Hans Peter Krupp-Geier v Open Family Australia Incorporated

[1995] IRCA 320

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - UNLAWFUL TERMINATION - REDUNDANCY - OPERATIONAL REQUIREMENTS -PROCEDURAL FAIRNESS - HARSH UNJUST OR UNREASONABLE - COMPENSATION

INDUSTRIAL RELATIONS ACT, 1988 Sections 170 DB 170 DE 170EE
Schedule 11

JONES V. DUNKEL (101 CLR 298)

HANS PETER KRUPP-GEIER V. OPEN FAMILY AUSTRALIA INCORPORATED

AI 1052 of 1995

LINKENBAGH J.R.
CANBERRA
9 JUNE 1995

IN THE INDUSTRIAL RELATIONS COURT

OF AUSTRALIA

AUSTRALIAN CAPITAL TERRITORY

DISTRICT REGISTRY  No A1 95/1052

BETWEEN       HANS PETER KRUPP-GEIER  Applicant          
  AND           OPEN FAMILY AUSTRALIA
  INCORPORATED  
  Respondent

COURT: JUDICIAL REGISTRAR LINKENBAGH

DATE OF HEARING AND JUDGMENT: 9 JUNE 1995

PLACE: CANBERRA

REASONS FOR JUDGMENT DELIVERED EX TEMPORE AND REVISED
  FROM THE TRANSCRIPT

This is an application under section 170EA of the Industrial Relations Act 1988 in which the applicant seeks a remedy in relation to the termination of his employment with the respondent, which termination was effected on 24 January 1995.

I find the facts as follows. The applicant was employed by the respondent from July 1992 in various positions and at the date of his termination his title was Co‑ordinator, CANA and Satellite Houses.  The terms of his employment were evidenced by a document which came into existence in April of 1994.

I find that there has never been any suggestion on the part of the respondent that the applicant was in any way incapable of or unsuitable to perform his duties, nor has the respondent had any cause to discipline or counsel him in relation to matters relating to his conduct or performance.

On 3 January 1995, the respondent's Executive Director, Mr Stirling, composed some notes, which are exhibit C to his affidavit, concerning a proposed restructure of the respondent's organisation in Canberra. He refined those notes in a further memorandum, dated 8 January, which is exhibit E to his affidavit.  Both of those sets of notes mention the retrenchment of the applicant.  Mr Stirling had made the decision on 3 January that the applicant's position and the applicant were to be deleted from the organisation.  He did not communicate with the applicant as to the proposals at all, nor did he communicate with others in the workplace about the issues relating to the choice of persons to be made redundant.

The document which is exhibit E, which is the 8 January document, anticipates that the applicant's duties will be taken over by Lisa Corrigan.  Miss Corrigan was, at that time, on leave.  She returned from leave on 16 January and resigned forthwith. The respondent did not take the opportunity presented by the resignation of Miss Corrigan to reassess the decision which had been made in relation to the retrenchment of the applicant and the abolition of his job, although Miss Corrigan's resignation clearly allowed for consideration of possibilities at that time, which had not existed at 3 January.

On 20 January, Mr Burkey, who was another employee, spoke to the staff and informed them that he had been appointed as the Director of Services.  Mr Burkey asked the staff whether they were happy with his appointment and the applicant responded to the effect that he was not happy because no one had been consulted.  Mr Burkey indicated that in the next week there would be changes within the organisation and his words, as reported by the applicant, were, "Everything will be revealed about changes within the organisation."

Mr Burkey is reported by the applicant in his affidavit to have said words to the effect that, "This is an exciting time for Open Family because it has a new future."  Mr Burkey did not indicate to any of the staff on 20 January that any employee's position or employment was at risk, notwithstanding that he knew at that time that the applicant's position and employment were at risk and that there were proposals in relation to the retrenchment of two other employees.

The applicant gave oral evidence that he was informed by Mr Burkey on 20 January that he would be "pleasantly surprised" when Mr Burkey spoke to him the following week.  On 23 January, Mr Burkey called the applicant to a meeting and asked him for a report about the projects he was undertaking at that time and, at the conclusion of that meeting, he informed the applicant that he, Mr. Burkey, was taking over CANA and that the applicant was to be retrenched.

The applicant was informed that there were to be two new positions created and the applicant immediately asked for a reason as to why he would not be able to do one of those jobs.  He was told that the Board had discussed that matter and that he was not suitable. One position mentioned by Mr Burkey at that meeting became a reality and shortly thereafter the respondent advertised for prospective employees for that position in the public press. The applicant applied and was not successful.  Further, in relation to that position, the applicant was given a note by the Executive Director on 24 January which mentions the new position and says, "... but to be fair, I'm sure he (Mr Burkey) would have told you that he didn't think you would have the inside running on it."

The respondent seeks to rely on its operational requirements as justification for the termination of the applicant's employment.  It was conceded at the commencement of the hearing that the position held by the applicant was abolished for reasons which related to the purpose for which the respondent organisation exists,  so that in one sense there is what might be seen as a genuine redundancy.  Redundancy, however, goes further than simply the rearrangement of the structure so that the position disappears. Redundancy is a chain of events. In this case the respondent's operational requirements dictated that the applicant's position no longer existed, but it does not necessarily follow from that that the applicant's employment can therefore be terminated with impunity.

The Recommendation concerning the Termination of Employment at the Initiative of the Employer which is Schedule 11 to the Industrial Relations Act, 1988 sets out a number of requirements which apply in situations of redundancy and those requirements are accepted in modern employment practice as being applicable and necessary in every case where an employer asserts that there is a redundancy. There must be effective communication between the employer and the employee; such measures as are possible must be taken to avert or minimise terminations; alternative employment opportunities should be investigated; training or retraining should be reconsidered; priority as to rehiring should be considered in appropriate cases.

The respondent has failed to pay any attention at all, in my opinion, to the requirements of the Recommendation.  It asserts that there has been a redundancy and that it has retrenched the applicant.  It did not discuss its proposals with the applicant or with other employees prior to the making of the decision on 3 January.  It did not consider, in any real way, on the evidence before me, alternative duties for the applicant.

I note the view expressed by Mr. Justice Higgins, who gave evidence for the respondent, that in his opinion the question of placing the applicant in the alternative position which was available involved no more than the respondent considering any application that the applicant might make for that position along with applications made by others in response to the advertisements for the position. The requirements of the recommendation go much further than that and oblige the employer to give preference to the person or persons who are to be made redundant for appointment to other positions, even if some training or retraining might be necessary or appropriate.  Not only did the respondent not communicate with the applicant prior to the making of the decision on 3 January, but it did not consider altering its decision when it had the opportunity to do so either on 16 January when Miss Corrigan resigned or when the vacancy for the new position was advertised.

The evidence of Mr Stirling is to the effect that after Miss Corrigan resigned, he left it to Mr Burkey to allocate Miss Corrigan's duties, which were to involve some of the applicant's former duties as well. Mr Burkey allocated a large part of those duties to himself, so that his own workload became quite heavy.

No consideration was given to allowing the applicant to continue his employment, given the unforeseen circumstances of the resignation of Miss Corrigan, and I find that the respondent was not minded to reconsider the matter.  The respondent had committed itself to the termination of the applicant's employment and was not prepared to review that decision, even though there were apparently no reasons relating to his conduct or performance which would have prevented him from being appointed to the other position. There was some evidence as to whether or not he was suitable for the position.  That evidence is unsatisfactory and insufficient, in my view, to lead to a conclusion that he was unsuitable for the position and would not have been able to perform the duties.  They were the duties that he had carried out in past years without any complaint from his employer.

I note that Mr Burkey was not called to give evidence. Mr Burkey filed an affidavit in reply to a small part of the facts deposed to by the applicant in his affidavit, but did not elect to give evidence‑in‑chief before me. Applying the principle in Jones v Dunkel (101 CLR 298), it is open to me to conclude that Mr Burkey could not have given any evidence which would have assisted the cause of the respondent in these proceedings. It appears to me that Mr Burkey was a significant player in the events that occurred in January of 1995 in relation to the applicant's employment and where there are gaps in the information provided to the Court, those gaps may well have been filled if Mr Burkey had been called as a witness.

There was evidence given that there was a philosophical difference between the applicant and the Executive Director about the implementation of the ideals of the respondent and that they had had differences in their points of view from time to time.  I do not accept that those philosophical differences were such as would have prevented the applicant from continuing as an employee of this organisation as at January of 1995.

I note Miss Corrigan's evidence that there was a myriad of different philosophies amongst the people who worked for the respondent and that there was no written material to give employees guidance as to the appropriate philosophical stance to adopt on matters that arose in the course of the day-to-day functioning of the organisation.  If, in fact, such philosophical differences did exist then, of course, the respondent, to make anything of them in these proceedings, would have had to comply with its obligations under section 170DC of the Act in relation to discussing those matters with the applicant, and giving him the opportunity to explain his point of view.

The circumstances of the termination leave much to be desired and Counsel for the respondent admitted as much in his submissions.  Those circumstances include the misleading comments made by Mr. Burkey on 20 January and the abrupt manner of Mr Burkey on 23 January when he informed the applicant that his job no longer existed and that his employment was terminated.  The lack of consultation and the matters that I have mentioned above are also relevant to the issue of procedural fairness.

The alternative position becomes significant in relation to the issue of whether or not the termination was harsh, unjust or unreasonable in a procedural sense and is also relevant in a substantive way. There was another job available.  The employer predetermined that that job was not going to be available to the applicant, whether or not he made an application for it.  When he did make an application, the respondent did not even go through the motions of showing that it had considered the application and simply informed the applicant that his written application had been unsuccessful.  It did not afford him the opportunity to have an interview or to compete for the position, particularly given his previous experience working for the respondent.

For all of those reasons, I find that the employer, the respondent, is in breach of Section 170DE of the act.  I find that there was a reason based on the operational requirements of the respondent for the restructuring of the positions within the organisation, but that is as far as the validity of the reason goes.  The termination of the employment was not based only on the abolition of the position, but involved the other factors which I have mentioned and I find that it was harsh, unjust and unreasonable, within the meaning of section 170DE(2).

This is a matter in which reinstatement is impracticable.  The applicant does not seek reinstatement and, given the evidence, it would not be in the interests of either of the parties to place the applicant back in this employment situation.  The applicant has remained unemployed since 24 January.  He received his two weeks pay in lieu of notice, which is his entitlement under section 170DB(2) of the act.  That is an entitlement separate, in my view, from his entitlement to compensation pursuant to section 170EE(3).

I propose to order compensation pursuant to the provisions of section 170EE(3) and I propose to order that the respondent pay the sum of $16,500 by way of compensation.  The applicant's salary was $33,000 per annum and the maximum to which he is entitled is six months' compensation at that rate.  I can see no reason in this matter why the maximum amount should not be awarded, given the conduct of the respondent and the fact that the applicant has remained unemployed in spite of efforts on his part to obtain work.

The orders that I make are therefore that the respondent is in breach of section 170DE of the Act and as compensation for that breach, pursuant to Section 170EE(3), the respondent is to pay the applicant the sum of $16,500.

I certify that this and the preceding four pages are a true copy of my reasons for judgment, as revised from the transcript.

Maria Linkenbagh
Judicial Registrar

Date: 19 July, 1995

Solicitor for the Applicant:      Mr. R. Refshauge
  Sly and Weigall

Counsel for the Respondent:       Mr. B. Salmon Q.C.
Solicitors for the Respondent:     Higgins