Barrie George Cooke v Confederation of Act Industry

[1995] IRCA 167

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - REDUNDANCY - PROCEDURE

Industrial Relations Act, 1988 Sections 170DB 170EA and 170EE

No. AI 135 of 1994

BARRIE GEORGE COOKE v. CONFEDERATION OF A.C.T. INDUSTRY

LINKENBAGH J.R.

CANBERRA

6 MARCH 1995

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA                 

AUSTRALIAN CAPITAL TERRITORY           No. AI 135 of 1994

DISTRICT REGISTRY

BARRIE GEORGE COOKE
  Applicant

CONFEDERATION OF A.C.T.INDUSTRY
  Respondent

COURT:    Linkenbagh J.R.
PLACE:     Canberra
DATE:      6 March 1995

REASONS FOR JUDGMENT

This is an application for a remedy under section 170EA of the Industrial Relations Act 1988 in which the applicant seeks a declaration that the termination of his employment contravened Division 3 of Part VI A of the Act and he seeks an order for compensation pursuant to Section 170EE of the Act. The applicant also seeks an order under Section 170EE(5) for damages in respect of breach of Section 170DB of the Act. I propose to deal with that matter first.

The applicant was employed with the respondent from 18 April 1986 to 23 June 1994, when the respondent wrote to him informing him that his position had been "dis-established" and that his services were no longer required. Pursuant to the provisions of section 170DB(2) an employee with continuous service of more than five years is entitled to at least four weeks notice, and he is entitled to an additional week in this case, because the employee is over 45 years of age and he has completed at least two years of continuous service with this employer. The entitlement to pay in lieu of notice was therefore five weeks. The applicant went on sick leave towards the end of April 1994 and that sick leave expired on 8 July 1994. Prior to 8 July, the employer agreed with the employee to extend his sick leave, on an ex gratia basis and in consideration of the employee's long and loyal service, to 31 July 1994.
Before 31 July, the employer made the decision to "dis-establish" the position and terminate the applicant's employment. The employer then sought to convert, in effect, the sick leave which it had granted up to 31 July into satisfaction of part of its obligation under Section 170DB. During the course of the hearing the parties agreed that in fact Section 170 DB had not been satisfied in this instance and that the five weeks in lieu of notice should have commenced on 1 August. The net loss which the applicant has suffered by reason of the employer's attempting to change its mind about the ex gratia sick leave, is $2769.28. I propose to make an order for that amount under the provisions of section 170EE(5) of the Act.

Now turning to the substantive application, the respondent's case is that the applicant's position as Industrial Relations Manager was, to use the word of the respondent, "dis-established" at a meeting of the respondent's Committee of Management on 22 June 1994.  The respondent argues that because the position was "dis-established" the incumbent of the position loses his employment and that in those circumstances there can be no question of the termination being harsh, unjust or unreasonable.  The applicant was on sick leave from towards the end of April and he had no knowledge of what was happening at the workplace until he received the letter terminating his employment in the mail on 27 June.

The flaw which I see in the respondent's procedure is that the respondent relied on the disestablishment of the position to justify the termination of the employment.  The disestablishment in effect amounted to a redundancy.  There are, in modern Industrial Relations practices, procedures which employers should follow when they are considering making an employee redundant.  Those procedures include consideration of certainly, the needs of the employer, but in selecting which employees should be made redundant the employer is required to go through an exercise of considering which of its employees are the most likely candidates for redundancy and it is generally good practice that the employer should consult with the staff and make its plans known to staff, and certainly consult with any employee organisation which is involved in the particular workplace.

In this case, the respondent has attempted to avoid those practices which might otherwise have been seen as desirable by maintaining that because it was restructuring, the position vanished, and that was the end of the matter.  The difficulty that I have with that argument is that whilst the title of Industrial Relations Manager vanished, in fact in the new structure there are not only the same number of employees in this very small workforce of, now, 11 people, but there are in fact one more than  at the end of June 1994 when the applicant's services were terminated. 

The procedure which the respondent followed was that the Executive Director planned a new structure and put it to the Committee for endorsement.  The Committee duly endorsed the structure and the employer then determined that the applicant would not fit into any other role and therefore had to go.  I have great difficulty in accepting that the procedure followed by the respondent is a procedure which is desirable or ought to be followed by any other employer and it certainly appears to me to be likely that the applicant's evidence that there was some personal difficulty between him and the Executive Director was the motive behind the restructuring and the termination of his services.  It is not necessary for me to make a conclusive finding about that because of my findings as to the procedure which was followed by the respondent.

Other evidence which the Court views with concern is that another employee of the respondent consulted with the applicant's doctor, about the applicant, without the applicant's permission and without his prior knowledge.  I am quite surprised that the doctor not only spoke to the respondent's Executive Director on the telephone but allowed him to make an appointment to have a personal discussion about the manner in which the applicant would react to the news that his position had been "dis-established" and his employment terminated.  I have had to resist, throughout the hearing of this matter, the inference that this respondent whilst on the surface treating the applicant with courtesy and respect, has nonetheless treated him as a person disadvantaged in some way, almost to the point of being patronised by the respondent.

I cannot see any reason why the applicant should not have been informed by the respondent of the intention to contact the doctor and his permission requested.  The respondent's representative also had discussions with other parties in an attempt to find alternative employment for the applicant, and did that also without the knowledge or consent of the applicant.  It is not appropriate, in my view, in this day and age, for an employer to treat an employee in such a manner, particularly given that in this case the employee was a person with whose conduct and performance the employer could not find fault, and in respect of whom the employer, at the time, wrote what can only be described as a glowing reference.

The respondent certainly made generous payments to the applicant on the termination.  The first of those generous payments is the ex gratia extension of the sick leave to 31 July, the decision to do that having been made even prior to the decision to disestablish the position.

On termination the applicant, who had slightly less than eight years' service, was treated as having 10 years service for the purpose of calculating long service leave entitlements, and there was a payment of $7600 made to the applicant without the deduction of Income Tax. That payment is described in the respondent's final statement of termination moneys as a "concessional component" but no one at the hearing was able to tell me the exact purpose or motive in making that payment.  It appears that there was no entitlement to it although the applicant did suggest that it was a payment to which he was entitled under Australian Capital Territory redundancy legislation.  The applicant's Executive Director was of the view that that payment was, in fact, a payment that the employer was not required to pay at all, and he expressed the view that overall, the applicant had received $4000 more than his strict entitlements.  I find that it is possible that the applicant has received as high as at least $7600 beyond his strict entitlements and certainly he actually received that money in respect of the termination of the employment.

I find for all those reasons that there has been a termination of this employment which is harsh, unjust, or unreasonable within the meaning of Section 170DE(2).  The respondent's prima facie argument that the termination was based on its operational requirements has not been established to my satisfaction. I then turn to the issue of the appropriate remedy.  I find that reinstatement is impracticable. The applicant does not seek reinstatement and given my findings of fact and the small size of this workplace I find that reinstatement would be definitely impractical.

In calculating compensation under section 170EE(3), I must have regard to the remuneration that the employee would have received or would have been likely to have received if the employer had not terminated the employment. That is a figure of about $49,500 per annum plus an amount of $1600 which the applicant says he received as an additional superannuation payment by the employer on his behalf over and above the employer's statutory obligations in that regard.

The employment terminated on 23 June 1994.  The applicant received weekly payments until 31 July and will receive under the order I have foreshadowed, five weeks pay in lieu of notice after 31 July which takes him into early September.  The applicant in fact obtained other employment on the 8 August and has been continuously employed since that date with two agencies.  He has not therefore, had a week when he has not received weekly income and in fact he has had, with the payment under section 170EE(5) he will have duplicated his income for some of the weeks in August.

His current salary, taking into account the provision of a motor vehicle by his current employer, is about the same as the income that he had in his employment with the respondent.  Were it not for the generous payments which were made to him on termination, I would have taken into account in much greater detail the difference between the benefits he receives in his present employment and the benefits he received in his prior employment.  They would, on the calculations which I have made, not be great in any event but certainly would add up over time.  I find, however, that the circumstances do not warrant the payment of any further moneys to the applicant by way of compensation under section 170EE(3) and I exercise my discretion that whilst I have found the respondent to be in breach of the Act, I do not consider that any moneys are appropriate by way of compensation.

The orders that I therefore make will be as follows: 

1. Declaration that the respondent is in breach of division 3 of Part VI A of the Industrial Relations Act 1988 in that the termination of the employment of the applicant on 23 June 1994 was in breach of the provisions of section 170DE of the Act.

1. Pursuant to section 170EE(5) of the Act that the respondent pay to the applicant the sum of $2769.28 within 28 days from today's date. 

I certify that this and the preceding three pages are a true copy of my Reasons for Judgment.

Maria Linkenbagh
Judicial Registrar

The Applicant appeared in person

Solicitor for the Respondent:     Mr. John Wilson
  Crossin Barker Gosling

Date of hearing and judgment:     6 March 1995