Brendon Smart v Newtown Timber and Hardware Pty Ltd

[1995] IRCA 380

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
  VI 1995 of 1995

B E T W E E N:

Brendan SMART
Applicant

A N D

NEWTOWN TIMBER & HARDWARE PTY LTD
Respondent

REASONS FOR DECISION

17 August 1995  PARKINSON JR

This is an application made pursuant to S170EA of the Industrial Relations Act 1988. The applicant seeks an order for reinstatement or alternatively, compensation. The following persons gave evidence in the proceedings:
Brendan Francis Smart          -       the applicant
Bruce Roland Saward            -       chartered accountant for the   respondent
Anthony Lawrence White       -       general manager of the respondent  
Robert William Kilby             -       accountant

It is appropriate to set out the background to this application and I now do so, together with setting out my findings as to fact.

Background and finding as to facts
The applicant was employed by the respondent as financial controller. The applicant holds formal accounting qualifications. He was employed on 13 June 1994 after attending for interviews for the position. The responsibilities of his position were set out in his letter of appointment dated 13 June 1994 (Document 3 in Exhibit A1).  They included the establishment of a new and updated computer based financial control system and the general overseeing of the incomings and outgoings of the business.  In my view it is apparent from the evidence that there was no issue as to the applicant’s competence in performing his duties. Despite there being implicit, although unjustifiable, criticism in correspondence from the accountants for the respondent, it was generally conceded that overall the applicant performed his duties efficiently, subject only to the limitations of the equipment and the business. I accept that this is the case and find that the work performance of the applicant formed no part of the decision to terminate his employment.

At the time of the applicant’s appointment the respondent was undergoing financial difficulties, and had been the subject of some scrutiny by its lending facilities. In this regard a report had been produced by a firm of chartered accountants and auditors for the use and information of the lenders. One of the recommendations contained in that report was that the respondent engage a financial controller to oversee and report on the internal financial management of the respondent. Hence the appointment of the applicant.

The applicant was injured at work on 26 September 1994. In mid October 1994, as a result of this injury and subsequent  surgery on his spine, he was confined to bed for a period of approximately four months. 

In  December 1994 the financiers increased the interest rates payable by the respondent which resulted in it being required to find an additional $10,000.00 per  month in payments to the bank. As a result of this, the respondent found itself in real financial difficulty. Various consultations took place in relation to this matter between the respondent’s officers, its accountants and the lender, with a view to reaching accommodation of the debts. In the course of these discussions measures were also sought to reduce the costs of the business operations.  At about this time consideration was given to the issue of the continuance of the position of financial controller, and the evidence of Mr White was that the decision to make the position redundant was made in principle in early January 1995.

The applicant was informed of the decision to terminate his employment as a result of the alleged redundancy by letter dated 24 February 1995 (Document 5 in Exhibit A1).   The letter informed the applicant as to the reasons for the termination of the  employment and provided for three months notice of the termination of the employment.

The respondent submits that the termination of the employment of the applicant came about as a result of the circumstances set out above: that there was a redundancy, the termination being as a result of the operational requirements of the business. As a result of the streamlining of the financial records of the business undertaken by the applicant, together with further modification proposed by the accountants, the respondent formed the view that it was not necessary to continue the position of financial controller,  the overseeing of the financial controls being able to be performed by the company accountants on the basis of 1/2 to 1 day per week.

The applicant submits that his employment was terminated in circumstances where he had been injured for some time and was about to return to work after recuperation. It was the applicant’s submission that the reason for the termination or part of it was as a result of his temporary absence for injury. 

The applicant further submits that there was a failure by the respondent to accord him procedural fairness in relation to the termination of employment, an opportunity to be heard in relation to the proposed redundancy and a failure to inform him of the redundancy at the earliest possible time, together with a failure in the respondent to consider alternatives to terminating his employment.

S170DF(1) (a)
Whist the evidence identifies a connection in time between the applicant’s absence from the workplace due to injury and the decision to terminate the employment on the grounds of redundancy, such connection in this case is not determinative of the issue.  In my view there is a difference between the injury or illness actually forming part of the reason for the termination as opposed to it being the catalyst for the decision, or the awareness in the respondent’s managers, that the position itself was no longer required by the business.  In this case, I am satisfied that the evidence reveals the latter, and that the injury of the applicant was not the reason or part of the reason for the termination of the employment.

I have come to this conclusion on the evidence as to the financial circumstances of the company as evidenced by the respondent and the applicant. Further there was evidence from Mr Kilby, Mr White and the applicant as to a lack of ongoing work sufficient to warrant a full time position, that is at least after the implementation of the computerised financial systems. I am satisfied that the applicant had knowledge of this fact and was himself anxious as to the ongoing viability of the respondent and the ongoing continuance of his own position.  This is apparent from the discussions initiated by the applicant with Mr White in relation to the appropriateness of the applicant being based in Tasmania, to the effect that this was where ‘the real work of the respondent lay’.

Whilst there is some difference in emphasis in the evidence as to these conversations, I am satisfied that, whichever version were adopted, in substance their character reveals that after the initial intensive work put in by the applicant, the position of financial controller was not viable and did not constitute a full time position, and that this fact was understood by everyone concerned with the actual financial operation of the business. It became particularly apparent during the period of absence of the applicant.

I am satisfied on balance that the reason for the termination of the employment was not for, and did not include, the applicant’s temporary absence from work because of illness or injury. 

S170DE(1)
As a result of my conclusions as to the evidence set out above, I have further decided that the termination of the employment of the applicant by the respondent was for bona fide reasons of redundancy brought about as a result of the operational requirements of the business of the respondent. I am satisfied on balance that the respondent had a valid reason for the termination of the employment of the applicant.

I turn now to consider the operation of S170DE(2) of the Act.

S170DE(2)
The applicant submits that there has been a failure to accord procedural fairness in that the applicant was accorded no opportunity to be heard in relation to the proposed redundancy, and further, there was a failure to inform him of the redundancy at the earliest possible time, together with a failure in the respondent to consider alternatives to terminating his employment.

Mr White’s evidence was that notwithstanding the decision having been made that the applicant’s position was redundant, he chose to wait until the applicant was able to return fit to work to inform him of the decision to make the position redundant, and that his employment was to be terminated. His evidence was that this was out of consideration for the applicant and his injury, and to enable him the opportunity to seek alternative employment as a fit person and not suffering under injury.  I accept this evidence.

The circumstances of the termination, and the timing having regard to the applicant’s injury, was unfortunate but not, in my view, harsh in the circumstances.

The evidence was also that there was an interview with the applicant at which interview Mr White informed him of the reasons for the decision and the termination.  The evidence in the proceedings is that there was no alternative employment available with the respondent having regard to the level of skill, qualifications and experience of the applicant and his relatively short period of service with the respondent compared with other employees. Whilst Mr White conceded that he had not given consideration to relocating the applicant to Tasmania as suggested by the applicant earlier in his employment, this was because his view had always been that this was not a viable or necessary placement. I accept this was the case.

If there be any criticism of the respondent in the course of this matter it would rest with its failure to inform the applicant at the earliest possible time that his position was to become redundant, and for initially advising of the situation by way of letter instead of personally. However in view of the circumstances of the applicant at the time, I accept that there were good and fair reasons for the respondent taking the course that it did and, on balance, I am not satisfied that there has been a failure to accord the applicant procedural fairness in the sense contemplated by S170DE(2) of the Act.

My final aspect of consideration in this matter relates to the notice period accorded the applicant by the respondent, and the failure by it to make any redundancy  payment to him. The letter of appointment (Document 3 in Exhibit A1) provided for a period of two months notice of termination of employment.

Whilst in my view a failure to accord adequate or appropriate notice of termination may in some circumstances, particularly in cases of  redundancy, render the termination of employment harsh, unjust or unreasonable notwithstanding what might be provided for in a contract of employment, in the present case I am not satisfied that is the case. In this case the notice given was in excess of the two months provided for in the contract of employment between the parties and in the circumstances having regard to the length of the  employment of the applicant was appropriate.

For the reasons set out above I am not satisfied on balance that the termination of the employment by the respondent was harsh, unjust or unreasonable. 

For the reasons set out in this decision I dismiss the application.

The orders of the court shall be:

1. That the application be dismissed.

I certify that this and the preceding eight (8) pages
are a true copy of the reasons for judgment of
Judicial Registrar Parkinson.

Associate:
Dated:  17 August 1995

Solicitors for the applicant:  Macmillan Segal Lenton
Counsel appearing for the applicant:  Mr J Riordan

Solicitors for the respondent:  Moores Solicitors
Counsel appearing for the respondent:  Dr K Handscombe

Date of hearing:  27 July 1995
Date of judgment:  17 August 1995