Gary Sinclair v Anthony Smith and Associates Pty Ltd

[1995] IRCA 663

CATCHWORDS

UNLAWFUL TERMINATION - review of decision by Judicial Registrar - redundancy - failure to consult with the employees or the union - whether dismissal harsh, unjust or unreasonable - whether reinstatement impracticable - whether another position on the same terms and conditions could be fashioned - onus of proof.

Industrial Relations Act 1988, ss 170DE, 170EE, 377

Ricky Bruce Mitchell-Collins v The La Trobe Council, Spender J, 25 August 1995, followed

Matter No. SI 1260 of 1995

GARY SINCLAIR v ANTHONY SMITH & ASSOCIATES PTY LTD

von Doussa J
Adelaide
1 December 1995

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT
REGISTRY  NO. SI 1260 OF 1995

BETWEEN:

GARY SINCLAIR

Applicant

AND:

ANTHONY SMITH & ASSOCIATES PTY LTD

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER           :          VON DOUSSA J

WHERE MADE  :          ADELAIDE

DATE OF ORDER             :          1 DECEMBER 1995

THE COURT ORDERS THAT:

1. The respondent reinstate the applicant by appointing the applicant to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment.

2. The respondent pay to the applicant lost remuneration resulting from the termination of his employment, being the wages that he would have received had he not had his employment terminated, less a sum of $4,044, being earnings received from other sources in the meantime.

Note:  Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS
COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT
REGISTRY  NO. SI 1260 OF 1995

BETWEEN:

GARY SINCLAIR

Applicant

AND:

ANTHONY SMITH & ASSOCIATES PTY LTD

Respondent

REASONS FOR JUDGMENT

Coram: von Doussa J
Place: Adelaide
Date : 1 December 1995

This is an application under s.377(1) of the Industrial Relations Act 1988 ("the Act") to review a decision of Farrell JR handed down in Adelaide on 2 November 1995. The applicant at first instance, Mr Sinclair, had been employed by the employer since January 1990 as a shift supervisor. For convenience I shall refer to Mr Sinclair as the applicant, and to the employer as the respondent. The applicant's employment was terminated on 15 June 1995.

An application for review is by way of hearing de novo.  It is the function of this Court to form its own view about the matter, uninfluenced by the decision and findings of fact made by the Judicial Registrar.  In this instance the parties have been prepared to re-argue the matter on the evidence and exhibits tendered below, there being no significant point of disagreement that needs to be resolved on the credit of the witnesses. 

It was common ground at the hearing below that the applicant's employment had been terminated because the job that he had been doing had been made redundant. The Judicial Registrar found - and on this there is no dispute - that the applicant had been given no warning that his employment was to be terminated, he was given no opportunity to work out his period of notice, and the respondent did not consult with the applicant or the relevant union who had members in the workplace regarding the matter. The respondent was bound by the Metal Industry (SA) Award, which included the well known provisions as to termination, change and redundancy. No attempt was made to find an alternative position for the applicant within the respondent's business, and the applicant was not counselled about his impending dismissal. The Judicial Registrar concluded that, if the respondent had consulted with the applicant and the union and had considered the alternatives available to it, it is likely that the applicant's employment would have continued. That led her to the conclusion that the termination of the applicant's employment was harsh, unjust and unreasonable, and breached the provisions of the Act. She observed that a number of positions at the respondent's business were currently filled by casual contract labour, and she was satisfied that reinstatement to some other position in the respondent's business was not impracticable. She therefore ordered reinstatement.

It is necessary to refer in a little more detail to the background which led to the applicant's position becoming redundant.

The respondent is a manufacturer and supplier in South Australia of wine corks and other consumables used in the bottling of wine.  It is a business that employs some 45 floor staff and, together with the management, had a complement of some 60-65 people at the time that the termination of employment occurred.  In March 1995 a consultant's report was obtained by the respondent which made recommendations about the restructuring of the business.  The evidence is to the effect that there had been some downturn in the work available to the respondent in the preceding 12-18 months.  During that period, overtime that had earlier been available to the floor staff was not so available.

The consultant's recommendations, so it is said by Mr Maieli who gave evidence for the respondent, was that the management structure be altered by eliminating certain management positions.  It was proposed that the positions of three staff supervisors, one of which was filled by the applicant, be done away with, along with a higher management position and two support staff positions.  In other words, the recommendation was for the downsizing of the staff by approximately 10 per cent.  When the recommendation was received from the consultant, it was discussed by the managing director of the respondent with Mr Maieli who holds the position of operations manager.

Although the Judicial Registrar expressed the conclusion that no attempt was made to find an alternative position for the applicant within the respondent's business operation, that is not literally correct on the evidence.  The evidence is that in the discussions held between the managing director and Mr Maieli the possibility of finding other positions for the staff supervisors was considered, but, having regard to the fact that three of them were going, and that they were paid at a higher rate than the other floor staff, it was not thought possible to do so.

It is common ground that no warning was given and there was no reference to the union.   On 15 June or thereabouts, each of the supervisors was informed that his position was to be made redundant, and particulars of severance payments were given to each person.  In the case of the applicant, he was given pay in lieu of notice and a redundancy payment, as required by the relevant clauses of the Award.  Further, because he was not being offered the opportunity to work out the notice period, he was given an additional two weeks pay.

It is against that background that the Court must decide whether the termination was harsh, unjust or unreasonable. As I have said, it is common ground that the position of the staff supervisors had become redundant. There was, therefore, a valid reason connected with the operational requirements of the employer's undertaking that led to the termination. Notwithstanding that fact, a termination might be contrary to the Act if the termination is harsh, unjust or unreasonable: s.170DE(2). The termination may be harsh, unjust or unreasonable either because of the substantive merits of the situation or because of the procedures by which the termination was brought about. In the present case it is contended by counsel for the applicant that the termination was harsh, unjust or unreasonable for procedural reasons.

First, it is alleged that there was no consultation of any sort between the employer on the one hand and with the union and those employees whose positions were affected, and in particular the applicant, on the other hand.  The applicant asserts that he was a member of the union, having joined it immediately before his dismissal occurred.  Even if that were so, and there is some uncertainty about it, that fact was not known to the respondent.  Nevertheless, there were other employees in the workplace who were members of the union and the employer was bound by the terms of the Award.

Secondly, it is asserted that the termination was harsh, unjust or unreasonable because there was no forewarning given to the applicant that his position had become insecure, or that it was shortly to be eliminated.

Thirdly, there was no discussion with the applicant about the possibility of delaying the implementation of the decision to allow him to look for other work.

Fourthly, there was no offer of counselling or retraining.  In the circumstances of this case that is of particular significance as the applicant actually asked, when he was informed of his termination, whether any counselling would be offered. 

Finally there was no offer made to him of alternative employment, albeit on lesser terms and conditions, within the respondent's workplace.

The broad answer to those submissions by the respondent is that consultation and the like with the employees and the union would not have brought about a different situation, and that no alternative job could have been fashioned for the applicant either on the same terms and conditions or on lesser terms and conditions.  On that latter topic, the respondent points to evidence of earlier events which had occurred, and discussions, during which the applicant expressed his dislike of working shift work and his concerns about being downgraded to a lower paid position.

In my opinion on the evidence it should be held that the termination of the applicant's employment was harsh, unjust or unreasonable on account of a failure to follow the appropriate procedures to bring about that termination. The most significant factor in my view is a failure to follow the requirements of clauses 37 and 38 of the Award, the objects of which are the same as those reflected in clauses 19 and 25 of the Termination of Employment Recommendation set out in Schedule 11 to the Act.

It is sufficient to refer to the requirements of clause 38 which relevantly reads:

"Clause 38.

(1) Redundancy in this clause means the loss of employment due to the employer no longer requiring the job the employee has been doing to be performed by anyone.

(2) Discussions before Termination

(i) Where an employer has made a definite decision that the employer no longer wishes the job the employees have been doing done by anyone and that decision may lead to termination of employment, the employer shall have discussions as soon as practicable with the employees directly affected and with the Union or Unions.  Discussions shall cover, among other things, the reasons for the proposed terminations, measures to avoid or minimize the terminations, and measures to mitigate the adverse effects of any terminations on the employees concerned.

(ii) For the purposes of discussion the employer shall as soon as practicable provide in writing to the employees concerned and the Union or Unions all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out.  Provided that any employer shall not be required to disclose confidential information the disclosure of which when looked at objectively, would be inimical to the employer's interests."

The clause required consultation both with the employees and the union once a definite decision had been made that the respondent no longer wished the job of the employees to be performed.  That definite decision was made at least some weeks in advance of the advice of the decision to the employees.  Had advice been given to the persons concerned, in particular the three shift supervisors and the union, the opportunity would have arisen for discussion.  Counsel for the applicant asserts that it should be concluded that had discussion occurred it would have been possible to reorganise the forming department in which the applicant worked so as to utilise the skills of the shift supervisors, who were the longest serving employees in that department, and, it may be inferred, who had substantial training and experience.

I do not think that conclusion can be drawn in such positive terms.  On the other hand I do not think it can be concluded that the position would not have been any different had there been due consultation with everyone concerned.  I think the evidence shows that the position may have been different had the Award provisions been followed, but it cannot be held that it was more probable than not that the applicant's employment would have continued.

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 underestimated, and finds expression 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.

As I have said I do not entirely share the view of the Judicial Registrar that had there been consultation it is likely that the applicant's employment would have continued.  Perhaps the reason why we differ is that I think that it is not appropriate in this case to look at the position of one employee in isolation.  At the time of the dismissal the respondent had a number of redundant positions.  One element of fairness would be that each of those affected by the decision be treated equally.  It would not be equal treatment - or at least it would not be perceived to be equal treatment - if one of those persons whose job were to go were singled out and given some preferential treatment into a new position.

In my view the applicant has made out a case that the termination of employment was harsh, unjust or unreasonable. That then gives rise to the question of what remedy should follow. It is now well established that the primary relief under Part VIA of the Act is reinstatement: Quality Bakers of Australia Limited v John Goulding & Anor, Beazley J, decision 23 June 1995, and the authorities cited by her Honour.

That primary remedy, however, is subject to certain qualifications. The first, in my view, is evident from the terms in which s.170EE(1) is expressed, namely that the reinstatement of the employee shall be either into the job position previously held, or, into some other job position on terms and conditions no less favourable than those which hitherto applied. The second qualification is that reinstatement is not to be ordered if the Court thinks that the reinstatement of the employee is impracticable. In that event compensation is the appropriate remedy: s.170EE(2).

When a court is required to consider whether the termination of employment is harsh, unjust or unreasonable for the purposes of s.170DE(2), a decision must be made having regard to all the circumstances of the particular work place and the employee which prevailed at the time when the decision was made. By way of example, in this case when the decision was made, there had been for some months a downturn in work; shift work of the kind that the applicant found satisfactory to him was not available; and there was no prospect in the foreseeable future of it becoming available. He had expressed dissatisfaction with the shift work and wages that would be applicable to him if he were moved to some other position in the respondent's work force. In those circumstances it is understandable that the respondent thought it inappropriate to try and offer some other lesser position.

However, when the Court comes to consider the question of reinstatement, in my view, the decision must be made in light of the evidence and circumstances that prevail at the time that the order is to be made.  By way of further example from the facts of this case, by the time the matter reached the Judicial Registrar in October 1995 there had been an unexpected upturn in work in the forming section of the respondent's business.  The nature of the shift work had changed and certain extra employees had been put on.  Those are the sorts of matters that I think can be taken into account.  More particularly, in June 1995 the employer was faced with a restructure that would result in three shift supervisors and three other staff being superfluous to needs.  As I have said, fairness required equality of treatment, and it may have been difficult to find positions for six people.  On the other hand, by October 1995 what the Court had to consider was whether it was feasible to reinstate one person.  Different considerations applied in October than in June 1995.

It is argued by the respondent that it is not practicable to award reinstatement for a number of reasons.  First, the position previously occupied has been abolished.  It would be necessary at the least to find some new position.  Secondly, there is no position presently in the forming section or in other sections of the respondent's business that carry the level of remuneration previously paid to the shift supervisors.  Thirdly, the applicant expresses a dislike for shift work and if he were reinstated shift work would again be a regular feature of his employment.  Fourthly, on occasions in October 1994 and March 1995 he had said that if he were regraded to another position at a lower salary he would leave as soon as he could find another job without shift work.  Finally, he had expressed on other occasions the view that he was looking for alternative employment with terms and conditions better suited to his family situation.  It was submitted that if he were reinstated there would be no certainty that he would remain in the position for any substantial period of time.

I deal first with the last three submissions, namely the need to go back on shift work and the expressions of dissatisfaction with the shift work and other employment conditions.  Whatever views the applicant may have expressed in the past in the course of open and congenial discussions with his superiors about his work, he remained at his job.  He had made it clear, by the time the case came on before the Judicial Registrar, that he would accept the shift work if reinstated.  He would not like it any more than he had done in the past but nevertheless he would do it.  In my view, the applicant is entitled to take that view and the practicability of the reinstatement order sought by him is not undermined by the views expressed on earlier occasions by him that if he could find work that better suited him he might be disposed to take it.  I think it is clear from the evidence that whatever his ideals may have been before his dismissal, they had been modified somewhat by the fact of the dismissal.  I do not think that this Court or any other tribunal should discourage people from trying to improve themselves in life if and when the occasion arises.  If there were solid evidence that an applicant for reinstatement was about to go off and take some other job or undertake some other pursuit in any event, that would be something entitled to substantial weight, but where it is no more than just a hope in life, I do not think that it should weigh against reinstatement.  But, it seems to me that that is a side issue which diverts attention from the real issues in the case. 

The other two matters are more substantial.  The former position, that of staff supervisor filled by the applicant, has been abolished, and, at least so far as the evidence disclosed, in June 1995 there was no other position in the work place carrying a salary equivalent to that of staff supervisor.  The supervisors' positions, or at least that of the applicant, carried a base salary of approximately $24,000, whereas the members of the floor staff who worked underneath the supervisors were on a base salary of approximately $20,000 per year.

The respondent's argument is that reinstatement is impossible in the present case because there is no job carrying the same terms and conditions to which the applicant could be reinstated. On a first reading of s.170EE(1), that appears as a forceful argument. However, if that approach were applied literally in the way that the respondent urges in this case, it would to a large extent undermine the evident intent of s.170EE which is that where an unlawful termination occurs, reinstatement is to be the primary remedy. It was recognised by Spender J in Ricky Bruce Mitchell-Collins v The La Trobe Council, decision 25 August 1995, that the reinstatement provisions can operate even where in a literal way the particular position formerly occupied has gone and another position carrying the same terms and conditions cannot be immediately identified in the work place.

In that case his Honour recognised the possibility that the respondent could fashion a position which adequately reflected the salary paid to the employee previously, and which would draw on the qualities and experience of the employee, so that it could be said that reinstatement to another position on the same terms and conditions was not impracticable. I agree with that approach to the application of s.170EE(1).

The first two of the grounds advanced by the respondent, in opposition to the reinstatement case, directly raise for consideration, in my view, the question whether the Court should be satisfied that it is impracticable to reinstate the applicant because it is not practicable to fashion in some way a position which could be filled by the applicant if it were ordered that he be reinstated to another position on terms and conditions no less favourable than those in which he was employed immediately before the termination.

The resolution of that question raises a matter of onus of proof.  In this case, the evidence barely touches on the question of whether it would be possible to refashion a position to be filled by the applicant.  The evidence outlines the nature of the operation of the respondent before the restructure carried out pursuant to the consultant's recommendations occurred, and there is some reference to what happened immediately afterwards.  The evidence discloses that the supervisors' roles were thereafter carried out by foremen fitters.  But the evidence does not include the consultant's report, the recommendations that were made, and more particularly, it does not disclose the economic and other factors that were said to be relevant to the restructure.  Nor was any direct evidence given on the question whether a job could be refashioned.

The respondent argues that the onus of establishing that the reinstatement is not impracticable rests upon the applicant. The Act itself is silent on that particular aspect of onus. The general rule is that a person seeking to establish a cause of action and a remedy before a court or tribunal carries the onus of establishing the facts necessary to justify the granting of the remedy. However, the Act is dealing with a very practical situation and a very practical approach has to be taken to the question of proof of relevant facts. The reality is that whether a job can be refashioned, and if so what implications that would have or might have in the employment place, are matters almost entirely within the province of the employer. In a realistic sense, in my view, the evidentiary burden of proof of impracticability rests upon the employer.

In the present case, insofar as a legal onus may have rested upon the applicant, the applicant has led evidence of the size and nature of the business of the respondent, and of the fact that the business is still in operation.  It is difficult to think that the applicant could have led any more useful evidence on the topic of reinstatement.  On the other hand, the employer, it may be assumed, knows precisely the operational requirements of its business and the difficulties or otherwise of fashioning a position that would accommodate the applicant if reinstated under an order requiring the provision of a position on terms and conditions no less favourable than the former position.

In my view the evidence fails to show that reinstatement is impracticable. On the other hand the evidence that has been adduced by the applicant justifies the Court in thinking that scope exists for accommodating such a position in some way or another. Absent any clear picture by the employer of impracticability, in my view, the primary remedy of the Act should be awarded. I therefore reach the same conclusion as the Judicial Registrar, although for slightly different reasons, and I emphasise that I arrive at that conclusion uninfluenced by any views expressed by her.

In my view the order of the Court should be (1) that the respondent reinstate the applicant by appointing the applicant to another position on terms and conditions no less favourable than those on which he was employed immediately before the termination of his employment; and (2) that the respondent pay to the applicant lost remuneration resulting from the termination of his employment, being the wages that he would have received had he not had his employment terminated, less a sum of $4,044, being earnings received from other sources in the meantime.

I certify that this and the
  preceding pages are a true copy
  of the Reasons for Judgement of
  Justice von Doussa

Associate:

Date:

Counsel for the applicant              :          Mr S Blewett

Agent for the applicant                  :          Australian Manufacturing
  Workers Union

Counsel for the respondent           :          Mr G D Copolla

Solicitors for the respondent         :          Kelly & Co.

Date of hearing  :          1 December 1995