Fitzgerald v Western Australian Specialty Alloys Pty Ltd

[1996] IRCA 358

DECISION NO:  358/96

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL EMPLOYMENT - REDUNDANCY - whether VALID REASON FOR TERMINATION - HARSH, UNJUST OR UNREASONABLE - claim for compensation for distress

Industrial Relations Act 1988 (C'th) ss170DB, 170DE, 170EE

Fair Trading Act (WA)

Metal Trades Award, Part I

Aitken v CMETSWU, WA Branch (1995) 63 IR 1.

Brackenridge v Toyota Motor Corporation Australia Ltd 19 April 1996, IRCA 162/96, Beazley J, unreported.

Burazin v The Blacktown City Guardian, Madgwick J, IRCA 660/95, 15 December 1995, unreported.

Ferry v Minister for            Health, Western Australia (1995) 64 IR 28.

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

Leddicoat v Schiavello Commercial Interiors (SA)18 October 1995, IRCA 569/95, Von Doussa J, unreported.

Pritchard v Standard Chartered Bank of Australia Ltd 2 February 1996, IRCA 11/96, Patch JR, unreported.

Quality Bakers of Australia Ltd v Goulding and Anr; Wickham and Anr v Quality Bakers of Australia Ltd (1995) 60 IR 327.

Sinclair v Anthony Smith and Associates Pty Ltd,1 December 1995, IRCA 663/95, Von Doussa J, unreported.

JOHN FITZGERALD, TERENCE VITUS VAN DER BERG, PAUL AUGUSTINE LAWLER and PAUL THOMAS NETTLETON v WESTERN AUSTRALIAN SPECIALTY ALLOYS PTY LTD - WI 0546, 0547, 0548 and 0549 of 1994

Before:                    BOON JR

Place:            PERTH

Date:                        12 August 1996

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY        

WI94/ 0546, 0547, 0548 and 0549

B E T W E E N:  

JOHN FITZGERALD, TERENCE VITUS VAN DER BERG, PAUL AUGUSTINE LAWLER and PAUL THOMAS NETTLETON

Applicants

A N D:  

WESTERN AUSTRALIAN SPECIALTY ALLOYS PTY LTD

Respondent

MINUTE OF ORDERS

12 August 1996  BOON JR

THE COURT DECLARES AND ORDERS THAT:

1. The termination of the applicants' employment contravened the provisions of sections 170DE(1) and 170DE(2) of the Industrial Relations Act, 1988

2. The respondent shall pay within 14 days of the date of this order the following amounts of compensation:

   (a)In relation to Mr Fitzgerald, the sum of $2,510.14

   (b)In relation to Mr Van Der Berg, the sum of $6,556.88

   (c)In relation to Mr Lawler, the sum of $3,500

   (d)In relation to Mr Nettleton, the sum of $4,912

3. The applications to be set down for Directions on Thursday 29 August 1996 at 9.30 am.

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        

WI94/ 0546, 0547, 0548 and 0549

B E T W E E N:  

JOHN FITZGERALD, TERENCE VITUS VAN DER BERG, PAUL AUGUSTINE LAWLER and PAUL THOMAS NETTLETON

Applicants

A N D:  

WESTERN AUSTRALIAN SPECIALTY ALLOYS PTY LTD

Respondent

REASONS FOR DECISION

12 August 1996  BOON JR

INTRODUCTION

The applicants, Mr Fitzgerald, Mr Van Der Berg, Mr Lawler and Mr Nettleton, have applied pursuant to section 170EA of the Industrial Relations Act 1988 for compensation arising out of the alleged unlawful termination of their employment by the respondent, Western Australian Specialty Alloys Pty Ltd.

The applicants have also applied for damages arising out of alleged breaches of the Fair Trading Act (WA) in relation to the termination of their employment.

On 23 February 1996, his Honour, Justice Madgwick, made an order that the claims arising under the Industrial Relations Act 1988 be heard separately from the claims arising under the Fair Trading Act (WA).  Accordingly, the claims made by the applicants under the Industrial Relations Act 1988 were heard before me.  As all those claims arose out of the same set of circumstances, the matters were heard together.

It is the respondent's position that the employment of the applicants was terminated solely on the basis of the respondent's operational requirements.  There is no allegation of poor performance or misconduct on the part of the applicants.

The applicants were represented by Mr A Lovell, an advocate from the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU).

At the outset of the hearing, Mr Lovell conceded that the respondent had a "technical" valid reason for the terminations within the meaning of section 170DE(1) of the Industrial Relations Act 1988, based on the operational requirements of the respondent's undertaking.  Mr Lovell indicated that this concession was made because of a number of decisions of this Court to the effect that the Court will not go behind management's decision to vary its operations or make some form of structural change. 

Further, Mr Lovell indicated that the applicants were no longer seeking reinstatement and were only seeking compensation. 

The main issue in this matter, therefore, is whether or not the termination of the applicants' employment was harsh, unjust or unreasonable within the meaning of those words in section 170DE(2) of the Act.

The applicants also allege that the respondent, in terminating their employment, breached the provisions of an enterprise bargaining agreement entered into by the respondent and the CEPU on 15 September 1994.

The respondent denies that it breached the provisions of the enterprise bargaining agreement and it also denies that the termination of the applicant's employment was harsh, unjust or unreasonable in all the circumstances of the case.

BACKGROUND

The respondent, Western Australian Specialty Alloys Pty Ltd ("WASA"), is a company owned by three shareholders: Western Aerospace Limited, Wyman Gordon Pty Ltd, and Pratt and Whitney Ltd.  WASA Pty Ltd is a manufacturer of a highly specialised product known as super alloy.  The product is for use in the rotating parts of jet engines, which endure high levels of stress and operate in critical environments.  There are only about eight other companies in the world which manufacture a similar product.  The respondent is the only company in the southern hemisphere which manufactures super alloy for applications in jet engines.

WASA was established in or about 1993.  The four applicants in this matter were amongst the respondent's first employees.  Each of the four applicants was employed in the maintenance section of the respondent company. 

On 3 November 1994, the directors of the respondent made a decision to terminate the employment of the four applicants and to contract out the respondent's maintenance functions to Skilled Engineering Pty Ltd.

The applicants were told on the morning of 4 November 1994 that their employment was to be terminated immediately. 

The main complaint of the applicants is that they were not consulted or warned in any way by the company in relation to the decision to terminate their employment on the grounds of redundancy.

JOHN FITZGERALD

Mr Fitzgerald is a 27-year old qualified fitter.  Immediately before he was employed by WASA, he was working for a company called Ausbit (Ceramco).  Whilst he was there, he was approached by a Mr Alan Stafford, who was then the union organiser for the Metal Trades Union.  According to Mr Fitzgerald, Mr Stafford approached Mr Fitzgerald and said that there was a new company being set up in Canning Vale.  Mr Stafford asked Mr Fitzgerald to come to see him. 

At an interview which Mr Fitzgerald attended, Mr Stafford indicated to Mr Fitzgerald that there were "great prospects" for the future of the company.  Mr Fitzgerald went to see his current employer and told him that he had been made an offer of other employment.  Mr Fitzgerald's employer offered to match whatever money the new company might offer to pay him, in order for Mr Fitzgerald to stay with Ausbit (Ceramco). 

Mr Fitzgerald was again approached by Mr Stafford and was invited to come to an introductory meeting at the company.  That meeting lasted for about four hours.  Mr Fitzgerald met George Durffe, who was the Operations Manager of WASA at the time.  Following that, Mr Fitzgerald was asked to attend a further interview at which his trade qualifications were examined in detail.  The recruitment process was extensive and went on for a number of months.  Mr Durffe then took Mr Fitzgerald on an introductory tour of the plant.  According to Mr Fitzgerald, Mr Durffe explained to him that the plant was "state of the art technology", and went into great detail about its machinery and about his prospects for the future.  Mr Fitzgerald said that he was led to believe by Mr Durffe that it was to be a long-term job of 10 to 15 years or more.  Because of this, Mr Fitzgerald discussed the matter with his fiancee.  They had just bought a house and it was an important decision for them to make as a couple.

Mr Fitzgerald decided to accept the offer made by WASA.  He told his employer who, once again, asked him to stay with Ausbit (Ceramco).  Mr Fitzgerald started work for WASA in August of 1993.  He was the first employee of the company, with the exception of a receptionist who was already there.  Mr Stafford joined the company shortly afterwards as Industrial Relations Officer.  At the time of Mr Fitzgerald's termination, WASA had only about 11  employees. 

About three or four months prior to the termination of his employment, Mr Fitzgerald spoke to Mr Brad Brown, who was at that time plant engineer with WASA.  One of the maintenance employees had resigned and a contract maintenance person from another company, Skilled Engineering, had been used to fill that position.  Mr Fitzgerald was shop steward, and he approached Brad Brown to ask him if there was any possibility of the whole maintenance function going to Skilled Engineering.  According to Mr Fitzgerald, Mr Brown assured him that was not the case.  Some time later, Mr Fitzgerald once again asked Mr Brown if there was any indication that the company might be going to use contract maintenance personnel and Mr Brown once again assured Mr Fitzgerald that this would not happen.  Mr Fitzgerald could not remember with any reasonable certainty when these conversations occurred, but he believed that one was before August and one just after August of 1994.

Mr Fitzgerald gave evidence that on 3 November 1994, he was on afternoon shift which commenced at 3 o'clock and finished at midnight.  He was the only maintenance person on duty and, as usual, he locked up the premises.  Mr Fitzgerald had been given the keys to the building, the exterior gates and the security alarm.  At about a quarter to eight on the following morning, he received a telephone call from Mr Brad Brown, who asked him to come in and attend a meeting at 9 am on that day.  Mr Brown gave no indication that there was anything wrong and Mr Fitzgerald was optimistic that he might receive a promotion.  Mr Fitzgerald, however, took a tape recorder with him.  He had never used one before but, by coincidence, had borrowed one from his father in-law only a few days before.  Mr Fitzgerald's evidence was that although he had no reason to suspect that his employment might be terminated at that meeting, he took the tape recorder along as he had had, for some time, a deep suspicion of some of the managers and their competence.  Mr Fitzgerald's evidence was that it was for his own record that he took the tape recorder.  He concealed the tape recorder in his top pocket during the meeting.

The termination meeting was attended by the four applicants in this matter; a WASA secretary; Alan Stafford, Mick De Bartino, Ron Harrison and Bradley Brown, all of WASA; and Rob Malpass of Skilled Engineering. 

At this meeting, Mr Brown advised the applicants that:

"A decision was made last night by the directors of the company to have our maintenance handled by contract maintenance.  The contract has been awarded to Skilled Engineering, effective immediately.  As a result, the present maintenance crew here will become redundant.  We have put together a redundancy package which we feel will be very good.  Rob [Malpass] here is from Skilled.  They have indicated an interest in interviewing everybody to give them a position in their system, so that in a short time, Rob will be wanting to talk to everyone to that effect . . . we believe that the company at this point in time would better concentrate on the key business facility. 

We are aiming to structure our maintenance programs and engineering such that we use specialist contract groups as and when needed in fields of hydraulics and gas, and other areas.  To this end, we will be running a smaller maintenance group than we are at present, and supplementing them with people who are specialists in the field.  This allows us, we feel, to get back more in production issues and still maintain the facility, and both in an economically and commercially viable manner. 

These decisions are not easy to make.  A lot of people do get affected adversely by them but, like I say now, there is no point of reflection on people's skills or anything of that nature.  We have been very happy with the maintenance group.  It is just that the company wishes to change with the times and a lot of other companies in the industry are going this way.  So, personally, I would like to say thanks for all your good efforts for WASA [Western Australian Specialty Alloys Pty Ltd], and it's been very much appreciated."

I will go into the termination meeting in greater detail further on in these reasons for judgment. 

Mr Fitzgerald's evidence was that he was absolutely devastated by what happened at the meeting and he didn't speak for quite some time because he just couldn't believe what he had heard.  He had made a number of financial commitments, had married and was financially reliant on his job.  He said he loved his job and had gone into the meeting perceiving that there was a possible promotion for himself. Mr Fitzgerald's evidence was that he had had no prior indication whatsoever that termination or redundancy was afoot.

Mr Fitzgerald's evidence was that at the meeting he was handed an envelope containing details of his redundancy package.  Immediately after the meeting, the men were asked to pack up their belongings and leave the premises. Mr Fitzgerald received two weeks' pay in lieu of notice and four weeks' redundancy pay.

The union was notified of the redundancy on 4 November 1994.  A picket line was organised outside the Western Australian Specialty Alloys Pty Ltd premises.  The applicants were unhappy about the decision to make them redundant and were seeking to be reinstated. 

An action was brought in the Western Australian Industrial Relations Commission in connection with the dispute over the termination.  Mr Fitzgerald acknowledged that at the conclusion of those proceedings, an offer was made to the union on behalf of the employees.  Mr Fitzgerald's evidence was that he believed the offer consisted of a further payment of two weeks' wages.  This offer was rejected by the applicants because they were seeking to have their jobs back.

Mr Fitzgerald gave evidence that when the company terminated his employment, they took away his security.  Mr Fitzgerald felt very insecure about getting another job.  First of all, he went to Skilled Engineering and worked casually but then when he got a full-time job, he worked 70 hours a week because he felt insecure.  As a result, his marriage broke up.  His wife left him because she felt that all he thought about was work and money.  Mr Fitzgerald's evidence was that he and his wife had not been arguing prior to the termination of his employment but that after the termination, his wife could not accept that Mr Fitzgerald worked 6 days a week, 12 hours a day.

TERENCE VITUS VAN DER BERG

Mr Van Der Berg is a 40-year old qualified fitter and turner.  Immediately prior to working for WASA, he was employed by Davmar Engineering. 

Mr Van Der Berg is the only one of the applicants who approached WASA seeking employment, as opposed to being approached by people acting on behalf of the company.  He completed an application form after he had heard about the job at WASA.  He started work with the respondent on 10 January 1994.  Mr Van Der Berg's evidence was that he believed the job to involve long-term employment.  He had gained this impression as a result of interviews with Alan Stafford and George Durffe.  Mr Durffe had explained to him that he would need some further training to do the job and that the company would train him in being able to manage the plant.  Mr Durffe said that the long-term prospects were that as the respondent was a new company and Mr Van Der Berg was one of the first employees, he was looking at him for a supervisory position later on.  Mr Van Der Berg gave evidence that he had just started his job with Davmar Engineering and he was quite happy there.  He discussed with his wife the prospect of changing employment to WASA.  The long-term prospects at WASA looked much better than those for Davmar Engineering, so he decided to hand in his notice.

Mr Van Der Berg's evidence was that on 4 November 1994 he was approached by Mr Brown, who asked him to attend a meeting in the lunch room.  Prior to this, he had no idea what the meeting was going to be about.  Mr Van Der Berg said that when Mr Brown told the men at the meeting that they were being made redundant, he was dumbfounded.  He was surprised and devastated.  Mr Van Der Berg said that it was just a short time before this that he had spoken with Mr Stafford about a pay rise and asked for something in writing as he was applying for a housing loan and needed some sort of guarantee about his job security for the bank.  The company gave him a letter.  He applied for the housing loan and bought an old house in Manning to renovate.  As a result of the termination of his employment he experienced financial difficulties and had to use his savings to make some of the mortgage repayments.

Mr Van Der Berg said that he received a redundancy payment when he left WASA.   He was paid what the company believed was his entitlement. Mr Van Der Berg was upset at being terminated because he had been told that he had long-term prospects with the company.  He agreed in cross-examination, however, that if they had given him a month's notice of the redundancy it would have been easier for him to go out and search for a job in the meantime.

PAUL AUGUSTINE LAWLER

Mr Lawler is a 36-year old qualified electrician.  Immediately prior to starting work for WASA he had been employed by Bradken Foundries in South Fremantle for five years.  Mr Lawler said that initially Clive Newman, a moulder at Bradken Foundries, approached him and asked if he would be interested in changing jobs.  Mr Lawler replied that he was not interested.  When another co-worker expressed interest in a job and went for interviews, Mr Lawler asked how he might be able to find out more about the position.  Mr Lawler telephoned Alan Stafford and sent him his resume.  He was interviewed by Mr George Durffe, who gave him a tour of the plant and told him what kind of work he would be involved in.  Mr Lawler's evidence was that he took a cut in pay to move to WASA..  Mr Stafford told Mr Lawler that there would be pay rises in the pipeline.  Mr Stafford also said that with the enterprise bargaining agreement negotiations that were taking place, there was further prospect of extra money.

Mr Lawler gave evidence that around early September 1994, some Skilled Engineering people started work at WASA.  Mr Lawler approached Brad Brown, as he was worried that the respondent was going to get more Skilled Engineering people in to take over the maintenance section of the plant.  Mr Brown assured Mr Lawler that he had nothing to worry about and that his job was quite secure.  Mr Brown told Mr Lawler that WASA had only taken the Skilled Engineering people on temporarily because the company had had problems locating an instrument fitter.

Mr Lawler gave evidence that prior to termination, he had applied for a personal loan.  He had asked Alan Stafford to give him a letter, setting out how much he earned, to assist him in his application for the loan.

Mr Lawler's evidence was that on the morning of 4 November 1994, he was told to attend a meeting in the lunch room.  He did not know what it was to be about.  Mr Lawler said that after Mr Brown advised the men that they were being made redundant, he was not sure at first if he was hearing correctly.  His reaction was that he had left a job that he was quite secure in, only to be made redundant.  When he attended at the interview at WASA, he was told that the job would be very secure.  He said that he had left a job he had been at for over five years and that if he had stayed at that job, he would have been entitled to long service leave.  Mr Lawler's evidence was that he couldn't believe what was happening and that it was the last thing he would have thought of, especially after he had asked Brad Brown about his job and was told that it was safe.  The company had given him no warning.

Mr Lawler gave evidence that after the termination interview, his main concern was to try to get his job back.  Because of that, he was anxious to contact the union. 

PAUL THOMAS NETTLETON

Mr Nettleton is a 29-year old mechanical fitter.  From April 1988, he worked at Bradken Foundries until he started work for WASA.  Mr Nettleton gave evidence that he was initially approached by Clive Newman, who said there was a job coming up at Western Australian Specialty Alloys Pty Ltd.  Mr Nettleton said that at that time he was not interested but later changed his mind.  Mr Newman advised Mr Nettleton that Alan Stafford would contact him.  Mr Stafford asked Mr Nettleton to hand in a resume, which he did.  Mr Nettleton was then invited to an interview in Perth and from there he was invited to a tour of the plant at WASA.  Mr Durffe showed Mr Nettleton around the plant and spoke to him for quite some time. 

Some time later, Mr Nettleton received a telephone call from Mr Durffe to ask him to attend another interview.  There were also a number of  telephone calls in between from Alan Stafford.  Mr Nettleton attended the interview with Mr Durffe, who then put a proposal to Mr Nettleton.  Mr Durffe advised Mr Nettleton that he would not be earning quite as much as he was earning at Bradken because there would not be as much overtime available.  However, he said that there would be extensive learning and promotional opportunities later on, and that the first people employed in the plant would be looked at first for promotion.

Mr Nettleton left the interview and later that day received a phone call from Mr Durffe, who offered him the job.  Mr Durffe told Mr Nettleton that they were looking at a minimum of 10 to 15 years' lifespan for the company.  Mr Nettleton resigned from Bradken Foundries.  His former employers were sorry to see him go as he had done a good job, and were quite upset that he was being poached by another company.

Mr Nettleton's evidence was that before he went to WASA, he discussed the matter with his wife.  They had one small child and another child on the way, so it was a big step for the family.  They decided that the promotions and the money to come later on were worth the cut in pay at the time.  Mr Nettleton started work at WASA on 23 August 1993.

Mr Nettleton said that, four or five days before the meeting of 4 November 1994, he had written a letter to Mr Stafford, criticising the state of the maintenance department.  Mr Nettleton said that he showed the letter to Mr Stafford and said that if he did not organise a maintenance meeting, he would submit that letter to the directors.  When he was called to the meeting on 4 November 1994, he thought that they had "finally organised a maintenance meeting between all the maintenance fitters and the maintenance supervisor at the time, Mr Brad Brown".

Mr Nettleton said that his immediate reaction to being terminated was a combination of disappointment, anger, frustration and dismay.  He described it as being "hit with a ton of bricks".  He said that he had no idea that this was going to happen.  He was concerned that he had a family to feed and a mortgage, and "all of a sudden, it's just taken away in one brief instant."  Mr Nettleton did most of the talking on behalf of the employees at the meeting.  Mr Nettleton's evidence was that this was just his personality as he is very "up-front" with people.  Mr Nettleton said that 80 per cent of the people who go through the redundancy process have a two or three month warning period and discussions with the company, so that they have ample opportunity to find other work and to organise their lives and get ready for the change.  Mr Nettleton said, "It's nice and clear, and an easy changeover, instead of this just abrupt halt and being asked to leave the premises." 

The termination of Mr Nettleton's employment had an effect on his wife and family.  He had just taken out a loan to replace the motor in his car, and he and his wife were just starting to save to try to buy a house.  Mr Nettleton was particularly unhappy about the fact that he had been approached by Skilled Engineering several weeks earlier and offered a job.  Mr Nettleton had discussed it with his wife and they had decided to stay with WASA as he had a permanent job there.  Mr Nettleton said that he felt humiliated that someone had done this to him and that he didn't believe that he deserved to be treated in this way.  If he had been notified of the change, he would have accepted the job with Skilled Engineering.

Like Mr Fitzgerald, Mr Nettleton agreed that the company had offered him another two weeks' pay after a hearing in the State Industrial Relations Commission.  He had declined that offer as at the time he was seeking reinstatement.

THE UNION

The Court also heard evidence from Mr Joe Fiala, an organiser with the CEPU.  Mr Fiala's evidence was that the union was not consulted about the redundancy until 4 November 1994, after the decision had been made.  Mr Fiala said that at approximately 1 o'clock on Friday 4 November, 1994, a meeting was held between the sacked employees and the production staff and, at that meeting, it was voted on and a resolution passed that they would go on strike in support of their sacked members.  The strike commenced from that afternoon onwards.  It finished on 14 November 1994 because they were ordered to return to work by Commissioner Parkes, as a result of a dispute in the State Industrial Relations jurisdiction.  The objective of the strike was to get the dismissed employees' jobs back.  A picket line was formed at the company's gates until Monday, 14 November 1994.

WASA had applied for a section 44 conference in the Western Australian Industrial Commission on the basis of the dispute.  Mr Fiala's evidence was that the union was present at the conference in the Western Australian Industrial Commission; however, while Mr Stafford was there on behalf of the company, the union refused to speak or to discuss the matter. 

On Friday, 4 November 1994, Mr Fiala and another organiser with the CEPU had a meeting with Mr Stafford and a Mr Harrison to try to find out why the redundancy situation had occurred.  According to Mr Fiala, the company's position at that meeting was that the decision had been made and that was to be the end of the matter.  There was no opportunity for negotiation.  The company simply explained that the decision had been made, and they were not going to change it.

THE RESPONDENT'S WITNESSES

The Court heard from Mr Kenneth Graham, who worked for WASA between November 1993 and February 1995, initially as senior metallurgist and then as manufacturing manager.  Mr Graham's evidence was that he had worked in a number of mining companies, some of which have had contractors carrying out the maintenance functions.  His evidence was that he was involved in the consideration of whether to contract out the maintenance function at WASA.

He said that early in 1994 it looked like contract maintenance was an option for WASA, but it was no more than a thought at that stage.  The idea he had during the early part of 1994 developed through informal discussions and in about July it was taken a step further, when the company looked at the possibilities of bringing in contract maintenance.  There were informal discussions with other managers and directors of WASA.

WASA considered four contracting companies that may be able to offer a service, one of which was Skilled Engineering.  It initially made informal inquiries of those four companies.  WASA then asked the contracting groups to submit proposals to provide a contracting service to the respondent.  Three of the contracting groups, including Skilled Engineering, submitted proposals.

The company weighed up the three proposals it received and decided that if they were going to go to contract maintenance, Skilled Engineering would be the most likely company they would wish to employ.  At that stage, no final decision was made.  The Skilled Engineering proposal was dated 9 August, and WASA decided not to take any action for a period of three months.  According to Mr Graham, it was first thought that it was better to stay with in-house maintenance at that stage.  There was no further examination of the proposal for contract maintenance until about three months later. 

WASA then looked at the advantages and disadvantages of contract maintenance.  It believed that there were many advantages in going to contract maintenance.  These advantages included having a flexible workforce; not having to put as much emphasis on certain aspects of training; and allowing the company to concentrate on its main operation of production and technical control.

According to Mr Graham, the decision to proceed with contract maintenance was made on the late afternoon or evening of Thursday, 3 November 1994.  They chose Skilled Engineering as it had a good track record of supplying contract maintenance to manufacturing and mining industries.  WASA asked Skilled Engineering whether or not they would consider taking on the maintenance people who would lose their jobs as a result of the restructure.  According to Mr Graham, this was a very important consideration to the managers of WASA, and Skilled Engineering told him that they would interview the people who would lose their jobs as a result of the restructure.  There was, however, no undertaking by Skilled Engineering to employ those people.

Mr Graham's evidence was that at the meeting on 3 November 1994, the directors of WASA told him to hold a meeting with production personnel to explain the changes that were going to be made.  At the same time, a meeting was to be held with the maintenance employees who would be made redundant immediately.  Mr Graham passed on these instructions to Mr Brad Brown, who was given the task of advising the men of the termination.  Mr Graham did not know when the redundancy packages were prepared.  He said that he was not involved in that side of things.

Mr Graham said during cross-examination that there was an intention to conceal from the workforce what the company was going to do.  This was to avoid rumours floating around.  Mr Graham said that the terms of the enterprise bargaining agreement were considered in the course of this decision-making process.  He said that the way in which WASA made the decision to use contract maintenance was, in his opinion, the best way of doing it under the circumstances at the time.  This was because of the time constraint that was imposed by the directors.  The directors told Mr Graham what to do on the Thursday afternoon, and he was told to put the decision into place by 9.00 am the next day. 

Mr Graham's evidence was that the workforce and the union were not consulted as part of the decision-making process, as "it was something that might happen and, in a situation like that, it quite often is best not to introduce too many rumours about the things that may or may not happen".  When asked during cross-examination why the board told him to implement the decision immediately, Mr Graham said this was because the company wanted to avoid rumours developing.  He was unable to communicate the decision to the union earlier because of the directive from the directors to implement the decision immediately.

The Court also heard from Kerry Hughes, the Executive Director and State Manager for Skilled Engineering.  His evidence was that Skilled Engineering's main business is labour-hire, together with project management, and contract and plant maintenance and management services.  Skilled Engineering provides a supplementary workforce to companies on a day to day basis.  In addition to that, it also provides a contract maintenance division which provides maintenance services to manufacturing and mining industries. 

Mr Hughes identified the proposal that Skilled Engineering had submitted to WASA.  His evidence was that that document was the normal or standard type of Skilled Engineering submission.  The schedule of rates included in the tender proposal was based on the Metal Trades Award, Part I and the Electrical Contractors Award.  Mr Hughes gave evidence that the first time he heard of a request to provide maintenance services to WASA was on 4 November 1994.

Mr Hughes explained that Skilled Engineering solicits this type of business by sending out hundreds of letters to businesses they see as potential customers for maintenance.  They follow up the letters by telephone calls to executives of the particular company.  During the telephone conversations, there are discussions as to what the plant is capable of doing, the numbers of personnel employed, and Skilled Engineering then sets out what it is offering in terms of improving maintenance services.  A proposal is formed and it is then up to the client to discuss the proposal with Skilled Engineering.  The normal procedure is to follow up a proposal some months later.  As far as Mr Hughes was concerned, the WASA was a "dead duck" until November 4, when he was advised that they wished to proceed and talk about maintenance facilities.  Mr Hughes himself had not had any personal involvement with WASA before that date.

When Mr Hughes was advised that Skilled Engineering was to take over the maintenance contract, the question of offering employment for the people being made redundant was brought up by WASA and Mr Hughes agreed that Skilled Engineering would interview them.  The contract between Skilled Engineering and WASA was signed a week or so after 4 November 1994.  Mr Hughes himself had no knowledge of why WASA moved so rapidly, once the proposal was accepted.

Mr Frederick Abbott, Managing Director of Western Aerospace Ltd and Managing Director of Western Australian Specialty Alloys Pty Ltd, was called to give evidence.  Mr Abbott explained that the material manufactured by WASA is a highly specialised product.  Mr Abbott said that the product quality requirements on the company are very tight.   If there is anything wrong with the metal they manufacture, it may affect the safety of the aircraft into which the metal is placed.  If there is an impurity in the product, the effect could be quite dramatic; for example, there may be an engine failure if there was an impurity because the disc the company manufactures could break up under stress. 

Mr Abbott said that in August of 1994, the company's manufacturing manager, Ken Graham, raised a potential change in maintenance arrangements with the directors of WASA.  The potential change related to the maintenance function of all the equipment at the facility.  According to Mr Abbott, WASA is essentially a manufacturer, and maintenance of the factory is an ancillary role.  Mr Graham raised the question of contracting out the maintenance function.  As the directors considered his arguments to be valid, they instructed him to investigate the possibility and he did so.  Mr Graham came back with a recommendation that WASA should concentrate on manufacturing, and should contract out the maintenance function.  According to Mr Abbott, Mr Graham came back to the directors at a meeting on 3 November 1994.  His recommendation was that Skilled Engineering undertake the maintenance work for WASA.

On 3 November 1994, Mr Graham introduced some people from Skilled Engineering who made a presentation to the directors of WASA.  Once the presentation had been made, the Skilled Engineering people left and the directors had a discussion.  A decision was made to contract out the maintenance immediately.  According to Mr Abbott, the main reason for deciding to implement the decision immediately was that the directors had a concern about the "possible impact of a disaffected employee affecting the quality of the product that the company makes".   Quality and safety are prerequisites for the company's business, and "the company would be out of business if there was one minor impurity which causes one disaster, no matter how small or how large".  The company had over $40 million invested in the factory.  As it was a new company, this was not a risk that the directors were prepared to take.  As an example of the way in which a disaffected employee might affect the product, Mr Abbott said that "the simple act of tossing a 20 cent coin into . . . a charge make-up can which has elements in it, that will make the whole melt out of spec and . . . cause a problem". 

The Court also heard from Mr Bradley Brown, the manufacturing manager at WASA.  At the time of the termination of the applicants' employment, Mr Brown was the plant engineer and reported to Mr Graham.  Mr Brown gave evidence that during 1994, he and Mr Graham were the two people from WASA mainly involved in investigations relating to the contracting out of maintenance services.  One of the company's maintenance people had resigned and Mr Brown had been unable to find a suitable person to fill that position. 

Mr Graham and Mr Brown discussed it further, and decided to call on a number of companies to give WASA presentations on providing the company with a contract maintenance service.  As the plant was still in its infancy, they were not sure of the skills they needed, and they wanted to have flexibility as the plant developed.  Mr Brown said that by contracting out the maintenance function, the company could have skills readily available and not have the delay of training people to meet the needs of its business.  They approached a number of companies, including Skilled Engineering, and asked them to give WASA proposals in this regard. 

The maintenance person who resigned did so in early July 1994, and Mr Brown and Mr Graham requested proposals from companies by early August.  Mr Brown and Mr Graham considered the question and put forward a recommendation to the board that they review the situation after a period of three months.  The immediate decision was that they would not proceed with contract maintenance, but rather leave it in abeyance for the time being.  There was still the problem of how to replace the person whom they needed and, whilst the contract maintenance proposal was under review for a period of three months, WASA decided to approach Skilled Engineering to provide a tradesperson to fill in. 

By August of 1994, Mr Graham and Mr Brown had decided that Skilled Engineering would be the preferred contractor if they were going to go ahead with the proposal to contract out the maintenance function.  According to Mr Brown, Skilled Engineering gave the company a very good presentation, had a lot of people readily available, and also agreed to interview the people who would be made redundant in such a move. Mr Brown said that this latter factor was the one that made them choose Skilled Engineering, should they decide to go ahead with the proposal.

Mr Brown's evidence was that after August, he did not have a lot of involvement in the matter.  He went to Melbourne in early November and returned to Perth on the evening of 3 November 1994.  On the Friday morning, upon arrival at work, Mr Brown was advised by Mr Graham that the directors had decided that contract maintenance would be implemented immediately.  Mr Brown was instructed by Mr Graham to address a meeting of the maintenance crew who would be made redundant.  He was presented with a number of envelopes, and he and Ron Harrison were to make the maintenance employees aware of their redundancy.  This was the first time that Mr Brown was made aware of the decision.

As to the speed of the implementation of the decision, Mr Brown said that he believed it was done in that manner to try to minimise the impact on the employees.

Mr Brown indicated that he was felt it was important that the employees made redundant attend interviews at Skilled Engineering as soon as possible to minimise the impact on them.  Mr Brown said that he also believed that if people are working and they are depressed or upset with something, their mind may not be on the job and then they may possibly become a safety hazard to themselves and others.  Mr Brown said that he felt that the manner in which the redundancy was advised to employees was in the interests of the employees.

Mr Brown gave evidence that at the termination meeting, it appeared to be John Fitzgerald who was the most upset or concerned about what had happened.  Mr Brown felt that Paul Nettleton had been more bitter and angry than distressed. 

During the termination interview, Mr Brown told the men that their career paths had opened up.  Mr Brown said that he made the statement as maintenance is a support role at WASA.  By giving the men an opportunity to go to Skilled Engineering, they could be rewarded by Skilled Engineering in that if they showed a lot of promise, their opportunities would be broadened.

Mr Brown admitted that he was not very good in his presentation at the termination interview and said that was because he had only just become aware of his role that morning.  He indicated that if he had had more time, he would have chosen his words more carefully.  Mr Brown said that throughout the interview, he was trying to implore upon the men that they go to an interview with Skilled Engineering.

THE TERMINATION MEETING

As Mr Fitzgerald tape-recorded the meeting at which the men were advised by Mr Brown that their employment was to be terminated immediately, and as the respondent's witnesses admit that the tape accurately reflects what took place, there is no conflict of evidence as to what transpired at that meeting.

The meeting lasted for some time.  Mr Brown did most of the talking on behalf of the respondent, and Mr Nettleton did most of the talking on behalf of the applicants.  Although Mr Nettleton stated very clearly his dissatisfaction with the company's decision and what he considered to be potential problems arising out of the decision, it is clear that the respondent's stance was that the decision had been made and it was not going to be changed.  It appears to me that Mr Brown was trying to soften the blow somewhat by stressing the fact that Skilled Engineering was offering each redundant employee the opportunity to attend an interview at its premises.  Mr Brown repeatedly said to Mr Fitzgerald that he believed Mr Fitzgerald would be back at the WASA premises as a Skilled Engineering employee.  I do not criticise Mr Brown for the way in which he conducted the interview, because it appears from his evidence that he was given the task with very little time for preparation.  He may have given a misleading impression to the men, however, and to Mr Fitzgerald in particular, in repeatedly saying that he felt they "would be back one day".

THE ENTERPRISE BARGAINING AGREEMENT - VALID REASON

On 15 September 1994, Commissioner Beech of the Western Australian Industrial Relations Commission made an order that an enterprise bargaining agreement between WASA and the CEPU be registered as an Enterprise Bargaining Industrial Agreement, pursuant to the provisions of the Industrial Relations Act 1979 (WA).  The parties before me agreed that the enterprise bargaining agreement had, for the purposes of the matter before me, a similar force and effect to that of a registered industrial award.  Clause (3) of that enterprise bargaining agreement states as follows :

1. - INTENTION

It is the objective of the parties to make the Western Australian Specialty Alloys Pty Ltd Foundry a highly competitive international manufacturer, and a model industrial site, excelling in safety, productivity, quality, flexibility, communication and commitment.

Our intention is to create an environment which will encourage and support a highly skilled and committed workforce where participation and development of employees will be a priority for the betterment of the individual and the business.

Work will be organised to maximise the flexibility of the workforce and enable employees to fully utilise their skills and capabilities.  There will be no artificial barriers preventing employees from performing tasks in which they have been training and are competent."

Clause 22 of the enterprise bargaining agreement states as follows :

"22. - INTRODUCTION OF CHANGE

(1)Company's Duty to Notify :

(a)     Where the Company has made a definite decision to introduce major changes in production, programme, organisation, structure or technology that are likely to have 'significant effects' on employees, the Company shall notify the employees who may be affected by the proposed changes and the union.

(b)    'Significant effects' include termination of employment, major changes in the composition, operation or size of the Company's workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the need for retraining or transfer of employees to other work or locations and the restructuring of jobs.  Provided that where the Agreement makes provision for alteration of any of the matters referred to herein an alteration shall be deemed not to have 'significant effects'.

(2)Company's Duty to Discuss Change

(a)     The Company shall discuss with the employees affected and the union, the introduction of the changes referred to in subclause (1) of this clause, among other things, the effects the changes are likely to have on employees, measures to avoid or minimise the adverse effects of such changes on employees and shall give prompt consideration to matters raised by the employees and/or the union in relation to the changes.

(b)    The discussion shall commence as soon as is practicable after a definite decision has been made by the Company to make the changes referred to in subclause (1) of this clause.

(c)    For the purpose of such discussion, the Company shall provide in writing to the employees concerned and the union, all relevant information about the changes including the nature of the changes proposed; the expected effects of the changes on employees and other matters likely to affect employees provided that the Company shall not be required to disclose confidential information, the disclosure of which would be inimical to the Company's interests.

Clause 22A, dealing with redundancy, states in part as follows :

22A. - REDUNDANCY

(1)An employee shall be deemed redundant in circumstances where the Company has made a definite decision that it 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, and termination of the employee results.

The balance of clause 22A deals with issues relating to severance pay for redundant employees.

It is the respondent's position that there was no breach of the provisions of the enterprise bargaining agreement.  It was argued that as clause 22(2)(b) requires that discussion shall commence as soon as is practicable after a definite decision had been made by the company to make the change, the company was not required to notify either the employees or the union until after the definite decision to employ contract labour and make its employees redundant was made.  The respondent argues that as the definite decision was not made until late on 3 November 1994, it complied with the requirements of the enterprise bargaining agreement by notifying the employees and the union at 9 o'clock on the morning of 4 November 1994.

The respondent also states that on the union's own evidence, there was an opportunity to discuss the changes in the days immediately following the termination but there was a refusal on the part of the union to take part in discussions.  I note in this regard, however, that the decision had already been made and implemented, and the respondent's management made it clear that it would not change what had happened.

The respondent argued that the enterprise bargaining agreement does not say that the discussions have to take place before implementation of the decision to make the change.  It was also argued for the respondent that as the union offered no proposal which was an alternative to reinstatement, there would have been no point in holding discussions as the company had already implemented its decision.

On behalf of the applicants, it was argued that there was a clear breach of the provisions of the enterprise bargaining agreement.  Further, it was said that if there was a technical compliance with the provisions of clause 22(2)(b) of the agreement, the speed with which the redundancy was implemented went clearly against the spirit and intention of the enterprise bargaining agreement.

Further, from the way in which the case on behalf of the applicants was conducted, it appears that the applicants do not accept that no definite decision was made by WASA before 3 November 1994.  Although one may have suspicions about the decision-making process in this case, that is not something on which this Court can act.  There is no compelling evidence to the effect that the decision was made at an earlier date, and I find as a fact that the company made a definite decision to make the applicants redundant on 3 November 1994.

Having said that, I do find that there has been a breach of the provisions of the enterprise bargaining agreement.  Clause 22 is clearly aimed at discussing change before the changes are implemented.  One need go no further than the provisions of clause 22(2)(a), which refers to "the effects the changes are likely to have on employees, measures to avoid or minimise the adverse effects of such changes on employees and shall give prompt considerations to matters
raised by the employees and/or the union in relation to the changes"; and the provisions of clause 22(2)(c) which refer to "the nature of the changes proposed; the expected effects of the changes on employees and other matters likely to affect employees" (my emphasis).

In my view, the respondent cannot avoid its obligations under the enterprise bargaining agreement by deciding unilaterally to implement the proposed changes immediately.  Further, it is my view that such an approach by the respondent goes against the spirit and intention of the enterprise bargaining agreement.  I refer in this regard to the provisions of clause 3, which state, amongst other things, that it is the objective of the parties to make the respondent a model industrial site, excelling in communication.  There is authority in this Court which establishes that a termination of employment in breach of an award is not a termination for a valid reason.  For example, in Ferry v Minister for      Health, Western Australia (1995) 64 IR 28 Marshall J said at page 36, "To terminate an employee in breach of the employer's obligations under State and Federal awards is not to terminate an employee's employment for a valid reason.

Counsel for the respondent, Mr Lucev, put forward some argument that as Mr Lovell had conceded that the termination was for a valid reason at the outset of this case, he could not now say that a termination in breach of the provisions of the enterprise bargaining agreement was not a termination for a valid reason.  I do not agree with that submission.  Mr Lovell's concession clearly related only to a recognition of the right of the employer to make a decision that the employees were to be made redundant. 

I understood Mr Lovell's concession to be based on authorities such as Quality Bakers of Australia Ltd v Goulding and Anr; Wickham and Anr v Quality Bakers of Australia Ltd (1995) 60 IR 327. In that case, her Honour Beazley J said at page 333:

"In the present case, there is evidence that Quality Bakers was engaged in a cost-effectiveness appraisal of its bread carting operations and that it had decided not to service customers it identified as unprofitable.  It made a consequential decision that the number of bread runs had to be reduced.  Mr Goulding's solicitor submitted that Quality Bakers had to prove that its approach to this restructuring was justified on economic or financial grounds and that it had not done so. 

I do not agree.  Part VIA provides, relevantly, that there must be a valid reason for any termination of employment based upon the operational requirements of the business.  An employer might decide to make certain positions redundant with the sole intention of increasing the profitability of an already profitable business.  Such a decision would relate as much to the operational requirements of the business as would a decision as to redundancies taken in the case of a business which was in a parlous financial condition or when a certain type of work was no longer undertaken by the business. 

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."

It was clear from the outset that the applicants were challenging the way in which the decision was implemented.  A logical extension of the proposition put forward by Mr Lucev is that by making that concession, the applicants would also be barred from arguing that the reason was not valid on the grounds that the termination was harsh, unjust or unreasonable.  That was clearly not the intention of the applicants in making the concession referred to.

For these reasons, I am of the view that there was no valid reason for the termination of the applicants' employment. 

HARSH, UNJUST OR UNREASONABLE

If I am wrong about my conclusion that the termination of the applicants' employment was not for a valid reason within the meaning of those words in section 170DE(1), the question of whether the terminations were in all the circumstances harsh, unjust or unreasonable within the meaning of section 170DE(2) remains to be decided. In this regard, the applicants rely on a series of authorities in this Court to the effect that where there is no consultation with the employees or the union prior to terminating their employment on the grounds of redundancy, that termination may be harsh, unjust or unreasonable. For example, in the Quality Bakers case, to which I have already referred, her Honour Beazley J stated at page 334:

"A failure to consult with an employee or union about the issue of redundancy may mean a termination on that ground is harsh, unjust or unreasonable . . . The need for consultation with employees and, if applicable, the employee's union, in the case of workplace change or restructuring, has consistently been recognised as an essential element of fairness in the relationship between employee and employer."

In the Quality Bakers case, her Honour found that the fact that there had been no discussion with the union as to whether there were alternative jobs for the employees proposed to be made redundant was fatal to the respondent's submission that there was sufficient consultation.  Her Honour found that there were other factors which compounded the situation, including the fact that the applicant was never consulted personally about the termination of his employment, save for being given one week's notice alternatively to being offered a week's pay in lieu of notice.

Her Honour found that, notwithstanding that there had been negotiations with the union in that case, the failure to consult Mr Goulding himself about the redundancy; the failure to consider alternative employment options, either with him directly or with the union; and the failure to provide him with any counselling or assistance in relation to the redundancy or in obtaining other employment, made the termination of his employment harsh, unjust or unreasonable. 

In the present case, there was no consultation with the union prior to the termination.  The only thing which may be said in the respondent's favour in this regard was that it arranged for Skilled Engineering to interview the employees who were to be made redundant. There was, however, no guarantee that Skilled Engineering would employ them.  The applicants received no warning of the impending termination.  The fact that the respondent was considering contracting out its maintenance function for some months prior to the final decision being made was actively concealed from the employees.

It was submitted on behalf of the respondent that a failure to engage in consultation does not necessarily constitute a denial of procedural fairness.  This Court was referred to the case of Jones v Department of Energy and Minerals (1995) 60 IR 304. In that case, his Honour Ryan J was not persuaded that the respondent's failure to engage in a formal process of consultation with Mr Jones amounted to a denial of procedural fairness. His Honour felt that the respondent had gone to reasonable lengths to explore the available options by attempting to redeploy the applicant and by giving detailed consideration to the effect of the changes which the restructure entailed. In that case, however, the respondent made considerable attempts to redeploy Mr Jones elsewhere in the Victorian Public Service. There was consultation with Mr Jones prior to the termination of his employment.

Although I agree that the failure to consult with employees prior to making them redundant does not necessarily mean that the termination will be harsh, unjust or unreasonable, the circumstances in the Jones case differ, in my view, markedly, from the circumstances in the case before me.

Counsel for the respondent also referred to the case of Leddicoat v Schiavello Commercial Interiors (SA), Von Doussa J, 18 October 1995, IRCA 569/95.  In that case, his Honour Von Doussa J said at pages 11 to 12:

"In almost every case, a termination of long-standing employment, especially for a person of the applicant's age, will be hard on the employee and a matter of distress and anguish.  The force of the blow will often be less if it is preceded by a sympathetic forewarning and counselling, but it does not follow that a termination without forewarning on the grounds of genuine redundancy is necessarily in contravention of section 170DE(2)."

In that case, his Honour was not satisfied that it was unreasonable for the respondent not to discuss alternatives to immediate termination and payment once the applicant was advised his position had become redundant.  In that case the applicant had a close working relationship with customers of the business and it could have been unsettling to those customers and harmful to the business to have a senior employee on notice administering ongoing contracts.  His Honour went on to say at page 12:

"I am not satisfied that it was unreasonable for the respondent not to discuss alternatives to immediate termination and payments once the applicant was advised his position had become redundant.  However, where forewarning is not given (and it will frequently be required by award conditions, but none applied here) it may be necessary, depending on the circumstances of the case, to consider whether a termination package that includes on account of a payment in lieu of notice only the amount required by section 170DB is adequate" 

In the present case,  the assurance of security made in late February 1995 was calculated to have the effect that the applicant would feel secure and not seek other employment to better protect the remainder of his working life.  To then terminate his employment without forewarning required, in my view in the circumstances of this case, some additional period either of notice or payment in lieu of notice, above the statutory minimum.  Again, on this ground, I consider there was a breach of section 170DE(2); but if that were the only matter of complaint, the compensation appropriate in this case to remedy it would not have exceeded an amount equal to pay for another week or thereabouts."

In the present case the applicants were, with the exception of Mr Van Der Berg, approached by representatives of the respondent company in an attempt to persuade them to leave their then current, secure employment to work for WASA.  The applicants were led to believe that the employment at WASA would be secure and would be for a period of at least 10 to 15 years.  Furthermore, when the question of job security was raised with the respondent's managers in the course of 1994, the applicants were assured that their positions were secure.  Mr Nettleton declined an alternative job offer from Skilled Engineering on the basis of the assurances which had been made to him.  In these circumstances, the facts of the Leddicoat case are relevant to the present case in deciding whether or not in all the circumstances it was harsh, unjust or unreasonable to terminate the applicants without warning or consultation.

The Court was also referred to the case of Pritchard v Standard Chartered Bank of Australia Ltd,  Patch JR, 2 February 1996.  In that case, Patch JR said that at pages 9-10:

"This case raises, in a direct way, the question as to whether a failure to give an employee a warning that her employment is to be terminated for reason of redundancy must, in all such cases, be held to be 'unjust' within the meaning of section 170DE(2) of the Act. 

In my opinion that cannot be the case.  Speaking hypothetically , there must be redundancy cases which come to the notice of an employer without warning, which require immediate and prompt action to safeguard the financial interests of the employer, and in which the immediate termination of an employee's employment is imperative. In such an extreme situation, the termination of that employee's employment would not be 'unjust'."

I do not consider that the Pritchard case assists the employer other than with the general proposition that failure to consult or warn an employee of a redundancy is not necessarily harsh, unjust or unreasonable.  It cannot be said in the present case that the redundancy situation came to the notice of the employer without warning and required immediate and prompt action to safeguard the financial interests of the employer.

The respondent argues that it was reasonable of the employer to implement the redundancy decision immediately in order to safeguard its business.  The respondent's witnesses differed to some extent on that question.  Mr Graham said that the company concealed from the workforce what it was going to do "to avoid rumours floating around".  Mr Abbott, the Managing Director of WASA, said that it was necessary to implement the decision immediately to protect the company's investment.  This was because the managers had a concern about the possible impact of a disaffected employee affecting the quality of the product that the company makes.  His example of a disaffected employee tossing a 20 cent coin into a charge make-up can was not supported by any evidence that the applicants in question were the types of people who were likely to take such action. 

Mr Brown's evidence in relation to this point was that it was necessary to implement the decision immediately because if they were warned of the impending redundancy, they might become depressed or upset, their minds might not be on the job and they may possibly become a safety hazard to themselves and others.  There was no evidence before me that the applicants were the types of people who would either intentionally or unintentionally act in such a manner as to affect the quality of the respondent's product.  Although I understand the concerns of the respondent's management in seeking to protect their investment, this must be balanced as a factor with all the other circumstances of the case.

The final case referred to by the respondent in relation to the question of whether the decision was harsh, unjust or unreasonable, was the case of Sinclair v Anthony Smith and Associates Pty Ltd, unreported, Von Doussa J, 1 December 1995, IRCA 663/95.  In that case, his Honour referred to the requirements of the Metal Industry (SA) Award, which included provisions similar in force and effect to the provisions of the Enterprise Bargaining Agreement referred to in this matter.  In particular, clause 38 of that award required the employer to discuss with the employees affected and the union or unions as soon as practicable after a definite decision had been made to make employees redundant.  In that case, his Honour said at pages 7-8:

"The requirement for consultation is in the award not only to permit the possibility of arriving at some rearrangement of the workplace which has lesser consequences than dismissal but also to allow time for the employees to deal with the emotional, family and domestic stresses that are likely to descend upon them when their employment is brought to an end.  The importance of those non-workplace, personal factors cannot be under-estimated, and finds expressions in the reasons of various tribunals that have had to consider clauses of this type. 

To put it into colloquial terms, it is desirable, as the award recognises, that employees whose security of employment is about to be shattered, be let down gently.  If they are forewarned and counselled they are more likely to be able to accommodate to their new situation, to adjust themselves to the search for other work, and the like.  Moreover, it is generally recognised that if an employee is in work and is given time off to go and look for other work, the prospects of finding new employment are somewhat better than if the person concerned is required to seek work as an unemployed person on social security.  The failure to consult is a significant matter in this case. 

In my view, it was also significant that no forewarning was given, and significant also that no counselling was provided.  Those are matters that should have been attended to, to render the dismissal in the circumstances of this case, reasonable and fair."

The matters set out by his Honour Von Doussa J in that passage are directly relevant to the circumstances of this case.  In balancing the various circumstances of this case, including the respondent's concern to protect its substantial investment and the dramatic effects that any impurity would have on the quality of its product; the fact that the respondent was a new company seeking to make its mark in the industry; the fact that there was no evidence that the employees would either deliberately or negligently affect the quality of the product; the fact that there was no warning or consultation; that there was no counselling provided; that the employees had been led to believe that their employment was secure; that they had been enticed away from other employment by representatives of the respondent company to work for the respondent; and that although the respondent had arranged for Skilled Engineering to interview the employees there was no guarantee that Skilled Engineering would in fact employ them, I find that the termination of the applicants' employment was harsh, unjust and unreasonable.

THE APPROPRIATE REMEDY

The applicants are no longer seeking reinstatement.  They all now have been successful in obtaining alternative employment.  It remains to be decided what compensation, if any, is appropriate to award in all the circumstances.

The applicants are seeking orders for payment of compensation relating to the remuneration they have lost as a result of the termination and, in addition to this, they are seeking compensation for the distress they have suffered arising out of the termination.  In relation to compensation for mental distress, the applicants rely on the case of Aitken v CMETSWU, WA Branch 1995 63 IR 1, in which Lee J stated at page 9:

"If guidance is sought from the measure of damages applied in contract for the breach of an employment contract by wrongful dismissal, damages may be awarded for the breach of an implied term that an employer would not so breach the contract to cause vexation, mental distress, disappointment or frustration to an employee where such an adverse consequence for the employee may be said to have been within the reasonable contemplation of the employer and the employee . . . it is also appropriate to keep in mind that the purpose of the Act in providing for compensation to be paid to an employee for an employer's failure to abide by the terms of the Act is not only to redress a wrong done to the employee but, in the public interest, to instil greater awareness of, and adherence to, the provisions of the Act.  A measure of compensation which addresses the consequences caused by conduct that has breached the Act assists to meet that purpose."

As counsel for the respondent has pointed out, the decision in Aitken's case has been referred to by Beazley J in Brackenridge v Toyota Motor Corporation Australia Ltd (unreported), 19 April 1996, IRCA 162/96.  At page 62 of that decision, her Honour states as follows:

"With respect to Lee J, I do not agree that damages for mental distress are available under section 170EE.  This is clear from the structure of this section.  In the case where the Court determines that reinstatement is practicable, section 170EE(1) specifies the whole of the available remedy.  That remedy is confined to reinstatement in the manner specified in subsection (1)(a) and specified in subsection (1)(b).  Those orders are :  such order as is necessary to maintain the continuity of the employee's employment and an order requiring the employer to pay the remuneration which has been lost from the time of termination to the date of reinstatement.

It is only if the Court considers that reinstatement is impracticable that compensation is payable: section 170EE(2).  The amount of compensation is calculated in accordance with section 170EE(3).  The reference point in the calculation of compensation is "the remuneration that the employee would have received or would have been likely to receive, had there been no termination."  Paragraphs (a) and (b) of subsection (3), together with subsection (4) provide a limit on the amount of compensation which might be payable.  If "compensation" in subsection (2) is wide enough to encompass damages for mental distress, it would mean an applicant's entitlement to such compensation would be dependent upon the Court's determination as to whether reinstatement was practicable, notwithstanding that the mental distress would have been suffered in any event.  In my opinion, section 170EE is directed to compensation for the loss of financial or monetary aspects of the employment.  It does not encompass other forms of compensation which may be available in respect of other courses of action."

The question of whether compensation is payable for mental distress has also been considered by his Honour Madgwick J in the case of Burazin v The Blacktown City Guardian, IRCA 660/95, 15 December 1995, unreported.  In his reasons for judgment, Madgwick J considers the question in some detail.  His Honour was of the view at that time that this issue should be decided by a Full Bench of this Court.  On 2 May 1996 his Honour decided not to so refer that issue.  In his further judgment handed down on 2 August 1996 his Honour finally decided that the applicant was not entitled to compensation under the Act or damages at common law merely for distress, disappointment or injured feelings arising out of the termination of her employment.

In the matters heard before me, there was no medical evidence of any psychiatric condition suffered by the applicants as a result of the termination of their employment.  I accept that the applicants, and Mr Fitzgerald in particular, suffered considerable distress as a result of the way in which their employment with the respondent was terminated.  In view of the decisions in the cases of Brackenridge and Burazin, however, I am of the view that compensation is not payable under the provisions of the Industrial Relations Act or by way of breach of contract for the mental distress or injured feelings arising out of the termination of the applicants' employment.

It still remains to be decided whether, in all of the circumstances of the case, compensation should be paid to the applicants pursuant to the provisions of section 170EE for remuneration lost.  Counsel for the respondent has submitted that the appropriate interpretation of "in all the circumstances of the case" in section 170EE requires the Court to weigh up the circumstances of the termination and the effect any order for compensation may have on both the employees and the employer.  I agree with that interpretation.  Having said that, there is no evidence before me that the employer in this matter is suffering from any financial hardship.  The redundancy of the employees concerned was based on the grounds of convenience of the employer, rather than financial hardship.  In these circumstances, I propose to look at the financial loss suffered by each applicant as a result of the termination in assessing the appropriate amount to be awarded by way of compensation.

MR FITZGERALD

Mr Fitzgerald received two weeks' pay in lieu of notice and four weeks' redundancy pay upon termination.   Mr Fitzgerald's total weekly rate of remuneration at WASA at the time of the termination of his employment was $755.15.  This figure includes payment of allowances.  Mr Fitzgerald received a termination payment of $3,160.08.  Mr Fitzgerald started work with Skilled Engineering on 18 November 1994 and finished on 23 February 1995.  There was therefore a period of two weeks before he started work when he did not receive any remuneration.  If he had been working for WASA, he would have received a total of $1,510.30 during that time.  At Skilled Engineering he received $559 per week.  That is $196.15 less per week than his weekly remuneration at WASA.  The period from 8 November 1994 to 23 February 1995 is a period of 14 weeks.  The remuneration lost over that period amounts to $2,746.10.  The remuneration Mr Fitzgerald lost from the time of termination to 23 February 1995 is $4,256.40. The difference between $4,256.40 and the termination payment of $3,160.08 is $1,096.32.  Since 27 February 1995 Mr Fitzgerald has been employed by Drillco.  He is presently earning $850 per week.

Mr Fitzgerald presented the Court with a claim for damages which included a claim for contract incentive payments, outstanding holiday payments and an outstanding leave loading.  Those items were apparently calculated on the WASA base rate of $523.64 per week.  I do not intend to make an award in relation to the contract incentive payment as I understand that that is included in the WASA total rate of $755.15 per week.  However, I consider it appropriate to make an allowance of $1,413.82 in addition to the $1,096.32 already mentioned to allow for leave and leave loading.  In the circumstances, I consider it appropriate to make an award for Mr Fitzgerald in the amount of $2,510.14.

Although Mr Fitzgerald presented the Court with a method of calculating his remuneration lost which arrives at a much higher amount, I do not consider that these calculations are correct.  Although I sympathise with Mr Fitzgerald and acknowledge he suffered considerable distress as a consequence of the termination, his remuneration lost is relatively low, primarily because he has since February 1995 been earning more than he earned at WASA.

MR VAN DER BERG

Mr Van Der Berg's total WASA rate of pay was $819.61 per week.  After the termination of his employment, he was offered work with Skilled Engineering but it was in the north of Western Australia and casual work with no guarantee of full time employment.  Mr Van Der Berg said that he was unable to accept that position as it was only one to two weeks' work.  He commenced full time work with WENCO on 21 November 1994.  Mr Van Der Berg was without work for two weeks, which resulted in a loss of $1,639.22.  Mr Van Der Berg earns $526 gross per week at WENCO and continues to do so.  This represents a weekly loss of $293.61.  Mr Van Der Berg continues to experience that loss.  Mr Van Der Berg received a termination payment of $2,254.19.  In all the circumstances of the case, I consider it appropriate to make an award to Mr Van Der Berg of a further eight weeks' pay at his WASA total rate.  This amounts to a total of $6,556.88.

MR LAWLER

Whilst he was employed at WASA, Mr Lawler received a total rate, including allowances, of $597 per week.  Mr Lawler was without work until 23 November 1994, which amounts to a period of just over two weeks.  The remuneration lost over that period amounts to about $1,200.  Between 23 November 1994 and 8 March 1995, he worked at Gories and received pay of $610.66 gross per week.  That is a higher rate than he received at WASA.  From 9 March 1995 to 30 June 1995 Mr Lawler worked at Keoghs at a rate of $572.75 per week, which represents a loss of $24.25 per week over what he earned at WASA.  Mr Lawler is still working for Keoghs and is still suffering a loss of $24.25 per week.  He received a termination payment of $3,308.28.  In view of the fact that Mr Lawler is continuing to suffer a loss of $24.25 per week, and the fact that whilst he was at Gories he was not entitled to sick leave, holidays or public holidays, plus the fact that he was unemployed for a period of 12 days, I consider it appropriate to award to Mr Lawler the sum of $3,500.

MR NETTLETON

Mr Nettleton's total rate of pay at WASA, including allowances, was $614 per week.  He received a termination payment of $3,160.08 from WASA.  A letter from Skilled Engineering dated 29 September 1995 states that Mr Nettleton started work as a casual employee with Skilled Engineering on 21 November 1994.  He was made permanent on 17 September 1995.  Documents show that whilst he was a casual employee, he received average weekly earnings of $777.89.  Since being made permanent, however, he has received average weekly earnings of $494.34.  That represents a loss of $119.66 per week since September 1995.  That loss is continuing.  In these circumstances, I consider it appropriate to award to Mr Nettleton a further eight weeks' compensation, amounting to a total of $4,912.

The Court declares and orders that:

1. The termination of the applicants' employment contravened the provisions of sections 170DE(1) and 170DE(2) of the Industrial Relations Act, 1988

2. The respondent shall pay within 14 days of the date of this order the following amounts of compensation:

   (a)In relation to Mr Fitzgerald, the sum of $2,510.14

   (b)In relation to Mr Van Der Berg, the sum of $6,556.88

   (c)In relation to Mr Lawler, the sum of $3,500

   (d)In relation to Mr Nettleton, the sum of $4,912

3. The applications be set down for Directions on Thursday 29 August 1996 at 9.30 am.

I certify that this and the preceding  forty-one (41) pages
are a true copy of the reasons for decision of
Judicial Registrar Boon.

Associate:
Date: 12 August 1996

APPEARANCES

Representative for the applicant:                Mr A Lovell
  Communications, Electrical,   Electronics, Energy, Information,   Postal, Plumbing and Allied Services   Union (CEPU)

Counsel for the respondent:  Mr AD Lucev
  Ms AE Colegate
Solicitors for the respondent:  Freehill Hollingdale and Page  

Dates of Hearing:  29, 30 April and 10 July1996

Date of Judgment:   12  August 1996