Carol Moreland v Optus Communications/Optus Mobile Pty Ltd
[1995] IRCA 48
•28 February 1995
CATCHWORDS
INDUSTRIAL LAW - Termination of employment - Retrospectivity of the operation of ss. 170EDA and 170EE of the Act - The effect of taxation on the amount of compensation to be awarded - Whether payments made as a consequence of an order for compensation are “eligible termination payments” within the meaning of s. 27A(1) of the Income Tax Assessment Act 1936 - The effect on the amount of compensation to be awarded of a finding that, but for lack of procedural fairness, the termination of the applicant’s employment would have been for a valid reason - Lengthy counselling process, but a failure by the responsible manager to read the applicant’s written responses to his criticisms - Opportunity to respond under s. 170DC must be a real one - Absence of procedural fairness - Unjust termination - Deteriorating work relationship between applicant and work colleagues - Reinstatement impracticable - Award of compensation.
Industrial Relations Act 1988, ss 170EA, 170EDA, 170EE, 170DC, 170DE
Industrial Relations Amendment Act (No. 2) 1994
Acts Interpretation Act 1901, s 8
Income Tax Assessment Act 1936, s27AMathieson v Burton (1971) 124 CLR 1
Maxwell v Murphy (1957) 96 CLR 261
Kraljevich v Lakeview and Star Ltd (1945) 70 CLR 647
In Re Athlumney; Ex parte Wilson (1898) 2 Q.B. 547
Fisher v Hebburn Ltd (1960) 105 CLR 188
Geraldton Building Co Pty Ltd v May (1977) 136 CLR 379
Bean v Milstern Retirement Services Pty Ltd (NI 423 of 1994) (unreported, 16 December 1994 )
Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233
Gregory v Philip Morris Ltd (1988) 24 IR 397
Wheeler v Philip Morris Ltd (1989) 32 IR 323
Byrne and Frew v Australian Airlines Limited (1994) 52 IR 10
Bostik (Australia) Pty Ltd v Gorgevski (1992) 36 FCR 20
Jones v Dunkel (1958) 101 CLR 298
British Transport Commission v Gourley [1956] A.C. 185
Cullen v Trappel (1980) 146 CLR 1
McIntosh v FCT 79 ATC 4
Reseck v FCT (1975) 133 CLR 45CAROL MORELAND v OPTUS COMMUNICATIONS/OPTUS MOBILE PTY LTD
No. NI 437 of 1994
CORAM: PATCH JR
PLACE: SYDNEY
HEARING DATES: 14, 15, 16 DECEMBER 1994
JUDGMENT DATE: 28 FEBRUARY 1995
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY No. NI 437 OF 1994BETWEEN: CAROL L. MORELAND
Applicant
AND: OPTUS COMMUNICATIONS/OPTUS MOBILE PTY LTD
Respondent
CORAM: PATCH JR
PLACE: SYDNEY
HEARING DATES: 14, 15, 16 DECEMBER 1994
JUDGMENT DATE: 28 FEBRUARY 1995MINUTES OF ORDER
THE COURT ORDERS THAT:
1. That the respondent pay to the applicant compensation in the sum of
$7, 500.00, within 21 days of 28 February 1995.NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRYNo. NI 437 of 1994
BETWEEN:
CAROL L MORELAND
Applicant
AND:
OPTUS COMMUNICATIONS/OPTUS MOBILE PTY LTD
RespondentBefore: Patch JR
Place: Sydney
Hearing Dates: 14, 15, 16 December 1994
Judgment Date: 28 February 1995REASONS FOR JUDGMENT
This is an application under section 170EA of the Industrial Relations Act 1988 (“the Act”).
The applicant, Ms Carol Moreland, seeks the following orders:
(a) An order declaring the employer’s termination of the employee’s employment to have contravened Division 3 of Part VIA of the Act;
(b) An order requiring the respondent to reinstate the employee in employment;
(c) An order that the respondent pay compensation to the employee;
(d) Such other order or orders as would put her in the same position (as nearly as can be done) as if her employment had not been terminated.
DO THE AMENDMENTS TO THE ACT, EFFECTIVE 30 JUNE 1994, HAVE RETROSPECTIVE OPERATION?
The applicant’s employment was terminated on 9 June 1994. The application was filed on 23 June 1994. The Act was amended by the Industrial Relations Amendment Act (No. 2) 1994 (Act No. 97 of 1994) (“the amending Act”), which took effect on 30 June 1994.
It is thus necessary to determine whether or not the amendments made by the amending Act are retrospective in operation. This is potentially important for several reasons:
1.Under the amended version of the Act, the test in respect of the question of whether or not to reinstate the applicant is whether I consider reinstatement to be “impractical”. Under the previous version of the Act, the test is whether I consider reinstatement to be “appropriate”.
2.It is clear that, under the amended version of the Act, reinstatement is the primary remedy, and orders for compensation would only be considered after the Court had decided that reinstatement is impracticable. Under the previous version of the Act, this is probably not so.
3.Under the amended version of the Act, there is an upper limit of $30,000, or 6 months remuneration, on the amount of compensation that can be awarded to an applicant in the event of an unlawful termination of employment. Under the previous version of the Act, there was no such limit.
4.In some respects the onus of proof was shifted by the amending Act.
Section 8 of the Acts Interpretation Act 1901 is as follows:
“Effect of repeal
8. Where an Act repeals in the whole or in part a former Act, then unless the contrary intention appears the repeal shall not:
(a) .....
(b) affect the previous operation of any Act so repealed, or anything duly done or suffered under any Act so repealed; or
(c) affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed; or
(d) ....
(e) affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid;
and any such investigation legal proceeding or remedy may be instituted continued or enforced, and any such penalty forfeiture or punishment may be imposed, as if the repealing Act had not been passed.”
As Windeyer J said in Mathieson v Burton (1971) 124 CLR 1 at 8:
“When a statute repeals an earlier enactment, the general provisions of the Interpretation Acts are assumed to be sufficient to limit the operation of the new Act and to prevent the disturbance of pasts transactions and accrued rights.”
Furthermore, it is a long established principle of the common law that an Act will not be regarded as having retrospective operation unless there is a clear expression of the intention of the Parliament that that be so.
In Maxwell v Murphy (1957) 96 CLR 261, Dixon CJ said this, at 267:
“The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise effect rights or liabilities which the law had defined by reference to the past events.”
This is particularly the case when a statute affects existing or accrued rights or liabilities. A number of cases illustrate that:
In Kraljevich v Lakeview and Star Ltd (1945) 70 CLR 647, an amending Act had altered the Workers Compensation Act (1912-1941) (W.A.) by changing the method of assessment so as increase the lump sum to which a worker was entitled by way of redemption. It can readily be seen that this both altered the extent of the worker’s rights and the consequent extent of the employer’s liabilities. The Western Australian Acts Interpretation Act, as it was at the time, was quite similar in terms to the Commonwealth Acts Interpretation Act as it is now. His Honour, Starke J, quoted, at 651, from the English case of In Re Athlumney; Ex parte Wilson (1898) 2 Q. B. 547, at pp 551 and 552, as follows:
“Perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards a matter of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment.”
In the same case Dixon J said this, at 652 :
“The presumptive rule of construction is against reading a statute in such a way as to change accrued rights the title to which consists in transactions passed and closed or in facts or events that have already occurred.”
In Fisher v Hebburn Ltd (1960) 105 CLR 188 at 194, Fullager J said that an amending Act is to be construed as having a prospective (future) operation only, in the sense that:
“...it is prima facie to be construed as not attaching new legal consequences to facts or events which occurred before its commencement.”
In Geraldton Building Co Pty Ltd v May (1977) 136 CLR 379, Stephen J said, at 399 to 400:
“...in the absence of clear indications to the contrary, amending enactments are to be taken to have a prospective operation only...so as not to upset vested rights and liabilities which are complete in themselves.”
So there is both a clear legislative, and a clear common law, presumption against interpreting any amending enactment so as to give it retrospective operation, and the presumption will only be displaced by the clear expression of the intention of the Parliament to the contrary.
Here, it is quite clear that the amending Act substantially altered both the rights of employees and the liabilities of employers. The above-mentioned presumption against the retrospective operation of the amending Act therefore applies in full force.
The question then becomes: “is there a clear expression of the intention of the Parliament that the amending Act have retrospective operation?”
In my opinion, an examination of the Act reveals such an intention, at least in respect of the operation of the newly inserted section 170EDA and the substitutes version of section 170EE.
Both of these sections include a definition of the phrase “termination of employment” as follows:
“...a termination of employment that occurred before, or occurs after, the commencement of this section, but does not include a termination of employment in respect of which an application under section 170EA was made to the Court before that commencement if the Court pronounced final judgment in respect of the application before that commencement.”
That definition quite clearly provides that the versions of those sections inserted into the principal Act by virtue of the amending Act are to cover terminations of employment that occurred before the commencement of the section (i.e. before 30 June 1994). This clearly retrospective phraseology is subject to the proviso only that applications in respect of which the Court has pronounced final judgment before 30 June 1994 are not to be affected.
I therefore conclude that sections 170EDA and 170EE, as set out in the amending Act, govern this application. My ex tempore judgment to the contrary in Bean v Milstern Retirement Services Pty Ltd (NI 423 of 1994) (Unreported 16 December 1994) was, on reflection, wrong.
THE COURSE OF THE TRIAL
The trial of the matter commenced on 14 December 1994 and further evidence was heard on 15 December and 16 December 1994. The evidence concluded on that date, and it was agreed that the matter would be dealt with by written submissions.
The applicant was the only witness in her case.
The respondent called three witnesses. They were:
· Mr Peter Cheel, who is a Human Resources Consultant for the respondent and in a senior managerial position;
· Mr Gordon Kimpton, who is the Handset Business Unit Manager for the respondent, also in a senior managerial position, and was the immediate superior of the applicant;
· Mr Peter O’Connell, the Service Operations Manager for Optus Mobile, who is at the same level of the managerial hierarchy as the applicant was, and worked closely with her for several months in 1994, in the period leading up to the termination of her employment.
BACKGROUND FACTS
The applicant commenced employment with the respondent on 11 May 1992. She was initially employed in a managerial position as a “Product Support Controller”.
In her affidavit sworn 18 November 1994 (Exhibit ‘B’) the applicant described her duties as follows:
“The position had two main areas of work. These were as follows:
a)The provision of services to Optus Service Centres. The service centres were responsible for installation, maintenance, and other support programs in relation to mobile phones. My role was to assist in the employment of staff, and provide the necessary training and tools to enable the service centres to operate efficiently. I was also required to develop operating procedures for the service centres.
b)I was responsible for liaising with suppliers of mobile phone products to ensure the technical adequacy of products, and to ensure that manufacturers provided a high level of ongoing technical support. This involved liaising with suppliers on a range of issues, communicating manufacturers technical information to Optus staff, and monitoring and reporting on quality standards.”
There was no substantial issue as to what her initial duties were and I accept what she says.
It is clear from the evidence that the applicant’s workload was very heavy. Apart from the people in the same office complex as herself, she had two quite distinct groups of people to work with - the managers and other staff in the various Optus service centres throughout Australia, and the managers and other staff in the companies which supplied the mobile phones to Optus.
In November 1993 Mr George Kimpton came to work for the respondent and became the applicant’s immediate superior. In early February 1994 Mr Kimpton advised the applicant that her position was to be split in two. Somebody else was to be employed to deal with the service centres and the applicant was to continue to deal with the suppliers. From that time the working relationship between Mr Kimpton and the applicant deteriorated.
On 10 February 1994 Mr Peter O’Connell was employed to deal with the service centres. As was to be expected, (because he was taking over half of the applicant’s previous job) initially Mr O’Connell and the applicant worked closely together. Mr O’Connell made it quite clear that he thought that the applicant had tried hard to be helpful to him, to familiarise him with the position, and help train him in his new job. He made it clear that, in his opinion, in addition to trying hard, the applicant’s performance in this respect was “excellent”.
THE SERIES OF MEETINGS AND WARNINGS LEADING UP TO THE TERMINATION OF THE APPLICANT’S EMPLOYMENT
From February until June 1994, there were a series of meetings between the applicant, Mr Kimpton and Mr Cheel, as well as a considerable amount of correspondence between them. These are set out below:
17 February 1994
Letter from Mr Kimpton to the applicant.
23 February 1994
Meeting between the applicant, Mr Kimpton and Mr Cheel.
28 February 1994
Memo from the applicant to Mr Kimpton
4 March 1994
Letter from Mr Kimpton to the applicant
8 March 1994
Memo from the applicant to Mr Kimpton
8 March 1994
Meeting between the applicant, Mr Kimpton and Mr Cheel
9 March 1994
Memo from Mr Kimpton to the applicant
21 March 1994
Meeting between the applicant, Mr Kimpton and Mr Cheel
21 March 1994
Letter from Mr Kimpton to applicant - first written warning
22 March 1994
Letter to the applicant from Mr Kimpton
24 March 1994
Memo from Mr Kimpton to the applicant
24 March 1994
Letter from Mr Kimpton to the applicant
5 April 1994
Meeting between the applicant and Mr Cheel
7 April 1994
Meeting between the applicant, Mr Kimpton and Mr Cheel
7 April 1994
Memo to the applicant from Mr Cheel
9 May 1994
Meeting between applicant and Mr Kimpton
24 May 1994
Applicant receives lengthy performance review document from Mr Kimpton
24 May 1994
Further performance review meeting between the applicant and Mr Kimpton
24 May 1994
Second written warning from Mr Kimpton to the applicant
30 May 1994
Applicant receives “final notice” from Mr Cheel
1 June 1994
Meeting between the applicant and Mr Cheel
7 June 1994
Meeting between the applicant, Mr Kimpton and Mr Cheel. Applicant given the choice of resigning, or being dismissed
9 June 1994
Final meeting between the applicant, Mr Kimpton and Mr Cheel. Applicant is informed that her employment has been terminated.
The applicant complains that she was given insufficient detail of the allegations against her to enable her to respond properly to her employer’s concerns about her work performance. It is therefore important to carefully analyse the contents of the various documents given to her, and the scope of the discussions at the numerous meetings as listed above.
Letter 17 February 1994. Mr Kimpton to Ms Moreland (applicant)
This letter is characterised in the applicant’s written submissions as “big on generalisations and lacking detail of any specific incidence”. On analysis, that submission is in itself a generalisation, and in that way, inaccurate.
The letter has the heading “Your Performance”. In it, Mr Kimpton makes a number of specific criticisms. These included:
A“I’m disappointed that in spite of the three discussions we had in relation to changes in the organisation, you appear to have not accepted the inevitability of change and that the change is designed to assist you to meet your performance targets.”
It is clear that the applicant did not agree with the changes made by Mr Kimpton (that is, her position being split in two, and someone else being given responsibility for the state service centres).
Nonetheless, the evidence of Mr O’Connell makes it clear that the applicant had, at least in the way she worked with Mr O’Connell, accepted the changes, and actively assisted Mr O’Connell to get settled into his new job. I therefore, on balance, find that this criticism of Ms Moreland, although reflecting her disagreement with the decision of Mr Kimpton, was justified only to the extent to which it reflected the applicant’s attitude to Mr Kimpton.
Mr Kimpton’s letter also said:
“What I am most concerned about, and what I cannot accept, is the level of your relationship with the States Sales Managers and the States Service Managers. Your relationship has degenerated to the point were your credibility as such that there is little cooperation.
Communication similar to last weeks with the South Australian Management is unacceptable, irrespective of the degree of fault or responsibility. Several of your comments in the recent strategy meeting caused both a regional manager to question and the consultants to ask how they could best relate to you.
Our role is to support and lead the line managers. Unless we have good relationships this is not possible. Equally, one person “ white-anting” the groups relationships causes untold difficulty”.
This is a clear criticism of the applicant’s management style. There is specific reference to what Mr Kimpton perceives to be a general problem, namely, that the applicant’s relationships with the state managers had “degenerated to the point where (her) credibility is such that there is little cooperation”.
There was also specific reference to an incident involving one of the South Australian managers, where acrimonious “e-mail” had been sent via the computer network between Ms Moreland and that manager. Although I have not seen any of that correspondence, I accept Mr Kimpton’s evidence that the terminology used by both the applicant and the South Australian manager was intemperate, and of the nature which would be likely to undermine the chances of a productive working relationship. The evidence established that the applicant must have known what that particular paragraph in the letter was in reference to, before it was written, as there had been discussions between her and Mr Kimpton about that matter.
Mr Kimpton then went on to put the applicant on clear notice that her performance (as he saw it) was jeopardising her continued employment. He said:
“I have to advise you that unless you can dramatically improve your relationships, and demonstrate positive leadership, I will be commencing the process of terminating your employment. I also want you to recognise that any current performance assessment will be marginal or unsatisfactory. I also recognise your disagreement with these conclusions.”
I note here that no evidence was called from any of the state managers referred to in this letter. The significance of this will be discussed below.
The meeting of 23 February 1994.
After the applicant received the above letter from Mr Kimpton she approached Mr Cheel. As a result of that approach, Mr Cheel convened a meeting consisting of himself, the applicant, and Mr Kimpton. That meeting lasted for well over an hour. It is clear that there was considerable discussion between those present over the criticisms that Mr Kimpton had made of the applicant in his letter. In his affidavit sworn 6 December 1994 (Exhibit F), Mr Kimpton said this (paragraph 20):
“Some of the matters that I referred to in this discussion as Carol Moreland’s weaknesses or deficiencies were:
(a) her relationship with key interfaces both State service personnel and suppliers;
(b) her unwillingness to accept the restructure;
(c) her lack of teamwork;
(d) her communications generally; and
(e) her inability to complete tasks in a satisfactory and timely manner.”
The applicant responded to that part of Mr Kimpton’s affidavit in paragraph 11 of her affidavit sworn 14 December 1994 (Exhibit G). That paragraph is as follows:
“I refer to paragraph 20 of Gordon Kimpton’s affidavit. In relation to the content of discussions at the meeting on 23 February, I became extremely frustrated during that meeting at the lack of details provided in relation to the general allegations made against me, particularly because I could not reconcile the generalisations with my own experience. For example, I asked the question: “what is wrong with my relationship with service managers; what are the specific complaints reported?” In response to this question Mr Kimpton and Mr Cheel said they were unable to give me such specifics. I also asked the following questions:
(a) “On what basis do you believe that I am unwilling to accept the proposed restructure?”
(b) “What do I need to do to demonstrate acceptance of the change?”
(c) “How can I improve my team work?”
(d) “How can my communications be improved?”
None of these questions received any answer whatsoever. All I was provided with at that meeting was the generalisations referred to in paragraph 20 of Mr Kimpton’s affidavit.”
Mr Cheel also referred to the content of that meeting in his affidavit sworn 6 December 1994 (Exhibit ‘D’).
He said that at the meeting he outlined the performance counselling mechanisms used by Optus.
He went on to say the following:
“At the meeting Gordon Kimpton identified the matters of deficiency in Carol Moreland’s performance and the means by which Carol could improve these deficiencies. Examples of these issues were:
(a) her relationship with the state sales managers, state service managers and external suppliers. Gordon advised Carol that these people did not regard her approach as professional;
(b) her lack of teamwork; and
(c) her poor relationships with key interfaces (both suppliers and fellow employees).”
Mr Kimpton and Mr Cheel each gave some evidence about what occurred at that meeting. Mr Kimpton elaborated somewhat and said, in the context of his criticisms of the applicant’s relationships with the State Sales and Service managers, that he specifically mentioned the applicant’s performance at a service strategy day, involving the State managers and Head office managers, which was held on 2 February 1994. When it was put to him that he had not done that. He said:
“I am very clear in my mind, in my recall, that that issue was raised on a number of occasions in counselling sessions with Carol Moreland.”
He also said:
“........ . that was one of the key issues that led up to the problems of the relationships.”
In respect of the questions referred to in paragraph 11 of the applicant’s affidavit, as set out above, in cross-examination it was put to Mr Kimpton that the applicant had asked those questions, and he agreed that had occurred. However, Mr Kimpton denied, in relation to the problems with the state managers, that he had been “unable to give specifics”. In fact, he said this :
“I was able to go state by state around the service managers and talk about the issues that she had and the lack of confidence that they had in her ability.”
In relation to questions enumerated a, b, c and d in Ms Moreland’s affidavit (above), Mr Kimpton said, in response to the suggestion that he did not give any answers to the those questions:
“I believe I did and I think they are contained in that letter that Mr Cheel wrote. ........ we talked about it at length. It was a very long meeting.”
It is difficult to accept that, in such a long meeting, Mr Kimpton and Mr Cheel did not get down to some specifics. On the other hand, it is only to be expected that they did sometimes speak in generalities, without putting specific allegations to the applicant.
In particular, if there was a generalised problem with the State managers, which did not especially relate to any particular incidents, it would have been virtually impossible for Mr Kimpton or Mr Cheel to talk about specific incidents - there may well not have been “specific” incidents upon which they could have relied.
To put it another way, the problem as seen by Mr Kimpton and Mr Cheel, with the applicant’s performance, at that stage, was not so much specific failures to do any particular task, but a more general one, to do with communication and relationships with her fellow employees.
At that meeting, there was a significant interchange between the applicant, on the one hand, and Mr Kimpton and Mr Cheel on the other. In paragraph 21 of Mr Kimpton’s affidavit of 6 December 1994 (Exhibit ‘F’) Mr Kimpton said that the applicant said to him “Gordon I feel you’ve raped me and I hate you.”
Mr Kimpton said that he was “stunned at this comment.” In his affidavit made on the same date (Exhibit D) Mr Cheel said that the applicant also said those words to Mr Kimpton.
In her affidavit made 14 December 1994 (Exhibit ‘G’), the applicant responded to that allegation by saying, in paragraph 12, that she had said the words “I feel raped and I hate it”. She went on to say, in her affidavit:
“this remark was not directed specifically at Mr Kimpton. It was a reflection of my feeling of frustration and powerlessness at the way the meeting was progressing.”
In my opinion, it doesn’t really matter whether the applicant directed the words specifically at Mr Kimpton, or just said it in general. Clearly, it would have had a very strong impact on both persons present.
The applicant may well have been feeling frustrated and powerless, but that this was a rather extreme comment to make. Certainly, such comments (regardless of whose version I accept) would have the strong tendency to poison the relationship between the applicant, on the one hand, and Mr Kimpton and Mr Cheel on the other. As I will canvas below, this is an important consideration in respect of the question of whether it is impractical to order the reinstatement of the applicant.
The correspondence of 28 February, 4 March and 8 March 1994.
On 28 February 1994 the applicant sent a memo to Mr Kimpton. Strangely, this memo did not refer at all to the meeting of 23 February 1994, but referred to Mr Kimpton’s letter of 17 February 1994.
In relation to “acceptance of change” the applicant said inter alia, “As you are now implementing some of the changes I’ve been seeking, I am of the impression that you have things under control in the Handset Service area and my personal skills may be better used elsewhere in the organisation.”
This was hardly an acceptance of the changes which Mr Kimpton was implementing - but, on the other hand, nor was it a refusal to work with those changes. As noted above, Mr O’Connell made it clear that the fact of the matter was that the applicant did work well with him in the implementation of those changes.
The true significance of the repeated reference, by both the applicant and Mr Kimpton, to this area of disagreement between them is that it shows the emerging personal difficulties between them.
In relation to the criticism by Mr Kimpton of her relationship with the State managers, the applicant said that she had spoken to the State Managers ( an assertion repeated in her later affidavit) and that no one had expressed any problems with her except to do with timeliness in the delivery of information.
In relation to the question of her “communication style”, the applicant asked for specific points or examples. She went on to say:
“waiting indefinite periods of time before raising vague interpersonal issues has not being considered good management in any company I’ve worked for previously nor do I think it is in accordance with Optus philosophy, although I am willing to stand corrected if appropriate.”
That comment, again, was likely to have the tendency to undermine the working relationship between herself and Mr Kimpton.
It is simply not correct to say that Mr Kimpton had waited an “indefinite period of time” before raising these problems with the applicant, and the problems that he did raise with the applicant can hardly be classified as “vague interpersonal issues.”
On 4 March 1994 Mr Kimpton sent a further memo to the applicant. This memo made specific reference to the meeting on 23 February. He set out a number of specific performance criteria for the applicant to follow. He said:
“During the following period criteria are:
· Your acceptance of the restructure of the organisation and a positive contribution towards its success.
· I have an expectation that all tasks undertaken by yourself will be completed to a satisfactory level, people are advised when an action cannot be completed and that promises of delivery are kept.
· You should ensure that communications from you are clear and understood and accepted by the recipient. Simple language and direct communication (not necessarily e-mail) will sometimes help facilitate this.
· You will need to develop your skills as a team player, recognise the importance of the extended team and the need to develop and cultivate relationships. You will need support the integrity of the team by not broadcasting inappropriate issues (ie non work specific issues).
· In terms of tasks, you will focus on developing and improving relationships with the manufacturers. It is expected that you make yourself aware of the issues with turn around times and measurements and share the information necessary to resolve the issue. You will develop documents of understanding to use as a basis for common understanding. You will focus on the problems with NEC in South Australia.
· You are expected to manage the current Ericsson 198 problem to its conclusion.
· You have agreed to develop a performance plan for you new position. I would like to review this with you prior to the Service Managers meeting on 16/03/94.”
On 8 March 1994 the applicant responded to the above memo from Mr Kimpton.
In relation to the question of the establishment of performance criteria, the applicant said:
“you stated that my performance is unsatisfactory and we need to determine appropriate performance criteria for me to meet. I would have thought that assessment of the quality of my performance could only be made after criteria had been established.”
That is patently not the case. The purpose of the establishment of specific performance criteria, was that, generally speaking, in the opinion of Mr Kimpton and Mr Cheel, the applicant’s performance had been inadequate. It is clearly quite possible to make an assessment of an employee’s performance without the necessity to have specific performance criteria in place. The applicant’s response reveals a certain inability to respond to criticism.
In relation to tasks and relationships, the applicant again requested further details.
The meeting on 8 March 1994 and memo of 9 March 1994
In paragraph 25 of his affidavit (Exhibit ‘F’) Mr Kimpton said this:
“a meeting took place on 8 March with Peter Cheel. At that meeting I explained some aspects of my letter of 4 March.”
By way of contrast, in her affidavit made 14 December, the applicant responded by saying:
“A meeting did take place on 8 March with Mr Kimpton and Mr Cheel. This meeting did not provide the specific information that I repeatedly requested. At that meeting, Mr Kimpton confirmed that the review of my performance objectives would occur on 18 March 1994.”
As the very purpose of the meeting was to go through the matters set out by Mr Kimpton in his letter of 4 March 1994, it would be expected that the meeting proceeded in accordance with its stated objective - namely that the matters set out on that letter of 4 March were further explained. Mr Kimpton gave evidence about that meeting and the following occurred:
Q How did Ms Moreland respond to your explanations?
A As I recall the meeting was very long it was in the order of two hours and Carol argued every point, word by word and it was a very semantic argument.”
The cross-examination of Mr Kimpton commenced with his evidence concerning the meeting of 8 March 1994. It was as follows:
Q “Paragraph 25, you talked about a meeting on 8 March?”
A “Mm”,
Q “That took some two hours did it?”
A “Mm”.
Q “Could you say yes or no?”
A “To the best of my knowledge it was a very long meeting and it took in the order of two hours.”
Q “You just have to say yes or no for the purpose of the record, that is what I am suggesting, if you only want to say yes or no?”
A “Yes”.
Q “Can I suggest you do not have any real recollection of the conversation that took place at that meeting?”
A “No I can’t, no I don’t.”
Q “And you cannot, I suggest, say that Ms Moreland argued every point?”
A “I believe I can say that. I say that because there were I think, again from my memory without looking at the affidavit, five or six points that were discussed, and five or six paragraphs that were discussed, each of one subject, and the meeting took a very, very long time to discuss that small number of points.”
Q “Well, she did not agree with the criticisms in the five or six points, is that what you are saying?”
A “She - true”.
It is significant that it was not put to Mr Kimpton that what he had said about the meeting being very long, and the applicant arguing every point, word by word, and making it a very semantic argument, was incorrect. Nor was it put that his evidence in cross-examination about the detailed discussion was wrong. All that was put by counsel for the applicant, apart from some questions as to his memory, was that Ms Moreland did not agree with the criticisms.
In these circumstances, I accept Mr Kimpton’s version of what occurred at that meeting - namely, that there was a very detailed discussion about each of the specific criticisms of Ms Moreland’s performance, as set out in his memo of 4 March 1994.
My opinion in this regard is reinforced by the failure of Ms Moreland to refer to the meeting of 8 March 1994 in her first affidavit in which she said:
“on 8 March 1994 I again sought clarification as to the ways in which my performance was inadequate. (a reference to her memo of that date). I received no satisfactory response to this request.”
My finding in this regard is also reinforced by the existence of Mr Kimpton’s’ memo dated 9 March 1994, which is a clear reference to the meeting of 8 March 1994. In that memo he said, “I believe everything was clarified yesterday in our two meetings.”
Meeting and letter of 21 March 1994 and the correspondence of 22 March 1994 and 24 March 1994
On 21 March 1994 there was a meeting between the applicant, Mr Kimpton and Mr Cheel. At that meeting the applicant was given three documents. These were:
1. A detailed two page letter from Mr Kimpton dated 21 March 1994 (Annexure ‘F’ to Exhibit ‘B’);
2. A “performance commitment” setting out various objectives/targets together with the level of achievement and/or the time frame in which those objectives/targets were to be met.(Annexure ‘G’)
3. A document entitled “confirmation of employee discussion” making reference to the detailed letter of 21 March 1994 ( Annex ‘H’)
In the letter dated 21 March 1994 (which was dictated on 18 March 1994 before the meeting of 21 March 1994) Mr Kimpton refers to the earlier correspondence. He makes reference to the objectives that he set for the applicant, and comments on her achievements of those objectives.
The first topic that he addressed in that letter was “your acceptance of the restructure of the organisation and a positive contribution towards its success.”
In that regard, Mr Kimpton made reference to a Service Managers meeting, which was a five day seminar commencing on 16 March 1994. Mr Kimpton criticised the applicant’s presentation at that seminar. In paragraph 30 of his affidavit he noted that in the attendee feedback survey the overall conference was rated 8.6 on a scale of 10, but that the applicant’s presentation had been rated poorly at only 4.6.
In relation of the question of completing tasks on time and advising people when that cannot be done Mr Kimpton made reference to the non-delivery of loan phones.
Loan phones are held in the supply centres, and are to be issued to customers when their phones are in for repair. Clearly, the availability of such phones can well be important from a public relations and sales point of view.
There had been a long standing problem with the provision of loan phones. Mr Kimpton makes the point that, as of 17 March 1994, the loan phones had not been delivered - despite him making commitments based on the applicant’s promises to him that they would be delivered. There had been a particular problem in late February and early March.
Mr Kimpton was clearly very dissatisfied with the applicant’s attempts to rectify the problem. However, in paragraph 19 of her affidavit of 14 December 1994, the applicant directly addressed that issue. She said:
“In relation to the loan phones, in late February and early March 1993 I went through the steps required to supply the loan phones to the service centres. On Friday 11 March 1994 I sent an e-mail message to Mr Chris Pitstock, at the warehouse responsible for distributing the phones, requesting confirmation that the phones had in fact been shipped to the state office. The same day I received a telephone call from Mr Pitstock advising that the phones had in fact been dispatched. It was not until 17 March 1994 that I was advised that in fact this was not the case. As soon as I was advised of this, I again contacted Mr Pitstock. Mr Pitstock subsequently on the same day telephoned me and advised that a mistake had been made at the warehouse.”
It was reasonable for the applicant to rely on the word of the person responsible for distributing the phones. In the absence of any evidence from Mr Pitstock disputing what the applicant said I accept her explanation.
In other words, the applicant did not refer the problem up to Mr Kimpton (the Optus word for this referral up the management chain is “escalate”) because she believed, on the word of Mr Pitstock, that the problem had been solved. On analysis, Mr Kimpton’s criticism in this respect was not soundly based.
In that letter dated 21 March 1994, Mr Kimpton also made reference to the need to ensure that communications are clear and understood, and for the applicant to:
“develop your skills as a team player, recognise the importance of the extended team and the need to develop and cultivate relationships. You will need to support the integrity of the team by not broadcasting inappropriate issues ( ie, non work specific issues).”
In respect of both of the above matters Mr Kimpton was unable to specify any particular problem except that the applicant’s performance at the managers’ seminar had not demonstrated an ability to communicate, and nor did it demonstrate leadership and that she was a team player.
This is not a particularly strong criticism.
Mr Kimpton also made it clear that the applicant was to develop what are called “documents of understanding” - an instruction first given to the applicant in his letter of 4 March 1994.
The provision of these documents of understanding was to become important in the following months. As can be seen from the letter of 21 March 1994, together with the performance commitment document which stated it as the first “objective/target” to be met, it was clearly spelt out to the applicant that the documents of understanding in respect of four suppliers, NEC, Motorola, Nokia and Ericsson, were expected to be “written and agreed by suppliers and circulated to State managers by 30 May 1994.”
The direction in the letter was clear and specific: “You will develop documents of understanding to use as a basis of common understanding. You will focus on the problems with NEC in South Australia.”
Documents of Understanding are plain English documents setting out the basis of a commercial relationship between one party and another.
Finally, towards the end of that letter Mr Kimpton said this:
“It is not possible to run a two person organisation when one person is not carrying a fair share, and is not demonstrating a performance level, or a commitment to the Optus values appropriate to the position. This then becomes a first formal warning.”
Once again, the applicant was clearly put on notice that her continued employment was in jeopardy.
On 24 March 1994 Mr Kimpton sent the applicant a further clarification of the matters he had raised in his letter of 21 March 1994 and at the meeting of that date. The effect of that second letter was to set further specific time frames by which the applicant had to meet key performance criteria or work objectives.
The meeting of 5 April 1994
Mr Cheel referred to this meeting in paragraphs 17 and 18 of his affidavit of 6th December 1994 (Exhibit D). Those paragraphs are as follows:
“17. From 2.00 pm until 3.30 pm on 5th April 1994 I met with Carol Moreland at her request to discuss the contents of the letter from Gordon Kimpton of 24 March 1994. Early in the course of this meeting with Carol Moreland we had a discussion in words to this effect:
Moreland: ‘I don’t necessarily believe that you are that impartial in the process and it is a concern to me.’
Cheel: “In these sessions I’m here to ensure that the discussions are fair and objective, that both parties get equal opportunity to express their views. At the same time, if it is necessary I’ll contribute to the meetings and for my understanding I’ll ask questions of either you or Gordon to ensure I understand the issues between you. My role is therefore one of an observer and also an active participant in the process.’
“18. Carol Moreland then addressed the letter from Gordon Kimpton of 24 March and told me she needed clarification on the points in the letter and that she disagreed with some other points. I asked her to identify all points of disagreement she had with the letter and her reasons for her disagreement in each case. I then agreed to set another meeting with Gordon Kimpton so that she could clarify the points raised at this meeting. I pointed out that, once Gordon had clarified the issues she identified, she was to take those issues on board and work through them to meet the objectives. She agreed to this.”
The applicant referred to the meeting in both of her affidavits. In paragraph 19 of her affidavit of 18 November 1994 (Exhibit B) she said:
“On 5th April 1994, I advised Mr Cheel that I believed my relationship with Mr Kimpton had deteriorated to the stage where an independent mediator was needed. I was advised by Mr Cheel that this was not necessary.”
In paragraph 54 of her affidavit made 14th December 1994 (Exhibit G) the applicant said this:
“In relation to paragraph 17 of Mr Cheel’s affidavit, I say that at the meeting referred to I suggested an independent mediator be brought in, and I offered to pay the cost of any such mediator. This suggestion was rejected by Mr Cheel.”
Mr Cheel was cross-examined about that meeting. However, it was not put to him at all that his version of the events was wrong, except for a couple of grammatical errors in the report of a conversation with the applicant.
I therefore accept his version of the meeting as set out in paragraph 17 and 18 of his affidavit.
Mr Cheel’s evidence therefore established that the purpose of the meeting of 7th April 1994, which was arranged as a result of the meeting of 5th April 1994, was to discuss in detail Mr Kimpton’s letter of 24th March 1994 to the applicant.
On the question of the impracticality of the reinstatement of the applicant, it is important that the applicant herself agrees that by 5th April 1994 her relationship with Mr Kimpton (her immediate supervisor) ‘had deteriorated to the state where an independent mediator was needed.’The meeting and correspondence of 7 April 1994
The persons present at the meeting of 7 April 1994 were the applicant, Mr Cheel, and Mr Kimpton. This meeting was a follow up to the meeting which had been held on 5 April 1994 between the applicant and Mr Cheel. The purpose of the meeting was to discuss Mr Kimpton’s letter of 24 March 1994 to the applicant. It seems that his letter of 21 March 1994 was also discussed.
Mr Cheel dealt with that meeting in paragraphs 19 and 20 of his affidavit. Those paragraphs are as follows:
“From 9.00 am until 10.00 am on 7 April I met with Carol Moreland and Gordon Kimpton. I asked Carol to go through the letter point by point and ask questions for clarification and put her point of view concerning each matter. Gordon at my suggestion then addressed each of these issues and clarified and elaborated where required. There were some points upon which Gordon conceded and accepted Carol’s view. However, the bulk of the issues highlighted in the letter remained concerns and the central issues of concern to Gordon and I remained unchanged. I emphasised that the objectives were still required to be satisfied.
“During the meeting Carol Moreland said ‘I find it very difficult to work for Gordon as I do not like him and I feel the feeling is mutual.’ I explained to Carol that she did not necessarily have to like the people she worked for and with, but she had to be professional and she was expected to be professional in all dealings with both fellow employees and customers. Based on Carol’s comments I suggested she and Gordon Kimpton meet weekly to ensure that they were ‘up to speed’ on any work related issues or developments. This was agreed and accepted by both of them.”
He was not cross examined on the contents of that part of his affidavit, and I therefore accept what he said.
It is important to note that, that being the case, it is clear that the letter of 24 March 1994 (and also the letter of 21 March 1994 which is referred to in the correspondence of 7 April 1994 from Mr Cheel to the applicant), were discussed in considerable detail.
Once again, the applicant expressed strong feelings about being unable to work with Mr Kimpton. This is, once again, relevant to the question of the impracticality of reinstatement.
The letter of 7 April 1994 to the applicant from Mr Cheel set out what is described as “some of the key action points agreed between yourself and Gordon” at the meeting of that date. These were quite specific.
The meeting of 9 May 1994
It had been agreed that Mr Kimpton and the applicant would have regular meetings, on Mondays. One of these occurred on 9 May 1994.
In paragraph 25 of her affidavit made 18 November 1994 (Exhibit B) the applicant said this:
“At the performance review meeting of 9 May 1994, Mr Kimpton gave me three possible options:
a) To transfer to another area of Optus.
b) To transfer to another area in mobile marketing.
c) To accept a “golden handshake” to leave Optus.
At the meeting I expressed a strong preference to transfer to another area in Optus.”
She was not cross examined about that part of her affidavit, and nor did Mr Kimpton give any evidence to the contrary. In fact, Mr Kimpton gave no evidence at all about the meeting of 9 May 1994, neither orally nor in his affidavit.
I therefore accept Ms Moreland’s version of the events, it being completely uncontested.
It is thus perfectly plain that, at least by 9 May 1994, Mr Kimpton no longer wished the applicant to work in the job that she had been working in.
The applicant also, in paragraph 26 of her affidavit, says that on 12 May 1994 Mr Cheel telephoned her to advise her that a transfer was not an option and to recommend that she resign from Optus. Mr Cheel denied saying any such thing in his evidence.
However, such a telephone call would be entirely consistent with what Mr Kimpton had said on 9 May 1994. I therefore, on balance, accept the applicant’s version, and find that Mr Cheel did recommend that the applicant resign from Optus.
The meeting and documents of 24 May 1994
There was a meeting on 24 May 1994 between the applicant, Mr Kimpton, and Mr Cheel. In his affidavit (Exhibit F) Mr Cheel said this about that meeting:
“Six Monthly Performance Review”
“41. On 24 May, I completed Carol Moreland’s performance review for the second half of the financial year. My review required an assessment of the performance goals that Carol had set for herself several weeks earlier and which set out in the “performance plan”...
“42. This was done as part of a performance review through the whole of Optus. I assessed Carol’s performance as ‘I rating’. This means a performance that fails to meet the job requirements reflecting serious under achievement. In the interview relating to the assessment, Carol agreed that this was the rating she expected and when asked to sign the document and return it to me as evidence of her having seen the document, she said she would sign it and return it the next morning. The document has never been returned to me.”
Mr Kimpton said, in relation to the document that he gave Ms Moreland at that meeting, “The document has never been returned to me”. This is clearly the case. However, that document was Annexure 2 to the affidavit of Mr Cheel. It was, therefore, in the possession of Optus. It was certainly not the applicant’s fault that it didn’t get to Mr Kimpton.
When he was cross-examined, Mr Kimpton agreed that, not only had he not seen that document (with the applicant’s responses to his criticisms) prior to the termination of her employment, he had still not seen it. I asked him these questions:
Q. The idea of the blank spaces is for the employee to respond?
A. Yes that’s correct.
Q. Because they are your thoughts, the primary person to whom the employee is to respond is you?
A. That’s right.
Q. In the normal course it would be you that would be expected to get that document so that you could consider, or perhaps reconsider, your thoughts, in the light of the employee’s responses, is that right?
A. That’s correct.
Q. Well, do you know why the document did not ever reach you?
A. I have no idea. It was asked for on a number of occasions.
The fact that the applicant’s responses never reached Mr Kimpton was obviously not her fault. It was the result of a failure in the procedures of Optus. The consequences of that are discussed below, in the context of the failure of the respondent to abide by the provisions of section 170DC of the Act.
After the meeting on 24 May 1994, Mr Kimpton sent a letter to the appellant. This was described in the letter as a “second formal warning.”
Mr Kimpton referred to the performance review document given to the applicant earlier that day, and reiterated that her performance was unsatisfactory. On a scale of one to five her performance had been assessed at “one”, which is defined as “performance which fails to meet job requirements, reflecting serious under achievement.”
Mr Kimpton also referred to two tasks which were set in the previous week which were incomplete or inadequate.
Mr Kimpton also said “there was nothing to indicate improvements in relationships.”
He said “the formal documentation will follow this note. We will review your performance again on June 9 at 10.00 am.”
The “Final Notice” of 30 May 1994
On 30 May 1994, Mr Cheel sent the applicant what was termed a “Final Notice”. This document made reference to the performance plan which Mr Kimpton had discussed with the applicant on 24 May, and to previous letters to Mr Kimpton outlining performance issues and expected performance standards. It was basically a reiteration of the document sent in the afternoon of 24 May 1994, and was probably the “formal documentation” referred to by Mr Kimpton in that document.
The meeting of 1 June 1994
On 1 June 1994 there was a meeting between Mr Cheel and the applicant to, as Mr Cheel said in his affidavit, “discuss her concerns with the matter raised in the meeting of 24 May.” In paragraph 25 of his affidavit, Mr Cheel said:
“25. She indicated that she disagreed with Gordon Kimpton’s conclusions. I asked her to highlight each point of concern and to clarify why it was a concern. I then agreed to call a meeting between Carol and Gordon to clarify any misunderstandings”
That part of his affidavit was not contested by the applicant, and I accept what he says.
The meeting of 7 June 1994
On 7 June 1994 there was a meeting between the applicant, Mr Kimpton, and Mr Cheel. In paragraph 29 of her affidavit of 18 November 1994 (Exhibit B) the applicant said this:
“On 7 June 1994 my performance review rating of (1) was discussed extensively with Mr Kimpton and Mr Cheel. No consensus was reached. I was advised that my options were to resign or have my employment terminated. I was urged to resign.”
It was clear that the meeting was a lengthy one. It went from about 4.00 pm to about 6.00 pm on that date.
In cross-examination, Mr Kimpton was asked these questions:
Q. Do you remember what was said about the documents of understanding at that meeting on 7 June?
A. On 7th June we discussed that one topic in her performance review for over an hour; where were they, why weren’t they presented, were they complete, why hadn’t Gordon seen them? When I say “we”, the meeting was Peter Cheel and myself and Carol, and we discussed that over and over again and Carol did not have the documents of understanding and was unable to present them at that meeting.
Q. Well I suggest to you that she did have the documents of understanding and wanted to present them at the meeting.?
A Well, it would have been very easy for her to do it because she was continually asked, “where are they”.
Q You would not accept them at that meeting, would you?
A I was not given the opportunity to accept them; she did not have them.”
Mr Cheel was also cross examined about the events of that meeting of 7 June 1994, as follows:
Q You gave the final warning on 24 May. Is that right?
A That’s correct.
Q By 9 June you had terminated Ms Moreland?
A That’s correct.
Q. What had happened in the meantime to precipitate that?
A She had had meetings with Mr Kimpton concerning her objectives and I guess at the meeting of 7 June it became patently clear that she had not achieved those objectives.
Q Do you remember which objectives they were that she had not achieved?
A Yes, one of them was the documents of understanding. The expectation there was that she would have completed all the documents of understanding and to the absolute completion stage and have circulated them with the suppliers, all the suppliers and that objective which was, as we’ve discussed previously in the sequence of these events, was a major objective. That objective was completely incomplete - sorry, was incomplete.
A I can’t recall anything specific in addition to those two, but those were two major considerations.
It is the applicant’s case that she had given Mr Kimpton draft documents of understanding in May as follows:
- In regards to Nokia on about 11 May 1994.
- In regards to NEC on about 18 May 1994.
- In regards to Motorola on about 26 May 1994.
- In regards to Ericsson on about 28 May 1994.
It is the Applicant’s case that, in so doing, she had carried out the performance commitments as per her performance plan.
However, her performance plan required her to, not supply Mr Kimpton with draft documents of understanding by 30 May 1994, but to have documents of understanding written and agreed by suppliers and circulated to State Manager’s by 30 May 1994.
It appears that the applicant is under the (incorrect) impression that she had carried out the requirements of that part of her performance plan by supplying Mr Kimpton with draft documents. That is obviously not the case. She clearly failed in what had been expressed to her (in very direct terms) as an important part of her work requirements.
It is still necessary to determine whether or not she had given draft documents to Mr Kimpton. I do not accept that she had. By all accounts, there was a very lengthy discussion as to her failure to provide documents of understanding at the meeting on 7 June 1994. If she had provided Mr Kimpton with, at least draft, documents of understanding by that date, the discussion would not have been necessary, and would not have occurred. I therefore do not accept what she says about providing Mr Kimpton with draft documents of understanding.
To reiterate, even if she had done that, she would still have been well short of that which was (quite reasonably) required of her. It is also important to note that she was first asked to draft these documents of understanding on 4 March 1994 - it terms which, at least by the end of March, gave her to understand that these were important documents, and yet, even on her evidence, she did not get around to providing even draft documents to Mr Kimpton until, in some cases, late May 1994.
At the meeting on 7 June 1994, the applicant was given the option of resigning (and thereby getting a more favourable termination package) or being dismissed. She had until 9 June to decide.
The meeting of 9 June 1994.
At this meeting, the applicant told Mr Cheel and Mr Kimpton that she would not resign. Her employment was thereupon terminated.
WAS THE DECISION TO TERMINATE THE APPLICANT’S EMPLOYMENT BREACH OF SECTION 170DC OF THE ACT?
Section 170DC of the Act is as follows:
“An employer must not terminate an employee’s employment for reasons related to the employee’s conduct or performance unless:
(a) the employee 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.”
In Nicolson v Heaven and Earth Gallery Pty Limited (1994) 126 ALR 233 Wilcox CJ said, in respect of section 170DC of the Act:
“The paragraph does not require any particular formalities. But this does not mean that it is unimportant or capable of perfunctory satisfaction. Section 170DC carries into Australian labour law a fundamental component of the concept known to lawyers as “natural justice” or, more recently, “procedural fairness”. The relevant principle is that a person should not exercise legal power over another, to that person’s disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. The principle is well established in public administrative law. It was accepted in international labour law when Article 7 was inserted in the Termination of Employment Convention. Section 170DC is directly modelled on Article 7. The principle is, I believe, well understood in the community. It represents part of what Australians call “a fair go”. In the context of section 170DC it is not to be treated lightly. The employee is to be given an opportunity to defend himself or herself “against allegations made”, that is, the particular allegations of misconduct or poor performance that are putting the employee’s job at risk.”
The opportunity for an employee to defend himself or herself must be a real one. If, through a failure in the procedures of an employer, the employee’s response is not considered by the responsible manager, then the employee has not been given ‘the opportunity to defend himself or herself against the allegations made.”
That is what happened here.The performance appraisal given to the applicant by Mr Kimpton, and the applicant’s responses became Exhibit Z. Exhibit Z is a version of the original document which was “redone” by the applicant during the trial of this case, because the photocopies of the original of that document (which was annexed to Mr Cheel’s affidavit, and had, all along, been in the possession of the respondent) were barely legible. It was agreed between the parties that the applicant’s typing of her original handwritten comments was accurate.
In her written responses, the applicant strongly disputed all of the criticisms made by Mr Kimpton, and, importantly in the context of this case, provided explanations for many of the criticisms. Those explanations were not considered, because of the failure of the procedures of Optus.
In the face of this fact, the lengthy counselling process was of little value. The meeting of 24 May, and the written criticisms given to the applicant by Mr Kimpton, were of crucial importance in the determination of the applicant’s future at Optus. The applicant’s written responses to the criticisms made of her by Mr Kimpton in the six monthly performance review process simply never reached him - and were therefore never considered by him.
For that reason, the termination of the employment of the applicant was a breach of Section 170DC of the Act. The failure of the Optus management to ensure that the applicant’s responses were considered by the manager with the responsibility to decide the question of whether or not the applicant’s employment was to be terminated rendered nugatory all of the procedures which the respondent had followed, and made the subsequent discussions between the applicant, Mr Cheel, and Mr Kimpton virtually meaningless.
WAS THE DECISION TO TERMINATE THE APPLICANT’S EMPLOYMENT A BREACH OF SECTION 170DE OF THE ACT?
It is the applicant’s case that Mr Cheel and Mr Kimpton had been, for a considerable time prior to June 1994, bent on terminating her employment. It is the applicant’s case that the procedures through which she and the Respondent went were, in large measure, a sham, in an attempt to disguise the decision that had already been made to terminate her employment.
The respondent denies this, and says that, at all times, Mr Cheel and Mr Kimpton were open to a change in the applicant’s performance. When her performance continued to be unsatisfactory, despite warnings, her employment was terminated.
It is clear that, from at least February 1994, both Mr Kimpton and Mr Cheel had very serious reservations about the applicant’s ability to perform her job. Nonetheless, a very lengthy counselling process was entered into. I do not accept that, as early as February 1994, they had made up their minds.
However, I do accept that had made up their minds by the meeting on 24 May 1994.Although it was not ultimately Mr Cheel’s responsibility to terminate the employment of the applicant (that responsibility was Mr Kimpton’s) he was clearly an active participant, together with Mr Kimpton, in the decision to terminate her employment. For practical purposes, it was a joint decision.
As set out above, there were two principal reasons, in Mr Cheel’s opinion, for the decision to terminate the employment of the applicant - her failure to complete the documents of understanding on time, and the fact that there had not been any significant improvement in her relationships at work and with external people.
In particular, Mr Cheel asserted that one of the reasons he agreed with the termination of the applicant’s employment was because there had been no improvement in the applicant’s relationships, both externally (the suppliers and the service centres), and internally, since 24 May 1994.
It is tempting to accept Mr Cheel’s assertion at face value. However, upon investigation, it was apparent that Mr Cheel had made no attempt at all to investigate the question of whether or not her relationships with outside people and at work had improved in that period.
At the end of re-examination, I asked him these questions:
Q. You say you gave evidence that there were two principal considerations leading to the termination of her employment, one, the documents of understanding were not completed and you regarded that as a major matter, is that right?
A. Absolutely, primary matter.
Q. That was the primary matter, rather than one of two, is that...?
A. No, it was well it was a major matter.
Q. Also, the second factor, “major consideration”, to use your words, was that, “Her relationships with external and internal people had not improved”?
A. That’s correct.
Q. In particular, they had not improved between 24 May and 7 June?
A. That’s correct.
Q. Because the decision was made on 7 June, is that right?
A. That’s correct.
Q. What investigations did you make in respect of the question of the improvement or non-improvement of her relationships with external and internal people between 24 May and 7 June, if any?
A. I didn’t make specific inquiries myself, I guess just to qualify that, I would not have seen it as my role to have made inquiries, that would have been the role of Mr Kimpton.
The admitted failure of Mr Cheel to make any investigations between 24 May and 7 June 1994 reveals that he had already made up his mind. It follows from this that, at least as far as Mr Cheel was concerned, the written warnings given on 24 May and 30 May 1994 as to the need to improve her relationships were a sham.
Mr Kimpton was in the United States from 27 May 1994 until 6 June 1994. He gave no evidence of any investigations that he made in the very short time since his return in respect of any improvement in the applicant’s relationship externally, and at work. It follows that he simply accepted that the situation on 7 June 1994 was unchanged from that on 24 May 1994.
That may well have been the case - but that is not the point. Both Mr Kimpton and Mr Cheel had an obligation to investigate the situation, in fairness to the applicant, and not simply assume that nothing had changed.
In Gregory -v- Philip Morris Ltd (1988) 24 IR 397, their Honours Wilcox and Ryan JJ, in considering a clause in a Federal award which prohibited the dismissal of an employee if that dismissal was “harsh unjust or unreasonable” said, at 413:
“We accept that, if the relevant facts are not clear, it is the obligation of an employer bound by a provision such as (the clause in question) to establish those facts before dismissing an employee”.
They went on to say: “...provided that the employer discharges the obligation to investigate the facts, a dismissal does not contravene the provision merely because it later appears that the true facts differ from those which appeared at the date of the decision to dismiss.”
In Wheeler -v- Philip Morris Ltd (1989) 32 IR 323, his Honour Gray J, in considering the meaning of the same clause, said, at 348:
“an inadequate investigation of the facts may lead to a conclusion that there has been a breach(of the clause), even if the facts do turn out favourably to the employer upon later investigation.”
That particular passage from the judgement of His Honour was cited with approval by their Honours Beaumont and Heerey JJ in Byrne -v- Australian Airlines Limited (1994) 52 IR 10, at page 38.
In Bostik (Australia) Pty Ltd -v- Gorgevski (1992) 36 FCR 20 his Honour, Gray J, said, at 34:
“An employer genuinely investigating an allegation of misconduct or neglect of duty, or some other act or omission which might provide a ground for dismissal, is required to carry out a proper investigation, and not merely to go through the motions. The employer is required to ascertain whether there are any mitigating factors, either associated with the alleged grounds for dismissal, or arising from the employee’s past record and future prospects.”
The above authorities, and the reasoning in them, compel me to the conclusion that the failure of the respondent to investigate whether or not the circumstances of the applicant’s relationships with her colleagues had changed between 24 May and 7 June 1994 (particularly in the light of the clearly expressed intention of the warning of 24 May, which was to give the applicant the opportunity to improve them) means that the dismissal of the applicant was procedurally unfair, and therefore “unjust” in the meaning of Section 170DE(2).
BUT FOR THE BREACHES OF 170DE(2) AND 170DC, WAS THERE A “VALID REASON” FOR THE TERMINATION OF THE APPLICANT’S EMPLOYMENT?
In my opinion, the answer to the above question is “Yes”.
The two reasons for the termination of the applicant’s employment were:
1) Poor working relationships, with the managers and other personnel in the Optus State Service Centres, with the managers and other personnel in the organisations supplying phones to Optus, and with her colleagues where she worked;
2) That she did not perform the tasks she was expected to perform - either through lack of ability, or as a result of not getting things done on time. In particular, she did not produce and circulate the documents of understanding.
The respondent has not proven that the applicant had poor relationships with the State Service Manager’s and the managers and other personnel at the suppliers. There was continual reference to the applicant’s relationships with these persons throughout the process leading up to the termination of her employment, and it was certainly regarded as a significant problem by Mr Cheel and Mr Kimpton.
However, in the absence of any evidence from the persons concerned, and in the face of the applicant’s assertion that, generally speaking, there were no problems with them, I am unable to conclude that the fact of the matter was that there was any substance in their complaints, or that any difficulties with them were somehow the fault of the applicant. If the respondent wished to prove those things, then it should have called those persons to give evidence. That was not done.
The above comment is not so much a result of any implications arising from the failure of a party to call evidence (see Jones v Dunkel (1958) 101 CLR 298) but rather a result of the simple lack of evidence on what could well have been an important plank in the respondent’s case. The onus is on the respondent to prove a valid reason for the termination of the applicant’s employment - not on the applicant to prove that there was not a valid reason for the termination of her employment. See section 170EDA(1)(a) of the Act.
It follows that those unproven assertions in the respondent’s case cannot be regarded as a “valid reason” for the termination of the applicant’s employment.
In saying this, I do not ignore the unchallenged evidence of Mr O’Connell, who said, in paragraph 10 of his affidavit (Exhibit E):
“From my experience with training, turnaround times, loan phones and parts it became clear to me that the relationship between Carol Moreland and the Optus suppliers was poor.”
In the absence of evidence from the suppliers, it is very difficult to evaluate the validity of that conclusion of Mr O’Connell.
However, it is clear that, at least in one limited respect, the respondent has made out its case. The applicant’s relationship with Mr Kimpton and Mr Cheel was very poor, even hostile. This was, on balance, principally the result of the Applicant’s combative style when presented with criticisms of her performance, and her tendency to react with anger to such criticisms. The incident in which she told Mr Cheel and Mr Kimpton that she felt that she had been “raped” is perhaps the most extreme example of her style, but it illustrates the point well.
Mr O’Connell, both in his affidavit and in his oral testimony, also made it clear that his working relationship with the applicant had broken down. He cited various examples of how and why that occurred. Mr O’Connell struck me as a careful and fair witness, indeed, one who was at pains to ensure that material favourable to the applicant of which he was aware was before the Court, and I give considerable weight to his evidence as to the breaking down of the working relationship with the applicant.
I find, therefore, that to the extent that the termination of the applicant’s employment was based on a poor relationship with Mr Kimpton, Mr Cheel, and Mr O’Connell, it would have been for a “valid reason”, but for the lack of procedural fairness referred to above.
I should add here that the applicant had clearly been put on notice that this question of relationships with her colleagues (not just externally but internally as well) was important. I accept that this had been made clear at the meeting of 23rd February 1994. Furthermore, in Mr Kimpton’s letter to the applicant of 4 March 1994 he said:
“You will need to develop your skills as a team player, recognise the importance of the extended team and the need to develop and cultivate relationships.”
The failure of the applicant to carry out her performance commitments in respect of the documents of understanding with the suppliers was a major matter. It had been expressed as such by her employer some months before her dismissal. She had not carried out, even on her own case, that which she was expected to do.
It follows that, but for the procedural unfairness of her dismissal, the respondent would have been legally entitled to terminate her employment.
There was a considerable amount of evidence is respect of specific aspects of the applicant’s performance of her job, which the respondent relied upon as tending to demonstrate that she was not performing her job competently. In view of the above findings, it is unnecessary for me to go through that body of evidence, and I therefore decline to do so.
SHOULD THE APPLICANT BE REINSTATED?
In my view, it would be impractical to order that the applicant be reinstated. This is for the following reasons:
1.It is clear that the working relationship between the applicant, on the one hand, and Mr Cheel and Mr Kimpton on the other hand, has been irrevocably poisoned. This is, in large measure, due to the applicant’s attitude when confronted with criticisms of her performance. Her working relationship with Mr O’Connell, although perhaps not “poisoned”, has certainly broken down.
2.In the face of my finding that the respondent had a valid reason to terminate the employment of the Applicant, and that the termination would, therefore, have been lawful but for its procedural unfairness, reinstatement would be “impractical”.
WHAT IS THE EFFECT OF TAXATION ON THE AMOUNT OF COMPENSATION TO BE AWARDED?
This has to be determined, because whether or not compensation is subject to tax determines the basis upon which it is calculated, and the amount which is to be ordered.
If compensation is subject to tax, then it is not to be “grossed up” by allowing for the deduction of tax.
See British Transport Commission v Gourley [1956] A.C 185, Cullen v Trappel (1980) 146 CLR 1, Wheeler v Philip Morris Ltd (1989) 32 IR 323, at pp 352-353.
In 1984 the Income Tax Assessment Act was amended to establish a new taxation regime for lump sum and similar payments upon retirement, resignation and dismissal. The provisions of Subdivision AA of Part III of that Act now include in assessable income any “eligible termination payment.” Section 27A(1) includes in the definitions of various phrases the definition of “eligible termination payment”. It is defined as meaning “any payment made in respect to the taxpayer in consequence of the termination of any employment of the taxpayer...”. Section 27A(3) provides that a payment is an eligible termination payment whether it is made voluntarily, by agreement or by compulsion of law.
As stated above, a payment is an “eligible termination payment” if it is made “in consequence of the termination of any employment.” In McIntosh v FCT 79 ATC 4, 325, the full Federal Court cited (at 4,327-8) the High Court in Reseck v FCT (1975) 133 CLR 45 as follows:
“Within the ordinary meaning of the words a sum is paid in consequence of the termination of employment when the payment follows as an effect or result of the termination. In the present case the payment did follow as a result of the termination of the taxpayer’s services. It is not in my opinion necessary that the termination of the services should be the dominant cause of the payment....
“To say that a payment ‘follows as an effect or result of the termination’ imports causation as the relevant nexus between the termination and the payment, but it is clear that termination need not be the dominant cause of the payment.”
In cases such as the present, it may be argued that the dominant cause of the payment is the order of the Court. Whether or not that be the case, it is clear that, but for the (unlawful) termination of the applicant’s employment, the order for compensation would not be made, and the payment, therefore, would not be made to the applicant by the respondent. Therefore, the payment of compensation ordered by the Court is a payment made “in consequence of the termination of (the) employment of the (applicant) taxpayer...”.
It therefore follows that payments made to applicants in proceedings such as these, by way of compensation, are “eligible termination payments” in the meaning of section 27A(1) of the Income Tax Assessment Act 1936.
It follows from that that they are to be regarded as taxable income, and that applicants receiving compensation for unlawful termination should receive them calculated according to rates of gross earnings, rather than earnings after tax.
WHAT AMOUNT OF COMPENSATION, IF ANY, SHOULD BE AWARDED TO THE APPLICANT FOR THE UNLAWFUL TERMINATION OF HER EMPLOYMENT?
The amount of compensation to be awarded is affected by the fact that, but for the procedural unfairness, the respondent would have been entitled to terminate the applicant’s employment.
In Nicolson v Heaven and Earth Gallery Pty Ltd (cited above) his Honour, Wilcox CJ, canvassed various authorities relevant to the question of the quantum of damages to be awarded for a breach of section 170DC of the Act (i.e. where there has been a breach of the requirements of procedural fairness laid down by the Act but there was an underlying valid reason for the termination of the applicant’s employment). He said, at page 246 of the report:
“They lead me to conclude that in assessing compensation for a breach of section 170DC, it is appropriate to consider what would have been likely to occur if that breach had not occurred. It should not be assumed that the employee would have been dismissed anyway. Such an assumption ignores the rationale of procedural fairness and everyday experience that decision-makers often change their minds when presented with another side of a case. It devalues section 170DC to the point of redundancy.
“On the other hand, it would be unrealistic for a Court automatically to assume that, if this employer had complied with section 170DC, the employee’s employment would have continued indefinitely.
“The statement of Sheppard and Heery JJ in Bostik, that ‘the respondent had substantial security in his employment’, was a comment about that case. It was not intended as a proposition of universal application.”
In Byrne and Frew v Australian Airlines Limited, (cited above) Black CJ, in considering the meaning of the phrase “harsh, unjust and unreasonable” in a Federal award, said, at page 17:
“It is plain that [the clause] was intended to protect employees and to provide them with very much greater security of employment than they had previously had under Federal awards. That purpose is one of substantial social and industrial significance because the consequences of dismissal from employment may be devastating to the person dismissed and his or her family.”
I approach this case in the light of what his Honour Wilcox said in Nicolson and what his Honour Black CJ said in Byrne and Frew.
In my opinion, it is likely that, if the respondent had followed the proper procedures in terminating the applicant’s employment, it is likely that the applicant’s employment would have been terminated sometime in the few months after early June 1994. This operates to reduce the amount of compensation that she will receive, as it reduces the amount of remuneration that the applicant “would have been likely to have received if the employer had not terminated [her]employment” (see section 170EE(3)).
When her employment was terminated, the applicant was earning a salary of $48, 500.00.
She gave evidence that she had been working in her own business in project managing and consulting since the termination of her employment, and that she had earnt a total of $15,915.00 in that business since she was dismissed. She said that, in respect of work in progress, she had about another $1,000.00 to $1,500.00 worth of work to invoice. This was as at 15 December 1994. In round figures, that is the sum of $17,000.00 of the period of the last six months. She also gave evidence that she has received no other income since the termination of her employment. It is reasonable to assume that she has continued earning at about the same rate since she gave evidence on 15 December 1994. Of course, if she had remained in employment, she would have received $24,250.00 in the six month period up to 9 December 1994. No evidence was adduced from the applicant as to the cost to her of earning that income, and it is impossible for me to guess. But she is working from home, and I would expect that her work-related expenses would not be great.
I take into account the fact that the applicant has been earning an income since the termination of her employment as a consideration tending to reduce the amount of compensation she will be awarded.
The maximum amount of compensation that I can award is limited by section 170EE(3) to
“the amount of the remuneration that would have been received by the employee in respect of the period of six months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect.”
In this case, that is a figure of $24, 250.00.
I have considered the relevant factors, as set out above. I also take into account the payments that the applicant received from the respondent upon the termination of her employment.
In all the circumstances, I consider that a round figure of $7,500.00 is an appropriate amount to order by way of compensation to the applicant. That amount is to be paid within 21 days of today.
______________________________________________________________________
REPRESENTATION
Solicitor for the Applicant: C. Howell, Geoffrey Edwards & Co
Counsel for the Applicant: S. Crawshaw
Solicitor for the Respondent: P. Hayward, Minter Ellison Morris Fletcher
Counsel for the Respondent: P. KiteI certify that this and the preceding thirty three (33) pages are a true copy of the Reasons for Judgment of Judicial Registrar Patch.
Associate: Julianne Taverner
Dated: 27 February 1995
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