GADECKI v International Health and Beauty Aids Pty Ltd trading as Elly Lukas Beauty Therapy College
[1997] FCA 698
•30 July 1997
FEDERAL COURT OF AUSTRALIA
INDUSTRIAL LAW - termination of employment - whether resignation by employee or termination by employer
Workplace Relations Act 1996 ss.170DB, 170DE, 170EA, 170EE
GADECKI -v- INTERNATIONAL HEALTH AND BEAUTY AIDS PTY LTD trading as ELLY LUKAS BEAUTY THERAPY COLLEGE
No. VI-1087 of 1997
Ryan JR
Melbourne
30 July 1997
FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-1087 of 1997
B E T W E E N :
EWA GADECKI
Applicant
AND
INTERNATIONAL HEALTH AND BEAUTY AIDS PTY LTD
trading as ELLY LUKAS BEAUTY THERAPY COLLEGE
Respondent
MINUTES OF ORDERS
Judicial Registrar Ryan 30 July 1997
THE COURT ORDERS:
the Respondent pay the Applicant compensation pursuant to s170EE(3) in the sum of $5,137.02
the Respondent pay the Applicant damages in the sum of $366.93 pursuant to s170EE(5) for breach of s170DB
compensation in (1) above and the damages in (2) above are to be paid within 28 days
any payment to the Australian Taxation Office within that period of 28 days in respect of and relating to the payment of the $5,137.02 compensation or the $366.93 damages is pro tanto satisfaction of the orders in (1) and (2) above
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules
FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-1087 of 1997
B E T W E E N :
EWA GADECKI
Applicant
AND
INTERNATIONAL HEALTH AND BEAUTY AIDS PTY LTD
trading as ELLY LUKAS BEAUTY THERAPY COLLEGE
Respondent
Ryan JR
Melbourne
30 July 1997
REASONS FOR JUDGMENT
THE CLAIM
The Applicant seeks compensation in a claim of unlawful termination of employment. The Respondent claims that the Applicant resigned and that the claim must fail for lack of jurisdiction.
QUOTATION OF EVIDENCE
The Court has not found it necessary to call for transcript. The quotations below are, in my view, accurate. They are taken from my notes and are a summary of certain evidence.
THE APPLICANT’S POSITION
The Applicant is a beauty therapist. She worked for the Respondent as a teacher in the Elly Lukas Beauty Therapy College. She was employed by the Respondent from 29 April to 13 December 1996 having agreed to work Tuesday to Friday 9.30 am to 4.30 pm and to take evening classes on Monday from 6.00 pm to 8.00 pm. She was paid $334 a week net ($304 for Tuesday to Friday and $30 for the Monday evening).
The undisputed evidence is that she was paid $334 net a week from commencement of her employment. This is supported by a schedule (Schedule A) said to have been completed by the Respondent’s accountant and which shows net payments of $334 a week from 4 July 1996 to 13 December 1996 (Exhibit A5 and A6). It is also conceded that the Managing Director of the Respondent company, Alex Zotos senior (Zotos) undertook to review the rate of pay after three months. The Applicant admits that she was unhappy with the rate of pay and, after three months had elapsed, she raised a salary review with Mr Alex Zotos junior (Alex) and with Ms Janelle Sutton, an employee who described herself as “manageress” of the College June 1996 to January 1997.
Mr Zotos spent most of the last 6 months of 1996 in hospital and he was not available to review the Applicant’s salary. In July 1996 the Applicant informed Ms Sutton of her dissatisfaction and of the salary review promised by Mr Zotos. Ms Sutton referred her to Alex and she told him that the wages were not “a fair amount” for the hours worked and “there were other problems with students”. She states that Alex declined to discuss a pay rise with her but did say that if she “was not happy” the Respondent ”would get a new teacher”. She states that she indicated that she needed to think about that and that “the next day” a new teacher came but Alex told her that he “did not like the new teacher” and requested her to continue. The Applicant, in her evidence, states:
“I agreed to stay because I was determined to stay. Alex also told me that it was not fair on the students if I went at that stage of the year. I agreed. I wanted to continue teaching. I met that woman that day. She was Theresa’s friend (i.e. Theresa Olszanka).
In Melbourne Cup week I received a cheque which was for probably $70 less than normal. I went to Janelle (Sutton). She said that she got less than me and that I should be happy. After that the weekly payment went back to $334 for a little while until I received a cheque dated 5 December 1996 in the sum of $263.70. I asked Alex why and he said he did not know and Janelle did not know either. I requested a meeting with Mr Zotos and I contacted Wageline who indicated that I was grossly underpaid.
A few days after 5 December Mr Zotos gave me a handwritten note (Exhibit A4) without words.”
The note which Mr Zotos admitted was in his handwriting reads as follows:
“5-12-98
EVA GADESKI
Work from 9.30 - 4.30 = 7 hr.
Less lunch time 45 m.
7. - 0.45 = 6.15 hours work
Rates $12.50 per hour
4 days 6.16 = 25 h.p. week
25 x 12.50 = 312-50
Less TAX on 312.50
$48.80 -
312-50 - 48.80 263.70
PLUS WORK at NIGHT
As agreed $15.00 per hour”
The general tenor of the Applicant’s evidence is that, after she received the note indicating that the appropriate weekly wage was $253.70. She tried on several occasions to speak to Mr Zotos and was unsuccessful but that about 4.00 pm on 13 December she said to Mr Zotos:
“If you have a spare moment I want to talk to you about the cheque” (i.e. the cheque for $253.70 dated 5 December).
The Applicant states that Mr Zotos immediately said:
“Get your garbage and go.”
And that she replied:
“I beg your pardon.”
She states that Mr Zotos then told her to go to the conference room and he “would talk” to her but, in the conference room, “without speaking”, he handed her a typed “letter” dated 12 December with four handwritten pages of figures attached. (Exhibit A6).
Her evidence is as follows:
“I read the letter very carefully. I said that not only was I not overpaid but that I was grossly underpaid and I had checked with Wageline.
He said, ‘give me that letter back’. I said ‘no, the letter goes with me’. He said ‘get your arse out and get out. Don’t even think of coming to the graduation. I said ‘I have my uniform here....obviously I will not need it.’ He chased me down the corridor. I got in to Theresa’s office. He screamed at me, ‘if you ever come back we will throw you out’.
I was not paid for the last week of my employment or for the first week.
The “letter” is a memo to the Applicant. Mr Zotos states that he had never seen the memo until it was presented to him in the witness box. He denies that it was handed to the Applicant. He also denies that the third and fourth handwritten pages of figures which are attached to the memo were handed to the Applicant.
His evidence will be addressed later but, in essence, it is that he handed the Applicant the two pages of handwritten figures which comprise the second and third pages of Exhibit A6. The two pages are a photocopy of gross and net wages and taxation deductions allegedly provided to the Applicant from 9 May 1996 to 13 December 1996. Both pages have the words “Actual Wages” written in pencil at the top and the first page has the words “SCHEDULE A” printed above the word “Actual Wages”. The words “SCHEDULE A” were printed in pencil, written over in biro and pink highlighter has been applied. The words “Actual Wages” on both pages and “SCHEDULE A” and a total aggregation of gross wages at the bottom of the first page were all added in pencil after the two pages were photocopied.
The fourth and fifth pages of Exhibit A6 are the third and fourth pages of the attachment to the memo of 12 December. These are pages which Mr Zotos swears were not handed to the Applicant. These two pages are originals. The figures have been written in pencil and the pages have been torn from a ruled A4 notebook.
The fourth page of Exhibit A6 (i.e. the third page of the attachment) has the words “SCHEDULE B” printed at the top and the words “SCHEDULE B - 2” printed six lines from the bottom of the page. As with the words “SCHEDULE A” on the first page of the attachment (i.e. second page of Exhibit A6), the words were printed first in pencil and later gone over in biro and pink highlighter was then applied.
The third page of the attachment also has the words “Wages @ $12.50” written at the top in pencil.
The fourth page of the attachment has the words “Wages @ $12.50 per hour” written at the top in pencil.
The memo which comprises the first page of Exhibit A6 is an original typed document. It is not signed. The memo is as follows:
“DATE: 12th December, 1996
TO: EVA GADECKI
FROM: INTERNATIONAL HEALTH & BEAUTY AIDS PTY LTD
RE: WAGES
We have to advise that a mistake has been made in regard to your wages. Our records show that you have been overpaid approximately $47 per week, since the third week of your employment. Consequently, we feel the only solution, is to adjust this against holiday pay owing. As you will see, from the schedule below, after holiday pay has been adjusted for (see point 4), there has still been a net overpayment to yourself of $5023.43. We feel as this has been our mistake, that no further action will be necessary.
Please refer to schedule below by way of explanation.
Schedule A - Actual wages paid for period 9th May to 13th December, 1996
Schedule B - Wage schedule at agreed rate of pay at $12.50 per hour plus $30 per week overtime allowance.
Schedule B - Part 2 - Holiday Pay for period per agreed note.
Difference between agreed rate (including holiday pay) and actual wages paid = $523.42 (overpayment).
We apologise for the mix up and thank you for your understanding in this matter.
Yours faithfully
Alex Zotos”
A curious aspect of Schedules A and B is that, in each case
the second page of the schedule contains the figures for the weeks 9 May 1996 to 27 June 1996 (i.e. 9 rows of figures being wages for eight weeks and a subtotal)
the first page of each schedule comprises a complete page of figures with wages from 4 July 1996 to 13 December 1996.
This arrangement of the figures suggests that the calculations for the first eight weeks (9 May to 27 June) were, in respect of both schedules, prepared after the calculations for the following weeks (4 July to 13 December). While this is curious, it is not a matter of significance.
THE RESPONDENT’S POSITION
Mr Zotos is elderly. He has been in poor health and was hospitalised for long periods in the second half of 1996. At times, he appeared to be a confused witness. Some aspects of his evidence were inconsistent. For example, at the commencement of his evidence, he claimed that at his initial interview with the Applicant he offered a wage rate of $12.50 an hour and that he obtained that rate from the Commonwealth Employment Service. However, it is clear that the Applicant was paid $357.60 a week gross for teaching Tuesday to Friday from 23 May 1996 until at least “Melbourne Cup Week”, presumably the week ending Friday 8 November 1996. Excluding the special $15 an hour she received for her two hours teaching on Monday night, $357.60 represents a rate of $14.30 an hour.
The weight of the evidence suggests that after 8 November the Applicant continued to be paid $357.60 gross a week ($14.30 an hour) until the week ending 6 December.
A few days after 5 December she received a cheque dated 5 December 1996 for $263.70 (Exhibit A3). Mr Zotos concedes that he wrote and signed the cheque. He seems confused as to when he wrote the cheque and assumes that he wrote and signed it on the day it is dated but claims that he was in hospital on that day.
Again, the general tenor of the evidence suggests that this is unlikely, but it does not matter whether Mr Zotos wrote the cheque on or after 5 December, or where he was when he wrote it. His evidence is that “a few days after” 5 December he wrote out the calculations which appear in Exhibit A4. The contents of that document are set out earlier in this judgment. Mr Zotos admits he prepared Exhibit A4. It is in his handwriting. It sets out the rationale for a cheque for $263.70. It is likely it was written before the cheque was made out. It purports to justify an hourly rate of $12.50 rather than an hourly rate of $14.30.
When referring to Exhibit A4, Mr Zotos stated “these were the rates agreed”. Despite his earlier evidence that, at the initial interview, he agreed a rate of $12.50 an hour for the Tuesday to Friday work and $15 an hour for the Monday evening work, his later evidence, and the documentary evidence, suggest the lower rate of $12.50 an hour was never agreed and was imposed by Mr Zotos in December 1996. His later evidence included the following:
“I rang Wageline and they gave me the exact rate for a Beauty Therapist inexperienced in teaching (i.e. $12.50 an hour).”
Even if the evidence of Mr Zotos as to what happened on 13 December was to be accepted, and it cannot be accepted, even if one applies the most lenient of tests on balance of probability, his evidence is that the first advice to the Applicant of the change of rate (from $14.30 an hour to $12.50) came during the final interview on 13 December 1996.
He stated that at that time
he handed the Applicant that part of Exhibit A6 which records payment at $14.30 an hour Tuesday to Friday and $15 an hour for Monday evenings
explained the “overpayments” on the basis that the correct rate for her work Tuesday to Friday was $12.50 an hour
indicated that part of the overpayment would be adjusted against holiday pay and that the remaining overpayment would in effect be written off
If this was what occurred it would not make sense to provide the Applicant with figures which confirmed the payments to her but withhold from her the calculations which Mr Zotos stated were made by the accountant and which set out the lower rate which Mr Zotos claims should have applied.
THE STATUS OF EXHIBIT A6
The Applicant’s evidence provides a far more believable version of affairs namely that she was provided with Exhibit A6 in its entirety. Exhibit A6 provides an explanation for the wage reductions. The first page is a memo which is completely consistent with Schedules A and B and B2 attached thereto.
I have concluded that Mr Zotos gave the Applicant Exhibit A6. It is not necessary for me to reach a precise finding on what Mr Zotos and the Applicant said to each other or whether he formally used the words the latter alleged. However, I have concluded that the exchanges between them on 13 December were acrimonious.
TERMINATION OR RESIGNATION
The real question for determination is whether the actions of Mr Zotos on 13 December amounted to a termination of the Applicant’s employment or whether the Applicant had resigned much earlier with her resignation to take effect at the end of the academic year. If the Court was to conclude the latter, the present application for compensation for unlawful termination of employment would fail for lack of jurisdiction and any claim the Applicant might have for some minor underpayment of wages and for leave entitlements due would have to be pursued elsewhere, there being no such claims directly before the Court.
The evidence alleging a resignation by the Applicant, effective from the end of the academic year, came from Theresa Olszanka and Janelle Sutton.
Ms Olszanka is a beauty therapist and teacher who still works for the Respondent and has worked at the College for some years. She concedes that she met the Applicant at a social occasion and that she recommended to Mr Zotos that he consider employing the Applicant because of her apparent experience and qualifications as a beauty therapist.
Ms Olszanka is not a close friend of the Applicant. In assessing her evidence I have taken account of her ongoing employment relationship with the Respondent.
Her evidence included the following:
a claim that the Applicant had reported finding “the work stressful” including “preparing for classes” and that the Applicant “often appeared stressed”
a claim that the Applicant had, on two occasions, expressed an intention to resign
a claim that the second “resignation” took place about October
Her evidence in respect of the second occasion included the following
“on the same day (i.e. the same day as the Applicant allegedly expressed an intention to resign) Alex came to me. He said ‘Eva is going to resign. What are we going to do?’ I said that I was not surprised and that I saw it coming. I said that there were only two months to the finish of the school year and that it would be good for the students if she stayed. I talked to Eva (the Applicant). She stayed. She did not object.”
While the Applicant in her evidence never, at any stage, conceded that she resigned or expressed an intention to resign, she did, on occasion, use words like “I agreed to stay”...”I agreed to think about it”...”Alex told me it was not fair on the students, if I went at that stage of the year. I agreed. I wanted to continue teaching.”
This evidence suggests that the Applicant may well have expressed an intention to leave but if this be so, on her evidence, this was in July not in October as Ms Olszanka asserts. Furthermore, while the Applicant’s language was redolent of someone who was dissatisfied and might have been expressing an intention to leave, her evidence, unlike that of Ms Olszanka and Ms Sutton, stops short of any admission of resignation. Indeed, the Applicant’s evidence was peppered with denials that she ever resigned. It must be said however that her evidence was diffuse and rambling and at times irrelevant.
The evidence of Ms Olszanka was not itself free of inconsistency. In evidence in chief she gave evidence of two occasions when the Applicant allegedly expressed the intention to resign. In cross-examination, Ms Olszanka said:
“she (the Applicant) said more than once ‘I resign’”.
When asked by the Court what she could recall of the words used by the Applicant in October Ms Olszanka said:
“She said, ‘I have had it and I am going to resign.’”
However, Ms Olszanka also conceded that at that stage the Applicant “agreed to stay”.
Ms Sutton described herself as an account manager and claimed that she was manageress of the College from June 1996 to January 1997, that she was responsible “for day to day management” and that “she wrote some cheques for wages”.
She claims that the Applicant personally resigned to her in October and that “it was upsetting” but that she “accepted the resignation”.
Her evidence included the following:
“I asked her to stay till we found a replacement teacher. There was no problem with that. She was very amicable. I spoke to Theresa about a teacher who had previously been there. We interviewed her. We also telephoned another girl that Teresa had spoken of.
Eva (the Applicant) said ‘is that the lady who is to replace me?’
We interviewed three people. We were going to see how one of them would go. She had other classes there (at the college).
We asked Eva to stay till the end of the year. We approached her. That was it. I asked her. Alex asked her. Theresa asked her.
On the last day she said ‘what about next year’.
I said ‘I thought you resigned. I’ll have to see about it, I’ll have to speak to Mr Zotos.’
She said ‘I am enjoying it. I would like to come back.’
I said ‘fine. I will speak to Mr Zotos.’
I do not think Mr Zotos was in his office that day. There were no further discussions.”
In respect of the memorandum of 12 December (the first page of Exhibit A6) Ms Sutton said:
“I never saw it. I did not type it. It is not on our letterhead. It is not our typeface.”
In cross-examination, Ms Sutton stated that:
the type font used on the first page of Exhibit A6 is accessible on the Respondent’s word processors
she “goes out” with Alex and was “going out” with him when she worked for the Respondent
the Applicant “resigned to me in the interview room on Thursday 10 October”
When asked in cross-examination how she recalled the meeting in the interview room as being on 10 October 1996 the witness replied:
“I wrote the date on the (office) calendar. I looked at it this week (i.e. the week commencing Monday 14 July 1997 given that the witness gave evidence on Thursday 17 July). I should have asked for it (the resignation) in writing. It was my silly fault. I had no idea this would happen. I trusted her.”
In assessing Ms Sutton’s evidence the Court has taken account of the fact that she admits an ongoing relationship with Alex (i.e. Alex Zotos Junior), at times visited Mr and Mrs Zotos (Mrs Zotos is Elly Lukas) in their home and, in the week of the trial, claims to have returned to the Respondent’s workplace to examine a note allegedly made on a calendar on or about 10 October 1996.
FINDINGS
At the conclusion of the hearing I indicated that I was unimpressed with certain aspects of the evidence of all four witnesses.
The Applicant gave evidence which was diffuse, often indirect, sometimes irrelevant and at times little related to questions put in evidence in chief.
Mr Zotos gave evidence that was inconsistent and at times contradictory and contrary to tendered documents. The Court has already observed that he appeared uncertain and confused.
Ms Olszanka and Ms Sutton are witnesses who have interests bound up with those of the Respondent.
I have concluded that
Mr Zotos brought the Applicant’s employment to an end on 13 December
Mr Zotos handed the Applicant the documents which comprise Exhibit A6, namely the unsigned memo of 12 December, the details of wages paid to the Applicant (Schedule A) and the wages at a lower rate which the Respondent suggests should have been paid (Schedule B and B2)
Mr Zotos did not assert on 13 December that the Respondent took the view that the Applicant had resigned on 10 October effective 13 December
Mr Zotos did not refer to a resignation in the memo of 12 December
there was a heated and acrimonious exchange between the Applicant and Mr Zotos on 13 December
The Court notes that
there is no letter of resignation from the Applicant
the calendar note allegedly made by Ms Sutton on or about 10 October and allegedly examined by her again at the offices of the Respondent in the week commencing 14 July 1997 was not produced
Ms Olszanka and Ms Sutton state that in October the Applicant agreed to continue teaching and the Applicant confirms that she took that position although she states she expressed that view in July not October
neither Ms Olszanka nor Ms Sutton gave any evidence of the Applicant specifically agreeing to remain only to the end of the academic year and there is no evidence that, on 10 October, the Applicant expressed an intention to resign “at the end of the academic year”. The evidence, which is strenuously denied by the Applicant, is that on 10 October the Applicant expressed an intention to resign and then “agreed to remain for the academic year”
REMEDY
The Applicant does not seek reinstatement. Her Counsel argues that the Applicant is entitled to the maximum compensation available under s170EE(3) and (4). I do not consider that maximum compensation is appropriate in the circumstances of this case. The Applicant regularly expressed dissatisfaction with the pay and conditions and the nature of the work. It is not clear to the Court that she would have returned to teach at the College in 1997. In any event, had that opportunity been open to her, and had she availed herself of it, the Court considers that her future employment at the College would have been of short duration.
The Court does not consider that compensation should be based on the actual weekly salary paid to the Applicant which was at a rate of $14.30 for 25 hours and $15 for two hours.
I consider compensation equal to thirteen weeks earnings at the hourly rate of a senior beauty therapist ($13.59 an hour) appropriate compensation, with additional compensation for 27 hours at that rate namely of $366.93. This reflects the fact that the Applicant was not paid for her last week of employment. Compensation for 27 hours a week for 14 weeks at an assessed rate of $13.59 an hour amounts to $5137.02.
The Applicant was terminated without notice and I also order the payment of damages for breach of s170DB equal to one week of 27 hours at $13.59 an hour, namely $366.93.
Counsel for the Applicant also seeks compensation for pro rata annual leave assessed at 2.6 weeks for 8 months service. I am not prepared to take that claim into account in assessing compensation under s170EE(2) and (3). No claim for recovery of leave entitlements has been made under s179 and, in any event, on the basis of the evidence, I would not be prepared to make an assessment of any pro rata leave entitlements which may exist.
MINUTES OF ORDERS
THE ORDERS OF THE COURT ARE
the Respondent pay the Applicant compensation pursuant to s170EE(3) in the sum of $5,137.02
the Respondent pay the Applicant damages in the sum of $366.93 pursuant to s170EE(5) for breach of s170DB
compensation in (1) above and the damages in (2) above are to be paid within 28 days
any payment to the Australian Taxation Office within that period of 28 days in respect of and relating to the payment of the $5,137.02 compensation or the $366.93 damages is pro tanto satisfaction of the orders in (1) and (2) above
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules
I certify that this and the preceding 10 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 30 July 1997
Solicitors for the Applicant: Maurice Blackburn & Co
Counsel for the Applicant: Ms Melanie Young
Counsel for the Respondent: Mr Bruce Shaw
Date of hearing: 17 July 1997
Date of judgment: 30 July 1997
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