Graeme Simpson v Systems Services Pty Ltd Neville Fryar v Systems Services Pty Ltd
[1995] IRCA 602
•17 October 1995
C A T C H W O R D S
INDUSTRIAL LAW - whether the employer had a valid reason for termination of the Applicants employment - redundancy - severance payment.
INDUSTRIAL RELATIONS ACT 1988, ss.170DE, 170EE
No. SI 116 of 1994
GRAEME SIMPSON -V- SYSTEMS SERVICES PTY LTD
No. SI 117 of 1994
NEVILLE FRYAR -V- SYSTEMS SERVICES PTY LTD
JUDICIAL REGISTRAR: L FARRELL
PLACE: ADELAIDE
DATE: 17 OCTOBER 1995
INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
SOUTH AUSTRALIA REGISTRY )
No. SI 116 of 1995
B E T W E E N: GRAEME SIMPSON
Applicant
AND: SYSTEMS SERVICES PTY LTD
Respondent
MINUTES OF ORDER
BEFORE: JUDICIAL REGISTRAR L FARRELL
PLACE: ADELAIDE
DATE: 17 OCTOBER 1995
THE COURT ORDERS THAT:
The Respondent pay to the Applicant the sum of $8,547.69.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
SOUTH AUSTRALIA REGISTRY )
No. SI 117 of 1995
B E T W E E N: NEVILLE FRYAR
Applicant
AND: SYSTEMS SERVICES PTY LTD
Respondent
.
MINUTES OF ORDER
BEFORE: JUDICIAL REGISTRAR L FARRELL
PLACE: ADELAIDE
DATE: 17 OCTOBER 1995
THE COURT ORDERS THAT:
The Respondent pay to the Applicant the sum of $6,361.45.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
]
INDUSTRIAL RELATIONS COURT )
OF AUSTRALIA )
SOUTH AUSTRALIA REGISTRY )
No. SI 116 of 1994
B E T W E E N: GRAEME SIMPSON
Applicant
AND: SYSTEMS SERVICES PTY LTD
Respondent
No. SI 117 of 1994
B E T W E E N: NEVILLE FRYAR
Applicant
AND: SYSTEMS SERVICES PTY LTD
Respondent
BEFORE: JUDICIAL REGISTRAR L FARRELL
PLACE: ADELAIDE
DATE: 17 OCTOBER 1995
REASONS FOR JUDGMENT
These two Applications pursuant to Section 170EA were heard together with the consent of all
parties. Both Applicants claimed compensation. Neither sought reinstatement.
The Respondent is an Information Technology Services Company. Both Applicants were engaged in mainframe technical support, one of three divisions of the Company.
The Respondent Company came into existence in 1985. It was created by a consortium of mainframe computer users to provide mainframe technical support. Since that time a number of changes have taken place. They are not relevant here, except to say the Company was in serious financial difficulty and that there has been a significant decline in the market for mainframe technical support, particularly in Adelaide. Ultimately, the employees of the Respondent except Simpson, Fryar and another employee Farnick formed another company and bought the Respondent. In January 1994 all other employees signed contracts of employment that involved a 20% reduction in their salaries.
Mr Simpson is 34 years old. He commenced employment with the Respondent on 16 September 1985 as a Systems Programmer. He had transferred to the Respondent from SGIC when SGIC outsourced the Department that he worked in.
Between late 1993 and April 1994 the Respondent negotiated with Mr Simpson to commence a new contract of employment. The most significant part of the negotiations was a 20% pay cut. Mr Simpson refused to accept the new contract of employment.
On 5 April 1994 Mr Simpson was given a letter terminating his employment. He was given nine months notice of the termination of his employment. By letter dated 22 November 1994 Mr Simpson was offered an extension of his notice of a further five weeks. He accepted that offer.
He was advised that his position would be redundant as from 17 February 1995 but there was some possibility for further employment initially in Singapore.
Mr Simpson’s employment with the Respondent ceased on 17 February 1995. He commenced employment with ISSC on 20 February 1995. He was required to relocate to Melbourne on 28 May 1995. At the time of the termination his wage was $55,560 per annum. His salary package was $60,960.00.
Mr Fryar commenced employment with the Respondent in February 1991, as a systems programmer. Prior to the commence of his employment he was employed by Santos from 1984.
Between November 1993 and April 1994 the Respondent sought to alter Mr Fryar’s contract of employment reducing his pay by 20%. He refused to accept the new contract of employment.
On 6 April 1994 Mr Fryar received a letter giving him seven and a half months notice of the termination of his employment. An offer was made by the Respondent to extent the notice period until 17 February 1994, however Mr Fryar did not accept the offer. At the time of the termination of his employment his salary package was $47,560.00 per annum. His wage was $41,350.00.
In late 1994 Mr Fryar and his wife formed a computer consulting company, in contract with another company, ISSC, which provides services to Santos. Mr Fryar’s company is paid $66,000.00 per annum. He receives a salary of $27,658.00 per annum and his wife receives $18,000.00.
Was there a valid reason for the termination of the Applicants’ employment?
The Respondent has produced substantial evidence to demonstrate that its difficult financial position and the changed circumstances in the narrow field in which the Applicants were employed. In my view the Respondent has established a valid reason for the termination of the Applicants’ employment.
Was the termination of the Applicants’ employment harsh unjust and unreasonable?
Counsel for the Applicants argued firstly, that the Applicants were given too little notice of the termination of their employment. Secondly, he argued that the Respondent should have given the Applicants payment in lieu of notice so they could obtain benefits of minimised taxation.
In my view the period of notice given to each of the Applicants was reasonable. I do not accept that the lack of opportunity to minimise taxation renders the termination of the Applicants employment unlawful. The opportunity to work out a notice period provides a substantial advantage to employees in seeking alternative employment and in preparing themselves for the termination of their employment.
Does the failure to make a severance payment where an employee’s job is made redundant render the termination of employment harsh unjust and unreasonable?
The Applicant’s employment was taken from them without any fault on their part. Neither Applicant received any severance payment. They have lost non transferable credits such as long service leave and sick leave. They have suffered some inconvenience and hardship as a result of the termination of their employment. In my view the failure to make any severance payment renders the termination of the employment of the Applicants employment harsh unjust and unreasonable.
In calculating the amount of compensation to be paid to the Applicant I take into account the loss of non transferable credits of long service leave and the inconvenience and hardship they have suffered. The Termination Change and Redundancy case of the Full Bench of the Australian Conciliation and Arbitration Commission [1984] 8IR 34 determined severance payments to be made in the case of redundancy. Whilst there have been decisions that have awarded increased severance payments, there needs to be some exceptional circumstances to warrant a departure from the standard. In my view such circumstances do not exist here. I am not prepared to accept that other factors can be taken into account in the circumstances of this case and particularly in light of the substantial period of notice given to each of the Applicants. I therefore award compensation based on eight weeks of the salary of each Applicant. I award to Mr Simpson the sum of $ 8,547.69 and to Mr Fryar the sum of $6,361.54.
I certify that this and the preceding 2 pages are a true copy of the reasons for my judgment.
DATE OF HEARING : 13, 21 and 28 SEPTEMBER 1995
FOR THE APPLICANT : MR J RAU
FOR THE RESPONDENT : MR G COPPOLA
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