Cameron v Pashley

[2004] NFSC 4

SUPREME COURT OF NORFOLK ISLAND

Cameron v Pashley [2004] NFSC 4

EMPLOYMENT – Appeal from decision of Employment Tribunal – Appeal limited to matters of law – Claim for payment in lieu of notice – Identification of contract of employment under which employees were working at date of termination – Breach of that contract in relation to termination – Computation of damages payable to employees – Whether employees were entitled to annual leave entitlements.

Employment Act 1988 (NI) ss 15, 19, 21, 91, 92

JULIAN JAMES CAMERON and SUZANNE LOUISE CAMERON v ANDREW PAUL PASHLEY, JAMES PATRICK FARRELL and NICOLA MEGAN HAYDEN
SC 2 of 2004

WILCOX ACJ
9 NOVEMBER 2004
SYDNEY (BY TELEPHONE LINK TO NORFOLK ISLAND)

IN THE SUPREME COURT
OF NORFOLK ISLAND	SC 2 of 2004

BETWEEN:

JULIAN JAMES CAMERON
FIRST APPELLANT

SUZANNE LOUISE CAMERON
SECOND APPELLANT

AND:

ANDREW PAUL PASHLEY
FIRST RESPONDENT

JAMES PATRICK FARRELL
SECOND RESPONDENT

NICOLA MEGAN HAYDEN
THIRD RESPONDENT

JUDGE:

WILCOX ACJ

DATE OF ORDER:

9 NOVEMBER 2004

WHERE MADE:

SYDNEY (BY TELEPHONE LINK TO NORFOLK ISLAND)

THE COURT ORDERS THAT:

1.        The appeal be allowed.

2.        The cross-appeal be allowed.

3.The orders made by the Employment Tribunal on 15 March 2004 be set aside and, in lieu thereof, it be ordered that, within 14 days of this date, the appellants, Julian James Cameron and Suzanne Louise Cameron, pay to:

(a)the first respondent, Andrew Paul Pashley, the sum of $1,316.48;

(b)the second respondent, James Patrick Farrell, the sum of $791.18; and

(c)the third respondent, Nicola Megan Hayden, the sum of $1,093.30.

IN THE SUPREME COURT
OF NORFOLK ISLAND	SC 2 of 2004

BETWEEN:

JULIAN JAMES CAMERON
FIRST APPELLANT

SUZANNE LOUISE CAMERON
SECOND APPELLANT

AND:

ANDREW PAUL PASHLEY
FIRST RESPONDENT

JAMES PATRICK FARRELL
SECOND RESPONDENT

NICOLA MEGAN HAYDEN
THIRD RESPONDENT

JUDGE:	WILCOX ACJ
DATE:	9 NOVEMBER 2004
PLACE:	SYDNEY (BY TELEPHONE LINK TO NORFOLK ISLAND)

REASONS FOR JUDGMENT

WILCOX ACJ:

1. This is an appeal against a decision of the Employment Tribunal (‘the Tribunal’) by Julian James Cameron and Suzanne Louise Cameron (‘the employers’), former employers of the respondents, Andrew Paul Pashley, James Patrick Farrell and Nicola Megan Hayden (‘the claimants’).  The claimants have filed a counter-claim which effectively amounts to a cross-appeal.

2. The Tribunal is constituted under s 79 of the Employment Act 1988 (NI) (‘the Act’).  An appeal lies from the Tribunal to this Court pursuant to s 91(1) of the Act.  However, where the matter in issue in an appeal does not exceed $2,500, the Court’s jurisdiction is confined to questions of law: see s 92(2).  It is accepted that the amount in issue, in relation to the individual claims of each of the claimants, does not exceed $2,500.

   The facts

3. The employers conduct a café known as ‘The Norfolk Island Coffee House’.  They apparently also have a business called ‘Norfolk Island Coffee Plantations’.  On 9 October 2003, Mr Pashley and Mr Farrell each entered into a contract with the employers to work in the latter business as a ‘maintenance and harvesting labourer’ (‘the coffee plantation contracts’).  In each case, the employee was to work as required during the coffee harvesting period, estimated at five weeks.  In each case, it was envisaged that the employee would work 35-40 hours per week.  Remuneration was to be at the rate of $13 per hour.  Each contract provided, by cl 8.1, that the employment might be terminated by either party giving at least seven days written notice of termination.  There was no provision for payment in lieu of notice.  Clause 5.1 of each contract made the following provision in respect of annual leave entitlements:

   ‘For each completed year of service, the Employee is entitled to the number of days that he/she would normally work in three ordinary working weeks as annual leave and will be paid in accordance with the provisions of the Employment Act 1988 (as amended).’

4. On a date that is not revealed in the evidence, Mr Pashley and Mr Farrell commenced working in the café.  They apparently carried out a variety of duties.  Mr Pashley had some supervisory responsibilities.  At that time, Ms Hayden was already employed in the café, pursuant to a written contract made on 26 May 2003.  This document described her position as ‘Café Attendant’.  She was to work a ‘changing roster’ for $11 per hour.  The contract provided for 14 days notice of termination or payment in lieu of notice. 

5. It appears the employers were absent from the café for a period in January 2004.  Upon their return, they became concerned about missing stock.  It was accepted practice in the café for employees to help themselves to drinks, out of stock, leaving a chit in the cash register which was used to calculate an appropriate deduction from their next wages payment.  The employers believed a substantial number of drinks had been taken without a chit being left behind. 

6. On 21 January 2004, the employers held a meeting with the café staff, being the claimants and one other person.  The employers complained of what had happened and indicated an intention of deducting from the wages of each of the four employees an amount equal to one-quarter of the value of the alleged missing drinks.  It seems none of the employees expressly agreed to this proposal, but none of them made an issue of it.

7. At the end of the meeting, Mrs Cameron asked Mr Pashley and Mr Farrell to stay behind.  She handed each of them a letter from the employers which complained of various matters, not including the taking of stock, and concluded:

   ‘Please accept this letter as your formal letter of termination.  As per your employment contract you have 2 weeks notice, your final working day will be Wednesday 4^th February 2004.’

8. It seems that Mr Pashley and Mr Farrell accepted his letter without demur.  They continued to make themselves available for work in the café as desired by the employers.  It seems Mr Pashley, although not Mr Farrell, actually worked between 21 January 2004 and the next relevant event on 24 January 2004.

9. On 24 January 2004, the employers issued more letters, one to each of the claimants.  The letters were in similar, though not identical, terms.  Each letter referred to ‘the recent discovery that the staff members of The Norfolk Island Coffee House have been stealing vast amounts of product from The Norfolk Island Coffee House, as admitted by all staff in the meeting’ held on 21 January 2004 and the failure of staff to come forward with information ‘or to offer so much as a simple apology for their actions’.  The letter said, ‘[w]e therefore have no choice but to remove the dishonest staff factor from our business’.  Each letter stated:

   ‘As the issue at hand is theft we have terminated your employment immediately and you should feel lucky that we are not pursuing criminal charges.  Under these circumstances we are not required to give 2 weeks notice or payment in lieu of 2 weeks.’

10. Apparently each of the claimants was paid the amount owing to him or her for past work, less $118.30 on account of the alleged missing drinks.

    The Tribunal’s decision

11. The claimants all believed they were entitled to pay in lieu of notice and that the sum of $118.30 had been improperly deducted from their wages.  They made a complaint to the Employment Conciliation Board.  The Board arranged a conciliation meeting under s 77 of the Act.  However, the complaints were not resolved, so each of the claimants applied to the Tribunal for an inquiry into their complaints.  The Tribunal conducted an inquiry.  On 15 March 2004, the Tribunal gave a decision in which it summarised the evidence and stated the following conclusions:

    ‘Section 21(3)(a) states that there are to be no deductions from an employee’s wages unless there is agreement in writing.  That the staff couldn’t come up with a “better solution” for the problem does not constitute an agreement and definitely is not an agreement in writing.

    In accordance with Section 21(3)(a) of the Employment Act this Tribunal orders that – moneys deducted on 22^nd January, 2004 from the wages of Andrew Pashley ($118.80 [sic]); James Farrell ($118.80 [sic]) and Nikki Hayden ($118.80 [sic]) be refunded.

    Summary dismissal is covered by Section 19(3) of the Employment Act.  There are four grounds for justified summary dismissal –

    (a)     Dishonesty in the course of employment

    (b)     Absence from duty without reasonable cause

    (c)     Wilful disobedience with, or failure to have regard to, a reasonable direction of the employer;

    (d)     Being under the influence of intoxicating liquor or a dangerous drug or narcotic substance

    In this matter, the respondents rely on (a) and (c).

    In respect of the grounds of dishonesty, the evidence is that the stock takes show a shortfall of drinks.  The accuracy of the stock stakes [sic] is questionable, because there are differences between those totals shown to the employees and those totals brought before the Tribunal – in one instance, a difference of practically one third less shortfall and in the other, a difference of one quarter less shortfall.

    The applicants are adamant that they had no intention to steal.  The evidence before the Tribunal relates more to the lack of apologies and so called “complacency” rather than theft.  In the Tribunal’s opinion the respondents have not produced any credible evidence to show theft.  The stock takes are shown to be flawed and Mrs. Cameron admitted that no action has been taken to reimburse the incorrect amounts deducted from the pay packets.

    In respect of the ground of wilful disobedience with, or failure to have regard to, a reasonable direction, it may be argued that failure by employees to write a chit and put it in the till meets that criteria.  However, if the stocktakes are not reliable, it is not possible to say how many chits should be in the till, nor which employee is responsible for any particular number of chits.  The employees admitted that they were careless in writing the chits during this very busy period and the Tribunal appreciates Mrs Cameron’s concerns for the loss of stock and profits.

    The Tribunal finds that the evidence is not sufficient to prove dishonesty in the course of employment.  Nor is the evidence sufficient to prove wilful disobedience with, or failure to have regard to, a reasonable direction of the employer.

    Therefore the summary dismissal was not justified

    We also find that Ms. Hayden believed her employment was summarily terminated by Mr. Cameron, (although he denies that this was his intention) and that her leaving the premises did not constitute an act of resignation.

    Ms. Hayden has a contract which states a notice of termination period of fourteen days.  The Tribunal orders that –

    Miss Hayden be paid all outstanding pay in lieu of notice equivalent to fourteen normal working days from 24 January 2004, together with any outstanding annual leave entitlements.

    Mr. Pashley and Mr. Farrell do not have valid employment contracts.  The Tribunal accepts that both have been employees of Mr. & Mrs. Cameron, owners of the Coffee House and the Coffee Plantation.  Both employees were given fourteen days’ notice of termination on 21^st January, 2004.

    The Tribunal further orders that –

    Mr. Pashley be paid all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004, together with any outstanding annual leave entitlements.

    Mr. Farrell be paid all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004, together with any outstanding annual leave entitlements.’

    Appeal to the Supreme Court

12. On 2 April 2004, the employers filed a Notice of Appeal in this Court.  The notice sought the following orders:

    ‘1.       The appeal be allowed.

    2.That the decision of the Tribunal be varied by –

    a.With respect to the first respondent by omitting from the Tribunal’s order

    “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004,” and substituting
    “the amount of wages and other entitlements accruing to the employee as a result of any work undertaken by the employee during the week the last day of which was the date of the employee’s termination.”

    b.With respect to the second respondent by omitting from the Tribunal’s order

    “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004,” and substituting
    “the amount of wages and other entitlements accruing to the employee as a result of any work undertaken by the employee during the week the last day of which was the date of the employee’s termination.”

    c.With respect to the third respondent by omitting from the Tribunal’s order

    “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 24 January 2004,” and substituting
    “the amount of wages and other entitlements accruing to the employee as a result of any work undertaken by the employee during the 14 day period the last day of which was the date of the employee’s termination.”

    3.        Costs.’

13. It will be noted that, read literally, the proposed orders require the employers to pay the claimants only for the work they had performed before 21 January 2004, in the case of Mr Pashley and Mr Farrell, and 24 January 2004, in the case of Ms Hayden; there would be no payment in lieu of notice at all.  However, this may not have been what the employers intended.

14. The claimants responded by filing a ‘Defence and Counter Claim’ in which they agreed that the Tribunal erred in law.  Their Counter Claim read:

    ‘1.   The respondents claim that the Tribunal was bound to quantify its orders.

    2.The respondents claim that by failing to quantify its orders the Tribunal has given rise to different methods of calculation being employed by the different parties.

    3.The respondents claim that the quantum of the Tribunal’s orders are:

    •    In respect of the first respondent $1948.30
    •    In respect of the second respondent $1483.30
    •    In respect of the third respondent $1054.30’.

15. The orders sought by the claimants were as follows:

    ‘That

    1.   The cross claim be allowed.

    2.   That the decision of the Employment Tribunal be varied

    a.   With respect to the first respondent by omitting from the Tribunal’s order “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004, together with any outstanding annual leave entitlements” and substituting “1948.30”.

    b.   With respect to the second respondent by omitting from the Tribunal’s order “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 21 January 2004, together with any outstanding annual leave entitlements” and substituting “1483.30”.

    c.   With respect to the third respondent by omitting from the Tribunal’s order “all outstanding pay in lieu of notice equivalent to fourteen normal working days from 24 January 2004, together with any outstanding annual leave entitlements” and substituting “$1054.30”.

    3.   Costs.’

16. The matter came before Beaumont CJ at a directions hearing.  By consent, his Honour ordered that the appeal proceed on the basis of written submissions.  The parties filed written submissions.  In the meantime, however, Beaumont CJ retired from the Court.  Accordingly, it has fallen to me to evaluate the submissions and determine the appeal.

    Submissions of the employers

    (i)        General

17. In his written submissions, Mr Wayne Richards, solicitor for the employers, accepted that the Tribunal was correct in concluding that s 21(3)(a) of the Act precluded any deduction from the claimants’ wages without their written consent; consequently, the sums of $118.30 that were deducted from the wages of each of the claimants ought to be paid to them.

18. Mr Richards also accepted that the Tribunal’s decision as to whether there was justification for the summary termination of the claimants’ employment was a question of fact, as was the question whether Ms Hayden resigned or was terminated.  It followed that each of the claimants was entitled to some payment in lieu of notice.

19. However, Mr Richards contended the Tribunal erred in law in quantifying the payment in lieu of notice in respect of each of the claimants.

    (ii)       Ms Hayden

20. Mr Richards noted that Ms Hayden’s contract specified a 14 day period of notice and provided that the employer may dismiss the employee without notice if ‘[t]he wages for the period of notice are paid out to the employee in lieu of notice’.  Mr Richards submitted:

    ‘This contractual provision does not entitle Ms Hayden to payment the equivalent of 14 normal working days but rather payment of the amount which she would have derived over a 14 day period.’

21. Mr Richards summarised the hours worked by Ms Hayden over the 14 days immediately prior to 24 January 2004.  They amounted to 75 in total.  He noted that, at the time, she had been receiving $13 per hour, this amount being said to include accrued holiday and sick leave entitlements.  Therefore, he said, Ms Hayden was entitled to $975 for wages plus the wrongly deducted $118.30, a total of $1,093.30.

22. In submissions filed on behalf of the claimants, Mr Michael King accepted this approach.  Accordingly, in relation to Ms Hayden, I will make an order reflecting Mr Richards’ calculation.

    (iii)      Mr Pashley and Mr Farrell

23. There is no agreement between the parties in relation to Mr Pashley and Mr Farrell.

24. Mr Richards submitted the Tribunal was wrong in law in holding that Mr Pashley and Mr Farrell did not have valid employment contracts.  He submitted their employment continued to be governed by the coffee plantation contracts.  His contention was that neither contract was vitiated by the change of duties from the coffee plantation to the café.  He said:

    ‘Clauses 8.1(a) and 8.1(b) of the Pashley and Farrell contracts are identical.  They purport to provide for 7 days written notice of termination but no payment in lieu thereof.  Clause 8.1(b) to this extent is not valid.  Under s. 12(1) of the Act Messrs Pashley and Farrell are entitled to payment in lieu of notice as determined by 19(1)(b)(i) of the Act (i.e. 7 days).’

25. Section 19(1) of the Act relevantly provides:

    ‘An employer must give an employee –

    (a)at least 7 days written notice of termination of employment; or

    (b)in addition to any other entitlement of the employee, pay the employee not less than an amount equal to the sum of –

    (i)      the amount of wages and other entitlements accruing to the employee as a result of any work undertaken by the employee during the week the last day of which was the date of the employee’s termination …’

26. Consistently with the approach he had taken in relation to Ms Hayden, Mr Richards argued that the amount payable to Mr Pashley and Mr Farrell was to be calculated by reference to the hours each had worked in the seven days immediately preceding their termination of employment on 24 January 2004.  Mr Pashley had worked 23 hours during the period.  His hourly rate was said to be $15; therefore, the employers were obliged to pay him wages of $345 plus the wrongly deducted $118.30, a total of $463.30.

27. Mr Richards contended that Mr Farrell had worked 16.25 hours during the seven day period immediately before 24 January 2004.  His inclusive hourly rate was said to be $13; so he was entitled to $211.50 plus the wrongly deducted $118.30, a total of $329.55. 

28. Mr Richards said the hourly rate of Mr Pashley and Mr Farrell was inclusive of all entitlements.  His reason for saying this is the ticking of a box in cl 4.1(b) of the coffee plantation contracts.  Clause 4.1 is headed ‘Rate of Pay’.  Clause 4.1(a) provides:

    ‘Ordinary rate of pay shall be:
               $13  per hour
    OR     $ … per week
    OR      $… per … (specify pay period)’.

29. Clause 4.1(b) says:

    ‘Entitlement shall be additional and accrued            ¨
    OR
    Not be accrued and paid each pay period                 þ’.’

1. Clause 4.1(b) is partially explained by a note that reads: ‘For the purposes of this clause, entitlements must be not less than the minimums provided by the Act (approximately 14.12%)’.  (Original emphasis)

2. The entitlements provided by the Act include annual leave, or payment in lieu of annual leave: see s 15, set out at para 36 below.  As mentioned in para 3 above, the coffee plantation contracts provided that Mr Pashley and Mr Farrell were entitled to the number of days that they would normally work in three ordinary working weeks as annual leave.

3. Mr Richards did not concede that either Mr Pashley or Mr Farrell was entitled to pay in lieu of annual leave.  His reason seems to have been that this entitlement was excluded by the parties ticking the lower box in cl 4.1(b) of each of the coffee plantation contracts.

   Submissions of Mr Pashley and Mr Farrell

4. Mr King agreed with Mr Richards in contending that the Tribunal erred in holding that Mr Pashley and Mr Farrell did not have valid employment contracts.  However, he disagreed with Mr Richards’ contention that the relevant contracts were the coffee plantation contracts.  He said those agreements were directed to a different type of employment, whereby the employee would work 35-40 hours per week as a maintenance and harvesting labourer.  He argued it was impossible to treat these contracts as applicable to work in the café on an ‘as required’ basis.  He noted that Ms Cameron admitted during her evidence before the Tribunal that she knew she ‘should do another contract for Andrew and Jay’ but did not do so.

5. Mr King said it followed that, in the absence of a new contract concerning their employment in the café, Mr Pashley’s and Mr Farrell’s terms of employment were governed by the Act until 21 January 2004.  On that day, however, new contracts were made by each of Mr Pashley and Mr Farrell accepting the terms of the letters issued to them by the employers giving them two weeks’ notice of termination.  He said contracts were formed that day by offer and acceptance.

6. Mr King contended that the formula contained in s 19(1)(b)(i) of the Act should not be applied.  He said this was a formula for calculating a minimum number of hours; a more reasonable and fairer course would be to take the average weekly number of hours worked by each employee and apply it to the employee’s hourly rate.  He said:

   ‘As Mr Pashley worked an average of 28.75 hours, his entitlement using his wage rate of $15.40 would be $885.50 (ie., 28.75 X $15.40 X 2 weeks); for Mr Farrell $558.05 (ie., 21.3 hours X $13.10 X 2 weeks).’

7. Mr King also submitted that, since the coffee plantation contracts had been discharged, the two men were entitled to payments in respect of annual leave as provided by the Act.  Section 15 of the Act deals with that subject.  It reads:

   ‘(1)     If an employee –

   (a)has continuously served an employer during the preceding year; and

   (b)at the end of the year, is employed by the employer on a regular basis,

   the employer –

   (c)must give the employee leave of not less than the number of days that the employee would work in three ordinary working weeks; and

   (d)must give the employee that leave on days on which the employee would ordinarily work; and

   (e)must pay the employee an equal amount in respect of each day of that leave, so that the total amount paid under this paragraph is not less than six per cent of the sum of the employee’s gross pay during that year; and

   (f)pay the employee for a period of leave before the commencement of that period.

   Penalty:          20 penalty units.

   (2)If subsection 15(1) does not apply, an employer must not later than -

   (a)the end of each year of continuous service; or

   (b)the termination of the employee’s service,

   (whichever occurs first) pay the employee (as a holiday entitlement) not less than six per cent of the sum of the employee’s gross pay during that year.

   Penalty:40 penalty units.

   (3)An employee is not entitled to payment of a holiday entitlement under subsections 15(1) and 15(2) in respect of the same period of service.

   (4)For the purposes of this section, an employee’s service will be taken to be continuous despite any leave taken by the employee in accordance with this Act, under an employment contract, or otherwise by agreement between the employer and the employee.’

8. Mr King said that, having regard to the formula in s 15(2) and the wages records that are in evidence, ‘Mr Pashley is due $502.43 (6% of $8373.90) and Mr Farrell $234.42 (6% of $3907.10). 

   Conclusions

9. Both Mr Richards and Mr King contended it was erroneous for the Tribunal to say that Mr Pashley and Mr Farrell ‘do not have valid employment contracts’.  Strictly, they are correct.  However, I think the Tribunal meant to indicate that, in its view, neither man had a subsisting comprehensive written employment contract.  If that is what the Tribunal meant, then I agree with it.

10. I accept Mr King’s submission that the coffee plantation contracts were particular to employment in the coffee plantation; they had no application to the very different work of Mr Pashley and Mr Farrell in the café.

11. On the other hand, while working in the café, Mr Pashley and Mr Farrell clearly each had an employment relationship with the employers.  That could only be because each had entered into a contract of employment with them.  There was initially nothing in writing, but there obviously was an oral agreement to work in the café for a stipulated hourly rate.  There being no evidence of any other agreed term, when the oral contracts were made, the additional terms of their employment were those prescribed by the Act or otherwise implied by law.

12. Contrary to the argument of Mr King, I do not think the letters of 21 January 2004 had the effect of creating a comprehensive new contract of employment between the employers and each of the recipients of the letters.  There is nothing in the letters or the surrounding circumstances to suggest this was intended.  The letters dealt only with one facet of the employment contract: its termination date.  However, I think each of the letters does evince an intention, on the part of the employers, to vary the existing contract of employment in relation to that matter; to impose a contract termination date, where none had previously existed.  The letters read: ‘your final working day will be Wednesday 4^th February 2004’.  The employers were proposing that, instead of the contracts of employment continuing indefinitely, subject to termination by at least seven days notice from either side pursuant to s 19(1)(a) of the Act, the recipient’s period of employment would conclude on a specified date, 4 February 2004.  As that day was more than seven days after the date of receipt of each letter, the fixing of that date did not contravene s 19(1)(a) of the Act.  Each of the addressees apparently received the letter on or shortly after 21 January 2004.  Each apparently continued to make himself available for work – that is, he continued to fulfil his contractual obligations. Each of them must therefore be taken to have accepted the employers’ proposed variation of his oral contract of employment.

13. On 24 January 2004, the employers chose unilaterally and immediately to terminate each of these contracts of employment.  To take that course was to repudiate the contract.  Because of the variation on 21 January 2004, Mr Pashley and Mr Farrell were entitled to have their employment continue until 4 February 2004.  They are therefore each entitled to damages for the repudiation.

14. If the entitlement of Mr Pashley and Mr Farrell to pay in lieu of notice depended upon s 19(1)(b) of the Act, the monetary value of their entitlements would have to be calculated in accordance with the formula in that paragraph.  It would not matter that the formula might impose a harsh result on them because of the fact that, in the particular week concluding on the day of termination, they worked fewer than their average number of hours.  Nor would it matter if the reverse were true, as when an employee happened to work in that week more than his or her usual number of hours.  The statutory right being tied to the formula, the formula would have to be followed.

15. However, as I see the present case, the claims of Mr Pashley and Mr Farrell do not depend on s 19(1)(b) of the Act.  They are entitled to damages for the employers’ repudiation of their contracts by terminating their employment unilaterally before the agreed conclusion date.  Damages for breach of contract are to be assessed by reference to what is reasonable between the parties, not by reference to any particular statutory formula.  It makes sense, in this case, to calculate them by reference to the average number of weekly hours worked by Mr Pashley and Mr Farrell in the café, not by reference to what might be an atypical situation in the last week of employment.

16. This being so, it is appropriate to take the general approach urged by Mr King, although for reasons that differ somewhat from his argument.  However, it would be wrong to calculate damages on the basis of a 14 day period.  Mr Pashley and Mr Farrell were presumably paid for any work done by them up to delivery of the termination letters on 24 January 2004.  As of that time, their contracts of employment had only 11 days to run.

17. Mr Richards did not challenge Mr King’s computation of the average number of weekly hours that were worked by Mr Pashley and Mr Farrell.  Nor did he challenge the hourly pay rates used by Mr King.  Accordingly, I adopt Mr King’s calculation, but each total must be reduced to a figure equal to 11/14^ths of Mr King’s figure.  On this basis, the amount payable to Mr Pashley, for damages rather than pay in lieu of notice, is $695.75.  The corresponding figure for Mr Farrell is $438.46.

18. This leaves the matter of pay in lieu of annual leave.  Having regard to their size, I assume that the wages records figures cited by Mr King (see para 37 above) cover Mr Pashley’s and Mr Farrell’s employment in the coffee plantation, as well as their employment in the café. 

19. As to the latter period, there can be no argument.  The relevant contract, in relation to each man, was an oral contract, subject to the variation on 21 January 2004 concerning termination of the contract.  That contract was silent as to pay in lieu of annual leave.  The statutory entitlement provided by s 15(2) of the Act clearly applies to both Mr Pashley and Mr Farrell.

20. The position in relation to the period of employment in the coffee plantation is perhaps less clear.  As I understand Mr Richards’ argument, it is that the two men were excluded from annual leave pay by the ticking of the lower box in cl 4.1(b) of the coffee plantation contracts.  However, that paragraph seems to have been directed to the time of payment of entitlements, not to the question whether there should be an entitlement to annual leave.  The latter issue was dealt with, favourably to the employee, by cl 5.1 of the contracts.  Annual leave being available, but apparently not taken in specie, cl 15(2) of the Act operated to entitle Mr Pashley and Mr Farrell to a payment in relation to annual leave equal to 6% of their gross pay while employed under the coffee plantation contracts.

21. In the result, Mr Pashley and Mr Farrell are each entitled to receive a payment, in addition to their other entitlements, equal to 6% of their gross pay for work undertaken at both the coffee plantation and the café.  As no challenge is made to Mr King’s figures, I will adopt them.

22. The total payment due to Mr Pashley is $1,316.48.  This sum is made up as follows:

    (i)        payment of wrongful deduction from wages  $118.30;

    (ii)       damages for repudiation of contract  $695.75; and

    (iii)      payment in lieu of annual leave  $502.43.

23. The corresponding figures for Mr Farrell are $118.30, $438.46 and $234.42, a total of $791.18.

24. Having regard to the result of the appeal and the fact that Mr King has acted as an agent of the claimants, rather than as their solicitor, there will be no order as to costs.

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Acting Chief Justice Wilcox.

Associate:

Dated:             9 November 2004

Solicitor for the Appellants:	Mr Wayne Richards
Agent for the Respondents:	Mr Michael King
The appeal proceeded on the basis of written submissions.
Date of Judgment:	9 November 2004