Brown v Sedco Forex International Drilling Inc
[1996] IRCA 482
•10 October 1996
DECISION NO: 482/96
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 1256 of 1996
B E T W E E N:
ADAM G BROWN
1st Applicant
A N D:
AUSTRALIAN WORKERS UNION
2nd Applicant
A N D:
SEDCO FOREX INTERNATIONAL DRILLING INC
Respondent
REASONS FOR JUDGMENT
10 OCTOBER 1996 BOON JR
INTRODUCTION
This is an application under section 170EA of the Industrial Relations Act 1988 (C'th) ("the Act"). The applicant employee, Adam Brown, is seeking payment of compensation arising out of the alleged unlawful termination of his employment by the respondent, Sedco Forex International Drilling Inc ("Sedco").
Sedco's position is that this Court has no jurisdiction to hear and determine the matter, as it says that there was no termination of Mr Brown's employment at the initiative of the employer. Further, Sedco says that if it is found that this Court does have jurisdiction, there was a valid reason, in any event, for the termination of Mr Brown's employment.
Mr Brown and the Australian Workers Union ("AWU") deny that there was no termination at the initiative of the employer, and state that there was no valid reason for the termination of Mr Brown's employment.
THE EVIDENCE
Sedco carries on the business of offshore oil and gas exploration drilling. It has a Perth office which conducts some administrative work.
Mr Brown is 30 years old, and commenced employment with Sedco on its 702 offshore drilling rig as a floorman from 18 June 1994.
On 26 June 1994, Mr Brown injured his shoulder whilst at work. From then on, Mr Brown received workers compensation payments under the provisions of the Workers Compensation and Assistance Act 1981 (WA) until he received the maximum amount payable under the provisions of that Act.
Mr Brown was placed on a rehabilitation program based in Adelaide, which is his usual place of residence, from 15 July 1994 until mid-1995. Mr Brown's family and friends live in Adelaide and he owns a property there. He has two mortgages.
In May of 1995, Mr Brown returned to the rig in a light duties position. After approximately two weeks on the rig, Mr Brown was unable to continue in that role because of his shoulder injury.
Towards the end of July 1995, Mr Brown was sent to Perth by Sedco to take up the position of assistant to the materials assistant in its Perth office. This was a light duties position and entailed office work. The materials assistant was in the process of leaving the company and after a short initiation period, Mr Brown occupied the position of materials assistant until his employment came to an end on 22 December 1995. This position attracted an annual salary of $27,000, compared with his salary as an offshore floorman of $61,383. Mr Brown was paid the difference between these two salaries by his employer, who in turn claimed that amount from its workers compensation insurer.
While Mr Brown was employed as a materials assistant, he was involved in further rehabilitation in Perth. The rehabilitation was provided by Mr Ronald Kington, of Work Dynamics, an independent rehabilitation provider. It is common ground that Mr Brown did not particularly enjoy the work of a materials assistant. At all times, he hoped that he would be able to return to work on the rigs. He enjoyed the lifestyle and the remuneration levels associated with working on the rigs. The main goal of the rehabilitation program was to enable him to gain some offshore work experience whilst his condition improved sufficiently to enable him to return to offshore work.
During this period, Mr Brown underwent a Functional Capacity Evaluation, carried out by a qualified occupational therapist from Work Dynamics. The results of that evaluation became available in early December 1995. The results showed that Mr Brown could not return to or carry out offshore duties (including those of floorman) because of his shoulder injury. When the results of the evaluation became available, a meeting was organised for 20 December 1995 between Sedco's management, Mr Brown and Mr Kington. Another meeting, however, was held on the previous day, 19 December 1995, between Mr Brown, Mr Dennis Shaw, the district administrator for Sedco, and Ms Jacqueline Nelson, the personnel administrator for Sedco.
Mr Shaw's evidence was that he and Mr Brown had had an open dialogue in relation to the rehabilitation, and they had both been waiting for the results of the Functional Capacity Evaluation. Mr Brown had been keen to have a meeting and Tuesday, 19 December was the first date that Mr Shaw had been available. Mr Shaw said that the purpose of the meeting of 19 December was to discuss the report and its findings, and to discuss where they would go to, from there. Mr Shaw said that, although they had a meeting organised for 20 December which would discuss those issues with Mr Kington, Mr Shaw wanted to discuss it with Mr Brown and Jacqui Nelson prior to the official meeting on the 20th. He said that the meeting on the 19th was an informal meeting.
THE MEETING OF 19 DECEMBER 1995
Mr Brown's evidence in relation to the meeting of 19 December was that he was called into Mr Shaw's office and was told that there was good news and bad news for him. The good news was that they had refunded an air fare that he had paid prior to being transferred to Perth. The bad news was that due to the Functional Capacity Report, he would not be able to return to the rig and that there was no longer a position at Sedco for him.
Mr Brown's evidence was that the materials assistant's position was not offered to him. He said that there was nothing to disagree or agree with, as he was simply told that his employment with Sedco would terminate and he was given no other option. He was not happy about it, but assumed that this was just the way things went. He knew that there was a meeting scheduled for the following day and he hoped that they could salvage something out of that meeting. He telephoned Ron Kington after the meeting of 19 December and told him that his employment had been terminated. Mr Brown's evidence was that although he was not particularly happy in the materials assistant's position, he had two mortgages to pay and he would have stayed on in that position if it had been offered to him, at least until he found another job.
Mr Kington was not present at the meeting of 19 December, but he confirmed that Mr Brown telephoned him after the meeting and told him that Sedco was "letting him go". Mr Kington went into the meeting on 20 December with the view that Mr Brown's employment had been terminated by Sedco.
The respondent's Summary of Facts filed in this Court states, at paragraph 9, that in the meeting of 19 December 1995, "the respondent offered the applicant the position of materials assistant on a permanent basis, but he rejected it". Mr Shaw said that at the meeting of 19 December, he made it clear to Mr Brown that the report showed that he was not fit to work offshore. Any other options for onshore work with Sedco were limited. Mr Shaw said that he went into other avenues, and wanted to know if Mr Brown was interested in carrying on with the materials assistant's position. He said that they led up to that, but nothing clear came out of it. According to Mr Shaw, Mr Brown said that he wanted to work outside, and go back to Adelaide. Mr Shaw said that if Mr Brown was not interested in the materials assistant's position, then there was no other option. Mr Shaw said that he suggested that they terminate the arrangement, and that Mr Brown "mutually agreed with that". Despite what was said in the respondent's Summary of Facts, Mr Shaw admitted during cross-examination that he had not offered the position of materials assistant to Mr Brown. He did not recall Mr Brown saying that if nothing else was available, he would take the materials assistant's job. Mr Shaw then said that he put the matter in very loose terms to Mr Brown in that the job was there if he wanted it.
Mr Shaw said that he took notes at the meeting of 19 December 1995 and that they were transcribed into a memorandum on Saturday, 23 December 1995. He did not retain the original notes. The memorandum of 23 December 1995, however, was drafted after an incident on 22 December 1995, during which Mr Brown attended at the offices of Sedco, and threatened Mr Shaw. Mr Brown said that he was upset on that date because, despite previous assurances to the contrary by Mr Shaw, his workers compensation payments had been cut off.
Mr Shaw agreed during cross-examination that during the meeting of 19 December 1995, the effect of what had happened at that meeting was that he had told Mr Brown that in light of the circumstances, they did not have a position and that they were going to terminate his employment.
Ms Nelson's evidence in relation to the meeting of 19 December 1995 was that it was called to discuss the results of the Functional Capacity Evaluation. They began the meeting by discussing the results of the test, which indicated that Mr Brown was not fit for offshore work. They discussed other options, and they agreed that these were not suitable.
Ms Nelson's evidence was that Mr Shaw had said that it appeared that Mr Brown was not interested in continuing as a materials assistant, and Mr Brown had agreed. Mr Shaw said that there was nothing left at Sedco for Mr Brown and that, as he was going home on leave anyway, they may as well terminate his employment at the end of the week, namely 22 December 1995.
Ms Nelson's evidence was that Mr Brown did not argue that he should continue in the material assistant's position, but she agreed that the job was not actually offered to Mr Brown.
Ms Nelson said that they had decided to terminate the employment. This was brought up by Dennis Shaw, and Mr Brown agreed. She could not remember his words but the outcome was that 22 December was a good day for him to leave, as he was going on holiday to Adelaide on that date, anyway.
Ms Nelson said that Mr Brown could have disagreed to that proposition. They did not go into it further, as they knew he was not interested in the position.
THE MEETING OF 20 DECEMBER 1995
Mr Kington's evidence was that the original purpose of the meeting of 20 December 1995 had been to go through the Functional Evaluation Report and determine what options, if any, could be provided for work by the employer. Mr Kington said that he was advised on 20 December that no options were available for Mr Brown in the company, and there were certainly none on the oil rig.
Mr Kington said that he put the question to the employer representatives whether there were any alternatives at all for work with Sedco, and he was advised that there were none. Mr Kington said that he could not recall any specific questions being asked regarding the materials assistant's position, but he had put in an open request for alternative positions and this was rejected. He said that no positions were offered to Mr Brown at that meeting. Mr Brown seemed to accept that he had no power to do anything about it. Mr Kington said several offshore positions were discussed at the meeting, and it was agreed that they were not suitable, as they all had heavy components to them. Mr Brown could not remember the materials assistant's position being discussed during the meeting on 20 December, but he agreed that it might have been.
Mr Kington took some notes immediately after the meeting of 20 December. His notes showed that he asked an open-ended question about whether any work could be provided by the company for Mr Brown and he was advised that there was no work available for him. He did not argue that Mr Brown should continue in the materials assistant's position, as it seemed futile because Mr Brown had been told that he was to be let go from that position. Mr Kington said that he had no option but to trust the employer representatives when they told him that there were no positions available with the company for Mr Brown. He said that, given the advice of the outcome of the meeting of 19 December 1995, it seemed pointless to argue.
Mr Brown's evidence in relation to the meeting of 20 December 1995 was that he was pretty sure that Mr Kington mentioned the materials assistant's position. Mr Brown said that he himself did not mention that position. The focus of the meeting of 20 December was to discuss any possible position within Sedco or one of its related companies that he could fill. Mr Brown said that every option raised was rejected by Sedco. He said that Mr Kington was pleading for any position at all, but was told that none were available.
The Court heard from Mr Donald Boser, the regional manager for Sedco. He was present at the meeting of 20 December 1995. He said that at the meeting they discussed Mr Brown's options of working offshore, and also covered the shore-based side of the company's operations. Mr Boser said that he was led to believe that Mr Brown was not interested in following the materials assistant's position. He said that in the past when he and Mr Brown had talked, Mr Brown had indicated that he wanted to work outdoors, and had expressed an interest in returning to Adelaide.
Mr Boser said that he knew that the materials assistant's job was talked about during the meeting of 20 December. Although Mr Boser said that the materials assistant's job was agreed not to be an option at that time, I found his evidence as to what was actually said at that meeting to be vague. This is hardly surprising, given the lapse of time between the date of that meeting and the date of the hearing in this matter. Mr Boser could not recollect any discussion about the meeting held on the previous day. He did remember offshore and onshore positions being discussed.
Mr Shaw's evidence in relation to the meeting of 20 December 1995 was that he did most of the talking on behalf of the employer, and Mr Kington did most of the talking on behalf of Mr Brown. Mr Shaw said that he reiterated the facts from the previous meeting. He then outlined the fact that there were no offshore positions available which would be suitable for Mr Brown. He said that he expressed the view that Mr Brown was not interested in office work and that there were no other positions available. He said that he had told the meeting that Mr Brown said that he was unwilling to fill the materials assistant's role and that Mr Kington did not argue with that. Mr Shaw said that Mr Kington did ask whether there were any positions at all available and Mr Shaw told Mr Kington that Mr Brown had mentioned that the materials assistant's role was not acceptable, although this was not covered in any great detail. Mr Shaw said that he provided a brief summary of the meeting of the 19th.
During cross-examination, Mr Shaw was asked whether it was ever put to Mr Kington that the position of the materials assistant was available, and his reply was that he did not think that there had been a great deal of discussion on it because Mr Brown had expressed no interest in that position.
Ms Nelson remembered that at the meeting of 20 December 1995, Mr Shaw opened the meeting with a summary of the results of the Functional Capacity Evaluation, and the position of materials assistant, and that they had decided to terminate the arrangement at the end of the week. They discussed other offshore positions and the fact that they were not suitable for Mr Brown. She could not remember Mr Kington saying anything.
Ms Nelson said that they did talk about the materials assistant's position but she could not remember what was said. Ms Nelson could remember that they had summed up what had happened on the previous day.
The thrust of the evidence of the respondent's witnesses was that the materials assistant's position was a temporary or holding position only, until Mr Brown returned to work on the rigs. Although I am satisfied that it was always intended that Mr Brown would be rehabilitated sufficiently to enable him to return to work on the rigs, there is no evidence that he was ever told that the materials assistant's position was a temporary position. The evidence is that the position existed before Mr Brown carried it out and after his departure another person was employed in that position.
Although Mr Brown admits that the materials assistant's position was never his first career choice, all the evidence points to the fact that he carried the work out competently. There have been no issues raised in relation to his performance in that position.
THE CREDIBILITY OF THE WITNESSES
Despite several concerns raised by counsel in relation to Mr Brown's evidence, I could find nothing about either Mr Brown's demeanour or his evidence, in all the circumstances, which caused me concern. Further, although it was suggested that Mr Kington was not truly an independent witness, I found his evidence to be straight forward and credible. I did, however, have some concerns about the evidence of the witnesses called on behalf of the respondent. In the first place, as I have already indicated, Mr Boser's evidence was vague and I was left with the distinct impression that he was not at all sure about the events that had happened at the meeting of 20 December 1995. I did not find him to be an untruthful witness but, based on his demeanour, I am not prepared to accept his evidence as reliable.
Further, I have some concerns about the demeanour and evidence of Mr Shaw. I was left with the impression that he told some half-truths and I felt that he contradicted himself on several occasions. As an example of the concern I had about Mr Shaw's evidence, when asked in cross-examination what Mr Brown's position was during the latter part of 1995, he said that he was employed as a floorman. He then admitted that he told the workers compensation hearing that the position occupied by Mr Brown as a materials assistant was a real job. He also indicated that Mr Brown's position as a materials assistant was a temporary one. As a result of Mr Shaw's evidence before the workers compensation hearing, it was found that Mr Brown had a partial capacity for work and that his workers compensation payments were properly assessed as the difference between what was he was earning as a floorman and what he was able to earn as a materials assistant.
Further concerns that I had about the evidence put forward on behalf of the respondents include the fact that each document produced by the respondent had apparently been shown to its insurer for approval or completion prior to being made public. The written recollections of the respondent's witnesses produced in various minutes or memoranda were not contemporaneous with the events described. Mr Kington's notes, on the other hand, were contemporaneous or at least made immediately after the events which they described. I am also concerned about the fact that Mr Brown was called in, without representation, to a meeting on 19 December 1995 to discuss his future, when a meeting had already been arranged for the following day, at which he was to have the benefit of representation.
Further, I consider it extremely unlikely that Mr Kington, who was doing his best to find any position for Mr Brown and who went into the meeting on 20 December 1995 believing that Mr Brown had been terminated against his will from the materials assistant's position, would not have picked up from what Mr Shaw said that the materials assistant's position was open to Mr Brown, if that had been mentioned at that meeting. I consider it extremely likely that if the materials assistant's position was mentioned on 20 December 1995, it was done so in general terms and that it was never made clear to either Mr Brown or Mr Kington that Mr Brown had an option of continuing in that position.
Therefore, to the extent that there is a conflict of evidence, I prefer the evidence of Mr Brown and Mr Kington over that of the respondent's witnesses.
WAS THERE A TERMINATION AT THE INITIATIVE OF THE EMPLOYER?
Counsel for the respondent referred to the decision in the case of Mohazab v Dick Smith Electronics (1995) 62 IR 200, in which the Full Court stated at page 205,
"The Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression 'termination at the initiative of the employer' as a reference to a termination that is brought about by an employer and which is not agreed to by the employee.
Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as the termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression 'termination of employment'."
It was submitted that a termination at the initiative of the employer must be one in which, firstly, the action of the employer is the principal contributing factor; and, secondly, that the termination is not agreed to by the employee. It was submitted that the principal contributing factor to the termination of Mr Brown's employment relationship was that he was not interested in continuing in the position of a materials assistant. It was said that, had he been interested, he would have continued. Further, it was said that Mr Brown agreed that his employment was to terminate.
It is my view that Mr Brown was never offered the material assistant's position, and he was never given a real choice of continuing in that position.
I accept Mr Brown's evidence that, although he did not particularly like the job, he would have continued in that position if he had had any choice in the matter.
In these circumstances, I am satisfied that there was a termination at the initiative of the employer and that this Court has jurisdiction to hear Mr Brown's application.
WAS THERE A VALID REASON FOR THE TERMINATION?
In relation to the question of whether or not there was a valid reason for the termination of Mr Brown's employment, counsel for the respondent referred to the case of Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. In that case, Northrop J stated at page 373,
"In its context in subsection 170DE(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 subsection 170DE(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, 5 May 1995, unreported, when considering the construction and application of section 170DC."
It was submitted on behalf of the respondent that where the circumstances were that there was no work that the employee is capable of or interested in performing, it must be a valid reason to terminate that employee's employment, particularly in light of all the circumstances. It was said that Mr Brown was not interested in the position, and had agreed that there were no other suitable positions available.
It was said that in those circumstances there was no work for him and that there must be a valid reason for his termination in terms of the operational requirements of the respondent. It was said that there was also some connection with Mr Brown's capacity. It was submitted that the bottom line was that there was no work which Mr Brown was capable of or interested in doing and that this must constitute a valid reason.
Further, it was submitted that the materials assistant's position was a holding position and the purpose was that Mr Brown was holding it until he was fit to return to the rig. Once it was clear that he could not return, a termination for a valid reason existed based on operational requirements of the respondent. It was said that there was no obligation for the employers to persuade employees to stay on. It was submitted that if it is accepted that it was a temporary or holding position, then once he could not return to the oil rig and his offshore career was over, operationally there was no reason for him to continue in the materials assistant's position unless he made it clear that he wanted to continue in that position.
I do not agree with that submission. In the first place, I have already indicated that I prefer Mr Brown's version of the evidence that he was never given the option of remaining in the materials assistant's position; that he felt that he was given no choice; and that if it had been offered to him, he would have continued on in that position rather than be unemployed.
I can see no valid reason, based on the employer's operational requirements, for terminating Mr Brown's employment. In the first place, the position of materials assistant existed both before and after Mr Brown's period of employment in that position. Secondly, even though Mr Brown admitted that he did not like the work, there was no suggestion that he performed the work required in anything other than a competent manner.
In these circumstances, I am not satisfied that the respondent has discharged its onus of proving that there was a valid reason for the termination, and I find that there has been a breach of the provisions of section 170DE(1) of the Act.
REMEDY
Mr Brown is not seeking reinstatement. He has returned to South Australia, and is seeking work there. Another person has been employed by Sedco as a materials assistant. In these circumstances, I am satisfied that it would be impracticable to order reinstatement.
The respondent argues that if there is to be an order for payment of compensation, this Court should consider the likelihood of Mr Brown having stayed on in Perth for a period of six months. The evidence was that Mr Brown returned to Perth after a brief holiday over the Christmas period in Adelaide. He then went back to Adelaide in March of 1996 because his father was seriously ill and needed a triple bypass operation. Mr Brown said that his father had a farming business and Mr Brown himself went back to Adelaide to try to do the farm work in his father's place. However, the farm work was too heavy for him. Mr Brown had remained in Perth between January and March of 1996 to continue his rehabilitation program with Mr Kington.
In these circumstances, I am not prepared to infer that Mr Brown would have returned to Adelaide, in any event, in March of 1996 to try to work on his father's farm if he had still been in full-time employment with the respondent.
Mr Brown has been unsuccessful in his attempts to obtain alternative employment.
In the circumstances, I am satisfied that it is appropriate to award payment of compensation at the rate of six months' lost remuneration, namely the sum of $13,500.
The Court orders and declares that:
The respondent has breached the provisions of section 170DE(1) of the Industrial Relations Act 1988 (C'th).
The respondent pay to the applicant the sum of $13,500 by way of compensation within 21 days of the date of this order.
I certify that this and the preceding 16 pages are a true copy of the reasons for decision of Judicial Registrar Boon.
Associate :
Dated : 10 October 1996
APPEARANCES
Representative for the Applicant: Mr M Llewellyn
Australian Workers Union
Counsel for the Respondent: Mr G Bartlett
Solicitors for the Respondent: Blake Dawson Waldron
Dates of Hearing : 25 and 26 September 1996
Date of Judgment : 10 October 1996
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - applicant permanently incapacitated by work related injury - whether TERMINATION AT INITIATIVE OF EMPLOYER- whether VALID REASON FOR TERMINATION - compensation
Industrial Relations Act 1988 (C'th) ss 170DE(1), EA
Workers Compensation and Assistance Act 1981 (WA)
Mohazab v Dick Smith Electronics (1995) 62 IR 200.
Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371.
ADAM G BROWN AND AUSTRALIAN WORKERS UNION V SEDCO FOREX INTERNATIONAL DRILLING INC, WI96/1256
Before: BOON JR
Place: PERTH
Date: 10 OCTOBER 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 1256 OF 1996
B E T W E E N:
ADAM G BROWN
1st Applicant
A N D:
THE AUSTRALIAN WORKERS UNION
2nd Applicant
A N D:
SEDCO FOREX INTERNATIONAL DRILLING INC
Respondent
MINUTE OF ORDERS
10 OCTOBER 1996 BOON JR
THE COURT DECLARES AND ORDERS THAT :
The respondent has breached the provisions of section 170DE(1) of the Industrial Relations Act 1988 (C'th).
The respondent pay to the applicant the sum of $13,500 by way of compensation within 21 days of the date of this order.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
0
4
0