Garry David Robertson v Queendale Investments Pty Limited, trading as Cash Converters Gosnells

[1995] IRCA 713

DECISION NO:  713/95

C A T C H W O R D S

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - ALLEGED UNLAWFUL TERMINATION - whether VALID REASON - whether PROCEDURAL FAIRNESS - negligible loss of REMUNERATION - COMPENSATION

Industrial Relations Act 1988, Ss 170DC, 170DE(1), 170EA.

GARRY DAVID ROBERTSON - v - QUEENDALE INVESTMENTS PTY LIMITED, TRADING AS CASH CONVERTERS GOSNELLS - WI 95/1897

BEFORE:                 R D FARRELL JR

PLACE:  PERTH

DATE:  1 DECEMBER 1995

IN THE INDUSTRIAL RELATIONS        )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/1897

BETWEEN:  GARRY DAVID ROBERTSON
  - Applicant

AND  QUEENDALE INVESTMENTS   PTY LIMITED, TRADING AS   CASH CONVERTERS   GOSNELLS
  - Respondent

MINUTE OF ORDERS

BEFORE:                 R D FARRELL JR

PLACE:  PERTH

DATE:  1 DECEMBER 1995

THE COURT ORDERS THAT:

1. The name of the respondent be amended to Queendale Investments Pty Ltd         trading as Cash Converters Gosnells.

1. The application be allowed.

1. The respondent pay to the applicant the sum of $350 within seven days of the date           of this order.

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  ) WI 95/1897

BETWEEN:  GARRY DAVID ROBERTSON
  -          Applicant

AND:  QUEENDALE INVESTMENTS   PTY LIMITED, TRADING AS   CASH CONVERTERS   GOSNELLS
  -          Respondent

BEFORE:                 R D FARRELL

PLACE:  PERTH

DATE:  1 DECEMBER 1995

REASONS FOR JUDGMENT (EX TEMPORE)

Revised from Draft Transcript

This was an application brought under section 170EA of the Industrial Relations Act 1988 for compensation as a result of the allegedly unlawful termination of the applicant, Garry David Robertson (“Mr Robertson”), by the respondent.

The respondent trades under the name of Cash Converters Gosnells (“Cash Converters”).  It was revealed in evidence that the respondent's correct name is in fact Queendale Investments Pty Ltd trading as Cash Converters Gosnells.  The first order that I would make, in the absence of any objection, is therefore that the name of the respondent in this application be altered to reflect that fact. 

Cash Converters contended that Mr Robertson was dismissed for a valid reason relating to the operational requirements of the undertaking.  The evidence was that 10 per cent of the shares of Cash Converters were purchased by Mr Santokh Gill, who was a sales assistant employed by the company.  The other 90 per cent of the shares were controlled by Christopher Mitchell, the managing director of the company, who appeared for the company at the hearing.

Mr Robertson had at that stage been employed as manager of the business for one month.  Following Mr Gill's purchase of the shares, a decision was made by Cash Converters, of which Mr Gill was by then one of three directors, to make Mr Gill the manager of the company.   As a result, Mr Robertson had to be moved to another position. 

Mr Robertson had, until that point been employed as a manager at a rate of $500 per week net.  He was advised of the proposed change by Mr Mitchell one day before it took effect.  He was told he would be offered the position of Buying and Loans Manager at the rate of $400 net per week, which appears to have been a little more than what was being paid to other sales assistants at the time.

Mr Robertson considered his options overnight, discussing it with his wife, and decided that he had no choice but to accept the demotion.  He commenced work the next day under the management of Mr Gill. 

I am satisfied that there was no relevant change in the employment arrangements, as opposed to the ownership, of Cash Converters.  There was merely a shifting around of the same personnel within the same employment positions.

The question which then arises is whether this was genuinely a change resulting from the operational requirements of the undertaking.  I am not satisfied that it was. 

In analysing situations of this sort, one must have regard to the employment status of individuals separately from their status as a shareholder or as a director of a company.  Where a person buys into and obtains control of the company, then it might be argued that, flowing from that, they have an unrestricted right to install themselves in an employment management position within the company.   However, where a person buys shares in a company but does not obtain control of the company, then in my view no special privilege in connection with employment with the company should flow from that.  If they are to obtain employment in the company at the expense of another of the company’s employees, then it should be justifiable on the basis of merit or on the basis of the criteria set out under the Act. 

However, in this case the change in the employment relationship between the company and Mr Robertson did not extend to dismissal at that time.  Mr Robertson was given the option of leaving or taking the lower paid job.  Had he have left, he may well have been able to argue that there was, in all the circumstances, a termination at the initiative of the employer, and I’m inclined to the view that he would have been on strong ground to do so.  However, for understandable reasons he chose to stay.  If it was a repudiatory act on the part of the employer to present him with a demotion, then it was not a repudiation that the employee chose to accept.

Accordingly, Mr Robertson stayed on, not for a short period, but rather for two months; this constituted two-thirds of his overall employment with Cash Converters Gosnells.  Mr Mitchell then approached him and had a conversation which brought about the termination of Mr Robertson’s employment.  It was not really contested that the conversation was brief and fairly casual.  In the course of it, Mr Mitchell told Mr Robertson that he did not believe that he and Mr Robertson were "getting on".  He told Mr Robertson that "It wasn't working out", and advised him that his employment would come to an end at the conclusion of the following Saturday.

There was dispute as to when this conversation took place.  Mr Mitchell says it took place early in that week.  Mr Robertson says it took place on the Friday.  It is of some relevance when the conversation took place because if there was greater notice then that would tend to make the termination less harsh.

On balance, I find that it is more probable that the conversation took place on the Friday than earlier in the week, and I do so chiefly because it seems to me that it would have been a matter of greater moment to Mr Robertson than to Mr Mitchell, and that Mr Robertson is therefore likely to have a better recollection of when it took place.  I do not believe that either of the witnesses was intentionally giving inaccurate evidence about the matter.

Assuming that that conversation took place on the Friday and the employment finished up the next day, Saturday, the question then arises, whether or not the employment was lawfully terminated at that point.  Mr Robertson says that he did not realise there were any problems and that it had never been suggested to him previously that there were any problems following his demotion from the management position.  In the witness box Mr Mitchell found it very difficult to articulate exactly what the problem was, other than to re-iterate that there was a problem, that it was not working out and that things were not going smoothly.

The final termination could not properly be described as a termination based on the operational requirements of the undertaking.  If anything, there was a vague suggestion that it had something to do with Mr Robertson’s capacity or conduct.  In reality, this is a case of  no clear reason being given to the employee at all and, indeed, of no clear reason being able to be given to the court.  If any reason going to capacity or conduct might be discerned then it is clear that any allegations of shortcomings in those areas were not put to Mr Robertson at the time of his termination as is required by section 170DC of the Act.

Therefore, I find that the dismissal was unlawful, firstly, because the employer has not satisfied me that there was a valid reason for termination, as is required by Section 170DE(1), and secondly, because if there was some valid reason going to conduct and capacity it was not put to the employee, as is required by Section 170DC. 

In so finding, I recognise that from Mr Mitchell's point of view he made an assessment that, in a general sense, things were not running smoothly, and that he then took the decision that the solution to that perceived problem was to bring the employment of Mr Robertson to an end.  I also note that Mr Mitchell took steps to try and alleviate any consequential loss to Mr Robertson resulting from his dismissal, by ringing around the other stores in the Cash Converters chain trying to arrange another job for Mr Robertson.

The bottom line, however, is that had Mr Robertson not been successful in getting a new job despite Mr Mitchell’s best efforts, Mr Mitchell’s actions would have left Mr Robertson out of work for reasons which he did not understand and in circumstances where, as Mr Mitchell found at the hearing, it was difficult to point to what the reason for dismissal was.

Now, I understand that sort of thing has been happening for years, and that in the past it has been something that employers have been able to do, but Division 3 Part VIA of the Act  has now been put in place.  It recognises the central importance in a person's life of their job and puts in place some processes which give an employee some security in their  employment.  It is not the case that an employer cannot dismiss somebody if they are not meeting the standards that the employer requires, but it is the case that the employer may have to be a little more formal about it than was previously the case, that they have to articulate to the employee what the problem is and give the employee an opportunity to fix the problem.  

Having said that, I turn to consider what order as to compensation, if any, I should make.  In doing that I have to look at what loss Mr Robertson has suffered.  He received one week's pay in lieu of notice.  He was finished up on Saturday so the payment of notice would take him up to the following Saturday.  I then find as a matter of fact that he started work in his new job the next Monday so it seems to me that any loss in terms of the period he was out of work is negligible.  In fact, assuming he was not previously working on the Sunday, it seems to me there is no loss at all.

The other possible loss would be any ongoing loss as a result of a reduction in income.  Mr Robertson in his new job is earning $475 net per week.  At the time he left his old job he was getting $400 net.  I appreciate that at the time he commenced his old job he was getting $500 net, and there may have been some unfairness in the manner in which he was demoted, but that was not a matter he chose to pursue at the time.  I do not feel that I can “concertina” these events into the one termination, in the way that I have been invited to by Mr Robertson’s solicitor,  given that two months elapsed between them. 

Accordingly, I find that the relevant figure with which his new salary of $475 net should be compared is $400 net rather than $500 net.  Therefore, I find that there is no ongoing loss of salary.

The final matter is the stress allegedly suffered by Mr Robertson as a result of what has happened.  I am satisfied that Mr Robertson was genuinely perplexed by the circumstances of his dismissal and that this could have been avoided had the process of dismissing him been different.  However, he is fortunate enough to have gone into another job which has improved his circumstances.  I am proposing to make a relatively nominal award of compensation to reflect his distress arising from the circumstances of his dismissal and I would fix that award at a sum of $350.

I certify that this and the preceding six pages are a true copy of the Reasons for Judgment of Judicial Registrar R D Farrell.

Associate

Date

Counsel for the applicant:                  Mr D I Connor
Solicitors for the applicant:                Julienne Penny & Associates

The respondent represented itself

Hearing date:             1 December 1995
Judgment date:          1 December 1995