Diprose & National Union of Workers v Simplot Australia Pty Ltd

INDUSTRIAL RELATIONS COURT OF AUSTRALIA

INDUSTRIAL LAW - termination of employment - redundancies created by outsourcing - terminations without notice and without consultation - operational requirements - reinstatement - severance payments - assessment of compensation - paucity of evidence of economic loss since termination of employment - applicants deprived of the chance, rather than the certainty, of avoiding retrenchment - whether compensation may be awarded in respect of losses suffered later than 6 months from termination day - damages for shock and distress

Workplace Relations Act 1996 ss.170DC, 170DE(1), 170EA, 170EE

DIPROSE & OTHERS & NATIONAL UNION OF WORKERS -v- SIMPLOT AUSTRALIA PTY LIMITED

No. TI-1060/1065 of 1996

Ryan JR
Melbourne
3 October 1997

CASES:

Kenefick and Others v Australian Submarine Corporation Pty Ltd No 1, 62 IR at 107, Mitchell-Collins v The Latrobe Council (1995) 60 IR 480

Quality Bakers of Australia v Gouldings (1995) 60 IR 327

Jones v Department of Energy and Minerals (1995) 60 IR 304

Kenefick v Australian Submarine Corporation Pty Ltd (No 2) (1996) 65 IR 366

Johns v Gunns Limited (1995) 60 IR 258

Heidt v Chrysler Australia (1976) 26 FLR 257

Atkins v Kirkstall-Repco Pty Ltd (1957) 3 FLR 439

Thomas v Ralph Lynch trading as Bellingen Grocery (1996) 71 IR 307

Nettlefold v Kym Smoker Limited (1996) 69IR 390

Kerr v Jaroma Pty Ltd (1996) 70 IR 469

Gerard Westen v Union des Assurance de Paris (IRCA, unreported, Madgwick J, 23 December 1996)

Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371

Gibson v Bosmac Pty Ltd (1995) 60 IR 1

Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199

Liddell v Lembke (1994) 1 IRCR 466

Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186

Patterson v Newcrest Mining Limited (1996) 68 IR 419

May v Lilyvale Hotel Pty Ltd (1996) 68 IR 112

Perrin v Des Taylor Pty Ltd (1995) 58 IR 254

Cox v South Australian Meat Corporation (1995) 60 IR 294

Messervy v Maldoc Pty Ltd (1995) 63 IR 61

Kenefick and Others v Australian Submarine Corporation Pty Ltd (No 3) (IRCA, unreported, Wilcox CJ, 26 July 1996).

Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1 at 9

Burazin v Blacktown City Guardian (1996) 142 ALR 144 at 155

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY

TI-1060 of 1996

B E T W E E N :

GREGORY REX DIPROSE & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

TI-1061 of 1996

B E T W E E N :

GREGORY NEIL ANDERSON & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

TI-1062 of 1996

B E T W E E N :

DARRYL LANCE RIES & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

TI-1063 of 1996

B E T W E E N :

DAVID IAN BUCKLES & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

TI-1064 of 1996

B E T W E E N :

PHILIP JOHN ARNOLD & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

TI-1065 of 1996

B E T W E E N :

KELVIN WILLIAM HARDING & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

MINUTES OF ORDERS

Judicial Registrar Ryan 3 October 1997

THE COURT:

Declares the termination of employment on 25 October 1996 of Gregory Rex Diprose, Gregory Neil Anderson, Darryl Lance Ries, David Ian Buckles, Philip John Arnold and Kelvin William Harding unlawful and in breach of s170DC and s170DE(1) of the Workplace Relations Act 1996.

Finds the reinstatement of the applicants as employees impracticable.

Considers it appropriate in all the circumstances of each case to order compensation.

Allows the parties 14 days in which additional written submissions may be made on quantum of compensation.

Adjourns the matters for final orders to Melbourne at 10 am on Friday 31 October 1997.

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

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY

TI-1060/1063 of 1996

B E T W E E N :

DIPROSE & OTHERS & NATIONAL UNION OF WORKERS
Applicant

AND

SIMPLOT AUSTRALIA PTY LIMITED
Respondent

Ryan JR
Melbourne
3 October 1997

REASONS FOR JUDGMENT

OUTSOURCING

The Respondent is a food processing company with premises spread throughout Australia. The company is part of an international operation. The Respondent took over the Australian food processing business in September 1995.

On or about 25 October 1996 the Respondent terminated the employment of 129 employees at the Ulverstone plant in Tasmania. These employees had worked in the security, refrigeration, boiler, electrical and despatch departments. The terminations resulted from a decision to contract out or “outsource” the functions carried out by those departments. The decision also embraced the outsourcing of all work performed by casual employees at the Ulverstone plant.

The decision was part of a strategy to concentrate on core activities at Ulverstone. The plant manager, Mr Mark McKellar described the strategy thus:

“The underlying principle we applied was that the business should focus on its core activities and that non-core activities, where possible, should be outsourced. The core activities of the business were the manufacture and packaging of french fries and potato products. On that analysis, I determined that the business could outsource the following functions:

(a)      security;
(b)      despatch;
(c)      refrigeration;
(d)      electricians;
(e)      boilers; and
(f)       casuals.”

Six employees in the refrigeration department were made redundant immediately and were paid redundancy payments. Those six men and fourteen others have brought separate actions claiming unlawful termination of employment. Two of the applications are outstanding and twelve applications were dealt with on 30 June 1997 in Stones and Others and CEPU v Simplot Australia Pty Ltd, Nos. TI-1048/1059 of 1996. This judgment deals with the Applications made by the six men who had been employed in the refrigeration department.

BACKGROUND - DEMARCATION DISPUTES

The Respondent took over the Australian food processing operations, including Ulverstone, in September 1995. Demarcation issues were alleged to have been a long standing problem at Ulverstone where production, despatch, security and mechanical maintenance employees were members of AMWU, electricians were members of the CEPU, administrative employees were members of ASU, boiler employees were members of CFMEU, NUW and AMWU and refrigeration employees were stated to be members of NUW. In fact the eight of nine employees working in the refrigeration department were members of CFMEU until mid 1996 when the six Applicants were signed up by NUW. Two other employees in the refrigeration department, Derek Diprose and Carl Braun, remained members of CFMEU. The employment of those two employees was not terminated but the Respondent denies that the union membership of the six Applicants was a reason for the termination of the employment of any of the Applicants.

Mr McKellar stated that during his time as manager of the Ulverstone plant there had been a number of operational and industrial problems including:

(a) high labour costs due to overmanning and a lack of multi-skilling

(b)strict demarcations between work performed by sections of employees of particular trade background
(c)ongoing industrial disputes involving work stoppages over demarcations and inter-union fighting
(d)a lack of co-operation between employees from different unions

CONSIDERATION OF OUTSOURCING

Mr McKellar’s evidence continued as follows:

“Since about 30 May 1995, the Business has attempted to resolve these problems by holding meetings with the relevant union officials and union delegates to discuss the problems. However, despite management’s efforts, the discussions did not result in any of the matters being resolved.

In the period from about 20 June 1996 to the end of July 1996, there were constant work stoppages. The work stoppages were in relation to disputes over the implementation of 12-hour shifts and an inter-union dispute between the NUW, CFMEU and AMWU was also on-going.

In about June 1996, management started to explore the possibility of outsourcing a number of functions of the Business. From about this time, we made enquiries with labour hire contractors about the services they could provide and the cost of the services. These enquiries progressed slowly at first, however, as the industrial disputes escalated, the pace of my enquiries accelerated.

By early September 1996, management began to seriously consider the logistics of outsourcing a number of functions of the Business. We prepared a number of calculations of the savings that would be produced as a result of outsourcing specific functions.”

As Attachment A to his statement of evidence Mr McKellar tendered outsourcing cost benefit analyses (Options “X” and “Y”). Both options calculate savings from wide scale outsourcing and redundancies. In my judgment in Stones and Others and CEPU v Simplot Australia Pty Ltd I observed on page 4 that

“Both options and Mr McKellar’s evidence confirm that the Respondent was seriously considering outsourcing in June 1996 and had completed a preliminary but detailed analysis of savings by outsourcing the entire electricial function to Manpower Pty Ltd”

I now observe that Mr McKellar had also completed preliminary but detailed analyses of savings by outsourcing in respect of the refrigeration, boiler, security and despatch functions.

In this case, as in Stones, Mr McKellar attached an issues paper to his statement of evidence. (Annexure “B”). The issues paper attached to the statement of evidence in this case contains thirty-six issues under the headings of management responsibility, hours of work, consultation process, team design and work arrangements, and training.

Mr McKellar has stated that the document was first prepared on 4 September 1996 “as part of Simplot’s strategy to deal with the on-going problems with the Business and because the Business had started to consider the possibility of outsourcing”. He stated that

“the purpose of the document was for management to be able to put to the unions the issues that needed to be addressed and to give them an opportunity to respond and demonstrate that they could assist management make the necessary changes.

“the issues paper, among other things, identified the overmanning issues and foreshadowed that the Business wanted to implement a number of redundancies.”

In fact the issues paper was not at all specific in relation to “the overmanning issues”. Only two of the thirty-six issues, issues 1.8 and 1.9, under the heading of “Management Responsibility”, refer to overmanning or redundancies, and then only in general terms.

Issue 1.8 reads as follows, “Overall Simplot Manning numbers to be significantly reduced.” Beside that issue, and under the heading of “Reasons” appears the following:

“Rationalise numbers on-site to more closely reflect the work requirements and business needs.”

Issue 1.9 reads as follows:

“Any future Redundancies will be by Selection.”

The reasons given for that statement are as follows:

“We need to retain the people best suited to the needs of the business and terminate those who have little to offer the business.”

“CONSULTATION” IN GENERAL, NON SPECIFIC TERMS

The Respondent claims that the Applicants were consulted prior to the termination of their employment on 25 October and that the consultation took place through

a management/union discussion on 24 September
the circulation of the Issues Paper with the reference in Issue 1.8 to “overall manning numbers to be significantly reduced”
a discussion on 22 October between Mr Howell, General Manager, Human Resources (Simplot) and Mr Richardson, an official of NUW

Mr Howell admits that the Issues Paper was first discussed with representatives of AMWU on 16 September and that that union agreed not to resort to work stoppages while it considered the document. The management/union discussion on 24 September did not involve AMWU but did involve NUW, CEPU and CFMEU. The Tasmanian branch secretary of NUW, Mr Strickland, represented his union at this meeting. He stated in evidence that the Issues Paper (Exhibit R1 Attachment B) “looked like” the document he was given at the meeting on 24 September. Mr Howell gave evidence that the issues paper “was given to the unions on 24 September and was discussed at length”.

Mr McKellar was less specific in his evidence but he stated that, at the meeting

“The unions were told that there would be redundancies across all areas of the Business, however, details of the numbers to be made redundant were not available at that time. My recollection of the Unions’ response is that they said the Business’s plan was an overreaction and that the Business was not as inefficient as management said.”

In cross-examination, Mr Strickland gave the following evidence

“After 24 September we had meetings to look at the document and to go through it and raise issues and to meet again.

We had to assume some of our people could be in it (the reduction in numbers) for sure.

On 24 September the Respondent led us to believe further discussions would be held before axing of labour. It simply did not happen.”

On 11 October Mr Strickland wrote to Ms Bethany Pellas, Human Resources Manager, at Ulverstone as follows:

“Dear Ms Pellas

As you are aware the National Union of Workers is extremely concerned with the way your Company is handling the issue of its proposed reduction to the workplace.

On the 24th September, the Company made a general statement that it intended to significantly reduce its workforce. Since this time, the Company has failed to further progress this matter and as a result, employees are suffering undue stress.

Accordingly the National Union of Workers request you commit to finalising this matter by Friday October 25, 1996.

We further request you provide us with set times and dates to achieve the above. This advice is to be received by close of business 5.00 pm Monday October 14, 1996.

It is essential I receive the requested information by 5.00 pm Monday in order to keep this matter in its current context.

I await your reply.

Yours faithfully

Darryl M Strickland
SECRETARY”

On 14 October Ms Pellas replied as follows:

“Dear Mr Strickland

I am in receipt of your correspondence dated 11 October 1996.

Unfortunately, because of the absence of some key players in this issue I am unable to make any commitment to providing set times and numbers by the close of business today.

As soon as I am able I will provide you with additional information.

I am cognisant of the unrest which our discussions have generated and I have certainly appreciated your efforts to date to keep things in their proper perspective.

Yours sincerely
Simplot Australia Pty Limited

Bethany Pellas
Human Resources Manager”

SPECIFIC “CONSULTATION”

Mr Howell states that on 22 October

he told Mr Paul Richardson, an official of NUW, that the Respondent intended to make the six Applicants who were members of his union redundant on Friday 25 October

(ii)he gave Mr Richardson a copy of a letter of 15 October which he (Howell) had written to Mr Neil Marshall of AMWU (Exhibit R3)

This letter refers to

a meeting between Simplot management and AMWU officials in Launceston on 14 October
“an agreed position...to contract out security, refrigeration, electrical and transfer despatch”
a meeting scheduled with “all other unions represented at Ulverstone site on Friday 25 October at 1 pm”
“a high probability that...immediate industrial action..will force the outsourcing issue forward to Monday 28 October”
“contract out refrigeration - six redundancies NUW, this includes the defrosters”
all future redundancies will be based on the need to retain the people with the appropriate skills/competencies/attitude to most effectively operate the Ulverstone plant in the future”

Neither party called Mr Richardson but either party could have called him. The Respondent submits that the failure of the Applicants to call Mr Richardson should lead to an inference that he would not have given evidence supportive of the Applicants. I am not prepared to draw an adverse inference. The Applicants and the Respondent were both in a position to call Mr Richardson. An adverse inference could be drawn against the Applicants or the Respondent. I shall treat the failure to call Mr Richardson as neutral but it does leave the Court with the uncontested evidence of Mr Howell.

However, Mr Strickland has also given uncontested evidence. This was his evidence that Mr Richardson did not inform him of any discussion with Mr Howell on 22 October. Mr Strickland also stated that he never saw a letter from Mr Howell to Mr Marshall (Exhibit R3) until it was presented to him in the witness box.

The Court accepts the uncontested evidence of Mr Howell in respect of his discussion with Mr Richardson on 22 October and the uncontested evidence of Mr Strickland that Mr Richardson did not tell him or provide him with the details of the proposed redundancies as set out in Exhibit R3.

The provision of information to Mr Richardson on 22 October, and the circumstances in which it occurred, was not, in the Court’s view, adequate consultation, or anything even bordering on adequate consultation. Even if Mr Richardson had told Mr Strickland of the information given to him, which the latter denies, and even if Mr Strickland had told the Applicants on 22 October or between 22 and 25 October of the details as given to Mr Richardson, I would not consider that the Applicants had been adequately consulted. All Mr Howell had done on 22 October was tell a union official that three days later, on 25 October, the six Applicants would be made redundant. This was advice of a decision taken by the Respondent. It was not “consultation” in any realistic sense.

In any event, I accept the evidence of Mr Strickland that Mr Richardson told him nothing. I accept the evidence of all six Applicants that they were never given details of the redundancies until 25 October when they were all told that the employment was terminated.

THE EVIDENCE OF THE APPLICANTS

Relevant evidence from the statements of evidence of each Applicant is as follows:

DIPROSE (Exhibit A4)

“In late September 1996 as shop steward of the National Union of Workers I attended a National Union of Workers - company meeting at Simplot. At the meeting was myself, Daryl Strickland, Daryl Ries and Bethany Pellas and Mark McKellar from the company. At that meeting the company indicated that they were looking at rationalising their workforce. However Bethany Pellas and Mark McKellar assured the National Union of Workers that this rationalisation would not effect the National Union of Worker members. They informed us that any downsizing would not effect the refrigeration plant nor the boilerhouse.

The next thing I knew there was a S.B.U. meeting on the 25th October 1996. There was a normal meeting set for 2.00 pm. This day was a regular day off for myself and so I travelled to work to attend the 2.00 pm meeting. When I arrived at the meeting all Unions were present, being the CFMEU, the AMWU and the CEPU. Daryl Ries was there as was Mark McKellar, Bethany Pellas, Ron Howe (Industrial Relations National Head of Simplot), Ernie Marshall (Engineer) and another person from the company who was from the mainland.

At the start of the meeting Mark McKellar read from a prepared statement in which he said that there were to be redundancies in the refrigeration plant but he did not inform us who. He also stated that electricians were to be transferred to manpower as were security guards and the despatch area was to be transferred to a transport company. I was then escorted out of the meeting by a person from the company who was from the mainland with Bethany Pellas and Ron Howe. They escorted me to the work area to pick up my gear and then to leave. Whilst getting my gear, Bethany Pellas told all the other workers at the refrigeration plant to go to the conference room At the conference room she listed everyone who had been made redundant. At the conference room she read from a prepared statement. I recall her saying that it was due to economic reasons that people were made redundant. Carl Braun and Derek Diprose were not in the room at the time and they remained on site. At the conference room redundancy pays were handed out to everyone.

At no time prior to the 25th October 1996 was I ever informed that I was at risk of being made redundant. Rather, the redundancy was presented to me as a fait accompli. It was never explained to me why my job had been chosen to be made redundant.”

ANDERSON (Exhibit A6)

“I last worked for Simplot on the 20th October 1996. After that date I had two days off sick, being the 21st and 22nd October 1996. The following three days were my rostered days off. In accordance with my roster I turned up to work on the 26th October 1996 at approximately 6.00 am. I went to the refrigeration section which was locked. In any event I gained access to the refrigeration section from the side door and started to do my normal work. Whilst I was on the roof doing a check I noticed a W & S Refrigeration vehicle driving in to the carpark at work. I recognised the driver as Sam. I left the roof and walked down to the carpark for a chat. I asked Sam what was happening and he said he didn’t know but that he was just told to come in that morning to sort something out and to have a chat with Ernie. He said that he might have to learn how to do the defrosting better so he asked me to show him what to do. As a result I walked up to the roof section with him to turn off one of the liquid valves. As we were walking I gave him a quick run down on what the job involved. In particular I told him where things such as valves were located. I was only up in the roof for approximately five minutes with him. I then went to turn some fans off but the switchboard was locked with a different lock. I then saw Ernie Marshall and Derek Diprose in the yard. I went out and asked them what was happening. I told them that I had started to defrost. Ernie said that I had better come for a walk with him to his office and he will explain to me what is going on. We went to his office and he told me that as of yesterday, my position had been made redundant. He offered to sign me up with Manpower and took me down to a person from Manpower to fill in an application. I signed the application while Ernie Marshall was still there and gave it to Manpower. Ernie then told me that I could go and get my tools and leave. As result I went and got my gear put it in the car and drove out of the premises.

I was also told to return back to Simplot on Monday or Tuesday to collect my pay. I did. My pay consisted of my normal wage up until Sunday 27th October 1996. I did not receive any redundancy pay.

I was never contacted by Manpower with an offer for a job.”

RIES (Exhibit A7)

“On the 25th October 1996 I attended my work as normal. I recall that I knew that there was a meeting at work schedules for 1.00 pm that day. I believed that the meeting was about a “wish list” that the company had formulated. The list had no specifics and was very vague. As a result the NUW had attempted to meet with the company to discuss the list on a number of prior occasions. I believed that this meeting was a meeting brought about as a result of those requests. It was never in my understanding, nor belief, nor suspicion that my employment was to be terminated. I arrived at the meeting at 1.00 pm. At the meeting was Gregory Diprose and Darryl Strickland as well as myself, the NUW. Also the relevant officials of the unions on site. Bethany Pellas was there as were among others the manager of Simplot and the Industrial Relations Officer from Melbourne. At the meeting a prepared statement was read out by the sites manager of Simplot. This statement was as to the direction the company wished to go and informed us that there was to be terminations. The sites manager read that there would be six terminations in the refrigeration section. When the statement was finished someone asked which of the refrigeration people were the ones to be terminated. It was announced as to who they were. After that it was apparent that all the refrigeration people who had been stated to be terminated were the entire six members of the NUW who worked at the refrigeration section of the plant.

As far as I am aware the other three employees in the refrigeration section, Derek Diprose, Karl Braun and Teague Murphy remained employed.

We were then informed at the meeting to call to the refrigeration section down to the conference room. We did that and brought the men to the conference room. Bethany Pellas then read from a prepared statement of that meeting. I recall her saying that it was not for economic reasons that the terminations were occurring. I do not recall if she read that out from the statement or not. At this meeting all the refrigeration men who were terminated including myself were handed out dismissal notices which included cheques for payments.”

ARNOLD (Exhibit A8)

“The first I knew of there being a risk in my position going was on the 25th October 1996. I was working at that time as a defroster on dayshift. I was in the crib room when Bethany Pallace and Ernie Marshall (the engineer) came down and said they wanted to see the five of us guys who were on shift in the conference room. We all went to the meeting. Bethany Pellas was there, Ernie Marshall, Ron Howe, Daryl Ries, Greg Diprose, Kelvin Harding, Ian Buckles, Daryl Strickland and myself. Also at the meeting was Peter King who was a National Union of Workers member who worked in engineering.

Bethany Pellas read from a prepared statement at the meeting and said basically that they had seen to do away with five of us in the refrigeration area due to economic reasons. We were handed our redundancy pays and told that we had five minutes to empty our lockers and leave the site.”

BUCKLES (Exhibit A10)

“On the 25th October 1996 I finished my nightshift at 7.15 am and went home. I was aware that there was a meeting with the National Union of Workers at 2.30 pm on that date and that meeting was a report back meeting, following a meeting the union were going to have with the company.

Refrigeration section had put in a request for a defroster position to be filled and wanted answers to that issue. I understood that the meeting on the 25th October 1996 was to update us in respect of that issue. I had also seen a list of issues which the company had issued and I understood the meeting was also to discuss that list. At no time was it my understanding that there was a risk of my position being made redundant.

I returned to the company at 2.30 pm on the 25th October 1996 to attend the report back meeting with the National Union of Workers. That meeting was held in the conference room. At the beginning of the meeting Bethany Pellase said that due to economic reasons it was viable to contract refrigeration out and we were no longer required as at that date. Our redundancy pays were handed out to us at that time. Bethany Pellas appeared to be reading from a prepared statement. I was handed my redundancy package and told that I had to leave.

This was the first notice that I had got from the company that I was to be made redundant. I was not informed as to the basis on which my job was selected as one to be made redundant and I was not informed of any other areas at the plant that I would be able to transfer to. Karl Braun continued to work in the refrigeration plant at the site.”

HARDING (Exhibit A11)

“On that day I was working day work. I was in the crib room when Bethany Pellas, Ernie Marshall and another person I did not know neared the crib room and requested that we attend the Conference Room for a meeting. As a result, myself, Phil Arnold, Daryl Ries, Greg Diprose, Ian Buckles and Peter King attended the meeting.

I am pretty sure that Karl Braun was working on dayshift on that day and Derek Diprose was also working day work. These two men were not called to the meeting regarding the redundancy.

When we arrived at the boardroom Bethany Pellas read from a prepared statement saying essentially words to the effect of, that due to economic reasons all of us were made redundant. I was told by Bethany Pellas that she would get in touch with me about finding alternative employment to complete my training. We were all handed redundancy payments.

We were then escorted by security guards to our clothes cupboards to get our belongings and then escorted off the plant. Following that date I was never contacted by the company as far as gaining alternative work to complete my apprenticeship.”

VALIDITY OF THE TERMINATIONS

Counsel for the Applicants attacked the validity of the terminations on several grounds. He asserted that there was no valid reason for any of the terminations

based on the operational requirements of the business
connected with the capacity and conduct of the applicants
involving a reasonable selection of any applicant after consultation and after providing each applicant with an opportunity to defend himself in respect of capacity and conduct
grounded in fairness and justice
excluding prohibited forms of termination under s170DF(1)

In other words, counsel for the applicants claims these were invalid terminations which

were not based on operational requirements and breached s170DE(1)
were unfair and unjust and breached s170DE(1)
were based on capacity and conduct and breached s170DC because the applicants were not consulted and were given no opportunity to answer any allegation of misconduct or of inadequate performance
were effected in whole or in part because of the membership of each applicant in a union and were terminations which were, on that account, for a prohibited reason and in breach of s170DF(1)(b)

The respondents position is that the terminations were

fair and just and valid
based on operational requirements
not based on criteria which required the provision of an opportunity to each applicant to respond to allegations
undertaken after consultation
not undertaken because of the union membership of the applicants

In other words, the respondent denies all grounds of invalidity alleged by the applicants.

The attack on the validity of the terminations is addressed below in terms of operational requirements, capacity and conduct, union membership and fairness and justice.

OPERATIONAL REQUIREMENTS

For the reasons given in detail in Stones I have no doubt that the twelve terminations in that case and the six terminations in this case were primarily based on the operational requirements of the respondent.

The operational requirements of a business can provide a valid reason for termination of employment. Section 170DE(1) provides for valid, lawful terminations based on operational requirements. There are many cases of redundancy that are based on the operational requirements of the business. There are many cases where the circumstances are such that claims for reinstatement and/or compensation filed under s170EA and relying on ss.170DE(1) and 170EE will fail. There are many cases where the circumstances are such that claims of this nature will succeed.

The Respondent sought to justify the terminations on a restructure, a reorganisation, a contracting out of labour designed to reduce the costs of such labour. On my assessment, the balance of the evidence indicates that the respondent has achieved and will continue to achieve cost savings. I have also concluded that the respondent relied on broad operational requirements to justify termination of 129 employees at the Ulverstone plant on 25 October. The respondent wanted to reduce, and if possible avoid, the demarcation disputes which bedevilled the Ulverstone site before and after the respondent took over the business.

In terms of assessment of the benefits of the restructure by outsourcing, I would not be minded to sit in the managerial chair (See Wilcox CJ in Kenefick and Others v Australian Submarine Corporation Pty Ltd No 1, 62 IR at 107. Furthermore, it is not necessary that an employer prove that a restructuring was justified on economic or financial grounds: Spender J, Mitchell-Collins v The Latrobe Council (1995) 60 IR 480 at 489. The proposition was rejected by Beasley J in Quality Bakers of Australia v Gouldings (1995) 60 IR 327 at 333:

“If the submission was correct, it would be necessary in every case of termination because of a redundancy for an employer to call expert economic or financial evidence to support an operational decision to make jobs redundant and the Court would become the arbiter of whether the employer’s operational decision was justified. There is nothing in the Act to justify such an approach.”

Ryan J in Jones v Department of Energy and Minerals (1995) 60 IR 304 at 308 stated:

“It is within the employer’s prerogative to rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganisation of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employer are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the reorganisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant in the sense in which the word was used in the Adelaide Milk Co-operative case”: R v Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-operative Limited (1977) 44 SAIR 1202.

In my view, the Respondent has put forward reasons why outsourcing, and the consequent termination of the employment of the six refrigeration mechanics, could have been justified objectively and on the valid reason of operational requirements. However, I do not accept the Respondent has or can justify these particular terminations on the grounds of operational requirements.

In this case as in Stones there was no real consultation prior to the terminations. While the Court accepts, in the absence of any contrary evidence, that Mr Howell told Mr Richardson of the intended terminations on 22 October, the mere evidence of a fait accompli three days before the terminations were affected, does not constitute consultation. In the circumstances here, valid terminations on the basis of operational requirements could not be affected without adequate consultation. Adequate consultation did not occur. The lack of consultation in itself rendered these terminations invalid. In Stones counsel for the applicants stated that

the Respondent has “not put forward any reason why outsourcing had to be effected on 25 October 1996”
“there was no objectively valid reason to terminate the...employment particularly at the time the terminations occurred”
“the timing of the outsourcing is all the more relevant when (account is taken of) the Respondent’s failure to comply with its obligations towards the Applicants”
the Respondent “had an obligation to inform, an obligation to consult, and an obligation to give each of the Applicants time to give proper consideration to the specific matters raised”

I agreed with those assertions in Stones and I am of the view that they are equally applicable to a termination of the employment of these six applicants by the respondent.

CAPACITY AND CONDUCT

In his statement of evidence, at paragraph 27, Mr McKellar states:

“In relation to the refrigeration function, the entire function was not outsourced, six employees were made redundant and two employees were retained. One of the employees retained, Derek Diprose, was offered a team leader role, which he accepted. Mr Diprose was previously a foreman on the site and was the only refrigeration employee with management skills. This was an essential requirement of the team leader position. The other employee retained, Karl Braun, was the most suitable person for the position on an assessment of his skills, personality, and focus on the job. Both Mr Diprose and Mr Braun were also the longest serving employees in refrigeration. The six employees made redundant received payments in accordance with the Redundancy Agreement.”

The Respondent had advised the AMWU on 16 September and the other unions on 24 September that “any future redundancies will be by selection” (paragraph 1.9 of Issues Document). The reasons were given were “we need to retain the people best suited to the needs of the business and terminate those who have little to offer the business” (paragraph 1.9 of Issues Document).

In his oral evidence Mr McKellar indicated that the respondent needed to retain two of the refrigeration mechanics. In evidence in chief he stated “Derek Diprose and Karl Braun still do minor maintenance work. W and S (the contractors) do major maintenance. We needed to retain two people in the refrigeration section. Derek Diprose co-ordinates the work for which we bring in W and S. Derek was the foreman. Karl was classified at C8. Greg Diprose and David Buckles were also classified at C8 but Karl had been an employee longer than the other two.”

In his oral evidence Mr McKellar was vague. He never directly conceded that Derek Diprose and Karl Braun were chosen for retention over the six applicants on the basis of any assessment of conduct and performance.

In cross-examination Mr McKellar gave certain evidence which was relevant to the selection of the applicants for redundancy and the decision to retain Derek Diprose and Karl Braun. The evidence is extracted below. It is not verbatim evidence from the transcript. It is a summary of evidence taken from notes taken during the hearing.

“There was no scope to transfer the six applicants to other parts of the plant or to W and S. I was not aware of any written warnings given to Karl Braun. I did not check his file.

I do not know if the union negotiated the C8 classification. I assume it is a rate which is based on skills but I do not know.

I was not aware that all six applicants had done post trade competency courses at TAFE. I assume that some of them had done such courses. Braun has a certificate in refrigeration. I do not know if he has a post trade certificate. I do not know if Derek Diprose has a post trade certificate.

I do not know whether all six applicants are fitters and turners. All six probably had skills to work in machine maintenance outside refrigeration.”

Counsel for the respondent submitted that the applicants were chosen for redundancy, and Derek Diprose and Karl Braun for retention, on the basis of objective criteria and that the objective criteria were length of service and classification level. The respondent submits that the employees to remain and the employees to go were not chosen on any assessment of conduct or performance and that, therefore, no opportunity had to be given to the applicants to defend themselves against allegations that Derek Diprose and Karl Braun were better qualified to remain: Kenefick v Australian Submarine Corporation Pty Ltd (No 2) (1996) 65 IR 366.

Counsel for the respondent argued that Mr McKellar’s statement in paragraph 27 of his statement of evidence was not inconsistent with the proposition that selection decisions were based entirely on length of service and classification. I do not agree. Mr McKellar has stated that Mr Derek Diprose was the only refrigeration employee with management skills but he has not explained how that conclusion was reached. Certainly Mr McKellar has stated that Mr Derek Diprose and Mr Braun were the longest serving employees in refrigeration but he has also stated that, after Mr Derek Diprose, Mr Braun was the most suitable person, for retention because of “an assessment of his skills, personality and focus on the job”.

There is also the statement in paragraph 1.9 of the Issues Statement that “future redundancies will be by selection (because) we need to retain the people best suited to the needs of the business and terminate those who have little to offer the business”. Counsel for the respondent sought to distinguish this as “a statement of principle” not necessarily applied in selecting the six applicants for redundancy.

The general weight of the evidence leads me to conclude that the six applicants were selected for redundancy after some undefined assessment of their performance and conduct when compared to Derek Diprose and Karl Braun. It may well be the case that the seniority of Derek Diprose and Karl Braun was also a factor but I have concluded that the selection process was one in which the six applicants were given no opportunity to put forward cases for their retention. Indeed, the applicants were not consulted at any stage by any person prior to being advised on 25 October that their employment was to be terminated there and then. The situation was not really much different to that outlined by the Full Court in Kenefick.

At 37 the Full Court said:

“The fact that the performance was assessed by comparison with that of other employees is not significant. Performance criteria will always have some reference point. The relevant consideration is that a decision is proposed to be made by accepting or rejecting a criticism of the employee. By s170DC the employee must be given a chance to answer the criticism, whatever be the reference point upon which the criticism is made.”

In these cases there is no way of knowing precisely what ”criticism” was made, concluded or implied by Mr McKellar or any other employee of the respondent responsible for the selection of the six applicants for redundancy. However, I have concluded that they were all assessed adversely when compared to Mr Derek Diprose and Mr Karl Braun. They should have been given an opportunity to answer the actual or implied criticism which led to an assessment adverse to each of them.

UNION MEMBERSHIP

Employers are inevitably placed in a very difficult position when employees allege termination of employment for a reason or reasons which include a reason prohibited under s170DF(1). In this case, the applicants allege they were all terminated for a reason or reasons which included their membership of the National Union of Workers.

The leading case on s170DF(1) is Johns v Gunns Limited (1995) 60 IR 258. This case is itself based on Heidt v Chrysler Australia (1976) 26 FLR 257.

In Johns at 267 Northrop J states:

“The reasons of an employer for terminating the employment of an employee are solely within the knowledge of the employer. The employer may state a reason but that reason need not be the actual reason nor need it be the only reason. Parliament has, from time to time, devised procedures to transfer to an employer the onus of proving the reason for termination of employment. Thus s5 of the Conciliation and Arbitration Act 1904 (Cth) made it a criminal offence for an employer to dismiss an employee by reason of specified circumstances. Section 5(4) provided that in proceedings for an offence, if all the relevant facts and circumstances, other than the reason set out in the charge as being the reason....of the....(dismissal)...are proved, it lies upon the person charged to prove that...(the dismissal)...was not activated by that reason....”.

In Heidt v Chrysler Australia Ltd (1976) 26 FLR 257, those provisions and earlier authorities relating to them were discussed at length and in particular at 266-271. I set out a passage appearing at 268 which has equal application to cases where s170DF(1)(a) of the Act applies:

‘The provisions of s5(4) of the Act cast an onus of disproving facts, namely, that the reason for the defendant’s action was not actuated by the reason alleged in the charge. It has been held that a defendant need not prove the reason why he dismissed an employee: Atkins v Kirkstall-Repco Pty Ltd (1957) 3 FLR 439. The mere proof of a reason for dismissal, other than the reason alleged in the charge, does not necessarily negate the reason alleged in the charge. A mere denial of the reason alleged in the charge may not be sufficient to satisfy the onus case upon the defendant. All the facts and circumstances leading up to the dismissal must be considered, including any reason expressed at the time of the dismissal, as well as any denial of the reason alleged in the charge.’”

In Heidt and in Johns Northrop J does not state that a mere denial is never sufficient to satisfy the onus cast upon the respondent. Indeed, in Johns at 269 he states “the onus is to be satisfied on the civil basis of balance of probabilities. Normally it would be expected that an employer would give a direct denial to a question of whether a reason for termination was for the (prohibited) reason”.

In Johns there was no express denial. In these cases the respondent has denied quite expressly that any of the terminations were based on union membership.

I have considered the denial in the light of the circumstances here where wholesale outsourcing of non-core functions led to the termination of the employment of 129 employees on 25 October 1996.

Given earlier conclusions that the terminations were invalid, it is probably not necessary for me to make a finding for or against the respondent but, in all the circumstances, and on the basis of probability, I have concluded that the respondent did not terminate any of the applicants because of their membership of the union.

FAIRNESS AND JUSTICE

Given the conclusion that the terminations of employment in these cases were in breach of s170DE(1) because the applicants were not consulted, and in breach of s170DC because the applicants were not afforded an opportunity to defend themselves against adverse assessments of performance and possibly conduct, it is not necessary to address in detail the authorities cited by counsel for the applicants in support of his submission that the terminations were not valid reason because unjust and unfair.

In Stones at 17-20 I concluded that those twelve terminations, although based on operational requirements, were nevertheless unfair, unjust and unlawful. I have reached the same conclusion in these cases. It is unnecessary to cite the authorities again in similar detail.

The procedural requirements placed on an employer where redundancies are created were discussed in the context of the now defunct s170DE(2) in Quality Bakers at 334 to 336, in Mitchell-Collins at 488 to 491 and in Jones v Department of Energy and Minerals at 308 (all in (1995) 60 IR).

Recent authorities as to valid reason under s170DE(1) are summarised by Wilcox CJ in Thomas v Ralph Lynch trading as Bellingen Grocery (1996) 71 IR 307. It is clear from Bellingen Grocery, from Nettlefold v Kym Smoker Limited (1996) 69IR 390, from Kerr v Jaroma Pty Ltd (1996) 70 IR 469 and from Gerard Westen v Union des Assurance de Paris (IRCA, unreported, 23 December 1996) that, to be for a valid reason, a termination must not be unjust or unfair and the validity of the employers reason for termination cannot be divorced from its effect on the employee.

In Bellingen Grocery at 312 the Chief Justice observed:

“Consultation between Mr and Mrs Lynch and Mr and Mrs Thomas might have failed to yield an outcome compatible with the company’s business needs. If so, it would probably would have been defensible for the company to terminate the employment of one or both of the Applicants; in that event it would have been able to demonstrate the existence of a valid reason for the termination related to the operational requirements of its business. The company deprived itself of this possibility because of the arrogant way it dealt with its problems.”

Here too, as in Stones, consultation might have failed to yield an outcome compatible with the Respondent’s needs to cut costs and reduce demarcation disputes. Here too it might well have been defensible for the company to terminate the employment of the Applicants and, in that event, the Respondent might have been able to demonstrate the existence of a valid reason for the terminations related to the operational requirements of the business. Here too the Respondent deprived itself of that possibility because of the way it dealt with its problems.

The Respondent has failed to establish a valid reason for the termination of the employment of any of the Applicants. The reasons for each termination in the circumstances were not sound, defensible or well founded in the terms outlined by Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. The reasons for each termination were not applied as they could have been applied in a practical commonsense way which would have treated each employee fairly: Gibson v Bosmac Pty Ltd (1995) 60 IR 1.

The reasons for each termination were not fair and just and objectively defensible in terms of Kerr and Jaroma, Nettlefold v Kym Smoker and Bellingen Grocery and Westen.

REMEDY - REINSTATEMENT

Reinstatement is the primary remedy but I have concluded that it is impracticable. I rely on Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 1 IRCR 199 and Liddell v Lembke (1994) 1 IRCR 466 and on the analysis of those authorities in Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186. In Perkins at 189 the Full Court said:

“In Patterson v Newcrest Mining Limited (1996) 68 IR 419 Wilcox CJ said at 420:

‘. . . The word ‘impracticable’ has caused difficulty in relation to unlawful termination claims. It appears in subs. (2) and has led Judges of the Court, including myself, to describe the scheme of s.170EE as one providing a primary remedy of reinstatement and a secondary remedy of compensation where reinstatement is impracticable. These comments must be read in the light of the amendments, where they apply, requiring the Court to reach a determination that it is ‘appropriate in all the circumstances of the case’ to order reinstatement. Contrary to the submission put by counsel for the appellant, it is my opinion that the matter of appropriateness, where that concept applies, is not restricted to the form of a reinstatement but applies to the initial question whether reinstatement shall be ordered or not.”

Wilcox CJ said he was “content to adhere” to what he said in Nicolson v Heaven and Earth Gallery Pty Limited (1994) 1 IRCR 199 at 210 regarding the meaning of “impracticable”. He added:

“The requirement to consider the impracticability of reinstatement necessarily requires the Court to have regard to all the relevant circumstances of the case relating to the employer and the employee; as I said in Nicolson, to evaluate the practicability of a reinstatement order in a common sense way.”

von Doussa J agreed with the Chief Justice’s construction of the word “impracticable” in s170EE of the Act. North J did not find it necessary to deal with that issue.

In Nicolson, Wilcox CJ said at 210:

“It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word ‘impracticable’ requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer’s business, it may be ‘impracticable’ to order reinstatement, notwithstanding that the job remains available.”

In Liddell v Lembke (1994) 1 IRCR 466 at 487; 56 IR 447 at 466, Wilcox CJ and Keely J said:

“. . . Plainly, it was Parliament’s intention that the primary remedy for unlawful termination should be reinstatement and that compensation should be available only where this was impracticable.
The precise meaning of ‘impracticable’ in this context should be left to another day; the question is one of general importance and it was not fully argued in this case. But, although ‘impracticable’ does not mean ‘impossible’, it means more than ‘inconvenient’ or ‘difficult’. The imposition of such a stringent limitation on the Court’s power to award compensation, rather than order reinstatement, is inconsistent with the notion that Parliament intended the Court to have an open discretion whether to intervene at all.”

Gray J said at 495 that the practicability of reinstatement:

“. . . does not depend on notions of loss of confidence in the employee.”

However, it is important to note that his Honour did not say that loss of confidence could never be relevant to the issue of impracticality. He was contrasting s170EE of the Act with the judge-made rule against ordering specific performance of contracts of employment because of a reluctance to force parties into a personal relationship involving elements of mutual confidence. Gray J was making the point that the Act did not evince that reluctance. It established a different test: impracticability.”

These are cases where it is not practicable to unscramble the omelette and order the reinstatement of the refrigeration mechanics as employees of the Respondent. Reinstatement of the Applicants would, in my view, adversely affect productivity and could lead to a re-emergence of demarcation problems. I have concluded that the outsourcing contract between the Respondent and W and S has achieved economies and efficiencies and work practices which the Respondent and predecessor employers failed to achieve. If the omelette was unscrambled it would impose “unacceptable problems (and) seriously affect productivity (and) harmony in the employer’s business”. Such reinstatement would be “impracticable” in the sense in which that word has been defined in Nicolson and Liddell.

REMEDY - COMPENSATION

Principles for assessment of compensation under s170EE(3) are outlined in May v Lilyvale Hotel Pty Ltd (1996) 68 IR 112 at 117 where the Chief Justice states:

“A redundancy payment must clearly be taken into account in considering the extent of the employee’s loss, and therefore the amount of compensation that would be appropriate in the absence of the s170EE(3) cap. As has been pointed out more than once, the proper approach is for the person assessing compensation, first, to assess the appropriate amount of compensation in the light of all relevant circumstances (including any redundancy payment) but disregarding the cap; secondly, to consider whether that amount exceeds the permissible maximum award and, if so, thirdly, to reduce the assessed amount accordingly: see Perrin v Des Taylor Pty Ltd (1995) 58 IR 254 at 258; Cox v South Australian Meat Corporation (1995) 60 IR 294 and Messervy v Maldoc Pty Ltd (1995) (63 IR 61).”

When these matters were heard in Burnie on 21 and 22 April, rather sparse evidence was available as to economic loss. The evidence, such as it is, is contained in the statements of evidence of five of the applicants. There is no evidence relevant to economic loss in the statement of Mr Arnold. Only two applicants, Buckles and Harding, gave oral evidence. Both gave their evidence on 21 April. Mr Buckles did not give any evidence relevant to economic loss.

On 1 April Mr Anderson stated (Exhibit A6)

“Since my redundancy I travelled up to Queensland around Christmas time and ended up staying there. I have looked for work in Queensland however have been unable to get any. I have an injured leg and will be having an operation which will put me off work for two to three months after the 19th March 1997. I have been receiving Unemployment Benefits since November 1996.”

On 4 April Mr Ries stated (Exhibit A7)

“Following my termination at Simplot I could not find work in Tasmania. I applied for employment In Mt Isa and was successful in obtaining a job. As a result I left Tasmania on the 28th December 1996 leaving my de facto wife and her two children. I still maintain a relationship with them. I travelled to Mt Isa and commenced my position at Tamrock on the 6th January 1997. I am employed by them as a maintenance technician as a full-time permanent. At Tamrock I receive $16.62 per hour for a 38 hour week. This is less than what I got paid at Simplot. At Simplot I was paid approximately $22-00 per hour receiving approximately $970-00 per week gross.”

On 24 February Mr Buckles stated (Exhibit A10)

“From the 25th November 1996 I obtained work with Road Runners as a part-time casual. That work ceased on Friday 31st January 1997. I have obtained another job with Tasmanian Woodpanels as a maintenance fitter. This job is full-time and I will be receiving approximately $560-00 per week gross.”

Mr Harding stated on 12 March (Exhibit A11)

“Since my redundancy I first obtained employment on the 3rd day of February 1997 with Andrew Cameron Refrigeration. I may continue to complete my apprenticeship with him. I am payed $13.00 per hour on a casual full-time basis to this day 12-3-97. (It may change).
As a result of my redundancy I have put my house on the market as I can no longer afford my mortgage repayments.”

Mr Harding’s oral evidence on 21 April included the following:

“I am now at Andrew Cameron Refrigeration as a casual. I am not working as an apprentice. I am full-time. I earn a little over $500 a week for 40 hours a week. I began on 3 February 1997. I work overtime. It varies. I work some Saturdays one and a half to two hours and double time thereafter. I am working overtime regularly. My base salary with the respondent was $28,000. Week to week I am earning close to what I got with the respondent.

I decided not to sign an agreement with Simplot releasing me from my apprenticeship. I could have become a qualified tradesman if I had been accepted by the Authority. I decided, at the particular time, not to go down that track. In hindsight if I had qualified I would be earning more money now than with the respondent. I don’t think I was acting on advice. I think I would have discussed the matter with Mr Strickland. I do not recall the detail.

When I said in my statement that as a result of my redundancy I had put my house on the market as I can no longer afford my mortgage payments, I meant that I had put my house on the market because of an insecure future.”

I am prepared to determine economic loss, if any, in respect of each applicant on the basis of the evidence as presented in the written statements of Evidence and orally by Mr Harding on 21 April. In the event that I am determining economic loss, if any, without any additional up-to-date evidence I shall follow the course outlined by the Chief Justice in Kenefick and Others v Australian Submarine Corporation Pty Ltd (No 3) (IRCA, unreported, 26 July 1996, Decision No 331/96, Matters SI-1290, SI-1292, SI-1294 and SI-1295).

In Kenefick (No 2) (1996) 65 IR 366 the Full Court remitted the proceedings to the Chief Justice for determination of the appropriate amount of compensation. In Kenefick (No 3), at pages 2 to 4 of the unreported decision the Chief Justice states:

“ASC has filed an application for leave to appeal to the High Court of Australia against the Full Court’s decision. Despite that fact, the solicitors for the applicants sought an early hearing of the remitted proceedings and an immediate determination of compensation. ASC did not oppose that course. Although I offered an opportunity to do so, no party elected to call additional evidence concerning the quantum of compensation. Each side provided written submissions and participated in a video hearing at which the submissions were discussed.

Determination of compensation in these cases is not an easy task. There are so many unknown factors that it is not possible to do more than make general assessments. It is impossible to demonstrate mathematically the correctness of any particular award.

General considerations

Before dealing with the applicants individually, I wish to make some comments of general application.

First, the evidence stops at 30 March 1995, the last day of the hearing before the Judicial Registrar. This was little more than three months after the date of the terminations. No additional evidence was called on the review - either at the first hearing conducted by me in July 1995 or, as I have said, after remittal. So there is no evidence concerning the circumstances of the applicant later than the first three months after termination. Counsel for ASC argue that, in this situation, the Court is not entitled to allow anything by way of loss after 30 March 1995. They say the applicants have the burden of proof of any continuing loss after that day, they had the opportunity to discharge it, but neglected to do so.

I do not think the Court is precluded, as a matter of law, from allowing compensation in respect of the period after 30 March. The Court has to look at the evidence as it is. If the evidence before the Court shows a possibility of loss after 30 March 1995, that possibility must be taken into account. If any applicant has prejudiced his case by neglecting to bring the evidence up to date, this may be because he could have established that something that appeared, at 30 March 1995, to be only a possibility actually happened.”

At page 5 the Chief Justice continues:

“The applicants’ cases were conducted on the basis that Mr Bews, who made the final decision as to which hull shop welders should be selected for redundancy, and the senior officers who advised him about that matter, made honest judgments as to which welders were least valuable to the company. In making those judgments, they did not follow the course prescribed by s170DC. Had they done so, they may have selected different people. But this cannot be assumed. The welding workforce was relatively small. The people who advised Mr Bews knew all the welders. It is not possible to say what would have been the fate of any applicant, if the s170DC procedure had been followed. But it is possible to say that ASC’s failure to follow the s170DC procedure deprived each applicant of the chance, rather than the certainty, of successfully arguing that his name should be deleted from the list of those selected for retrenchment. It is necessary, in each case, to assess the value of that chance.”

The maximum chance each applicant had of avoiding selection for retrenchment was 25%, there being two positions retained and six made redundant. Given the seniority and experience of the two employees retained (D Diprose and K Braun) a more realistic chance of retention might well be assessed in the order of 20%.

At page 6 the Chief Justice outlines in some detail why in the cases before him Counsel for the applicants and Counsel for the Respondent agreed that the redundancy payments in those cases were to be ignored. The circumstances in those cases does not apply in the cases now before me. I will be taking account of the redundancy payments in assessing economic loss, if any.

I will also take account of the view expressed by the Chief Justice on page 7 that the Court is not precluded, as a matter of law, from taking into account any loss suffered, or likely to be suffered, after the expiration of six months from termination of employment.

If I am determining compensation in each case without any further evidence concerning the quantum of compensation I will take account of the approach taken by the Chief Justice in pages 8 to 13 of the unreported decision in Kenefick (No 3).

However, while I do not consider it is appropriate to offer the parties an opportunity to call additional oral evidence, I consider that it is appropriate to offer the parties a brief period in which to make further written submissions on quantum of compensation. If written submissions are received from either side I will offer the parties an opportunity of a video or telephone hearing at which the submission or submissions may be discussed.

I leave open the possibility of modest damages under s170EE(2) for shock and distress occasioned to these applicants by the way in which their employment was terminated by the respondent. My consideration will embrace the authorities cited in Stones at 27 to 29. I will take account of Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1 at 9 and the endorsement of Aitken by the Full Court in Burazin v Blacktown City Guardian (1996) 142 ALR 144 at 155.

I will take account of the fact that Mr McKellar has attached to his Statement of Evidence, as Appendix “F”, typed statements of what he said when the Applicants were advised of their redundancy. The statements contain the following:

“Apologies for the long delay in getting back to you however there were a whole range of issues to consider and each required careful consideration before we could address.”

“Refrigeration operations will be contracted out today and there will be 5 redundancies as a result - effective immediately. These people will be paid out under the current Redundancy Agreement.”

“We would like to thank you for your past work and effort. We’d also like to apologise for the shock that this decision may cause you, but in the interest of all parties it is better that this is carried out quickly and without delay.”

I will also be mindful of the admonition of the Full Court in Burazin at 156 that:

“There is an element of distress in every termination. To ensure compensation is confined within reasonable limits, restraint is required.”

MINUTES OF ORDERS

THE COURT:

Declares the termination of employment on 25 October 1996 of Gregory Rex Diprose, Gregory Neil Anderson, Darryl Lance Ries, David Ian Buckles, Philip John Arnold and Kelvin William Harding unlawful and in breach of s170DC and s170DE(1) of the Workplace Relations Act 1996.

Finds the reinstatement of the applicants as employees impracticable.

Considers it appropriate in all the circumstances of each case to order compensation.

Allows the parties 14 days in which additional written submissions may be made on quantum of compensation.

Adjourns the matters for final orders to Melbourne at 10 am on Friday 31 October 1997.

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

I certify that this and the preceding 23 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.

Associate:
Dated: 3 October 1997

Solicitors for the Applicant: Jennings Elliott
Counsel for the Applicants: Mr B McTaggart

Solicitors for the Respondent: Sharwood Eyers Wilkie

Counsel for the Respondent: Mr M McDonald

Hearing: 21 and 22 April 1997

Judgment: 3 October 1997

[1997] IRCA 279

3 Oct 1997