Diprose v Simplot Australia Pty Ltd & Anderson v Simplot Australia Pty Ltd & Ries v Simplot Australia Pty Ltd & Buckles v Simplot Australia Pty Ltd & Arnold v Simplot Australia Pty Ltd & Harding v Simplot Australia...
[1997] IRCA 284
•31 Oct 1997
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 - economic loss since termination of employment - applicants deprived of the chance, rather than the certainty, of avoiding retrenchment - whether damages for shock and distress
Workplace Relations Act 1996 ss.170DC, 170DE(1), 170EA, 170EE
Kenefick and Another v Australian Submarine Corporation Pty Ltd (No 3) (IRCA, unreported, Wilcox CJ, 26 July 1996)
Nicolson v Heaven and Earth Gallery (1994) 1 IRCR 199
Stones and Others and CEPU v Simplot Australia Pty Ltd (IRCA unreported, 30 June 1997)
Brackenridge v Toyota Motor Corporation (1996) 67 IR 162
Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1
Burazin v Blacktown City Guardian (1996) 142 ALR 144
DIPROSE & OTHERS & NATIONAL UNION OF WORKERS -v- SIMPLOT AUSTRALIA PTY LIMITED
No. TI-1060/1065 of 1996
Ryan JR
Melbourne
31 October 1997
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 31 October 1997
THE COURT ORDERS THAT:
The respondent pay the applicant Gregory Rex Diprose compensation in the sum of $20,438.
The respondent pay the applicant Gregory Neil Anderson compensation in the sum of $12,236.
The respondent pay the applicant Darryl Lance Ries compensation in the sum of $14,905.
The respondent pay the applicant David Ian Buckles compensation in the sum of $15,360.
The respondent pay the applicant Philip John Arnold compensation in the sum of $9,780.
The respondent pay the applicant Kelvin William Harding compensation in the sum of $10,278.
The compensation ordered pursuant to s170EE(3) in 1 to 6 above is to be paid to each applicant by the respondent within 21 days.
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
31 October 1997
REASONS FOR JUDGMENT ON COMPENSATION
JUDGMENT 3 OCTOBER
On 3 October the Court:
declared 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
found the reinstatement of the applicants as employees impracticable
considered it appropriate in all the circumstances of each case to order compensation
allowed the parties 14 days in which additional written submissions could be made on quantum of compensation
adjourned the matters for final orders to Melbourne at 10 am on Friday 31 October 1997.
COMPENSATION
When delivering judgment I said “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.”
Mr McTaggart and Ms Mackey of Jennings Elliott, Barristers and Solicitors, appeared for the applicants at the hearing in Burnie in April. Ms Mackey prepared written submissions on penalty. These were filed in the Hobart Registry on 13 October. I directed that a copy be forwarded to the respondent’s solicitors, Anderson Legal, on 15 October. On 20 October, in Melbourne, Mr McDonald, counsel for the respondent, made oral submissions on penalty with Ms Mackey participating by telephone link from Hobart.
In Kenefick and Another v Australian Submarine Corporation Pty Ltd (No 3) (IRCA, unreported, Wilcox CJ, 26 July 1996) the Chief Justice said:
“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.”
That too is the situation in determining compensation in these cases.
GENERAL CONSIDERATIONS
The evidence stops at 22 April 1997, the last day of the hearing in Burnie. This was just short of six months after the date of the terminations. No additional evidence was called on 20 October 1997. Indeed, I had indicated on 3 October that I would consider any written submissions on quantum of compensation but that I did not consider it appropriate to offer the parties an opportunity to call additional oral evidence. The result is that I am determining compensation twelve months after termination and six months after the most recent evidence concerning the circumstances of each applicant.
Counsel for the respondent has submitted that there is no room for doubt that six redundancies would have occurred irrespective of the procedural steps which might have been taken and which could have avoided a breach of s170DC of the Workplace Relations Act 1996 (the Act). There would, he said, have been six redundancies irrespective of whether it was six applicants or five of them or four of them. I agree.
The Chief Justice said in Kenefick (No 3) at 5:
“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.”
That is also the situation with these applicants.
Again, as in Kenefick, the retrenched employees received redundancy payments. In Kenefick, the circumstances were such that counsel agreed to ignore the redundancy payments. The Chief Justice said:
“If the redundancy payments received by the applicants were taken into account in reduction of their losses, it would be necessary also to take account of the fact that they lost the value of their later entitlement. It is true that a cash payment received at a particular point of time has a higher value than the same amount to be received at a later date. The nominal value of a delayed payment must be discounted to allow for the recipient’s inability to use it in the meantime. The greater the assumed rate of inflation in the period before the delayed payment, the greater the discount. However, any adjustment of the value of the redundancy payments to allow for that factor would have to be counterbalanced against the circumstance that a later redundancy payment would be based upon the wages payable at that time. The greater the assumed rate of inflation in the meantime, the more allowance must be made for increased wages. There being imponderables on both sides, but both being affected in the same way by any given assumption about inflation, the sensible course is to ignore the redundancy payments altogether.”
Ms Mackey has urged me to ignore the redundancy payments in assessing compensation. Mr McDonald made no submission on the redundancy payments on 20 October but, at the conclusion of the hearing in Burnie on 22 April, he submitted that should the Court find the terminations of employment unlawful, the redundancy payments should be taken into account in determining any compensation which might be considered appropriate.
In the case of at least four of these applicants and possibly in the case of all six of them, their positions would have been made redundant in any event and probably, if the respondent had acted regularly and complied with s170DC and accorded the applicants procedural fairness, the redundancies would have occurred by the end of 1996 at the latest.
While, to put the potential for retention at the highest possible level and retrenchment at the lowest feasible level, it could be argued that two of these six applicants would still be employed by the respondent, it is inevitable that at least four of them would have been made redundant.
I have concluded that compensation should not be determined without some consideration of the redundancy payments but those payments do not constitute adequate compensation for ongoing economic loss.
These are clearly cases where it is possible to say that the respondent’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. Ms Mackey has submitted that the probability of avoiding redundancy is not reducible to a mathematical calculation and ought not to be reduced to such a calculation. While I have endorsed the view of the Chief Justice that “it is impossible to demonstrate mathematically the correctness of any particular award”, it does not follow that the assessment of the value of a chance of avoiding retrenchment cannot be approached by way of some form of disciplined calculation. The rigid application of a predetermined formula may be inappropriate but an assessment of chance should not itself be a pure matter of chance.
Ms Mackey also argues that the chance of retention was higher for the applicants Diprose and Harding than for their colleagues Anderson, Arnold, Buckles and Reece. She asserts that Gregory Diprose was a long serving employee and that his chance of retention was greater than that of colleagues. However, if seniority was a factor, as the respondent claims, then none of the applicants, including Greg Diprose, would have met that criteria to the extent it was met by the two employees who were retained namely Derek Diprose and Mr Braun. I do not propose to assess the likelihood of retention at a variable rate on the basis of seniority.
The argument for a higher chance or likelihood or probability of retention of Harding is based on the assertion that his contract of apprenticeship increased the probability of retention. The fact is that his contract of apprenticeship did not result in his retention and I do not accept that the existence of the apprenticeship increased such a probability. In fact, Mr McDonald has argued the reverse namely that Mr Harding chose a course of action which prevented the continuation of his apprenticeship elsewhere with a release from the respondent. This contrary proposition is akin to an argument of failure to mitigate loss but I am not inclined to accept that argument either.
The general tenor of the evidence of Mr McKellar (see the reasons for judgment 3 October) has led me to the conclusion that Derek Diprose and Mr Braun were chosen as the most suitable employees for retention because of a combination of their experience and assessed suitability for supervisory or management roles. Their experience and seniority is not in dispute. It was the failure of the respondent to demonstrate that it had assessed the supervisory and management skills of the applicants in comparison with the two retained employees and the failure to give the applicants an opportunity to argue a case for retention which led to the conclusion that the respondent breached s170DC.
I am satisfied from the evidence provided by the applicants and from the evidence of their post-termination earnings that each of them has sustained and continues to sustain some economic loss as a result of the termination of employment. The degree of that loss varies but in each case it is likely to exceed, and in some cases may have already exceeded, the maximum compensation payable under s170EE.
However, I do not agree with Ms Mackey that appropriate compensation in each case is the maximum compensation open under s170EE. I am unsatisfied that any one of the applicants had a realistic chance of retention which could be reasonably assessed at above 20%. Furthermore, at least four of the applicants and perhaps all six of them were likely to have been terminated by Christmas 1996 if the respondent had acted regularly and accorded each an opportunity to argue a case for retention.
In Nicolson v Heaven and Earth Gallery (1994) 1 IRCR 199 at 213 the Chief Justice found that, had it been necessary in that case to reach the question of compensation, he would not have awarded a large sum because the employer, acting regularly, would have been entitled to dispense with the employee’s services and would have done so. I am convinced the respondent, acting regularly, would have dispensed with the services of at least four of the applicants and probably all six of them.
I believe this could have been readily and lawfully achieved on the basis of operational requirements and within eight weeks or perhaps even within four weeks. However, given ongoing economic loss and given a 20% chance of retention of each applicant, which assessment may be generous, I propose to order each applicant be paid compensation generally based on three months continued employment at the rates then applicable.
SHOCK AND DISTRESS
On 3 October I left 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. I indicated that I would consider the authorities cited in Stones and Others and CEPU v Simplot Australia Pty Ltd (IRCA unreported, 30 June 1997) TI-1048/1059 of 1996. Those authorities were Brackenridge v Toyota Motor Corporation (1996) 67 IR 162, Aitken v Construction, Mining, Energy, Timberyards, Sawmills and Woodworkers Union of Australia - Western Australian Branch (1995) 63 IR 1 and Burazin v Blacktown City Guardian (1996) 142 ALR 144.
In Stones there were unusual, exacerbating circumstances that I considered warranted some compensation for the distress unnecessarily caused to the applicants.
In Stones each applicant gave evidence of shock and distress.
In Stones each applicant was told that a failure to sign up and work for the outsourcing company, Manpower Pty Ltd, would result in being treated as having abandoned the employment.
In these cases none of the applicants gave evidence of shock and distress. No doubt some distress was occasioned there being, as the Full Court said in Burazin at 156, “an element of distress in every termination”.
However, in the circumstances here, where I propose to award compensation for economic loss, and there being no evidence of shock and distress, I am not prepared to order additional compensation on that account.
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The respondent pay the applicant Gregory Rex Diprose compensation in the sum of $20,438.
The respondent pay the applicant Gregory Neil Anderson compensation in the sum of $12,236.
The respondent pay the applicant Darryl Lance Ries compensation in the sum of $14,905.
The respondent pay the applicant David Ian Buckles compensation in the sum of $15,360.
The respondent pay the applicant Philip John Arnold compensation in the sum of $9,780.
The respondent pay the applicant Kelvin William Harding compensation in the sum of $10,278.
The compensation ordered pursuant to s170EE(3) in 1 to 6 above is to be paid to each applicant by the respondent within 21 days.
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 5 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 31 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: Burnie 21 and 22 April 1997
Judgment: Melbourne 3 October 1997
Final Orders: Melbourne 31 October 1997
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