Cohen v D.C. Marine Engine Services Pty Ltd

[1996] IRCA 157

DECISION NO:  157/96

CATCHWORDS

INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - whether termination for VALID REASON  of OPERATIONAL REQUIREMENTS - whether HARSH UNJUST OR UNREASONABLE - COMPENSATION

Industrial Relations Act 1988, ss 170EA, 170DE(1), 170DE(2), 170DC, 170EE

GREGORY STEPHEN COHEN v D.C. MARINE ENGINE SERVICES PTY LTD
VI 4629 of 1995

Before:  PARKINSON JR
Place:  MELBOURNE
Date:  1 MAY 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4629 of 1995

B E T W E E N:

Gregory Stephen COHEN
Applicant

A N D

D. C. MARINE ENGINE SERVICES PTY LTD
Respondent

REASONS FOR DECISION

1 May 1996  PARKINSON JR

This is a decision in relation to an application made pursuant to s170EA of the Industrial Relations Act 1988. The applicant was employed as sales engineer for the respondent’s marine and industrial engines business. The applicant is qualified as a diesel mechanic and has experience in engine services over many years. The business of the respondent is located at Mornington in Victoria and is a business which had been recently purchased by the respondent at the time of engaging the applicant.

The applicant was approached to join the respondent and was employed following discussions between the parties as to the role and objectives of the position, together with the applicant’s plans for implementation (exhibits R2 and R4). The applicant commenced employment on 8 August 1995.  The employment was terminated on 18 August 1995 and  was confirmed in writing by letter dated 21 August 1995. 

The applicant had originally become known to the respondent as a result of dealings between the managing director of the respondent, Mr Mooney, and the applicant’s former employer. Indeed the applicant had been formally approached and employed by letter dated 15 September 1994, when the respondent intended to takeover his then employer, Diesel Engine Machine Co. Such arrangements did not in the end eventuate.

The evidence of Mr Mooney, the managing director of the respondent and the person responsible for terminating the applicant’s employment, was that it became apparent to him that the applicant had not promoted the respondent’s desired sales direction and had achieved no new business in the time employed.

The respondent relied upon the fact that the applicant in its view spent the majority of his time in the office and at the premises of the respondent in the first weeks of employment, instead of being out on the road generating orders and sales. Mr Mooney’s evidence was that some of this knowledge was obtained through information supplied by his daughter who was working at the premises, and some through his own direct observation.  The reason given for the termination in the letter dated 23 August 1995 was “this termination has been brought about through lack of sales for parts and services” (exhibit R6 ).

The applicant disputes that he did not sell or that he did not get out to generate sales. He gave evidence of various orders which he says were generated by or settled by him in the limited period in which he had the opportunity to perform any work at all. His evidence was that it was necessary in the first week or so for him to familiarise himself with the administration of the business and to canvass some customers by telephone initially.

The fact of the matter is that the applicant was engaged to develop the business of the respondent in the sales area. The evidence was that the business had been allowed to run down by the previous owners and that the task was to develop and rebuild. The applicant was in my view given no opportunity to either implement any of the business development strategies or programs which he had identified in writing to the respondent prior to the employment.  It was put to the applicant in cross examination that in the two weeks he was employed he did not either increase gross sales or extend the product or service range. The applicant responded to this proposition by pointing to a number of steps taken by him to extend the business, including calling potential customers, visits to various marinas, and the placing of advertisements .

Aside from the criticism of the applicant that he spent too much time in the office, no example was given of a failure by the applicant to perform his duties or to perform his work properly. The applicant’s evidence was that in the initial stages of the employment it was necessary for him to spend a fair amount of time in the office.  No particular incident was relied upon to found the reason to terminate the employment. Mr Mooney gave evidence as to a loss of confidence that the applicant could perform the duties, but no evidence of a reasonable basis for this loss of confidence was forthcoming.

I accept the applicant’s evidence that he was informed on the Friday afternoon by the respondent that it could not afford to keep him on, and that an option as to a restructuring of his salary package was put to him. This the applicant did not immediately agree to, and indicated he would think about it over the weekend. On Monday at 7.00am he was telephoned and, I am satisfied, informed at that time by Mr Mooney that his employment was terminated.  I preferred the evidence of the applicant in these proceedings. The evidence of Mr Mooney was that he subsequently hired a person to replace the applicant at substantially less wages than what he was paying to the applicant. This outcome is consistent with the evidence of the applicant as to the circumstances of the termination.  The evidence does not satisfy me that the reason for the employment being terminated was as a result of the work performance of the applicant.

I am not satisfied that the respondent had a valid reason for the termination of the applicant’s employment.  The respondent has not satisfied me on balance that the applicant failed to perform his duties, or that his work performance was below standard, or that these factors were the reason for the termination of the employment.  I am satisfied that the termination of the employment was without valid reason.

S170DC and S170DE(2)
It is also appropriate to comment upon the application of s170DE(2) and S170DC to this case. The applicant was given no warning of the dissatisfaction of the respondent with his work performance, although discussions were held in the period as to the lack of work or ongoing orders. It was never put to the applicant in that time that the respondent viewed him as being responsible for this lack of work. In so far as work performance is relied upon by the respondent as the reason for termination of employment, the applicant was given no opportunity to explain his approach to the work tasks, nor was it ever suggested to him that he was not complying with the position requirements or description, or indeed with his own plan set out in exhibit R2.

The respondent’s action in terminating the employment after such a short period of time in employment in circumstances where a number of factors were apparently operating upon the delay in orders and custom, was unreasonable. This was not a case where there was any measurable outcome on which either the respondent or applicant could make an assessment of performance.  There was too little knowledge of the business in either party for this to be the case.

The termination of employment occurred in circumstances where the respondent seeks to rely upon imprecise and unreasonable performance criteria, imprecise because at no time in the proceedings or at any other time, was the level of sales which the respondent said ought to have been achieved, identified.

I do not accept that the applicant was given any opportunity to be heard in relation to the allegations made as to his work performance.  I accept the applicant’s evidence that such allegations were not put to him prior to the employment being terminated.

I am satisfied that the termination of the applicant’s employment was harsh, unjust and unreasonable and that in terminating the employment the respondent failed to comply with the provisions of s170DC and S170DE(2) of the Act. I turn now to consider the question of remedy.

S170EE - Remedy
The applicant and respondent both submit that an order for reinstatement would be impracticable. The applicant submits that this is so because of the circumstances of the termination of employment, and due to his having obtained  alternative employment.  Having regard to the length of the employment,  and the circumstances of the new employment, I am satisfied that an order for reinstatement would be impracticable. 

I turn now to consider the question of compensation. Whilst the applicant was employed for an extremely short period of time, the termination of his employment involved no fault and resulted from no conduct on his part.  In the circumstances, I am satisfied that an order for compensation ought be made.  I am of the view that the applicant was entitled to expect a reasonable period of notice of the respondent’s intentions regarding his ongoing employment.  This period, in view of the alternative employment and the applicant’s earnings in the period since the termination of employment, is an additional eight weeks.  That is the amount of compensation which will be ordered to be paid.    

The order of the court will be:

1. That the respondent pay to the applicant compensation in the sum of          $6461.00.

I certify that this and the preceding five (5) pages
are a true copy of the reasons for decision of
Judicial Registrar Parkinson.

Associate:
Dated:   1 May 1996

APPEARANCES

Applicant in person

Representative appearing for the respondent:               Mr G Haggar
  Australian Chamber of   Manufactures

Date of hearing:  4 March 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 4629 of 1995

B E T W E E N:

Gregory Stephen COHEN
Applicant

A N D

D. C. MARINE ENGINE SERVICES PTY LTD
Respondent

MINUTES OF ORDER

1 May 1996  PARKINSON JR

THE COURT ORDERS THAT:

1. The respondent pay to the applicant compensation in the sum of      $6461.00.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules