reasonable action” even if particular steps in that action were not. Looking at the “whole process”, I am not satisfied that the respondent’s actions with respect to performance appraisal and discipline of Ms Baldwin in March 2009 were reasonable. The respondent failed to have proper regard to the terms of the enterprise agreement and, regardless of the enterprise agreement, failed to give Ms Baldwin a reasonable opportunity to address her perceived shortcomings. The respondent’s process overall was not reasonable.
CONCLUSION
Having conducted a review on the merits, the true and correct position is that the respondent has failed to establish that its actions with respect to the performance appraisal and/or discipline (demotion) of Ms Baldwin were reasonable and its s 11A defence therefore fails. Both parties submitted that, if I upheld the appeal, the matter should be remitted to a different Arbitrator for determination of the outstanding issues.
DECISION
Time to appeal is extended until 12 November 2010.
The Arbitrator’s determination of 17 September 2010 is revoked and the matter is remitted to a different Arbitrator for determination of the applicant worker’s entitlement to weekly and other compensation.
COSTS
The respondent employer is to pay the appellant worker’s costs of the appeal, as agreed or assessed. Costs of the first arbitration are to follow the event of the second arbitration.
Bill Roche
Deputy President
30 March 2011
I, MARGOT UNDERCLIFFE, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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