Dornan v Metro Inns Hotel and Motels Pty Ltd (First Respondent), Transmetro Corporation Ltd (Second Respondent)
[1996] IRCA 50
•23 February 1996
DECISION NO: 50/96
CATCHWORDS
INDUSTRIAL LAW - UNLAWFUL TERMINATION - VALID REASON - REDUNDANCY - once it has been proven that a genuine decision was made that no-one be employed in the position in which the applicant was employed, the employer has established a “valid reason” for the termination of the applicant’s employment.
INDUSTRIAL LAW - UNLAWFUL TERMINATION - HARSH, UNJUST AND UNREASONABLE.
INDUSTRIAL LAW - BREACH OF AWARD - section 179 of the Industrial Relations Act 1988 - claim for unpaid redundancy severance payment.
INDUSTRIAL LAW - ASSOCIATED JURISDICTION OF THE COURT - claim for unpaid long service leave accumulated by virtue of Long Service Leave Act 1995 (New South Wales) - the Court has jurisdiction to hear such claims by virtue of the broad wording of section 430 of the Industrial Relations Act 1988.
Industrial Relations Act 1988 ss 170DC, 170EA, 179, 430
Long Service Leave Act 1955 (NSW) ss 4, 12
Hotels, Resorts and Hospitality Industry Award 1995
Nicolson v Heaven and Earth Gallery Pty Limited (1994)126 ALR 233
Kate Erin DORNAN -v- METRO INNS HOTEL AND MOTELS PTY LTD (First Respondent), TRANSMETRO CORPORATION LTD (Second Respondent)
No. NI 2325 of 1995
COURT: PATCH JR
PLACE: SYDNEY
DATE: 23 FEBRUARY 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NI 2325 of 1995
BETWEEN :
Kate Erin DORNAN
Applicant
AND:
METRO INNS HOTEL
AND MOTELS PTY LTD
First Respondent
TRANSMETRO CORPORATION LTD
Second Respondent
REASONS FOR JUDGMENT
23 FEBRUARY 1996 PATCH JR
This is an application under section 170EA of the Industrial Relations Act 1988 (“the Act”), together with a claim in the associated jurisdiction of the Court under section 430 of the Act for unpaid long service leave, together with a claim under section 179(1) of the Act for a redundancy severance payment in accordance with the Hotels Resorts and Hospitality Industry Award 1995 (a Federal Award).
BACKGROUND FACTS
The applicant was born in May 1972. Up until the time she ceased working for the respondent, all her working experience had been with the “Willows” restaurant, at the Willows Motor Inn, Gosford.
After a short period as a junior kitchen hand, she commenced her apprenticeship in the trade of commercial cooking on 2 May 1988. She successfully completed her apprenticeship training on 1 May 1992.
The applicant worked her way up in the kitchen of the Willows Motor Inn. For a considerable period of time she was the second chef, and from 1 April 1995 until 23 May 1995 (following the resignation of the head chef) she performed the duties of head chef until a new head chef was appointed.
There was no question as to the competence with which she performed her duties. Indeed, it was common ground that she was offered the job of head chef following the resignation of the previous holder of that position, but declined the offer of that job because the salary had been reduced from that received by the previous holder of the position.
The respondents did not assert that the termination of the applicant’s employment had anything to do with her conduct or performance. Accordingly, if the Court determines that the termination of the applicant’s employment was at the initiative of (one of) the respondents, that respondent would have the onus of proving that there was a valid reason, or valid reasons, based on the operational requirements of the undertaking, establishment or service, for the termination of the applicant’s employment.
On 10 November 1994, the applicant was informed that the Willows Motor Inn was being taken over by “Metro Inns”. On that date, at a drinks function after work, she was introduced to the new managers, Ms Kathy Seryl and Mr Andres Piltz.
On 11 November 1994, the applicant and Mr Piltz had a conversation about her continuing employment. For some period up until that time the applicant had been paid a $40 bonus per week by the Willows Motor Inn, but Mr Piltz made it clear to the applicant that that would not continue. She said in her evidence “.....he advised me that Metro did not pay above award wages and I would be losing the bonus in my pay”. She went on to say “He stated that I would be taken off permanent employment and put on a casual wage for a couple of weeks until the initial settling down”.
After an initial two weeks as a “casual” employee, the applicant was returned to a normal 40 hour week, and the type of work and hours she had been doing before the changeover.
A short time after that initial two week period, Ms Seryl approached the applicant and gave her a copy of a draft contract of employment. The applicant’s evidence (which was not challenged in cross examination, and which I accept) was as follows: “She told me that it was the policy of Metro to introduce contracts to the staff”.
The applicant subsequently told Ms Seryl that she wished to negotiate the pay rate, and that she wanted one section of the contract under the heading “specifications” clarified.
The applicant’s evidence as to Ms Seryl’s response to these requests was as follows: “She told me that she would have to take it down to head office to get it approved. She came back the following day saying Mr Piltz was in a bad mood and I should just sign the contract.”
Negotiations did not happen, and the applicant did not sign the contract.
In early 1995, Ms Seryl and Mr Piltz resigned their positions at the motor inn. The applicant was informed about their departure by a Mr Andrew Bryson, a person who was an executive of the corporation controlling the motor inn. I reach that conclusion from the combination of the facts that he came to the motor inn to announce the departure of the former managers, and because in response to the question “was Mr Bryson generally at the motel?” the applicant replied “No”.
Mr Barry Partridge became the new manager.
In February 1995 the three breakfast cooks resigned and the applicant took over the breakfast shift as well. Prior to that, she had been principally concerned with doing the “lunchtrade”.
In the middle of March 1995 Mr Peter Mortimer, the head chef, resigned. His last day at work was 1 April 1995. On 22 March 1995 the position of head chef was advertised in the Central Coast Express. Shortly after that advertisement had appeared Mr Partridge approached the applicant and suggested that she take on the position.
In that same conversation Mr Partridge said to the applicant that he was (to quote the applicant’s evidence) “thinking of closing the lunch trade so there would not be any work there for me”. The significance of this conversation will be canvassed later in these reasons for judgment.
On 28 March 1995 the applicant applied for the position of head chef. On 29 March 1995 Mr Partridge offered the applicant the position, with a salary of $30,000 per annum. The applicant said that she was “unhappy with that amount”, and that she should have been paid the same as Mr Mortimer.
Mr Partridge repeated that the salary on offer was only $30,000.
On 30 March 1995, the applicant attended the office of Mr Partridge, accompanied by her father. She had asked him to come along for “moral support”. The applicant told Mr Partridge that she had decided not to accept the position of head chef, and that she had made that decision because she was not happy with the amount of money being offered as salary.
The applicant gave evidence (which was not contested in cross examination, and which I accept) that Mr Partridge “demanded that I stay there until they could find a replacement for Peter and then he stood up and left”. The applicant said that it was not a pleasant conversation, but only lasted a couple of minutes. The applicant agreed to stay there until a replacement was found, and in fact, did so. She took over the performance of the duties of head chef, and was given an increase in salary in recognition of her increased responsibilities.
By the end of the first week of April the management of the motor inn had, to use the applicant’s words “stopped the lunch trade” - except for lunches which were provided for persons attending conferences at the motor inn.
In about the middle of April Mr Steve McMullen and Ms Pam Bodkin took over as managers of the hotel. In reference to Mr Partridge, the applicant’s evidence (which was uncontested and which I accept) was: “......he left. Metro gave him leave”.
On 15 May 1995 a new head chef was appointed. On that day, the applicant spoke to Mr McMullen about her future. Her evidence was as follows: “I approached him and I asked him what would be happening about my redundancy and what the procedure of redundancy was. He told me that he had to clarify with head office whether I was made redundant, I resigned or I was sacked. At that stage I assured him that I resigned from the position”.
Also in that conversation on 15 May 1995 Mr McMullen told the applicant that her last day of work would be 23 May 1995. The purpose of working for the extra eight days was to help the new head chef “settle in”.
A couple of days later, Mr McMullen got back to the applicant about that matter. Her evidence about this conversation was as follows: “.....he called me aside in a couple of days after that and told me that he had spoken with head office and head office had informed him that I had resigned. At that stage I told him again that I had not”. Her evidence continued as follows: “I told him that Barry had informed me that I was to be made redundant. (“Barry” is a reference to Mr Partridge).
In that conversation the applicant asserted that she was entitled to pro rata long service leave and redundancy pay.
WHO WAS THE EMPLOYER OF THE APPLICANT AT THE TIME OF THE TERMINATION OF HER EMPLOYMENT?
The respondents are represented by the same firm of solicitors and counsel. It is their case (as outlined to me at the commencement of the case) that the second respondent leased the restaurant from the first respondent and was, therefore, the true employer of the applicant. But there is no evidence of such a lease.
The group certificate given to the applicant upon the termination of her employment names the second respondent (Transmetro Corporation Limited) as the employer of the applicant.
However, it was never put to the applicant that she was employed by anybody other than Metro Inns. In fact, the whole tenor of her evidence was that her employer, as far as she understood it, was Metro Inns.
I have set out the evidence above, under the heading of “background facts” and will not repeat it at length.
In my opinion the true employer of the applicant was the first respondent. It is important that the applicant was told by the managers who took over in November 1994 that Metro Inns was her employer. The contract that the applicant was asked to sign was a contract with Metro Inns. It was Metro Inns who would only pay award wages, and would not pay the applicant the $40.00 bonus which she had been receiving. An outside executive came to the motor inn to inform the staff of the change of management. Mr Partridge was given leave by Metro Inns, and new managers came in to take over his duties.
Furthermore, when the applicant received her termination pay it was accompanied by a “with compliments” slip from “Metro Inn, Gosford”. The same “with compliments” slip accompanied the last group certificate she received for the period prior to the takeover by Metro Inns - given to her by the new management after that takeover.
The preponderance of the evidence, therefore, is that the applicant was employed by the first respondent, not the second respondent, and I so find.
DID THE APPLICANT RESIGN, OR WAS HER EMPLOYMENT TERMINATED AT THE INITIATIVE OF THE RESPONDENT?
In my opinion, the applicant’s employment was terminated when she was informed by Mr McMullen on 15 May 1995 that she would be finishing up on 23 May 1995. There was simply no evidence upon which I could conclude that the applicant had resigned. (I note here that the respondent elected not to call evidence).
WAS THERE A “VALID REASON” FOR THE TERMINATION OF THE APPLICANT’S EMPLOYMENT?
As noted above, there were no questions as to the applicant’s performance or conduct. It follows that the respondent must prove that there was a valid reason based on the operational requirements of its undertaking, establishment or service.
In the conversation between Mr Partridge and the applicant during which Mr Partridge suggested that the applicant take on the position of head chef, Mr Partridge told the applicant that he was “thinking of closing the lunch trade so that there would not be any work there for the applicant”.
This is in fact, on the applicant’s evidence, what happened.
The applicant’s evidence also established, that, as a result of the lunch trade being closed, the respondent had decided to employ only one chef.
The decision to close the lunch trade, and the consequential decision to employ only one chef, were matters for the management of the motel. As there was only one position left in the motel for a chef, which would obviously have to be the head chef, the position of second chef had been made redundant.
In my opinion, there was, therefore, a valid reason to do with the operational requirements of the respondent’s business for the termination of the applicant’s employment.
Once it has been proven that a genuine decision was made that no-one be employed in the position in which an employee is employed, the employer has proven a “valid reason” for the termination of that employee’s employment. The Court does not have to enquire further and establish whether or not it was a sound business or a sound management decision - although that might, it should be noted, be relevant to the issue of whether the “decision” was “genuine”.
WAS THE TERMINATION OF THE APPLICANT’S EMPLOYMENT HARSH, UNJUST OR UNREASONABLE?
Counsel for the applicant submitted that, because of a lack of procedural fairness, the termination of the applicant’s employment should be deemed to be not for a “valid reason”, as it was “harsh” and “unjust” within the meaning of section 170DE(2) of the Act.
I do not agree with that submission.
The applicant was told, in the conversation with Mr Partridge in late March during which he suggested that she take on the position of head chef, that her employment was in jeopardy because he was thinking of closing the lunch trade. It follows that, from that moment on, she knew that her job was in jeopardy, and she knew the reason why her job was in jeopardy.
This information was given to her by Mr Partridge in ample time for her to consider her position, for her to make a submission to her employer about alternatives to the possibility that she would lose her job, and for her to make other arrangements if she felt that that was what she should do.
In those circumstances, in my opinion, it cannot be said that she was denied procedural fairness. It follows, therefore, that the termination of her employment was not “unjust” within the meaning of section 170 DE(2) of the Act.
The evidence does not, in my opinion, establish that the termination of her employment was “harsh”.
CONCLUSION AS TO THE LAWFULNESS OF THE TERMINATION OF THE APPLICANT’S EMPLOYMENT
As there was a valid reason for the termination of the applicant’s employment, and as the termination of the applicant’s employment was not harsh, unjust or reasonable, the termination of the applicant’s employment was lawful.
It follows that the application, insofar as it relates to that matter, will be dismissed.
THE CLAIM UNDER SECTION 179 OF THE ACT FOR A REDUNDANCY SEVERANCE PAYMENT
On 6 July 1995 Vice President Ross of the Australian Industrial Relations Commission varied the Hotels Resorts and Hospitality Industry Award, effective 23 May 1995. By chance, that is the last day upon which the applicant was employed by the first respondent. That award, as varied effective that date, therefore applied to the applicant. (It is agreed that that award was an award which governed the terms and conditions of employment of the applicant).
Paragraph 17.3 of that award gives employees who have been employed for a continuous period of service of four years and over an entitlement to eight weeks pay as severance pay if employment is terminated for reasons set out in paragraph 17.1.1. of the award.
Paragraph 17.1.1. reads as follows:
“Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour....”
In my opinion the termination of the applicant’s employment was such a termination.
If, therefore, the applicant has been in a continuous period of service with the first respondent for four years and over, she is entitled to eight weeks pay as severance pay, in accordance with paragraph 17.3 of the award.
Paragraph 17.9 of the award is as follows:
17.9.1. “Transmission of business. Where a business is before or after the date of this award, transmitted from an employer (in this sub-clause called “the transmitter”) to another employer (in this sub-clause called “the transmittee”) and an employee who at the time of such a transmission was an employee of the transmitter in that business becomes an employee of the transmittee then:
(a) the continuity of the employment of the employee shall be deemed not to have been broken by reason of such transmission; and
(b) the period of employment which the employee has had with the
transmittor or any prior transmittor shall be deemed to be service of the employee with the transmittee.
17.9.2. In this sub-clause “business” includes trade, process, business or occupation and includes part of any such business “transmission” includes transfer, conveyance, assignment or succession whether by agreement or by operation of law and “transmitted” has a corresponding meaning.”
In my opinion, the first respondent simply took over the business of the applicant’s former employers, and was a “transmittee” within the meaning of paragraph 17.9. of the award.
As the applicant had commenced employment at the Willows Motor Inn on or just before 2 May 1988, she is therefore to be deemed to have been in the continuous employment of the first respondent for more than four years. She is therefore entitled to severance pay equivalent to eight weeks pay.
Clause 17.3 (a) of the award reads as follows:
““Weeks pay” means the ordinary time rate of pay for the employees concerned.”
The applicant’s pay slip for the week ending 16 May 1995 (the pay slip for the week ending 23 May 1995 is not in evidence) recorded an ordinary time rate of pay of $14.4230 per hour. However, for many weeks leading up to the week ending 9 May 1995 the applicant was paid an ordinary rate of $11.1525 per hour. In my opinion, the “ordinary time rate of pay” for the applicant is more accurately to be regarded as $11.1525 per hour rather than the aberrations as evidenced by the last two pay slips. The applicant’s uncontested evidence was that her ordinary hours were 40 hours per week. 40 hours at $11.1525 per hour comes to $446.10.
Eight weeks at that rate of pay comes to a total of $3,568.80. The first respondent will therefore be ordered to pay the applicant that sum in accordance with section 179 of the Act.
THE APPLICANT’S CLAIM IN THE ASSOCIATED JURISDICTION OF THE COURT (SECTION 430 OF THE ACT) FOR UNPAID LONG SERVICE LEAVE
The applicant’s entitlement to long service leave is a statutory entitlement which arises under the provisions of the Long Service Leave Act 1955 (New South Wales).
Section 12(1) of the Long Service Leave Act reads as follows:
“Any worker may apply to a Local Court constituted by a Magistrate sitting alone, or to the Industrial Court, for an order directing the employer to pay to the worker the full amount of any payment which has become due to the worker under this Act at any time during the period of 6 years immediately preceding the date of the application but not earlier than 2 years before the date of assent to the Long Service Leave (Amendment) Act 1980.
The Local Court or Industrial Court may make any order it thinks just in the matter and may award costs to either party, and assess the amount of such costs.”
The respondent argues that as the applicant’s entitlement to long service leave is a statutory right, and as the courts in which that statutory right can be enforced are set out in the legislation granting that right, the applicant is not entitled to pursue her claim for long service leave before this Court.
Counsel for the applicant, on the other hand, argues that the broad wording of Section 430 of the Act is such that the applicant’s claim is able to be pursued in this Court.
Section 430(1) of the Act is as follows:
“(1) [Jurisdiction of Court] So far at the Constitution permits, jurisdiction is conferred on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked.”
In my opinion, the evident intention of the Parliament was to enable this Court to deal with matters “not otherwise within its jurisdiction” which are associated with matters which are in its jurisdiction, as a matter of practicality so that all related controversies can, where constitutionally possible, be dealt with in one forum.
By way of analogy, it is common place for common law claims for damages for breach of the contract of employment to be dealt with in this Court, in the associated jurisdiction, when they “are associated with” a claim that the termination of the applicant’s employment was unlawful. Such common law claims for damages arise under the common law of the states and territories, and would not otherwise be within the jurisdiction of the Court. But for section 430 of the Act, such a claim could only be pursued in the state or territory courts. But that matters not, as the right to damages for breach of contract exists independently of the forum in which it is enforced.
In my opinion, the right to long service leave established by the Long Service Leave Act is a right which is independent of the forum in which it is enforced. That claim is a matter which is “associated with” the principal claim before the Court, as it concerns the same sub-stratum of facts. The Court therefore has jurisdiction to deal with the claim.
The first respondent also argues that the applicant has no entitlement to long service leave in accordance with the Long Service Leave Act because as at the date of the termination of her employment the applicant did not have at least five years service as an adult with the first respondent.
A worker’s entitlement to long service leave is set out in Section 4(2)(a) of the Long Service Leave Act. A sliding scale of entitlements is set out in the Act. A worker has no entitlement to long service leave unless the worker “has completed with an employer at least five years service as an adult”.
Section 4(2)(a)(1) defines “service as an adult” in a number of alternative ways. The only applicable sub-section is section 4(2)(a)(1)(i) which is as follows:
“In the case of a worker employed to do any work for which the price rate or wages has been fixed by an Award enforced under the Industrial Relations Act 1988 of the Commonwealth or by an award or agreemet in force under the Industrial Relations Act 1991 - means the period of service with an employer during which the remuneration applicable to the worker was at a rate not less than the lowest rate, fixed under the award or agreement for an adult male or adult female in the same trade, classification or calling as the worker;...”
Unless, therefore, there is evidence which establishes that, during the period of her apprenticeship, the applicant was earning remuneration “at a rate not less than the lowest rate fixed at the award.....for an adult male or adult female in the same trade, classification or calling”, that period of employment (which ended on 1 May 1992) would not be a period of service which would qualify her in any sense for long service leave.
It would follow from that that the applicant would not be eligible for long service leave, as less than five years elapsed between 1 May 1992 and the termination of the applicant’s employment.
The applicant’s Group Certificates for the financial years ending 30 June 1988, 1989, 1991, 1992 are in evidence (exhibit 9).
From the period of 2 May 1988 to 30 June 1988 set out in the 1988 group certificate, the applicant’s gross salary was $1,384.18. That is an average of $161.49 per week. During that period the minimum wage for an unqualified (adult) cook under the Hotel and Retail Liquor Award 1983 was $275.30. It is therefore apparent that the evidence does not establish that the applicant was earning not less than the relevant adult wage at the time.
In the year ending 30 June 1989, the applicant’s gross salary was $11,618.15. That is an average of $223.43 per week. During that year the minimum wage for an unqualified (adult) cook varied from $275.30 to $304.90. Once again, the evidence does not establish that, in that year, the applicant earned not less than the relevant adult wage.
There is no evidence as to what the applicant earned in the year to 30 June 1990.
From 1 July 1990 to 23 May 1995 is less than five years. It follows that, no matter what the applicant earnt in that period, the evidence does not establish the necesary period of “service as an adult”.
As the burden of proof is on the applicant to prove her claim under Section 430 of the Act, and as that burden of proof has not been discharged, the applicant’s claim in the associated jurisdiction of the Court for long service leave will be dismissed.
ORDERS
The orders that the Court makes are as follows:
That the application under section 170EA of the Act be dismissed.
That, in respect of the claim under section 179 of the Act for redundancy severance pay, the respondent be ordered to pay the Applicant the sum of $3,568.85 (gross) within 21 days of today.
That the respondent deduct tax from that sum at the appropriate rate, and the that the balance only be paid to the applicant.
That leave be given to the parties to re-list the matter if agreement cannot be reached as to the appropriate sum to be deducted.
That the applicant’s claim in the associated jurisdiction of the Court (Section 430 of the Act) for long service leave be dismissed.
I certify that this and the preceding eighteen (18) pages are a true copy of the reasons for judgment of Judicial Registrar Patch.
Associate:
Dated: 23 February 1996
Solicitors for the Applicant: Knibb, Kaine & Associates
Counsel for the Applicant: Mr S Galitsky
Solicitors for the Respondent: Staunton & Thompson
Counsel for the Respondent: Mr R Moore
Date of hearing: 30 November 1995
Date of judgment: 23 February 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
NI 2325 of 1995
BET WEEN :
Kate Erin DORNAN
Applicant
AND
METRO INNS HOTEL
AND MOTELS PTY LTD
First Respondent
TRANSMETRO CORPORATION LTD
Second Respondent
BEFORE: PATCH JR
PLACE: SYDNEY
DATE: 23 FEBRUARY 1996
MINUTES OF ORDERS
THE COURT ORDERS THAT:
That the application under section 170EA of the Act be dismissed.
That, in respect of the claim under section 179 of the Act for redundancy severance pay, the first respondent pay the applicant the sum of $3,568.85 (gross) within 21 days of today.
That the first respondent deduct tax from that sum at the appropriate rate, and the balance only be paid to the applicant.
That leave be given to the parties to re-list the matter if agreement cannot be reached as to the correct sum to be deducted as tax.
That the applicant’s claim in the associated jurisdiction of the Court (Section 430 of the Act) for a long service leave payment be dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
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