Ian Peter Marchesi v Mitsubishi Motors Australia Ltd

[1994] IRCA 141

CATCHWORDS

INDUSTRIAL LAW - Employer and employee - termination of employment - termination at the initiative of the employer - employee ceasing duties after final warning and return to work- whether constructive dismissal.

Industrial Relations Act 1988, ss.170EA.

Australian Bank Employees Union -v- ANZ Banking Group Ltd (Australian Conciliation and Arbitration Commission, 22 September 1988, unreported, Print H4736).

Western Excavation (ECC) Ltd -v- Sharp [1978] IRLR 27.

Siagian -v- Sanel Pty Ltd (1994) 122 ALR 333.

Association of Professional Engineers, Scientists and Managers Australia and Anor -v- Skilled Engineering Pty Ltd (1994) 122 ALR 471.

Grout -v- Gunnedah Shire Council (Industrial Relations Court of Australia, Moore J., 30 September 1994, unreported).

Wong -v- Hodes & Anor (Industrial Relations Court of Australia, Tomlinson JR, 26 September 1994, unreported).

IAN PETER MARCHESI -v- MITSUBISHI MOTORS AUST. LTD

NO. VI 1669 of 1994

Before:     MURPHY JR

Place:      MELBOURNE

Date:       14 December 1994

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1669 of 1994

BETWEEN:

IAN PETER MARCHESI
Applicant

AND

MITSUBISHI MOTORS AUST LTD
Respondent

MINUTES OF ORDER

14 December 1994  Judicial Registrar Murphy

THE COURT ORDERS THAT:

1. The Respondent’s Notice of Motion filed 12 October 1994 is allowed.

2. The Application is dismissed.

NOTE:  Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 1669 of 1994

BETWEEN:

IAN PETER MARCHESI
Applicant

AND

MITSUBISHI MOTORS AUSTRALIA LTD
Respondent

REASONS FOR JUDGMENT

14 December 1994  Judicial Registrar Murphy

Introduction

This application under Part VI of the Industrial Relations Act 1988 arises out of the breakdown of the employment relationship between the parties. The central issue in the case is whether that breakdown constitutes the termination of the Applicant’s employment at the behest of the Respondent.

Background

The Applicant was employed in 1986 as a fleet sales officer in a regional office of the Respondent.  The Respondent is of course a manufacturer and distributor of motor vehicles and the Applicant’s position involved him in liaising with fleet owners and dealers and in other duties involved in the promotion of fleet sales.  A considerable part of his duties involved him actually contacting dealers and fleet owners and attending at their premises.

The Applicant was successful in this position and a couple of years later was promoted to the position of area manager.  He performed well in these duties and the evidence revealed that he had been successful in obtaining an award from the Respondent, for his services, soon after his promotion.  He continued in those duties until he was “demoted” to the position of fleet sales officer in around June 1992.  The Respondent’s evidence on the “demotion”, which I accept was that there was a restructure of positions with less positions available than the existing personnel.  Three staff, including the Applicant, did not retain their existing positions, but their salary packages were retained.

The structure of the office from 1992 consisted of three fleet sales officers, the Applicant, Mr Sharp and Mr Kingwell.  These three reported to the Regional Fleet Sales Manager, Mr McCoull.  He in turn reported to the Regional Manager, Victoria/Tasmania, Mr Mackew.  Of the three fleet sales officers Mr Sharp handled Government and Local Government fleets, Mr McCoull handled major commercial clients.  The Applicant handled some minor commercial clients and assisted Mr McCoull.  Mr Kingwell remained in the office doing paper work and answering telephone queries.  Mr Kingwell was in ill health and subsequently retired in March 1994.

The Applicant’s Involvement With Amway.

In January 1991 the Applicant and his wife became involved with an organisation known as Amway.  This organisation is involved in the direct selling of products to consumers.  The Applicant’s wife was primarily responsible for the selling and distribution of products although the Applicant was also involved in attending meetings associated with recruiting new members to the organisation.

On 6 August 1991, prior to the above demotion, the Applicant was given a warning in writing by Mr Mackew that he should discontinue his activities with Amway products and only be involved with the Respondent’s products during working hours.  This warning arose out of a verbal communication to Mr Mackew that the business interests of the Applicant and his wife apparently had been furthered in company time.  The Applicant gave evidence that all times he had kept separate the activities of his business from that of his employer although he did say that from time to time people would call him on the phone during working hours in relation to the business.  He would defuse the calls and ask them to call him after hours.  He claimed that Mr McCoull knew this.  He also denied suggestions to him that he had attempted to recruit employees or persons that he met in the course of his employment to the business.  He stated that approaches were made to people that he met in a social context only.  He denied initiating conversations about Amway whilst in a work environment.

Monitoring Of The Applicant.

Mr McCoull gave evidence that from the second half of 1992 he became aware of anecdotal evidence that the Applicant had been using the Respondent’s time and resources to further his business interests.  He discussed with Mr Mackew monitoring the Applicant’s activities.  As a result of this discussion Mr McCoull arranged to keep track of the Applicant’s visits to clients, and his use of his vehicle.  This culminated on one occasion where the Applicant spotted Mr McCoull actually following him to an appointment in Carlton.  The extent and duration of the monitoring of the Applicant’s activities by the Respondent did not emerge in the evidence.  The Applicant admitted in cross examination that he did not raise with any of the staff of the Respondent the alleged monitoring of his activities except that he confronted Mr McCoull at the Carlton engagement at which time Mr McCoull claimed that it was a coincidence.

It would appear that the Respondent did monitor the Applicant for possible breaches of his duty of fidelity to it until the middle of 1993 because the need to keep him under close supervision was recorded in his July 1993 Performance Evaluation.

In that Performance Evaluation he was refused a salary increase.  It was noted that “he should consider whether (his) best interests are served by remaining with Mitsubishi or looking for other fields of endeavour”.  He was required to make a “considerable improvement in (his) commitment of time and energy to the job and (his) ability to work effectively without constant, close supervision”.

Mr Mackew gave evidence that at that stage he still remained of the belief that the Applicant was in breach of his duty of fidelity to the Respondent and was in fact involved in other business activities but did not have the evidence to prove it.

In March 1994 the fleet management division of the Respondent was again reorganised, consequent upon the ill health retirement of Mr Kingwell.  This particular officer as indicated earlier had been engaged in desk duties and not liaising in person with clients and dealers as the Applicant had been.  As a result of the retirement the Applicant was assigned the duties of remaining in the office processing paper work whilst his duties of liaising in person with dealers and clients were transferred to the other fleet sales officer, Mr Sharp, who was already handling those duties within the Government and Local Government sectors.  Mr McCoull gave evidence that one of the factors in the decision to change the duties of the Applicant in this way was the lack of trust in him by the Company associated with his outside activities.

At that time the Applicant was handed a duty statement which showed that his duties were administrative duties associated with processing claims and other paper work, telephone liaison with fleet owners and dealer personnel, co-ordinating the fleet evaluation fleet and providing other statistical analysis as required.  His salary did not change upon the new duties.  Part of the Applicant’s duties required him to take motor vehicles from the fleet that the Respondent ran to a service station to be washed.  He would do this on a regular basis and usually wait at the service station while that was being done.

Around June or July this year the operations of the Fleet Department were again reorganised when the other fleet sales officer, Mr Sharp, was promoted to another position.  His duties, rather than being conferred on the Applicant, were absorbed by Mr McCoull.  The Department had thus shrunk in a period of a few months from a total of four staff to two.

July 1994 Allegations Of Breach Of Duty.

On 7 July 1994 Mr Mackew received a handwritten note from the Proprietor of the service station that provided car washing facilities for the Respondent.  The thrust of the note was that the Applicant had been approaching members of staff of that service station to actively canvass his Amway business and recruit new members.  At the time that this letter was received by the Respondent, the Applicant had arranged to take some annual leave but this was deferred for a day to enable Mr Mackew to interview the Applicant and put the allegations to him.  Mr Mackew basically accused the Applicant of being “clever” in avoiding a breach of his duty of fidelity.  Mr Mackew made statements to the effect that he would obtain the evidence to support his view that the Applicant had breached the earlier warning.

The allegations in the letter were denied by the Applicant, although he did admit that he had had a meeting with one employee of the service station after hours.  Mr Mackew did not accept the Applicant’s denial at that point and indicated to him that he intended to investigate the matters and that the Applicant should proceed on his annual leave pending that investigation.

In the course of the conversation on that day Mr Mackew discussed resignation with the Applicant and according to the Applicant told him that he should resign.  Mr Mackew denied this but did admit that he suggested that the Applicant should resign.  It is unnecessary for me to reconcile this conflict in the evidence because on any view the Applicant was not at that stage placed in any position where he had no alternative but to resign.

The Respondent Investigates The Allegations.

Subsequent to the meeting on 8 July 1994 Mr McCoull arranged to attend the service station and interview the relevant employees.  From these interviews the Respondent distilled four allegations against the Applicant.  These were:

(a)That the Applicant offered to the Proprietor the benefits of a certain type of car alarm and inferred that if the Proprietor was interested the Proprietor would be able to sell the product through his detailing area.

(b)The Applicant suggested to the Proprietor that a woodgrain dashboard on a Mitsubishi model was inferior and that he the Applicant could obtain for the Proprietor a superior product if he was interested.

(c)The Applicant offered to three employees of the service station a superior hand cream product and deposited a trial tin with them to use.

(d)The Applicant had discussed the terms of employment of one of the employees with him and suggested work could be available in a business venture that the Applicant would be involved in later in the year.

On 19 July 1994, a day after the Applicant returned from leave, a meeting was arranged between representatives of the Respondent and the Applicant and his solicitor at which time the allegations arising from the investigation were put to the Applicant.  The earlier warning and the 1993 Performance Evaluation were also raised by the Respondent.  The Applicant denied all the allegations and denied that the hand cream product referred to was an Amway product.  Mr Mackew indicated in the course of the interview that he did not accept the Applicant’s denial of his involvement or his explanations and that he would need to seek advice from his superiors in Adelaide.  While the matters remained unresolved the Applicant was directed not to attend the service station in the course of his duties.

The Applicant was feeling pressurised by what was happening to him and on 21 July 1994, after consulting with his GP, went on sick leave.  On the same date his solicitors wrote to the Respondent providing a further confirmation of the denials made by the Applicant and providing an explanation in relation to one of the denials, namely that the tin of hand cream was not an Amway product and had its origin in an innocent purchase by the Applicant of cream to assist him in some home renovations and which he thought would be of help to the employees in the service station.

In the course of the same letter the solicitors noted that some of the Applicant’s duties were not being assigned to him and that the actions being taken by the Respondent were causing health problems to the Applicant.  The process of the Respondent in dealing with the allegations was also criticised by the solicitors.  They stated that the allegations were vague and unsubstantiated and that the people involved in the allegations were also involved in the investigation of the matter.

The Final Warning.

The interview on 19 July 1994 was left on the basis that Mr Mackew would obtain further advice from the head office of the Respondent in Adelaide.  He did obtain that advice and consequently contacted the Applicant and advised him, by telephone, that there was no intention to terminate his employment or dismiss him.  Further he wanted to put the matter back on even keel and that it had got out of hand.  He requested that the Applicant attend for an interview.  The Applicant, although still on sick leave, did attend on 27 July 1994.

At that interview Mr Mackew confirmed the telephone conversation to the effect that there was no intention to terminate the employment and that he wished to re-establish a proper working relationship with the Applicant.  He stated that he wanted the Applicant to attempt to re-build trust between the parties.  The Applicant in turn indicated that he wanted to continue his job.  In the course of the interview Mr Mackew handed to the Applicant a final warning.

The final warning canvassed the events of the interview of 19 July 1994 including the 1993 Performance Evaluation and the previous warning dated 6 August 1991.  The letter stated that the Respondent believed that the Applicant had, contrary to the previous warning, continued to use company time for purposes other than the sale or distribution of the Respondent’s products.  Specifically the letter referred to “the attempted distribution of the car alarm, imitation woodgrain dashboard, and hand cream”.  Further it claimed that the actions of the Applicant had soured relations between the Respondent and the service station Proprietor.  The letter indicated that the Respondent believed that the Applicant had “breached the duty of good faith by (him to the Respondent) by denying the truth of the (above) events.”

The letter concluded with a final warning suggesting that if there was any further evidence of the Applicant using company time or resources in an improper manner his employment would be terminated.  It referred to different types of resources, including telephones, cars and stationary, and said that it would monitor his usage of the resources.  It further stated that if there was any further evidence of damage to relations between customers he would be terminated.  The same would apply in the event of evidence of disloyal or unfaithful conduct by him.  Finally it stated that the investigations were continuing and if further allegations arose his side of the story would be heard before the Respondent acted on them. 

The Respondent’s position at that time that the employment had not been terminated nor was there any intention to terminate the employment was confirmed in a letter from the Respondent’s solicitors to the Applicant’s solicitors, dated 3 August 1994.

The Applicant’s solicitors wrote to the Respondent’s solicitors on 3 August 1994 confirming he was returning to work on 4 August 1994.  They further repeated his denials in relation to the earlier allegations and gave his explanation as to the circumstances in which the conversations arose in relation to the car alarm, the imitation wood dashboards and the hand cream.  They also detailed his response to the matter relating to the discussions of the terms of employment of one of the employees of the service station.  They repeated that the Applicant had scrupulously avoided any conflict of interest or breach of duty.  The letter confirmed that he

“will return to work ready, willing and able to perform his duties.  He wants to re-establish the earlier working relationships and to avoid the suggestion that he is now being penalised.  He expects to perform all of the duties set out in his duty statement.  We note that there was a temporary unilateral change in them some weeks ago as a result, it now appears, of your pending investigations.  In the circumstances he should be allowed to carry out his full range of duties.”

Subsequently the Applicant returned to work on 4 August 1994.  At the time that he returned to work Mr Mackew confirmed the earlier conversations with him and in particular that he was to be treated in a business-like fashion by employees of the Respondent and that the parties were to agree to differ on the earlier allegations.  These matters and the return to the duties he was performing prior to 7 July 1994, and the fact that he was being given a clean slate, are confirmed in a File Note dated 9 August which was tendered in evidence.  The thrust of them was not really contested by the Applicant.

Events Between 4 August 1994 And 8 September 1994.

The Applicant returned to his duties on 4 August 1994 and performed, as admitted in cross examination, the duties listed in the March 1994 position description.  He claimed however that he was under-utilised in the position and that he was able to finish the paper work which he was required to do in at most two to three hours.  He also claimed that despite the fact that Mr McCoull was very busy and aware that the Applicant had insufficient duties no extra duties were assigned to him.  Instead he spent his time looking out the window and was forced to ask other people in the office for menial duties such as attending to the mail.

His principal grievance seemed to be that he was not out in the field liaising with dealers and fleet owners as he had been prior to the March 1994 changes but was office bound.  He was permitted to resume attending the service station.

Given the Applicant’s experience and personality he was very bored because he was used to being able to stimulate himself with work.  He told Mr McCoull on a number of occasions that he was bored and at a loose end.  He said that he was not earning his money over this period. 

In early September he felt that he was being watched and that intimidating tactics were being used.  He was no longer being used and he felt that he could no longer tolerate it.  He had a feeling of helplessness and hopelessness so that he went on sick leave on 6 September 1994.  Subsequently on 8 September 1994 he attended at the office and handed in a solicitors letter which indicated that as a result of the actions of the Respondent he was forced to cease his employment.  He handed in his keys and other company property.  He said that when he went to the Respondent’s premises it was his intention to terminate his employment with the company.

Around the time that he attended the Respondent’s office to hand in the letter, he contacted Mr Ray Graham who had been the person who had supplied him with the hand cream and had also supplied the woodgrain dashboard referred to in the allegations.  He had had no prior commercial relationship with Mr Graham and Mr Graham offered him some casual work installing those dashboards.  He said that he received the first job from Mr Graham to install such a dashboard the day after he indicated to the company that he no longer was able to work for them.  The Applicant gave evidence that subsequent to 8 September he had installed some 18 of the woodgrain dashboards.

He was so devastated by the circumstances surrounding the cessation of his employment that he was unable to attempt any meaningful search for work until the time of the hearing.  His general practitioner Dr Jenko gave evidence that he had treated him for stress commencing 21 July 1994 and again on 6 September.  Dr Jenko confirmed that his condition was such that the period of some two or three months since his ceased employment was a reasonable time for him to recover from those events given his background and the circumstances.

In October the Applicant saw his old job advertised.  The job description was wider than the duties which he had been performing up to his cessation of employment because it included liaison with fleet owners and dealers which he had not been permitted to do since March 1994.  He claimed that this confirmed the unfair treatment prior to him ceasing work.

The Applicant gave evidence that he had not seen any suitable positions in the papers and had not applied for any.  He further stated that as a result of the Christmas closure of the automotive industry no suitable position would become available to him until approximately February or March 1995.

The remedy that the Applicant sought was an order for compensation of six months salary including his superannuation entitlements.  The applicant was on a salary of $40,000.00 per annum plus superannuation plus the provision of a fully maintained motor vehicle.

The Respondent’s Version Of Events.

The Respondent’s version of the events over the period from March 1994 to the date of the cessation of his employment does not differ markedly from that of the Applicant.  The Respondent’s evidence was that it chose as an operational measure to alter the Applicant’s duties in March 1994, so that he was not engaged in the field liaising with clients and dealers.  On occasions, however, he did attend at dealers to deliver cars and he still attended and arranged for the washing of cars.  He would also be liaising with dealers, and commercial clients on the telephone.  It claimed that it needed to have a person desk-based and the decision was taken that it was the Applicant.  Both Mr Mackew and Mr McCoull claimed that the job was worthwhile and vital to the functions of the fleet operation.  The job also involved other duties as directed including assisting in a major launch in the period prior to July.

The Respondent asserted that it genuinely attempted to provide the Applicant with a new start after delivery of the final warning on 27 July 1994.  According to Mr Mackew it was attempting to allow him to rebuild the relationship and rebuild the trust between the parties.  The Respondent did not really challenge the Applicant’s evidence that he was underemployed over the period after he returned to work on 4 August 1994.  It maintained, however, that it treated him like any other employee, and did not set in place any of the monitoring which was referred to in the final warning.

Findings On The Evidence

To a large respect the parties are agreed on the evidence in this proceeding.  Where they diverge is the legal consequences to be drawn from the evidence.  I find that the Applicant was a highly motivated and effective employee of the Respondent who had an outside business interest known as Amway.  As a result of information received by the Respondent, a warning was issued to him in August 1991 that he was not to distribute any products other than the Respondent’s products in the course of his employment.  Subsequent to that time, commencing at about mid 1992, the Respondent had concerns that the Applicant was in breach of fidelity to the Respondent and in breach of the warning.  It therefore implemented some monitoring of his activities and this continued for a period at least until mid 1993.  I find that the extent of that monitoring did not constitute any breach by the Respondent of its obligations under its contract of employment with the Applicant.  At least from mid 1993 Mr Mackew lacked confidence in the Applicant and did not trust him.  This however did not manifest itself in any actions by the Respondent which could constitute any breach of the contract of employment between the parties.  I find that he was not “demoted” as such in mid 1992 but there was re-organisation which resulted in a return to his original job title.  The reduction in duties and title was not related to his performance or the earlier warning.

The Applicant’s duties were reorganised in March 1994 and one of the influencing factors in that re-organisation was the continued lack of confidence held by Mr Mackew in the Applicant.  The Applicant accepted the re-organisation of his duties and essentially performed them from March 1994 until September 1994.

Further allegations were made on 7 July 1994 and the Applicant denied those allegations.  The Respondent investigated them and as a result of its investigations did not accept the Applicant’s explanation and proceeded to issue a final warning in relation to those allegations.  The issuing of that final warning did not, however, constitute a breach of the contract of employment between the parties.  Subsequent to the issuing of the final warning both the parties genuinely attempted to re-establish trust between them.  The Applicant continued to be paid by the Respondent and the Respondent provided duties to him which he performed.  I find that the Applicant was under-employed in the period from 4 August to 6 September and the Respondent knew this.  I find however that that situation did not constitute the evidencing of an intention by the Respondent to be no longer bound by the contract of employment between the parties.

On 8 September the Applicant made a considered decision to cease the employment relationship.  He had made prior to that date some tentative arrangements for work fitting dashboards.  At the time he took the decision to cease work the Respondent was not by its actions putting him in any position where he had no alternative.

Was There a Termination of Employment by The Employer?

The Applicant’s case was that the Respondent’s actions in monitoring the Applicant, withdrawing the outside duties, failing to give him sufficient duties, issuing a final warning on the basis of false allegations, and failing to have any trust in the Applicant created an atmosphere of intimidation which constituted the termination of the Applicant’s employment by the Respondent.  The Applicant submitted that the 1992 demotion, the reduction of the fleet section from four people to two without allocating any of the additional work to the Applicant, the refusal to provide him with meaningful work despite persistent requests show that the Respondent was in breach of its duty of fidelity to the Applicant.

The Applicant contended that objectively the Court should find that the actions of the Respondent and in particular Mr Mackew and Mr McCoull in failing to provide meaningful work to the Applicant, when combined with the final warning, were such that the Applicant was not required to wait around to be terminated but was entitled to leave his employment and make a claim under the Industrial Relations Act. It was claimed that there was an atmosphere of psychological harassment. The Applicant’s Counsel also contended that the final warning was based on false allegations and could not be relied upon by the Respondent. He contended that it was a repudiation of the contract of employment because it imposed an oppressive regime of monitoring of the Applicant’s every move. Reliance was place on some comments of Gray J. in Wheeler -v- Philip Morris Ltd (1989) 97 ALR 282 at 308-9 where the learned judge held that a dismissal could not be defended on the basis of a flawed final warning.

That case is distinguishable because here it is clear that the parties agreed to put the final warning in the past and attempted to rebuild the relationship.  Further I am not satisfied that the Respondent acted unreasonably in issuing that final warning although it is not necessary to express a concluded view on this in view of my finding the Applicant discharged his contract of employment.

The Respondent, on the other hand, argued that there had been no termination of employment by the employer here but rather the Applicant himself had terminated his employment by his act of resignation on 8 September 1994.  The Respondent referred to the fact that the Applicant conceded in cross examination that he had performed all the duties set out in his job description in the period after he returned to work on 4 August 1994 and also that he had been treated in a business-like fashion by officers of the Respondent.  The Respondent maintained that no actions of it had constituted any evidencing of an intention to terminate the contract which would be required for there to be a constructive dismissal.  (See Western Excavation (ECC) Ltd -v- Sharp [1978] IRLR 27).

The Respondent maintained, rightly in my view, that the mere fact that an employer may have lost confidence in an employee, and even suggested resignation, does not constitute constructive dismissal.  (See Wong -v- Hodes and Anor (Industrial Relations Court of Australia, Tomlinson JR, 26 September 1994, unreported) and Australian Bank Employees Union -v- ANZ Banking Group Ltd (Australian Conciliation and Arbitration Commission, 22 September 1988, unreported, Print H4736).

The Court was referred to two leading authorities on whether there had been a “termination ... of employment” in the terms of Division 3 of Part V1A of the Industrial Relations Act. In Siagian -v- Sanel Pty Ltd (1994) 122 ALR 333 at 351 Wilcox C.J. said:

“Bearing all these matters in mind, and given that the courts have sometimes recognised the possibility of a difference between a termination of employment and a termination of the contract of employment, it seems preferable to treat the words “termination of ... employment” in Division 3 of Part V1A of the Industrial Relations Act as including any act that brings to an end the employer-employee relationship, whether or not the act, or any acceptance of it, also brings to an end the contract of employment.”

In Association of Professional Engineers, Scientists and Managers Australia and Anor -v- Skilled Engineering Pty Ltd (1994) 122 ALR 471 Gray J. approached the matter at 482 as follows:

“Both the requirement that expressions in Division 3 of Part V1A be given the same meanings as in the Convention and the form of the provision of Division 3 therefore suggest that “termination” refers to what is done by an employer attempting to bring about the end of the employment. The legislative intention is to permit applications under s.170EA of the Industrial Relations Act if an employer has done some act terminating or purporting to terminate the employment, irrespective of whether the act is effective to bring about the termination without some further act on the part of the employee. The “termination” referred to in s.170EA and s.170EE is the act of the employer. If the act of the employer is effective to terminate the contract of employment, remedies appropriate that situation can be granted. If the contract remains on foot, the Court still has power under s.170EE(1) to “make such orders as it thinks appropriate to put the employee in the same position (as nearly as can be done) as if the employment had not been terminated.”

The two authorities were considered by Moore J. in Grout -v- Gunnedah Shire Council (Industrial Relations Court of Australia, 30 September 1994, unreported) and at 32 he said:

“On the approach of Wilcox C.J. it is necessary to ask did the employer terminate the employment relationship and on the approach of Gray J. it is necessary to ask whether the employer has done some act terminating or purporting to terminate the employment.”

Moore J. found it unnecessary to express a preference between the two approaches.  He did note however that Division 3 was remedial legislation and should be construed liberally.  (See also Gray J. in Skilled Engineering (above) at 483).  He further said that a narrow meaning was not intended for the phrase “termination ... at the initiative of the employer”.  At 33 he said:

“A principal purpose, if not the sole purpose, of Division 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment.  An employee may do some act which is the first in a chain of events that leads to termination.  An example would be an employee who engaged in misconduct at work which ultimately lead (sic) to the employer dismissing the employee.  However, that situation and the present are not situations where the termination was at the initiative of the employee.  In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.”

Grout (above) concerned a case where an employee had, at a time of stress-related illness, handed a letter purporting to give notice to his employer, such notice to come into effect after three days.  The employer, knowing the stressed condition of the employee at the time of the giving of the letter, purported to accept the notice.  The Court held that the notice was unreasonable in its length given the nature of the employment and that it had been withdrawn by the employee shortly after the expiration of the time when it was due to expire.  The employer had purported to refuse to act on the withdrawal of the notice.  The Court held that it was the actions of the employer in purporting to accept the invalid notice that constituted the termination of the employment and thus the Applicant was entitled to issue proceedings under Division 3.

Adopting the approach of Moore J. in my opinion the Court is required to ascertain what was the operative act which terminated the employment.  Here in my opinion the operative act was the act of the Applicant in attending at the Respondent’s premises on 8 September, handing in a letter and handing back keys and other property to the Respondent.  This indicated that he, the Applicant, no longer intended to work for the Respondent.

Prior to that act the employment remained on foot.  The Applicant had returned to work on 4 August after the final warning.  He had been paid and had performed his duties, although he claimed that they were insufficient.  There were no actions of the employer which showed that the Respondent was attempting to bring to an end the contract of employment or “attempting to bring about the end of the employment”.  In my view it is important to note that the Respondent had re-organised the Applicant’s duties and he had accepted those re-organised duties prior to the July allegations.  Upon his return to work in August he returned to the earlier duties.  The fact that he claims that he was not sufficiently utilised is not enough in these circumstances to suggest that he was in effect being forced out.

On either of the tests in Siagian (above) and Skilled Engineering (above) it was not the action of the Respondent which brought the employment to an end and I so find.

The Applicant submitted that common law tests in relation to whether a party was evidencing an intention to no longer be bound by the contract of employment were inappropriate in determining whether or not there had been a “termination ... of employment” for the purposes of Division 3 of Part VIA.  In my opinion the authorities relating to constructive dismissal such as Western Excavation (ECC) Ltd -v- Smith (above) are relevant to determining whether or not Division 3 is applicable.

Here in my opinion there were no actions of the Respondent which could be characterised as “evidencing an intention to no longer be bound by the contract of employment”.  On the contrary, as submitted by the Respondent, the issuing of the final warning on 27 July was an indication that the Respondent did intend to maintain the contract of employment.  The Applicant accepted this by returning to work, performing duties and accepting payment of salary and benefits.  It was his later act alone which brought the employment to an end.  He voluntarily ceased his employment.

Proposed Order.

In view of my conclusion that there has been no “termination of .... employment” by the employer pursuant to s.170EA I therefore propose to allow the Respondent’s notice of motion filed 12 October 1994 that the application be dismissed. I therefore propose to dismiss the application.

ORDER

THE COURT ORDERS THAT:

1. The Respondent’s Notice of Motion filed 12 October 1994 is allowed.

2. The Application is dismissed.

I certify that this and the preceding thirteen (13) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:

Dated:  December 1994

Solicitors for the Applicant: Counsel for the Applicant:	Messrs F. W. Robson & Co. Mr J. Bourke
Solicitor for the Respondent: Counsel for the Respondent:	Messrs Freehill Hollingdale & Page Mr F. Parry
Dates of hearing:	25 & 28 November 1994
Date of Judgment:	December 1994