Downs v Finsbury Press Pty Ltd - [1996] IRCA 274

DECISION NO:   274/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - breach of company policy - extent of knowledge of policy - whether VALID REASON for termination - HARSH, UNJUST OR UNREASONABLE - COMPENSATION.
Industrial Relations Act 1988 Ss 170DB, 170DC, 170DE, 170EA, 170EE(3)
Bostik (Australia) v Gorgevski No 1 (1992) 36 FCR 20.
Gregory DOWNS -v- FINSBURY PRESS PTY LTD
SA 1648 of 1995
BEFORE:       R. D. FARRELL JR
PLACE:          ADELAIDE
DATE:            18 March 1996
IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA                   )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )         No. SA 1648 of 1995
BETWEEN:  Gregory DOWNS
  -         Applicant
AND:  FINSBURY PRESS PTY LTD
               -         Respondent
MINUTE OF ORDERS
BEFORE:               R. D. FARRELL JR
PLACE:                  ADELAIDE
DATE:  18 March 1996
THE COURT ORDERS THAT:
1. The respondent pay damages to the applicant pursuant to Section 170EE(5) of the Industrial Relations Act 1988 in the sum of $432.08 within 14 days of     the date of this order.
2. The respondent pay compensation to the applicant pursuant to Section 170EE(3) of the Industrial Relations Act 1988 in the sum of $7,777.44.
3.         The respondent pay the compensation referred to in order 2 above in      fortnightly instalments of not less than $864.16.
NOTE:          Settlement and entry of Orders is dealt with by Order 36 of the   Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
SA 1648 of 1995
BETWEEN:
Gregory DOWNS
Applicant
AND:
FINSBURY PRESS PTY LTD
Respondent
REASONS FOR DECISION
(Delivered ex tempore - revised from transcript)
18 March 1996  R. D. FARRELL JR

This is a claim brought under section 170EA of the Industrial Relations Act 1988. The applicant, Mr Gregory Downs (“Mr Downs”), was a book-binder who had been working for almost a year with the respondent, Finsbury Press Pty Ltd (“Finsbury Press”), which conducted a printing business.

Findings as to the Facts.

Mr Downs was dismissed on 18 November, 1995. Mr Downs claims that Finsbury Press, in dismissing him, acted in breach of section 170DE of the Act. He says there was no valid reason for dismissal and that, in any event, the dismissal was harsh, unjust and unreasonable. He also claims a breach of sections 170DC, in that he was not given an opportunity to defend himself against the allegations made of him, and of section 170DB in relation to notice. Because Finsbury Press bears the onus of showing that there was a valid reason for dismissal, the parties accepted my suggestion that Finsbury Press proceed first with their evidence.
After Finsbury Press had led its evidence and closed its case, Mr Blewett, who appeared for Mr Downs, made an application to the effect that, on the evidence before the Court, Finsbury Press had not satisfied the onus of establishing that there was a valid reason for dismissal.

The Reason for Dismissal

I heard evidence from Mr Peter Orel, who was the General Manager of Finsbury Press, and Mr Ernest Orel, who was the managing director of Finsbury Press. It was apparent that the decision to dismiss Mr Downs was made at the initiative of Ernest Orel, but after discussion with Peter Orel.
Finsbury Press pointed to difficulties in Mr Downs’ work history. I heard evidence of various verbal warnings and have before me two written warnings that were issued to Mr Downs in the less than 12 months of his employment. Those warnings do not go to the question of smoking. One warning goes to the question of keeping of time, another goes to the question of the applicants relationships with other employees as manifested in a particular incident, and the other warnings which were verbal went to the quality of the applicants work.
According to Ernest Orel, he was standing by the door in the stores area on the day of the dismissal, when he saw Mr Downs smoking and talking to somebody at the corner of the building. It was put to Mr Orel that the position where Mr Downs was standing was the position where there was an ashtray kept by employees. Mr Orel could not confirm that. When Mr Downs saw Ernest Orel, he started to walk towards him, a cigarette in one hand and a bin in the other. Ernest Orel's recollection is that the bin probably had a lid on it and it was his impression that the bin was empty. When he challenged Mr Downs, he says that he asked Mr Downs whether he knew about Finsbury Press no smoking policy. Ernest Orel says Mr Downs responded that he did, but he thought he could smoke when using the bin. Ernest Orel then responded that Mr Downs should have known it was unsafe, and things proceeded from there.
Mr Peter Orel gave evidence that, as he understood it following his discussion with Ernest Orel, the reason for dismissal was the fact that Mr Downs had been found to be smoking in contravention of Finsbury Press policy on smoking. It was his view that any employee who had been found engaged in that conduct would have been dismissed even had it not been Mr Downs. I therefore infer that any such employee would have been dismissed even if that employee had not had the difficulties in their work history that Mr Downs had had.
Based on that evidence, which was not contradicted by the evidence of Mr Ernest Orel, I find that the reason for the dismissal of Mr Downs was Finsbury Press view that Mr Downs had breached their policy on smoking, rather than any other difficulties in the employment relationship. I now have to consider whether or not that was a valid reason.

Whether There was a Valid Reason for Termination

The terms of Finsbury Press' original non-smoking policy is set out in a memorandum dated 1991. The terms of that policy are clear. It relevantly reads:
“Would all smokers please take note that this is a FINAL WARNING regarding smoking on the premises. It is an offence to smoke in or around the work place and yet there is evidence of people still doing so. Consequently anyone who is found or reported to be smoking ANYWHERE ON THIS PROPERTY will be dismissed.”
It is clearly a strict policy. There is no problem in principle with employers having strict policies on matters of this sort and the fact that there was subsequently a fire which Finsbury Press believe was a result of smoking on the premises might tend to show the need for such a policy.
The memorandum refers explicitly and prominently to a prohibition on smoking “anywhere on this property”. At the time the memorandum was issued, Finsbury Press was at premises at Jeanes Street in Beverley. The evidence was that the practice at that premises was for those employees who smoked to do so on the street outside the premises, which was practical in those circumstances.
After the memorandum was issued, two things happened. Mr Downs was taken on in employment and, in the course of his employment, Finsbury Press moved to premises in South Road in Adelaide.
In order to establish that there was a valid reason for dismissal, Finsbury Press not only has to establish that there was a policy in existence, but also that Mr Downs was aware of what it was that the policy required.
I am reinforced in that view by the leading case of Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 36 FCR 20, which coincidentally was also a case of an employee who was dismissed for smoking. Mr Gorgevski’s successful defence was that, as a matter of fact, he was not aware of the policy. In that case, the employee was a person for whom English was a second language and there were issues as to whether or not he understood that the smoking policy existed. Similar issues arise in this case, and I looked at the evidence with a view to ascertaining how it was Mr Downs would have learned about the policy.
Evidence was given of fire drills which took place from time to time. Mr Ernest Orel gave evidence that one of the matters that was likely to be discussed at fire drills was the respondents policy on smoking. However, I was not sufficiently satisfied that this would have led to the policy being brought to Mr Downs’ attention in sufficient detail. Mr Orel said he would not raise any fixed matters in the course of fire drills; rather he would ask people to raise issues of concern with him. I infer that there could therefore be no guarantee that the smoking policy was reinforced in sufficient detail or at all on each occasion a fire drill was held. In addition, it appears there was no fire drill after the move to the new premises in South Road.
The other matter to which regard could be had is a memo dated 13 October 1995 issued by Peter Orel which talks about staff uniforms and break times. It was clear from Mr Peter Orel's evidence that he regarded this as containing a prohibition on smoking outside of break times, but the text of the memo is more ambiguous than Mr Orel suggests. It relevantly provides:
"Break times for meals, coffee or cigarettes are (and the times are listed)...
If you use the lunch-room facilities I would ask that you clean up after yourselves as the cleaning contract does not include this area.”
If read objectively, that memorandum does not convey a prohibition on smoking outside of those break times. Mr Orel conceded that it would be no more dangerous to smoke outside of those times than during those times and the letter of termination suggests that the main mischief to which the policy was directed was the place of smoking rather than the time of smoking. That letter reads in part:
“As advised on 8 November, due to your breach of our strict non-smoking policy, this notice is to advise of your instant dismissal. The smoking policy has been in place since May 1991. You have been made aware of this policy on numerous occasions including, but not limited to, a memo dated 13 October 1995 from Peter Orel which was circulated to all staff and placed on the notice board, and by staff meetings from Ernie Orel during the months of March and July...
This policy was put in place due to flammable materials we deal with and it is a condition of our insurance. Your breach of the policy has put the company, yourself, and all staff under extreme risk. This policy and these reasons are well known by staff with designated smoking areas well established. You were aware of this policy, however, totally ignored it.”
It is clear from the termination notice that the mischief behind the policy was the problem with safety. It follows and it was acknowledged by Mr Peter Orel that when a person smoked did not really impact on the safety; the important issue was where they smoked. Therefore, the memorandum of 13 October did not have the effect of making Mr Downs aware of the earlier policy, which had been issued before he began his employment.
An additional problem with Finsbury Press evidence was that I was left with the impression that the designated smoking area was far from well established at the time of the dismissal. Certainly the designated smoking area in the old premises was well established. However, the geographical layout of the new premises was different. As a result, it was put to Finsbury Press witnesses that the effective implementation of the policy had changed with the shift to the new premises. I am not suggesting that this was a positive decision on the part of Finsbury Press. Rather I am of the view, that there was an understandable failure to deal with the problems of implementing the policy in the circumstances of the new premises before the dismissal. No doubt there were more than enough things to attend to following the move to new premises without reviewing the smoking policy.
Mr Ernest Orel said in his evidence that he did not police where the employees smoked in the new premises, apart from inside the building, and he also said that he would not expect them to smoke near the paper compactor nor near the bin. I believe Mr Orel conceded at one point in his evidence that he had perhaps seen employees smoking during a break in the car park. I infer from that that Mr Orel, given that his main concern was safety, took the reasonable position that, as long as the employees were smoking away from the paper areas, and as long as they were not smoking inside, he was not too concerned. It follows that clearly the policy had shifted, in that he was not concerned any more with some smoking occurring on the premises, so long as it was away from the paper. I do not think one could any longer say, as the termination notice said, that the designated smoking area was well established. In Mr Ernest Orel's mind, he was not too concerned as long as it was away from the compactor and the bin, but quite how far away one had to be had become unclear.
I heard evidence that after the incident which led to Mr Downs’ dismissal, and I think at the behest of the relevant union official, an area on the premises was designated a smoking area. That is consistent with Mr Orel's own evidence that his main concern was safety.
This is a problem for Finsbury Press because, on Mr Ernest Orel's evidence, the reaction of Mr Downs when he was challenged about the smoking was that he thought he could smoke when using the bin. Thus, on Mr Orel's own evidence, Mr Downs’ immediate response was a claim that he was not aware of the policy, or at least not of the detail of the policy and its application to the new premises. When Mr Ernest Orel has conceded that people may have been smoking during a break in an area not too far away from where Mr Downs was smoking, then I am not satisfied in all the circumstances that Mr Downs was aware of the policy or that the policy was still understood to be strictly applied, and therefore I find that Finsbury Press has not met the onus on them to show that it was more probable than not that Mr Downs was aware of the policy as it applied in those circumstances.

Whether the Termination was Harsh, Unjust or Unreasonable

If I were wrong on the question of a valid reason, then in this case, where:
·   there has been a change in the circumstances from when the policy was first introduced;
·   there had been no prior warnings issued on an individual basis about smoking; and
·   there was a suggestion that the policy was not understood in the context of the new premises by Mr Downs,

I am satisfied that it was harsh, unjust and unreasonable to dismiss Mr Downs in those circumstances.

Clearly, a more appropriate response would have been to issue a warning to Mr Downs on this issue. Issuing a warning would have had the necessary effect in terms of reinforcing the smoking policy and could have clarified its application in the new premises.
In terms of section 170DC, under which Mr Downs must be given an opportunity to defend himself against any allegation against him, there were exchanges between both Mr Ernest and Mr Peter Orel and Mr Downs.
If the allegation were merely that Mr Downs had been smoking, then clearly Mr Downs had been smoking. However, the full allegation was that Mr Downs was smoking in breach of a company policy known to Mr Downs. Mr Downs immediately raised the issue of the extent to which the policy was known by him. It seems to me that section 170DC would have entitled Mr Downs, having raised that matter, to a more thorough investigation of what it was that he was claiming in his defence than he in fact received. I therefore find a breach of section 170DC.

Conclusion

In the circumstances, summary dismissal was not the appropriate course. It therefore follows that a week's pay in lieu of notice should be ordered for breach of section 170DB, given that Mr Downs was an employee of less than one year's standing.
With regard to compensation, Mr Downs’ has had no alternative employment since his dismissal, despite some efforts to obtain employment. His efforts have been somewhat hampered by the fact that he has a bad back, which he must disclose to any prospective employer. He has been successful in getting another job in Victoria which is due to begin on 20 March, 1996. He will have been out of work for 19 weeks by then.
I am awarding compensation under Section 170EE (3) of the Act for the loss of 18 weeks wages, taking into account the order for a week in lieu of notice.
Compensation for relocation expenses are claimed. While I accept that it is sometimes appropriate to compensate for relocation expenses, I am not satisfied that it is appropriate in this case, given that the new job - happily for Mr Downs - attracts a significantly higher salary than that from which he was dismissed.

I certify that this and the preceding (9) pages
are a true copy of the reasons for decision of
Judicial Registrar R.D. Farrell.
Associate:
Dated:
APPEARANCES
Counsel appearing for the applicant: Mr S Blewett
Solicitors for the applicant: Australian Manufacturing Workers Union

Counsel appearing for the respondent: Mr A Chizmesya
Solicitors for the respondent: Printing & Allied Trades Employers Federation of Australia

Date of Hearing: 15 March 1996
Date of Judgment: 18 March 1996