Bill v Welding Technology Institute of Australia
[1998] IRCA 22
•16 June 1998
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON FOR TERMINATION - whether refusal to hand over laptop computer for use during Christmas holiday period was gross insubordination - not a valid reason for termination of applicant - SERIOUS MISCONDUCT - not sustained - SUMMARY DISMISSAL - applicant escorted from premises by security guards - not justified - CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND - no opportunity given by Council, of which applicant was Federal Secretary, to respond to allegations by Director until after application filed - HARSH UNJUST OR UNREASONABLE - claim no longer possible as not a valid enactment of Australian Parliament - SEXUAL HARASSMENT - prior complaints of sexual harassment - resolved by Respondent with reluctant consent of applicant - REINSTATEMENT IMPRACTICABLE - Applicant had not put aside prior allegations of sexual harassment so as not to disrupt future work situation - COMPENSATION - assessed on basis of period without work - amount included for distress shock and humiliation of manner of termination - deduction allowed for ex gratia payment - NOTICE OF TERMINATION not given - WAGES IN LIEU OF NOTICE not paid - PERIOD OF NOTICE - statutory period allowed of three weeks.
Workplace Relations Act 1996 (Cth) (formerly known as Industrial Relations Act 1988 (Cth))
ss 170DB, 170DC, 170DE (i),170DE(ii), 170DE(1).
Annual Holidays Act 1944 (NSW)
State of Victoria v Commonwealth of Australia & Ors (1996) 138 ALR 129;
Cindy Ann Nettlefold v Kym Smoker Pty Ltd 69 IR 370;
Ian Kerr and Helen Kerr v Jaroma Pty Ltd T/a Treasury Motor Lodge (Marshall J, 7 October 1996, unreported, decision no.470/96);
Gerard Westen v Union des Assurances de Paris (17 December 1996, unreported, decision no. 660/96);
Burazin v The Blacktown City Guardian Pty Ltd (Full Court, IRCA, 13 December 1996, unreported, decision no. 606/96);
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371;
Leisa Jane Mooney v W&B Morieson Pty Ltd (Moore J, 5 June 1996, unreported, decision no.186/97);
Nokia Telecommunications Pty Ltd v Keith Davis (Wilcox CJ, 10 October 1996, unreported, decision no. 549/96);
Bennett v Board of Fire Commissioners of New South Wales (1976) 87 WN(PTI) NSW 307
Perrin v Des Taylor Pty Ltd (1995) 58 IR 254;
Lidell v Lembke T/A Cheryls Unisex Salon (1994) 56 IR 447;
R J Gilbertson (Qld) Pty Ltd v Errol Lloyd (Full Court IRCA, 29 November1996, unreported, decsion no. 580/96)
May v Lilyvale Hotel Pty Ltd (1995) 68 IR 112.
Bill v Welding Technology Institute of Australia
NI 1078 of 1996
Before: McILWAINE JR
Place: SYDNEY
Dates of hearing: 23 May, 21 and 23 August 1996 and 20, 21 and 23 January 1997
Date of judgment: 16 June 1997
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 1078 of 1996
BETWEEN:
ELVIN STUART BILL
APPLICANTAND:
WELDING TECHNOLOGY INSTITUTE OF AUSTRALIA
(ACN 003 696 526)
RESPONDENT
JUDICIAL
REGISTRAR:
MCILWAINE JR
DATE OF ORDER:
11 JUNE 1998
WHERE MADE:
SYDNEY
MINUTES OF ORDER
The Court declares that:
The Respondent has contravened section 170 DB of the Act in that wages for three weeks were not paid in lieu of the period of notice required by the Act.
The Respondent has contravened section 170 DC of the Act.
The Respondent has contravened section 170 DE(1) of the Act in that it did not have a valid reason for the termination of the employment of the Applicant on 22 December 1995.
It is impractical to reinstate the Applicant in any position with the Respondent.
It is appropriate to award compensation to the Applicant in the sum of fourteen thousand, four hundred and thirty seven dollars and fifty cents ($14 437.50).
The Court orders that:
The Respondent pay to the applicant within twenty one days the amount of three thousand, three hundred and thirty one dollars and seventy four cents ($3 331.74)
The Respondent pay to the applicant within twenty one days the amount of fourteen thousand, four hundred and thirty seven dollars and fifty cents ($14 437.50).
Any sum paid within twenty one days to the Australian Taxation Office, which the Respondent is obliged to pay on behalf of the applicant, or which can lawfully be made on his account, in respect of the sums ordered in paragraphs 6 & 7 shall be pro tanto satisfaction of the obligations of the Respondent under those orders.
Naomi Englebrecht
Acting Associate to
Judicial Registrar McIlwaine
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 1078 OF 1996
BETWEEN:
ELVIN STUART BILL
APPLICANTAND:
WELDING TECHNOLOGY INSTITUTE OF AUSTRALIA
(ACN 003 696 526)
RESPONDENT
JUDICIAL
REGISTRAR:
MCILWAINE JR
DATE:
16 JUNE 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
APPLICATION
This is an application by Elvin Stuart Bill (“the applicant”) claiming unlawful termination of his employment under Division 3 Part VIA of the Industrial Relations Act 1988 (“the Act”), now known as the Workplace Relations Act 1996, against his former employer, Welding Technology Institute of Australia (ACN 003 696 526).
The applicant was 44 years of age at the time of his dismissal and his claim records the work performed as “Federal Secretary” of the respondent. The applicant started work with the respondent on 13 July 1992 and the last day he worked for the respondent was 22 December 1995. The remedy sought by the applicant in his application was compensation, although, during the course of the hearing the applicant made it clear through his counsel that reinstatement was now sought.
The respondent, Welding Technology Institute of Australia (ACN 003 696 526), which I will refer to in future as “the Institute”, was licensed by the Corporate Affairs Commission of NSW on 19 October 1989 to be registered as a company with limited liability without the addition of the word “Limited” to its name. The licence is not to be regarded as a guarantee of the activities of the company.
The Institute is an Australia wide organisation consisting of numerous state based divisions and a federal organisation. The latter is divided into three sections: research, corporate and individual. The Articles of Association set out the qualifications for membership and the mission of the Institute is said to be:
“the focus of excellence in welding science, practice and related technologies by coordinating resources from within industry, government and institutions to provide cost effective services in information dissemination, education and research to improve quality and productivity so that Australian Industry becomes internationally competitive”.
For this purpose the Institute conducts various activities including: research projects, seminars, conferences, issuing pamphlets and providing technical support to its members and other persons.
The Council of the Institute comprises a number of people including two non-voting ex-officio members, being the Director of the Institute and the Federal Secretary. Relevant sections of the Articles of Association which pertain to the appointment of the Director and the Federal Secretary are:
81(1) “to appoint, and at its discretion to remove or to suspend all such managers, secretaries, officers, clerks, agents or servants for permanent, temporary or special services as it may from time to time think fit, and to determine their duties and conditions of employment, and to fix and pay their salaries or remuneration, and in particular to appoint a Principal Executive Officer who may be styled the ‘Director’ , who shall be entrusted with the general direction and supervision of the work and staff of the Institute.”
103 “The Secretary, herein referred to as the Federal Secretary, shall in accordance with the code be appointed by the Council for such term, upon such conditions as it thinks fit, and any Secretary so appointed may be removed by it. Nothing herein shall prevent the Council from appointing a member of the Institute as Honorary Secretary, and any member so appointed, shall forthwith become an officer(sic) bearer of the Institute and, if not already a member of the Council ex-officio, a non-voting member of the Council, and he shall be subject to the provisions of clause 4 of the Memorandum of Articles of Association.”
The application was apparently filed in the Registry of the Court on 5 January 1996. A Notice of Appearance was filed by the employer on 18 January 1996. Vice President McIntyre of the Australian Industrial Relations Commission at Sydney issued a Certificate dated 16 February 1996 in the following terms:
“In accordance with subsection 170ED(2) of the Industrial Relations Act 1988, the Commission hereby certifies that it has been unable to settle this matter by conciliation.”
There was no objection to the certificate made by either party. In addition, the application was lodged with the court within the time allowed by the legislation. I therefore find the matter is properly before the Court.
BACKGROUND
It is not in dispute that the applicant was an employee of the respondent, commencing his duties as the Administrative Manager on 13 July 1992. On 15th March 1993, the applicant was promoted to Federal Secretary and, until the 18th January 1995, also performed the duties of acting Director of the Institute.
While Mr Bill was acting as Director, the position was advertised. Mr Christopher Smallbone, the successful applicant, however, could not take up his position until he migrated to Australia from South Africa.
In January 1995, there was an allegation of sexual harassment which arose against the applicant while he was still acting in the capacity of Director. As a result of those allegations, the Executive of the Institute removed him from the position of acting Director and gave him a first and final warning about such conduct on 18 January 1995. He retained the position of Federal Secretary and his administrative duties.
Mr Christopher Smallbone started as Director of the Institute on the 1st April 1995 (the "Director"). Following his arrival, he drew up a business plan for the Institute which involved a reorganisation and reduction of staff.
On 6 June 1995, the Institute was notified by the Human Rights and Equal Opportunity Commission that sexual harassment claims had been lodged against it by two females. Neither person gave evidence in these proceedings, and to avoid unnecessary embarrassment I shall refer to them as “X,” being the employee who left in August 1994, and “Y,” who left the Institute in January 1995. In late September 1995, a settlement of these claims was reached which consisted of letters of apology being signed by the applicant and the Director and provided to the two women and some compensation was paid by the Institute. According to the respondent, the applicant then announced a “work to rule” at this time. The applicant denies the claim saying:
"I said I was not working any extra overtime"
Apparently in June 1995 the applicant and another person at the Institute, Mr Gross, received pay increases.
There was an October council meeting coming up which required the Federal Secretary of the organisation to send out the notice of the meeting. This was apparently done by the Director and not by the applicant. The applicant did not attend the Council meeting held on 31 October 1995, for reasons which are in dispute between the parties.
During that Council meeting a decision was taken that his future at the Institute was to be discussed with him by Mr Klansczek, the President (the "President") of the Institute. The applicant maintained that his role at the Institute was not discussed with him by the President. Although it was conceded that he knew there was to be a restructure of the Institute.
On 18th November 1995 the applicant had completed an application for annual leave with pay which was due to commence on 27 December 1995 and finish on 5 January 1996. The applicant also completed the Personnel Section on the form indicating he had twenty-two days accrued leave. Seven workdays were to be taken, leaving fifteen days accrued leave. This was also verified by him on 18 November 1995 and approved by the Director on 21 November 1995. On 20 December 1995, the Director, in accordance with the decision of the October Council meeting and by agreement with the President, informed the applicant that he was to be made redundant on 27 January 1996 and he would be paid three months salary as an ex gratia payment.
On the morning of 22 December 1995, an incident arose between the applicant and the Director concerning the use of a laptop computer over the Christmas holiday period. The Director wanted the computer so his spouse could teach him to use the word processing package at home over the holiday period. The applicant had taken the computer home to write a major report about the failings of the Director for presentation to the Board.
There was a verbal altercation between the two men in the office. The Director, with the concurrence of the President, then arranged for a Sydney-based board member to be present and engaged two security officers to attend while he summarily terminated the applicant and had him escorted by these officers from the premises. His termination of employment was confirmed by letter dated 22 December 1995 signed by the Director in the following terms:
“Our Ref: CS266.95
Dear Mr Bill,
This is to confirm your termination of employment on 22 December, for reasons of unco-operative behaviour.
As previously agreed we have enclosed a cheque for $14,437.50 representing three months termination salary over and above your normal retirement entitlement.
Your annual leave entitlement requires clarification. Would you please advise us of this so we can verify it and make appropriate payments.
Yours faithfully
(Signed)
C. Smallbone
Executive Director”
Accompanying the letter of 22 December 1995 was a cheque for $14.437.50, which was said to equal the equivalent of three months salary. Later that day the applicant returned the computer to the Sydney based board member of the Institute.
It was claimed on behalf of the applicant that the termination was without warning and without notice. It was also suggested that the applicant was not given an opportunity to defend himself against the allegations made with regard to his conduct and the performance of his duties.
Included as part of the original claim of the applicant was the submission that the termination of his employment was harsh unjust or unreasonable within the meaning of s170DE(ii) of the Act. State of Victoria v Commonwealth of Australia & Ors (1996) 138 ALR 129, held such a claim to be no longer possible as section 170DE (ii) is not a valid enactment of the Australian Parliament. Nevertheless, the facts which the applicant has drawn attention to about the decision being harsh, unjust or unreasonable may be taken into consideration in determining whether there was a valid termination of his employment. (See the discussion on this issue by Lee J in Cindy Ann Nettlefold v Kym Smoker Pty Ltd 69 IR 370 and Marshall J in Ian Kerr and Helen Kerr v Jaroma Pty Ltd T/a Treasury Motor Lodge (7 October 1996, unreported, decision no. 470/96) and Gerard Westen v Union Des Assurances De Paris per Madgwick J (17 December 1996, unreported, IRCA decision no. 660/96).
In addition, the applicant claims that it was an implied term of the contract of employment between the respondent and the applicant that termination should be determined only by reasonable notice. Although the original letter of his appointment (as Federal Secretary), dated 15 March 1993, makes provision for a period of notice of one month, it was submitted in these proceedings that reasonable notice was twelve months, having regard to the seniority and responsibility of his position as Federal Secretary. It was suggested that this period was also necessary in order to give the applicant the chance to obtain a similar position.
It was claimed that, as the applicant was appointed by the Council of the Institute, it was only with the authority of that body that he may be removed from this position. It was submitted also that in summarily terminating the employment of the applicant the officers of the Institute acted wrongfully and beyond the Articles of Association of the Institute.
EVIDENCE OF THE APPLICANT
Prior to his employment with the Institute, the applicant testified he had previously held a position for six or seven years with the ABC as the NSW Radio Accountant. The applicant maintained he has a Bachelor of Business Accounting major from the University of Technology - Sydney.
His conditions of employment as Federal Secretary were set out in a letter dated 15 March 1993 (Exhibit 1). These included that the applicant was to receive a salary of $50,000 per annum paid monthly on the fifteenth day of each month which would normally be reviewed in December each year. His hours of engagement were from 8.30 am to 5.00 pm, with additional hours of duty for which overtime would not be paid. The applicant and the Institute were required to give notice of termination of one month. The applicant was entitled to four weeks leave but the annual leave loading would not be paid. In addition, the applicant was entitled to ten days sick leave per annum accumulating indefinitely. In the event that the applicant was injured and had made a workers compensation claim, the institute would provide full make up pay. In respect of superannuation, the Institute would pay the statutory amounts currently five per cent to the Australian Retirement Fund on behalf of the applicant
Originally, the duties of the applicant as Federal Secretary were to ensure that the Institute had complied with the Articles and the Corporations Law: he was required to prepare the financial accounts, including monthly and statutory accounts at year end, the annual budget and protect the assets of the Institute. In addition he had a supervisory role over the office staff. He convened and attended all the Council meetings. The applicant also chaired the editorial board, looking after the Institute’s official journal, together with the marketing and press releases of the Institute (including the Annual Report). With the help of other staff, he organised exhibitions, conferences, seminars and the data associated with any promotional material. He had oversighted the awards which were made to members for meritorious work within the organisation.
In his evidence the applicant suggested that the administration was in a shambles when he first started at the Institute, due to the amalgamation of the Australian Welding Institute and the Australian Welding Research Association in 1989. This required him to set up a consistent accounting system. As well, the applicant testifies he conducted a national conference in Wollongong in November 1993. The applicant was overseas for four weeks in March 1994 at the expense of the Institute. In August 1994 when the first draft of the strategic plan was released, the applicant claimed to have been working up to 16 hours a day on a seven days per week basis. In the 1993-94 period the office comprised a technical manager, a welding engineer on secondment from BHP Steel, an information officer, a senior secretary, administration officer and the applicant.
A major international exhibition, “Weldtech” ‘94 at Darling Harbour, was held in conjunction with the first federal office productivity seminar. In October 1994 there was a national conference in Melbourne and in the last part of 1994 there were completely new computer facilities installed for the Institute.
In October 1994 the President of the Institute advised the applicant that Mr Smallbone was their preferred candidate for the position of director, provided he could successfully emigrate from South Africa. Otherwise, he was told, he was their second preference. He was asked by the President to facilitate the immigration of Mr Smallbone (the "Director"), and the applicant maintains this was done, by writing a letter to the proper authorities.
In 1995 the first major seminar (on the subject of lasers) was held, having been initiated by the applicant in 1994 and a further series of nine quality seminars were to be conducted throughout the country during August, September and October of 1995.
From 18 January 1995, the position of director remained vacant until the arrival of the Director around 7 April 1995. The technical responsibilities were transferred from the applicant to the technical manager. Similarly, the journal was removed from his control and made the responsibility of the Information Officer. When the President returned from overseas in January 1995, the applicant requested a duty statement, given he was no longer the acting Director. They also had a "long talk about the sexual harassment allegations".
There were no further meetings held with the applicant by the President, apart from the budget meeting of the Executive in February 1995. The applicant says he had no cause, after the arrival of the Director to speak to the President, between April 1995 until October 1995 There were two discussions reported in evidence: one was to obtain a copy of the Contract of Service for the Director; the other was when he picked up the telephone for the Director and was congratulated by the President for the 1994 Annual Report. This failure to follow up these discussions by the President is important to the employee-employer relationship given the position of the applicant as Federal Secretary. It is in the President’s favour that the applicant acknowledged him to be the Managing Director of the largest welding supply company in Australia, which required him to be overseas regularly. Moreover, his position at the Institute is on a voluntary basis.
The applicant said that he and the Director had numerous and detailed discussions about the office and its procedures following the Director's arrival in April 1995. The applicant maintained he had told the Director about the sexual harassment allegations and how he was disappointed with the directors' handling of the matter. He mentioned he was looking forward to his vacation, which was to last the whole of May, now the computer facilities were up and running. He also informed him that he was looking for another job.
On his return from leave the applicant testifies that he told the Director he was prepared to put the sexual harassment issues behind him as he was feeling much better, and was looking forward to working with him in the future. On his return to the office in June 1995, the applicant needed to update the monthly financial accounts for April and May. He was also expected to “cold call” various people using the "Yellow Pages" and invite them to the seminars. This was designed to improve the response rate for the seminars which had not been good.
SEXUAL HARASSMENT ALLEGATIONS
The complaints made to the Human Rights and Equal Opportunity Commission were received by the Institute in June 1995, during the period when the applicant was busy preparing the Annual Report for publication. It was decided at a meeting between the Director and himself to send a general response to the initial inquiry and the Commission then replied around August 1995. The applicant testified there was some discussion with the Director about the sexual harassment matters, although at the time, he was avoiding any conversation on the actual complaints. Subsequently, the Director advised the applicant that the Institute was going to settle the matters. Certain conciliation agreements arrived requiring the signature of the applicant, who described himself as being completely “ropeable about this”. He was concerned an agreement had been reached without his knowledge and yet requiring his signature. During this period the applicant, unwisely in my view, telephoned the female "X" to discuss the matter. He maintains he was told by the Director that the Institute intended to settle the matter and if he didn’t sign he would lose his references, his career would be jeopardised and his contact within the Institute would be lost.
The applicant then sought legal advice on the amount of compensation being offered which he was advised was of a minimal nature. He also discussed the matter with another director on the Council, Mr Allan Le Gallant. The applicant says that he was similarly advised by Mr Le Gallant to the effect that the compensation was minimal and, agreeing with the applicant, that Mr Bruce Cannon was culpable. Finally, Mr Le Gallant advised the matter should be put aside and the applicant get on with his job. Following those discussions the applicant agreed to sign a Conciliation Agreement on 9 September 1995.
It was obvious that there were increasing tensions between the applicant and the Director over these issues. An example of this is the evidence by the Applicant that he demanded to sign the letter addressed to “Y” in order to show that he held no animosity towards her while the Director understandably wished to sign on behalf of the Institute. Both the applicant and the Director eventually signed the letter. The applicant’s attitude indicates he clearly resented this direction, and failed to see the importance of the organisation taking responsibility for the problem. These increasing tensions lead to personal conflict between the two men. The applicant was not happy about the outcome of these events or the method used by the Executive to resolve the allegations. After the October Council meeting the applicant sought to again address these issues in a discussion with the President. However, the President did not agree and cut the discussion short.
These complaints should not have been relevant to the dismissal of the applicant. They became relevant by the failure to deal with them on a personal basis with the applicant. It is understandable that the President of the Institute did not want to rehash the issues with the applicant. However, if he was so concerned about the applicant's reaction at their meeting in October, then he should have either done more to reassure the applicant or sought other means of support for him by arranging for counselling, for example, with a view towards him accepting the position. It was to be expected that the President would take a long term view, considering that two senior positions could not be maintained in the long term given the level of income being received by the Institute. It would be extremely rare to find any employer who relishes the task of telling an employee that his future employment there is short-lived. There is no reason to suspect the President would be different from the norm. It was easier to brush the applicant away, by returning to Melbourne, leaving the applicant in a most unsatisfactory situation.
OCTOBER COUNCIL MEETING
During the last seven days in October, the Director was away conducting the quality seminars. While he was away the Director had told the applicant he was to complete three sets of monthly accounts in addition to finalising a computer model calculating proposed membership fees. The applicant says he required two days to do each of the monthly accounts and seven days for calculation of the monthly membership fees. For reasons which I accept were partly beyond his control, the applicant did not complete the accounts on time. They were ready shortly before the meeting instead of some days before. The applicant did not attend the meeting. He says he was prevented from attending whilst the Director maintains he did not interfere with his attendance. In support of the applicant is the fact that the minutes neither record his attendance nor tender an apology on his behalf. The applicant says he read these minutes first on 18 December 1995. This is two days before he is advised orally by the Director of his retrenchment. These conflicts show a further deterioration in the working relationship between the two men.
EVIDENCE ON BEHALF OF RESPONDENT
The evidence of the Director was to the effect that a change of attitude occurred in the applicant after the Institute settled the sexual harassment complaints, and then the applicant announced the ‘work to rule’. Thereafter the Director and the President had cause to be dissatisfied with the performance of the applicant and his conduct generally. A number of oral warnings were given to him about his attitude and the need to improve his conduct and performance. He maintained the attitude of the applicant to those complaints was itself a cause of concern to the Institute. At the end of June 1995 there had been a series of strategic planning workshops which were designed to map out a future course of the Institute. These workshops occurred in the context of falling membership and revenue and budget difficulties which, according to the Director, made it impossible for the Institute to continue with two full-time senior administrative/managerial staff. The Director had been recruited from abroad, having peculiarly significant experience and skills in this area, and it was hoped that the applicant might be given some other alternative position.
The employer alleges that the actions of the applicant regarding the resolution of the complaints to the Human Rights and Equal Opportunity Commission became bizarre. As a result it was suggested that both the President and the Director began to have grave fears for the safety of the staff, as well as the fear that the applicant might cause some serious physical damage to the Institute such as the destruction or interference with records.
The Director was absent overseas during late November and early December. The incident between them about the laptop computer occurred a short time after his return. It had been intended, after the restructuring plan had been approved at the end of October by the Council, that the President would inform the applicant there was no place for him as Federal Secretary or Accountant in the restructure of the Institute. This he did not do in specific terms and it was not until 20 December 1995 that the applicant was told that the redundancy would take effect from the end of January 1996 and there would be a payment of three months salary as an ex gratia payment.
MISCONDUCT
It is finally suggested on behalf of the respondent that the applicant’s refusal to bring the computer in to the office represented gross insubordination amounting to serious misconduct sufficient to justify summary termination. I infer that the “grossness” of the insubordination was magnified in the perception of the Director by the fact that the access to the computer was being denied, not only to him, but to his wife over the Christmas period. There were a number of alternatives available to the Director in order to avoid the confrontation which occurred. A simple way would be to have either the President speak to the applicant and give him a direction on behalf of the council to surrender the laptop computer and suggest to him that he enter on leave until he could make an appointment for the applicant to meet with the President or the Executive and discuss the situation early in the new year.
If it needed to be done in person, Mr Sim could have been the bearer of that message. This would have avoided the controversy, and the need for security guards to subject the applicant to the indignity of being escorted from the premises in that manner. See the remarks of the full court in Burazin v The Blacktown City Guardian (IRCA, 13 December 1996, unreported, decision no.606/96)
The Director may have concluded he had to act first before any report was given to the Council. Such an inference may explain in part the reason for his actions. This challenge was also the final straw in the usurpation of his authority. In addition, there would be the usual tensions which arise in any office before the forthcoming Christmas period. At the same time I do not believe the applicant to have been wholly without fault. I am satisfied that the applicant was determined not to let the Director have access to the laptop over this period. It was also his way of bringing to a head the tensions between them. Both men were exerting their mutual intolerance while trying to assert their authority which had not been conclusively determined by the Council. The conduct of the applicant in initially refusing to produce the computer was not serious misconduct when all the circumstances are taken into account.
SETTLEMENT OF THE SEXUAL HARASSMENT CLAIMS
The settlement of the sexual harassment claims left a longstanding grievance in the mind of the applicant as he was not able to test the allegations made against him, nor was he able to give his explanations in the tribunal by way of evidence. Based on the material which I have seen, it is quite likely that he would have been unsuccessful in his defence of the proceedings. It was an appropriate action for the Council to settle the proceedings. More, however, could have been done to assist the applicant in coping with the situation and improving his understanding of socially acceptable interaction in the workplace. Instead the situation festered and became a running sore for the applicant. When he sought to discuss these issues with the President he was rejected. His rejection of a discussion was probably based on the practical view, earlier expressed by Mr Le Gallant, that the issue was best put behind the applicant. I accept the President when he says:
"Okay, I mean, I - after the settlement with the Equal Opportunity Board or Commission I mean my view of the matter was that there was nothing further to be done with it. I mean it was better to be left even in terms of confidentiality and even revisiting it and just there was nothing to be gained from going back over it again".
The applicant was no doubt traumatised by the sexual harassment allegations. Counsel for the respondent has specifically referred me in the transcript to a discussion which was held between the applicant and myself regarding his description of Mr Cannon as a perpetrator of the allegations. The applicant’s use of the word ‘perpetrator’ is clearly misconceived. Mr Cannon should have initially raised the issue of the sexual assault allegations with the applicant although this was not done. The applicant was technically the more senior employee in the organisation at the time and this might have been part of the reason for his actions. It should not be forgotton that any employee has a duty under the NSW Occupational Health and Safety Legislation to protect fellow employees from such actions as were alleged to have occurred in this case.
As the exchange went on only for a short time, it appears that the applicant is still unable to face the reality of the situation. Whether he accepts that his conduct was wrong is not essential, and should not prevent him adapting to the situation and ensuring on his part that circumstances do not arise in which similar allegations could be made against him in future cases. The Institute could have benefitted by arranging some mutually convenient course or counselling for the applicant to assist him to understand the situation.
CREDIT OF MALE WITNESSES
Not a lot turns on credit in this case as to a large extent both men have given similar versions of the events. Whilst the Director gave the impression he was cool and collected in giving his evidence, he did not satisfactorily explain the need to call in security guards to arrange the termination of the applicant.
When the applicant gave evidence it was given in a slow and precise manner. He would often pause before answering and then give a considered reply. He adopted an inscrutable visage when under pressure during cross examination. This is easily seen through. However, it is also understandable that it may have given the wrong impression to the President and the Director in their face to face contact with the applicant.
The evidence of Mr Gribble, a former member of the committee, about his clash with the Director is confirmation of the conduct that might be expected in such a male dominated organisation. All of the participants were used to working in the welding industry, on building and construction sites as well as on the factory floor. As such, the use of strong language and abusive arguments would be a daily occurrence. I do not accept the denials of either the applicant or the Director of resorting to such conduct.
WAS THERE A VALID REASON FOR TERMINATION
Under the provisions of the Act, the respondent carries the burden of showing that at termination it had a valid reason or reasons for bringing the employment to an end summarily. In his decision in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, Northrop J describes the meaning of this phrase in the following way:
“Section 170DE(1) refers to “a valid reason, or valid reasons”, but the Act does not give a meaning to those phrases or the adjective “valid”. A reference to dictionaries shows that the word “valid” has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: “2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.” In the Macquarie Dictionary the relevant meaning is “sound, just, or well founded; a valid reason.”
In its context in s170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that” the employer and employee are each treated fairly, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd (1995) 60 IR 1, when considering the construction and application of s170DC.”
It is quite clear that there were increasing tensions between the two men, that these had come to a head during the month of December, if only for the reason that it had taken from the October 31 meeting through till December to advise the applicant that he had been made redundant.
The reason put forward by the respondent for the termination was that the applicant’s actions were now amounting to gross insubordination. However, if the laptop computer situation dispute is put to one side, there is very little evidence to support the respondent’s claim. The main criticism of the applicant was that he did not complete the necessary work in time for the 31 October 1995 Executive and Council meetings. Some of the work which he only completed on that day. The applicant gave evidence as to the reasons for the delay in completing the required duties. No reason to rebut his explanations has been forthcoming from the respondent. The President has testified that the applicant had previously been able to meet the time scale for the production of accounts for the Executive and Council meetings. Accordingly I am satisfied that the suggested deterioration in the applicant's conductdid not give the respondent an opportunity to validly terminate his employment summarily.
With Christmas looming, it was strange timing to advise the applicant of his redundancy on 22 December 1995. The resentment of the applicant was understandable.
Had the respondent maintained its position of the applicant leaving his employment on 31 January 1996, based on operational reasons, it may well have been in a position to establish a valid reason at that date. In Leisa Jane Mooney v W&B Morieson Pty Ltd (Moore J, 5 June 1997, unreported IRCA decision No 186/97), Moore J made it clear that it must be shown by the employer that, having regard to the operational requirements of the company (where one of two shops were to be sold), there existed a valid reason for terminating Mooney's employment that afternoon. Similarly, I am not satisfied that the operational requirements of the company demanded the applicant be terminated on 22 December 1995. The termination occurred on any analysis by the removal of the applicant from the premises by the two security officers on 22 December 1995 and was confirmed by the letter of the same date.
The applicant had retained his appointment as Federal Secretary of the Institute. The only body that could terminate his appointment, according to the Articles, was the Council and this was not done until early in 1996. In those circumstances it seems to me that the applicant did have a right to have access to the computer and the question of who had the pre-emptive right ought to have been determined at Board level. It could not in my view be determined as a result of the personal dispute between the applicant and the Director.
In Nokia Telecommunications v Keith Davis (10 October 1996, unreported, decision no. 549/96), Wilcox J, points out:
"An employee of a company is entitled to draw the attention of a senior officer of the company to matters that the employee perceives to be irregular or poorly handled, without thereby being treated as unfit for continued or further employment. It is in the interests of the company itself for managers, at all levels, to accept this entitlement; otherwise junior officers will feel inhibited about calling attention to matters that ought to be investigated and perhaps rectified. It is, of course, important that allegations be made in the right way and to the right person. It would be wrong for an employee to make public allegations damaging to the employer's business and reputation; at least, not unless the employee was satisfied they were accurate and there was an overriding public duty to do so."
In this case the applicant maintained that he wished to bring to the attention of the board certain aspects of the administration of the Director with which he did not agree and which he felt the board should be informed. Although there may have been an element of pique contained in his attitude, as Federal Secretary of the Council, the Director had not legitimate role in preventing him from performing that task. Contrast this situation with Bennett v Board of Fire Commissioners of New South Wales (1967) 87 WN (PTI) NSW 307.
The respondent is required to prove that at 22 December 1995 it had a valid reason for the termination of the applicant. Its reasons for dismissing the applicant revolve around the dispute about the use of the computer by the Director over the Christmas holiday period. That is, from 22 December 1995 until 5 January 1996, when the approved leave of the applicant expired. I am not satisfied that at 22 December 1995 this could be properly established by the respondent as a valid reason for the termination of the applicant.
The evidence in this case leads me to the conclusion that there was not well founded or just grounds for the decision to terminate the employment of the applicant. There was not a valid reason to terminate the employment of the applicant.
SECTION 170DC: EMPLOYEE OPPORTUNITY TO RESPOND
Section 170DC is in the following terms:
“An employer must not terminate an employee’s employment for reasons related to the employer’s conduct or performance unless the employee
(a) has been given the opportunity to defend himself or herself against the allegations made or
(b) the employer could not reasonably be expected to give the employee that opportunity.”
The President and the Director both maintain that the applicant was exhibiting signs that he may have become violent. The applicant denies such occurrence. There is no help for the case of the respondent in the evidence of the two female witnesses who did not notice anything occurring until the applicant was being escorted from the premises.
The reaction of the applicant to the appearance of Mr Sim and the Director in his office, with the two security guards in the background was described by Mr Sim as "quite calm".
Moreover, in response to the advice of his immediate termination by the Director the applicant had replied in a conversational manner:
"Its best I say nothing."
He was then escorted from the building by the security guards and by Mr Sim. This evidence also does not support the case for the respondent. I am not satisfied that the respondent could not reasonably be expected to have given the applicant the right to defend himself against the allegations which were made by the Director.
Section 170DC(b) does not apply to the circumstances of this termination.
In Perrin v Des Taylor Pty Limited (1995) 58 IR 254 at 256-7, Moore J said the following about the purpose of section 170DC:
“Its purpose is at least twofold. It is to give the employee the opportunity to demonstrate that the allegations have no foundation in fact or they should not be viewed as reflecting on the employee’s capacity. In the present case, the applicant may have been able to show that the complaints about slow delivery parts had no factual foundation or that there was an explanation for their slow delivery that did not relate to any want of effort on his behalf.
A second purpose of s170DC is that an employee with whom an allegation has been raised may be able to persuade the employer that, while the allegation is of substance, there are factors that should persuade the employer not to terminate the employment. They may be extenuating personal circumstances or they may involve undertakings about future conduct.”
On the question of Section 170DC(a) I find that the respondent was in breach of that section. This applicant was the Federal Secretary of the Institute. It was not until well after this case commenced that there was a resolution of the council on 10 April 1996, terminating his position as Federal Secretary and his employment relationship. It was put to me by counsel for the respondent that it was a sufficient opportunity to give the applicant a day’s notice to provide him with a detailed submission and to provide him with a series of papers which are set out in the affidavit sworn on 20 January 1997 by Mr Christopher Smallbone (Exhibit P). Even the most generous reading of the Section in the respondent’s favour together with the need to disregard most of the cases on this issue could not suggest that this was a proper way for the council to proceed. An alternative would have been for the respondent to acknowledge in these proceedings that there had been a breach of Section 170DC and to outline the circumstances explaining that breach and seeking to minimise the effect of the breach in terms of this litigation. That course was not chosen by the respondent. Therefore, I have no alternative but to find that there was a breach of the Section which I have taken into account in the decision I have come to in relation to compensation.
It was argued by Counsel for the respondent, that the Director as the Chief Executive Officer had the implied power to hire and fire. In my view that may be the case in an ordinary organisation but in this Institute the applicant held a separate corporate position which only the Council had the power to determine. Had the Council carried a resolution delegating that power to the Director or approving of the proposed package then the situation would have been different. That is not the case here and accordingly the respondent fails on that account.
In my view, the respondent breached section 170DC of the Act, in that it should have given the applicant the opportunity of making representations about his termination as early as possible in 1996. In those circumstances there will be a finding against the respondent that there was a contravention of section 170DC of the act by the respondent.
REINSTATEMENT IMPRACTICABLE
I am satisfied that I have only a limited discretion not to reinstate the applicant where it has been found that there is no valid reason for termination of his employment. (See discussion of this issue Liddell v Lemke T/A Cheryls Unisex Salon (1994) 56 IR 447.)
The working relationship between the applicant and the Director was destroyed on 20 December 1995 when he, rather than the President or another member of the council of the Institute conveyed the news of his proposed redundancy to the applicant. These are both men at senior levels of industry where it can normally be expected that they should or will be able to put aside their differences which have arisen out of a work-related dispute. I do not see this as a difficulty.
The two female witnesses have been very fair in their evidence about the applicant and the method of his termination. It is clear that in the interests of the continued good working environment of the small office they are not supportive of him returning to his position at the Institute.
A more important factor is his failure to give any convincing evidence that he has left the previous allegations of sexual harassment behind so that they will not again become a disruptive influence if he were to be reinstated in his position as Federal Secretary of the Institute. For these reasons the limited discretion which is available should be exercised against him. I find it is impracticable to reinstate the applicant in any position with the respondent.
DISTRESS, SHOCK AND HUMILIATION
On any assessment the introduction of security guards into the dismissal process was unnecessary. The evidence of Mr Sim was that the applicant reacted ruefully to the situation and remained calm when he returned the computer to Mr Sim later that day. The Director, in contrast, gave evidence as to his fears of a violent reaction. The evidence of the two female office workers was that they first realised there was a problem when they saw him being escorted down the stairs by men in black provides support for the applicant on this issue. The testimony of the female employees also confirmed that the applicant had been making a reasonable attempt to work with the Director. Whatever may be said of the shortcomings of the applicant he had made a strong effort on behalf of the Institute. If he had received the courtesy of being informed of his situation by the President, rather than his competitor for the council position, he may have reacted a little differently.
The fact that the applicant was unceremoniously and physically escorted from the premises was not appropriate. There was no time to explain the situation to his fellow workers or to obtain guidance from a member of the council. These were people with whom he had a reasonable working relationship . I am satisfied that his termination did have an adverse impact on him. Those circumstances justify taking that damage into account.
I am satisfied that the applicant suffered distress, shock and humiliation of the nature outlined in Burazin v The Blacktown City Guardian Pty Ltd (IRCA Full Court, 13 December 1996, unreported, decision no. 606/96) by this termination. In that case the full court suggested that in making an assessment of damages caused by stress suffered in a termination of employment restraint must be exercised in the level of damages.
My observations of the applicant in giving his evidence suggest that he still harboured a large amount of resentment over his treatment. The applicant had worked with a number of industrialists at senior level who, if he had been allowed to leave in a proper manner may of been of some assistance in helping him obtain employment in a related field of endeavour. The manner of his dismissal would quickly become common knowledge and destroy that opportunity. Damages suffered through distress, shock and humiliation caused by the method of termination are assessed at $1000.
There was no evidence of any breach of duty which would justify provision being made for an assessment of damages on a Non Economic basis.
COMPENSATION
Ordinarily, the calculation of the payment of remuneration lost by the employee commences from the date of termination, which was 22 December 1995. The agreement dated 15 March 1993 between the Institute and the applicant for his position as Federal Secretary was for his salary to be $50000 per annum paid monthly (see Exhibit 1). There was testimony that the applicant received a salary increase during the period of his employment. In the letter of termination dated 22 December 1995 (Exhibit 8), the payment of $ 14,437.50 was said to represent three months salary. This converts to an annual figure of $57, 750.00 or a monthly payment of $4, 812.50. As this was the basis of payment used by the respondent a weekly figure of $1,110.58 should be used for the purpose of the calculation of compensation. This is equivalent to $27.76 per hour based on a forty hour week.
On the question of compensation Mr Lawler, Counsel for the respondent, submited that the employment of the applicant was to terminate at the 31 January 1996 on the basis that the applicant was redundant to the organisation’s needs. Section 170EE(3) requires that I am to take account of the remuneration likely to have been received by the applicant. Had the applicant not been dismissed over the computer incident and been given the opportunity of placing his “report” before the Board the proposed controversy or disruption at board level may have been too much for the executive to countenance. It is likely that negotiations would have been entered into to improve the package being offered to the applicant. In this regard I note that I have often seen redundancy packages which range from two weeks per year to eight weeks per year. These rates vary according to the size of the company, the employee concerned and length of service. Indeed there are many factors that lead to this variable amount. I think it unlikely, in view of the limited financial resources available to the Institute, that eight weeks payment, which might be seen as generous in some sections of industry, would be offered to the applicant. I am aware of at least one payment of up to twelve weeks per year. In my view it is more probable than not that the likely outcome of those negotiations would have been an increase in the package from the approximately four weeks per year to six weeks per year. However, I have not proceeded to adopt this method because the parties have not had the opportunity of arguing this issue. See discussion of this concept by the Full Court in RJ Gilbertson (Qld) Pty Ltd v Errol Lloyd (29 November 1996, unreported, IRCA decision no.580/96)
In the circumstances, the economic loss should be assessed over the period during which he was without work. The applicant was unemployed from 22 December 1995 until 14 June 1996, a period of twenty five weeks, during which he would have been paid $27 764.50 gross. The applicant had applied for a number of jobs but was not successful during that period. Between 17 June 1996 and 22 August 1996 he was , apart from a short period between engagements, in employment the applicant has been in employment since August 1996 and based on his testimony he is now averaging $25.00 per hour. There is some continuing loss wahen this is compared to his former hourly rates of $27.76. However, I expect that the applicant will quickly establish himself at his former level of salary.
In May v Lilyvale Hotel Pty Ltd (1995) 68 IR 112, Wilcox CJ, made an assessment of the future economic losses of the applicant based on the difference in terms of the salary which the applicant was likely to receive and that which she would have received in her previous position in her former employment. The calculation of that amount of damages was in excess of the maximum amount of compensation allowed under the legislation. Accordingly the latter amount was awarded.
In the present case the future loss is unlikely to be lengthy. There is no evidence on which I can rely to make a similar prediction. In the circumstances I am limited to assessment of the damages based on the evidence from the applicant for the period he was unemployed, together with the amount for distress which has been assessed earlier.
The calculation of compensation payable is:
Economic loss $ 27 764.50
Damages for distress $ 1 000.00
Loss of one week of Notice
not compensated for
under s170DB $ 1 110.58
Total amount $29 875.08
This amount exceeds the maximum amount of compensation allowed under the legislation of $28875. Adopting this figure the amount to be paid to the applicant is
$28 875.00 less
Ex Gratia Payment $14 437.50
$14 437.50
It is therefore appropriate that there be an award of $14 437.50
PERIOD OF NOTICE
It appears that a payment was not made by way of notice to the applicant in this matter. Section 170DB(1) states:
"An employer must not terminate an employee's employment unless:
(a)the employee has been give either the period of notice required by subsection (2)(b) or compensation instead of notice; or
(b)the employee is guilty of serious misconduct, that is, misconduct of a kind such that it would be unreasonable to require the employer to continue the employment during the notice period."
The applicant had been with the Institute for more than three years but less than five years. He was not over forty five years of age at the time of dismissal and therefore is entitled to three weeks payment in lieu of notice in accordance with the table in s 170DB(2). In coming to this conclusion it should also be remembered that the agreement for the Federal Secretary's position included a notice period of one month which also did not appear to have been paid.
In view of the findings that I have made about the argument over the computer, the respondent is unable to establish that the conduct of the applicant constituted serious misconduct within the meaning of section 170DB(1)(b). The applicant could have been sent on his already approved annual leave. I am not satisfied that it would be unreasonable to require the employer to continue the employment during the notice period.
Finally there should be an award of compensation for the failure to give the required period of notice under Section 170DB of the Act.
There was in this case some oral evidence of additional payments being made to the applicant after his termination. The exact amount was not supported by any written material. If this amount had been paid as a result of the Annual Holidays Act 1944 (NSW), then this payment would not be effective as compensation in lieu of notice. Having indicated to the parties the orders intended to be made and given an opportunity to the respondent to provide evidence of any such payment it has now been confirmed that he additional payments related to untaken annual leave. Accordingly there will be no change to the orders outlined on 11 June 1998.
There will be judgment and orders accordingly.
I certify that this and the preceding pages
are a true copy of the reasons for decision of
Judicial Registrar McIlwaine
Associate:
Dated:
APPEARANCES
Counsel appearing for the applicant: Mr. J. Wallace Solicitor for the applicant: Holding Redlich Counsel for the respondent: Mr M.J. Lawler Dates of Hearing: 23 May, 21 and 23 August 1996; 20, 21 and 23 January 1997.
0
7
0