Barry Charles Sargeant v Regent Press Pty Ltd

[1995] IRCA 38

CATCHWORDS

INDUSTRIAL LAW - Termination of employment - Alleged redundancy - Compensation - Claim for arrears of wages - Powers of Judicial Registrar.

Industrial Relations Act 1988, s.336(1) and (2), Order 74 and s.430.

Shearer -v- Action Mercantile Pty Ltd, 5 VIR 149

BARRY CHARLES SARGEANT -v- REGENT PRESS PTY LTD (A.C.N. 004 361 479)

NO. VI 196 of 1994

Before:     STAINDL JR

Place:      MELBOURNE

Date:       15 FEBRUARY 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 196 of 1994

BETWEEN:

BARRY CHARLES SARGEANT
Applicant

AND

REGENT PRESS PTY LTD
(ACN 004 361 479)
Respondent

MINUTES OF ORDER

15 February 1995  Judicial Registrar Staindl

THE COURT ORDERS THAT:

1. The respondent pay to the applicant compensation of $8,000.00

2. The respondent pay to the applicant arrears of wages in the sum of $9,184.84.

3. That there be a stay of 21 days in respect to the payment of the above sums.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 196 of 1994

BETWEEN:

BARRY CHARLES SARGEANT
Applicant

AND

REGENT PRESS PTY LTD
(ACN 004 361 479)
Respondent

REASONS FOR JUDGMENT

15 February 1995  Judicial Registrar Staindl

Barry Sargeant (“the applicant”) commenced employment with Regent Press Pty Ltd (“Regent Press”) in October 1985. On 11 April 1994 his employment was terminated and he applied to this Court alleging that his dismissal was contrary to the provisions of Division 3 of Part VIA of the Industrial Relations Act (the “Act”).

Background

Prior to his employment by the respondent, the applicant had developed a career in the printing industry.  He replied to an advertisement in the “Age” of 21 September 1985 for a sales representative.  The advertisement provided for the position to be a “career opportunity with a salary of $24,000.00 per annum plus incentive and a fully maintained car”.  The applicant obtained this position and worked as a sales representative for some years until he took on the role of sales manager for the respondent.  He remained in the position of sales manager until 11 April 1994.

On Friday, 8 April 1994 there was a meeting between Mr Garry Turner, the managing director of Regent Press and Mr Chris Davis, the company’s accountant at that time.  Either during or following this meeting Mr Davis left the meeting and asked the applicant to produce the wage records for all staff including annual leave entitlements.  The applicant realised that such a request was often associated with a reduction in staff.  Accordingly, he later asked Mr Turner whether or not his position with the company was secure.  He told Mr Turner that he had been approached recently by someone acting on behalf of another company with a view to working with that company.  The applicant said that after working for 8.5 years his allegiances lay with Regent Press but that he had to give an answer that day in respect to the job offer.  I accept that Mr Turner replied that his job was safe and so the applicant contacted the other company and told them that he would remain with Regent Press.

The above conversation occurred on Friday, 8 April.  On the following working day, Monday, 11 April, the applicant was to attend a sales meeting at about 8:30am.  Just prior to this meeting he was called into Mr Turner’s office and told that “he had drawn the short straw” and unfortunately for him he was the one that had to go.  He was told to clear his desk and leave.  The reason given for the applicant’s termination of employment was that the company was in financial difficulties and the applicant’s position was being made redundant.

Fortunately for the applicant, he contacted the company who had sought to employ him and was able to gain employment with that company.  It seems to me that this was also fortunate for Regent Press as it affects the amount of any compensation to be awarded.  In any event the following points should be noted about the termination of the applicant’s employment:

1.There was no dissatisfaction with the applicant’s performance of his duties.  In fact Mr Turner signed a reference dated 8 April 1994 in favour of the applicant which states that he had diligently performed his duties and that he was trustworthy and conscientious.

2.The applicant was given no notice of the proposed termination of his employment.  Indeed, the reverse occurred in that he was told that his employment was secure when in fact it was not.

3.No possible alternatives to the termination of his employment were discussed with the applicant.  He was not offered part time employment or employment in a slightly different position (such as that of sales representative).

Operational Requirements Of The Employer

Mr Hargrave, for the respondent employer, argued that Regent Press had a valid reason for terminating the applicant’s employment, based on the operational requirements of the company.  It was said that the company was in dire financial circumstances.  However the evidence of Regent Press’ managing director, Mr Turner was surprisingly deficient in this regard.  He seemed to be unsure about many of the details of Regent Press’ financial situation and placed very heavy reliance on his accountant, Mr Davis.  Although Mr Davis was in Court throughout the hearing, he was not called to give evidence.

Throughout the hearing it had been suggested by the respondent that it had been incurring losses in recent times.  However when questioned closely about this Mr Turner gave evidence that the trading loss between 1 July 1993 up to April 1994 was between $4,000.00 and $5,000.00.  In the context of the case as a whole this sum was surprisingly small, and it seems to me that savings could have been made by the company in other areas.  I need refer to only one such area, that of the salary being paid to Mrs Carol Turner, Mr Gary Turner’s wife.  Mr Turner was cross-examined about the salary paid to her and conceded that in 1992-1993 it was $673.00 per week:  in fact the wages book records that this salary was increased to $773.00 per week from 18 August 1993 and remained at that level until mid 1994.  Mr Turner was asked how many hours per week his wife worked with the company and he replied that, “she didn’t” and he agreed that she did not turn up.

Although the evidence also established that she was a co-director of Regent Press it does seem to me that savings could have been made in respect to the payment of her salary.

Thus it seems to me that the evidence fails to establish that the operational requirements of Regent Press necessitated the termination of the applicant’s employment.  I further find that even if the termination of the applicant’s employment had been for a valid reason, nevertheless in the circumstances of this case it was harsh or unjust.

The applicant was a loyal and dedicated long serving employee. Although there may have been no requirement under an award for the respondent to consult with the applicant prior to making him redundant as a matter of fairness it should have done so. Instead on the working day prior to the termination of his employment he was deliberately misled as to the security of his employment. He was then confronted with the fact of the termination, the decision having already been made. He was paid a total of 5 weeks pay in lieu of notice, being his entitlement pursuant to s.170DB(2) of the Act. He was not given any redundancy or severance pay. These circumstances lead me to the view that his dismissal was harsh and unjust.

The respondent seemed to approach the case on the basis that if it showed that the termination of employment was due to redundancy then that was enough.  In my view that is not enough.  I adopt with respect what was said by President Zeitz of the Employee Relations Commission of Victoria in Shearer -v- Action Mercantile Pty Ltd 5 VIR 149 at 151:

“When considering an application for a finding that a dismissal is harsh unjust or unreasonable where it is alleged by a respondent that redundancy is the reason for dismissal, this Commission will look to whether both substantive and procedural fairness has been afforded to an applicant when deciding whether it should intervene.  An absence of substantive fairness will invariably lead to a finding that the dismissal was harsh unjust or unreasonable.  An absence of procedural fairness, although not inevitably leading to such a finding, may lead to a finding that a dismissal was harsh unjust or unreasonable.

In this case it appears from the facts that there was a total absence of procedural fairness afforded to the applicant.  Indeed, there appears to have been a callous disregard for the applicant in the conclusion being reached to dismiss him.  Not only was the applicant not consulted about the matter but he was given no notice of the impending redundancy.”

The second paragraph of this extract is particularly apposite this case.

Remedy

The applicant did not seek reinstatement.  As already noted he obtained other employment almost immediately with a firm called Buscombe Printers, although he has since changed jobs to work with Valiant Press Pty Ltd.  Prior to the termination of his employment the applicant was a loyal employee of Regent Press with 8.5 years’ service.  The events of 8 and 11 April 1994 obviously would have reduced this sense of loyalty.  It was put by the applicant’s counsel that the applicant’s loyalties now lie with his current employer and I accept this to be the case.  Furthermore, no one was employed to take on the duties of the applicant.  Although I have found earlier that the evidence did not establish that the operational requirements of Regent Press required the applicant’s employment to be terminated, nevertheless I accept that the company was facing a period of financial difficulty.  It may have been that it was unlikely that the applicant’s employment on his current terms and conditions would have continued for very long.  Taking the above factors into account I find that reinstatement of the applicant is impracticable.

Compensation

Prior to the termination of his employment by Regent Press the applicant was earning $835.00 per week with other expenses being paid for him of $125.00 per week together with superannuation of $25.00 per week and the use of a fully maintained car.  His remuneration was thus $985.00 per week and car.  At Buscombe Printers he received a total of $27,000.00 per annum ($519.00 per week plus superannuation of $16.00 per week) plus car.  He remained in this position until about 12 August 1994 when he commenced employment with Valiant Press where his income was $672.00 per week (including superannuation) plus car.  Although I accept that the values of the cars provided to the applicant in his jobs since leaving Regent Press were less, there was no satisfactory evidence to quantify this difference and I disregard it in assessing compensation.

Between 11 April 1994 and 12 August 1994 the applicant earnt $6,955.00 from Buscombe Printers (13 weeks at $535.00 per week):  in addition he was paid $4,175.00 in lieu of notice upon termination by Regent Press, a total of $11,130.00.  From 12 August 1994 to 13 October 1994 (the last day of hearing) the applicant’s wage was $672.00 per week.  His income during this period therefore is about $5,376.00.  Thus, his total income for the 21 weeks from 11 April to 13 October 1994 is $16,506.00.  If he had remained at Regent Press his income would have been $20,685.00, a difference of $4,179.00.  I take this figure into account in making an award of compensation, but that is not the end of the matter.  The applicant’s income is $313.00 per week less than what it was.  It is difficult to say how long this differential will continue, but I am prepared to find that it is likely to continue for some months.

There is a further factor which I take into account in awarding compensation.  This is the loss of opportunity for the applicant to accrue long service leave with Regent Press.  He had been employed there for 8.5 years, just 1.5 years short of qualifying for pro-rata long service leave.  The applicant gave evidence that his employment with Regent Press was not recognised by his new employer for the purposes of long service leave.  (Indeed, it would be surprising if it were otherwise).

However, there is one important factor which in my view operates to reduce the amount of compensation.  This is the fact that the applicant does not seek reinstatement.  Any ongoing difference between the applicant’s remuneration with Regent Press and his current remuneration is of less significance.

Taking all of the above factors into account I award compensation to the applicant of $8,000.00.  There is no precise calculation that can be done to arrive at this amount, but it represents my assessment of compensation having regard to the competing considerations.

Compensation And Period Of Notice

I deal with one further matter on the question of compensation. Mr Miller, counsel for the applicant, submitted that the applicant should be entitled to compensation for the income lost by the applicant over a period of 6 months, the period of 6 months being the period of notice to which the applicant was entitled at common law (ie reasonable notice). When pressed as to the relevance of a period of notice in determining the amount of compensation, Mr Miller submitted that there is a “synergistic effect” on a reading of the Act with the common law principles. I do not accept this submission.

In my view the question of compensation to be awarded under the Act is not determined by the period of notice required to terminate the contract of employment. At common law, once an employer had terminated a contract of employment, the only question to be asked in most cases was whether or not the employer had terminated the contract in accordance with its terms, ie by giving the requisite period of notice. The period of notice was the measure of damages for an employee who had been dismissed without notice (and even then, there was a duty on the employee to mitigate his/her loss).

This Act creates a new statutory cause of action compared to the common law.  Now it is not sufficient that the employment contract be terminated by providing the correct period of notice.  The termination must not be harsh, unjust or unreasonable.  In determining this question a relevant consideration in some cases will no doubt be whether or not the employer has given the employee the correct period of notice.  But this is only one of the relevant considerations.  The decisions of this Court already point to the multitude of factors which may be considered in determining whether a dismissal is harsh, unjust or unreasonable.  One such consideration which was not present at common law is that before employees are dismissed for misconduct they should be given the opportunity to answer the allegations against them.

In the present case the question of the length of the applicant’s period of notice has not assisted me in determining the amount of compensation to be awarded to him.  Rather I have taken into account the considerations previously discussed.

Claims For Wages:  Powers Of A Judicial Registrar

The statement of claim in this matter claimed the sum of $12,559.84 as arrears of wages.  This claim was for the period from 1 April 1992 to 11 April 1994, the date of termination of the applicant’s employment.  I raised with Mr Miller the question of my powers in respect to this claim.  Subsections 376(1) and (2) provide:

“s.376(1)The Rules of the Court may delegate to the Judicial Registrars, either generally or as otherwise provided in the Rules, all or any of the Court’s powers in relation to proceedings in the Court, in so far as the proceedings relate to:

a)a claim for an amount of not more than the amount specified in the Rules; or

b)a claim that the termination of an employee’s employment was unlawful, or that the proposed termination of an employee’s employment would be unlawful, whether because of this Act or any other law (including an unwritten law) of the Commonwealth or of a State or Territory.

(2)   For the purposes of paragraph (1)(a), the Rules may specify an amount of not more than:

a)$10,000.00; or

b)such greater amount as the regulations prescribe.”

Reference also needs to be made to Order 74 Rule 2 of the Rules which provides:

“2:   In relation to any proceeding in the Court, in so far as that proceeding relates to:

a)a claim for an amount of not more than $10,000.00 or such greater amount as the regulations may from time to time prescribe; or

b)a claim that the termination of an employee’s employment was unlawful, or that the proposed termination of an employee’s employment would be unlawful, whether because of the Act or any other law (including an unwritten law) of the Commonwealth or of a State or Territory;

all the powers of the Court are delegated to each Judicial Registrar.”

During the hearing of this matter I stated to Mr Miller that my preliminary view was that I did not have the power to deal with the claim for arrears of wages as it exceeded the amount of $10,000.00.  Accordingly, after seeking instructions, Mr Miller abandoned the excess above $10,000.00 if that was my decision concerning my powers.  However, he submitted that I do have power pursuant to the Court’s accrued jurisdiction and/or its jurisdiction pursuant to s.412 (together with s.360) and its jurisdiction in associated matters (see. s.430).  Section 412 provides the Court with its jurisdiction:  s.360 defines a proceeding to include an incidental proceeding.  Section 430 confers on the Court jurisdiction in associated matters.

I accept that the Court has jurisdiction to deal with the claim for arrears of wages but I do not accept that Judicial Registrars have power to deal with a claim for an amount of more than $10,000.00.  Paraphrasing the relevant part of s.376(1), it gives to Judicial Registrars powers in relation to proceedings in the Court in so far as the proceedings relate to a claim for an amount of not more than $10,000.00.  The words “a claim” as underlined are not confined in any way:  they do not refer, for instance, to “a claim under the Act”.  So where the subsection refers to proceedings (which) relate to a claim of not more than $10,000.00, the proceedings must include any accrued, incidental or associated claims.  Accordingly in my view I do not have power under subsection 376(1)(a) to deal with a claim for more than $10,000.00 even though that claim may arise in the Court’s associated or accrued jurisdiction.  I only add that the claim for arrears of wages does not arise under s.376(1)(b).

I turn now to deal with the claim itself.  The applicant alleged that in March 1992 Mr Turner told staff that Regent Press had financial problems and that everyone’s pay was to be reduced by 15% for a period of 6 months.  In fact the applicant’s pay was reduced by 15% as from 1 April 1992 but was not increased until November 1993 when it was increased by 7.5%.  Mr Turner agreed that there was a general reduction in salary which took effect on 1 April 1992 but maintained that this was open-ended.

In his statement of claim the applicant concedes that he agreed to this reduction salary for a 6 month period, ie until 30 September 1992.  Despite being pressed on this matter in cross-examination the applicant maintained that Mr Turner had stated that the salary reduction was for a set period of 6 months.  The applicant’s version received some support from two sources.

Firstly, support came from Mr Patrick Acevedo, a former employee of Regent Press who was there at the time of the salary reduction.  He gave evidence that Mr Turner had told him and other employees that the company was in bad shape and it was necessary that there be a salary reduction of 15% for a 6 month period. He said that at the end of the year (1992) he and others raised with Mr Turner the question of their pay but that the response was that the company was still in trouble.  In cross‑examination Mr Acevedo conceded that the reduction was for around 6 months, not exactly 6 months, but that a proposed bonus system should give the employees of Regent Press more money than was represented by the salary reduction.  Mr Acevedo’s grasp of English was not perfect but I was impressed by his evidence:  he was an entirely credible and forthright witness.

Secondly, Mr Max Campbell gave evidence.  His company (Campbell Wallis Moule & Co.) had prepared the books of account for Regent Press for the period 1981 to 1993 with the exception of the year 1988/89.  He worked closely with Mr Turner and met with him regularly especially between 1991 to 1993.  Mr Campbell discussed with Mr Turner the proposed 15% pay reduction:  it was Mr Campbell’s understanding based on these discussions that this was to be for a period of 6 months after which it was to be reinstated.  This evidence from Mr Campbell was not challenged.

Accordingly I accept that Mr Turner did say that the salary reduction was for a 6 month period.  This reduction was accepted by the employees of Regent Press but at the conclusion of the 6 months the applicant and others sought the reinstatement of the pay cut.  In my view the employees of Regent Press did not accept that their pay should remain at the reduced level.

The applicant’s salary was increased by 7.5% from 3 November 1993 and remained at this level until the time his employment was terminated.  The amount due to the applicant is therefore the amount of the reduction of 15% form 30 September 1992 (the end of the 6 month period) to 3 November 1993 and thereafter the amount of the reduction of 7.5% up until 11 April 1994.  I calculate such amounts owing as follows:

Period 30 September 1992 to 3 November 1993

57 weeks at $135.00 per week  $ 7,695.00

Period 3 November 1993 to 11 April 1993

22 weeks at $67.72 per week  $ 1,489.84
  $ 9,184.84

There will be orders to provide that the respondent pay to the applicant compensation of $8,000.00 and arrears of wages of $9,184.84.  I will allow a stay of 21 days.

I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment of Judicial Registrar Staindl.

Associate:

Dated:  15 February 1995

Solicitors for the Applicant: Counsel for the Applicant:	John Guthrie Mr R. Millar
Representative for the Respondent:	James A. Hargrave
Dates of hearing:	11, 12 & 13 October 1995
Date of Judgment:	15 February 1995