Industrial Relations Bureau v Knox Auto Parts and Accessories Pty Ltd

[1982] FCA 45

Re: INDUSTRIAL RELATIONS BUREAU
And: KNOX AUTO PARTS AND ACCESSORIES PTY. LTD.
V. No. 2 of 1982
Industrial Law
1 IR 314

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT
INDUSTRIAL DIVISION
Keely J.

CATCHWORDS

Industrial Law - alleged breaches of award - summary dismissal - whether award recognized a common law right or conferred an independent right to dismiss - whether conduct amounted to "misconduct" or "neglect of duty" - necessity for penalty to be sufficiently high to deter breaches

HEARING

MELBOURNE

#DATE 22:3:1982

JUDGE1

This is an application by the Industrial Relations Bureau under s.119 of the Conciliation and Arbitration Act 1904 (the Act) for penalties to be imposed upon Knox Auto Parts and Accessories Pty. Ltd. (the respondent) for two alleged breaches of the Vehicle Industry - Repair Services and Retail - Award 1980 (the award).

In substance the first breach alleged is that the respondent terminated the employment of an employee, one Ann Denise Johnston, a driver, without giving her a week's notice or the payment of a week's wages. The second breach alleged is that the respondent after terminating the employment of the employee failed to pay an amount due in respect of proportionate annual leave.

It was common ground that the amounts had not been paid. As to the first alleged breach, Mr. Ryan Q.C. who appeared with Mr. Vickery of counsel for the respondent, contended in his opening address that under clause 6 (d)(i) of the award the respondent was entitled to summarily dismiss Ms. Johnston because she had disobeyed three directions given to her by the respondent. Those directions were : 1. To give priority to a delivery to M.B.C. Automotive.

2. Not to carry passengers in company vehicles during working hours without permission, and

3. To put Mrs. Lee out of the vehicle.

Mr. Ryan contended that this latter instruction was disobeyed in that Mrs. Lee (a fellow employee who had ceased work for the day) was allowed to remain in the respondent's vehicle during the time taken to travel the short distance - a few hundred yards - from the place where the instruction was received to M.B.C. Automotive.

I accept the submission of Mr. Neil Young of counsel on behalf of the Industrial Relations Bureau that the burden of proving that grounds existed for such summary dismissal lies on the respondents - see North v Television Corporation Ltd. (1976) 11 ALR 599 at page 602, per Smithers and Evatt JJ.

Mr. Vickery, in his final address, and in his reply, carefully analysed the evidence and strove to persuade me that I should accept the respondent's contentions. However, the evidence called by the respondent in support of those contentions was quite unsatisfactory and in my opinion it does not show any acts of wilful disobedience of orders by Ms. Johnston and accordingly did not justify summary dismissal.

I have no hesitation in accepting the evidence of Ms. Johnston and Mrs. Lee. They both gave their evidence in a manner which has satisfied me, not merely on the balance of probabilities but beyond all reasonable doubt, that the facts are as stated by them. Each of them was subjected to a very searching cross-examination by Mr. Ryan on behalf of the respondent and the evidence of both of them had a ring of truth about it.

I do not accept the evidence of the respondent's witnesses where it conflicts with the evidence of Ms. Johnston or with the evidence of Mrs. Lee. In particular I reject as untrue the evidence of Mr. Poxon, a director of the respondent -

(a) that some time before Ms. Johnston was dismissed he had told her that Mrs. Lee had been reprimanded for carrying a passenger in her vehicle;

(b) that in doing so he told her that it was the respondent's policy that under no circumstances were people allowed to be in the company vehicles without authority; and

(c) that she had previously been told of the respondent's policy to that effect.

I accept Mr. Poxon's evidence-in-chief that, after he spoke to Ms. Johnston on the two-way radio and directed her to go to M.B.C. Automotive, he spoke to Tough Tyres and was told that Ms. Johnston had not been there. In the light of that evidence it is difficult to understand how Mr. Poxon could have told Mr. Williams, the director of the respondent who summarily dismissed Ms. Johnston, that Ms. Johnston had persisted in delivering to Tough Tyres before going to M.B.C. Automotive despite Mr. Poxon's direction over the radio.

It is not necessary for me to set out in detail all of the matters to which the evidence of both Ms. Johnston and Mrs. Lee related. However, on the evidence, I find specifically that at the time when Ms. Johnston began her afternoon delivery run for the respondent on 19 March 1981 :-

1. Ms. Johnston had been told that a delivery to M.B.C. Automotive was urgent. She was told of the delivery to Tough Tyres shortly before she commenced the afternoon delivery run. She believed that that delivery was important and "was just as urgent" as the one to M.B.C. Automotive because there had been a mistake earlier that day in the delivery to that customer. After she had been informed of the delivery which she was required to make to Tough Tyres she was not given any further directions by anybody in authority to deliver the items to the customers in any particular order.

2. The situation at the respondent's premises just before Ms. Johnston began her afternoon delivery run was described by her as being "very hectic". That description, which I accept, fitted in with the general pattern which she described in these words: "It got very chaotic before a run and everyone got into total confusion because there were a lot of orders received. So everyone used to just pitch in and yell at everybody else trying to get it organized". It was usually left to the driver to decide the order in which to make deliveries except as to urgent deliveries. As to those, Ms. Johnston, when asked who gave instructions concerning urgent deliveries, said: "Anyone who thought they were urgent; there was not any particular person who used to give any advice or orders. If somebody thought when they picked up the phone and there was a message on the phone, they thought that was urgent, they would leave a note". On 19 March 1981 Ms. Johnston, after she received her final delivery orders, including Tough Tyres immediately before she commenced her delivery round, was not under any specific instruction to go first to M.B.C. Automotive.

3. On 19 March 1981 Ms. Johnston believed that there was nothing wrong in deciding to deliver first to Tough Tyres and that belief was not in any way unreasonable or unjustifiable when regard is had to its geographical location and to her belief as to the importance and urgency of the delivery because of the earlier delivery of a wrong item.

4. Ms. Johnston had not been told that she was not to take passengers in the respondent's vehicles without first obtaining permission.

5. Ms. Johnston did not then know that Mrs. Lee had a few weeks previosly been rebuked for having a passenger in the vehicle she was driving.

6. At the time of leaving the respondent's premises on her afternoon delivery round she had not made any arrangement with Mrs. Lee to meet her in Station Street in order to take her as a passenger in the respondent's vehicle.

7. The presence of Mrs. Lee in that vehicle did not in any way add to the time taken by Ms. Johnston on the delivery round. It was not suggested that her presence in the vehicle interfered in any way with Ms. Johnston's proper performance of her duties.

8. Ms. Johnston, on being told by Mr. Poxon to get Mrs. Lee "out of the vehicle" did not believe that it was vital to do so exactly at the place where she was when she received the instruction, as it was only a few hundred yards to M.B.C. Automotive where she had to make a delivery. I am satisfied that this conduct did not constitute wilful disobedience of an order.

Clause 6 (d)(i) of the award provided, inter alia, as follows:-

"Termination of Employment

(d) (i) Employment shall be terminated by a week's notice on either side given at any time during the week or by the payment or forfeiture of a week's wages as the case may be. . . . This shall not affect the right of an employer to dismiss an employee without notice for malingering, inefficiency, neglect of duty or misconduct and in such cases wages shall be paid up to the time of dismissal only."

Mr. Ryan submitted that clause 6 (d)(i) of the award conferred a right upon the respondent to summarily dismiss an employee for the reasons referred to in the clause, including those of "misconduct" and "neglect of duty". In my opinion, the clause does not confer such a right. I adopt, with respect, what was said by Sir John Spicer in Printing Industry Employees Union of Australia v Jackson and O'Sullivan Pty. Ltd. (1957) 1 F.L.R. 175 at page 177:

"Insofar as the award provides for dismissal without notice for inefficiency in my opinion it preserves the common law right of the employer so to dismiss on that ground."

In my opinion, the right recognized by clause 6 (d)(i) is no more than the right which exists at common law to summarily dismiss an employee. The common law does not confer a right to summarily dismiss an employee for every act constituting "neglect of duty", nor for every act falling within the word "misconduct", let alone for every act of "inefficiency". It is unfortunate that clause 6 (d)(i) of the award is so worded that it may mislead both employers and employees into believing that the employer has the right to dismiss an employee without notice for any act which constitutes neglect of duty or misconduct or inefficiency. I realize that clauses in the same or similar form have existed in awards for many years. That may explain the use of the words in the present clause but it does not excuse it. An employer is required by clause 43 of the award to keep a copy of the award available to its employees. That provision is plainly intended to help the employees to understand their rights, not to mislead them into wrongly believing that they could be summarily dismissed for a minor neglect of duty or an insignificant act of inefficiency.

In Jupiter General Insurance Co. Ltd. v. Shroff (1937) 3 All E.R. 67 at page 74, the Privy Council said:-

"Sir John Beaumont, C.J., was stating a proposition of mere good sense when he observed that in such cases one must apply the standards of men, and not those of angels, . . . . . their Lordships have yet to determine, . . . . . whether the misconduct of the respondent was not such as to interfere with and to prejudice the safe and proper conduct of the business of the company and therefore to justify immediate dismissal. It must be remebered that the test to be applied must vary with the nature of the business and the position held by the employee. . . . ".

Accordingly, I find that the respondent on 19 March 1981 breached clause 6 (d)(i) of the award by failing to pay to Ms. Johnston a week's wages in lieu of notice, an amount of $186-00.

As to the second alleged breach, Mr. Vickery has submitted that even if, contrary to his submission, the respondent had breached clause 6 (d)(i) of the award, it had not committed a breach of sub-clause 27 (1)(i) of the award. That clause reads as follows:

"Proportionate Leave on Termination

(1) An employee on weekly hiring who:

(i) after one week's continous service in his first qualifying twelve monthly period with an employer, lawfully leaves the employment of the employer or his employment is lawfully terminated by the employer through no fault of the employee, or . . . "

Mr. Vickery submitted that the word "fault" in that sub-clause is satisfied if some blame attaches to the employee's conduct leading to the termination of the employment. He contrasted the words used in that sub-clause with those used in clause 6 (d)(i). However, having considered sub-clause 27 (1)(i) in the context of clause 27 itself and of the award as a whole, in my opinion it is not intended to bring about the result that, where an employee is guilty of some "fault" which is not sufficient to justify summary dismissal for alleged misconduct, the employer is not required to pay to the employee the amount otherwise payable for proportionate annual leave.

I accept Mr. Young's submission that such a result is not intended and that in sub-clause 27 (1)(i), the word "fault" refers to conduct of the employee which would confer upon the employer a right to dismiss the employee without notice. I also accept Mr. Vickery's submission that the employment of the employee was "lawfully" terminated, notwithstanding that I have decided that the respondent had no right to dismiss her without notice. In my opinion, the termination of Ms. Johnston's employment by the respondent was a termination "through no fault of the employee", within the meaning of sub-clause 27 (1)(i) of the award.

Accordingly, I find that the respondent breached sub-clause 27 (1) of the award by failing to pay to Ms. Johnston upon the termination of her employment the amount due to her in respect of proportionate annual leave, an amount of $186-10.

As to the amount of the penalties, it has not been suggested that the respondent has previously breached an award. However, it is important that employers should understand their responsibilities in considering whether to summarily dismiss an employee. On the evidence in this case, it is clear that the respondent did not give adequate consideration to the exercise of that power and in particular, it failed to sufficiently investigate the incident so as to ascertain the full facts. In considering the amount of the penalties, I adopt with the respect what was said by Smithers and Evatt JJ, in the Australian Industrial Court in North v Television Corporation Limited (1976) 11 A.L.R. 599 at page 612. Their Honours there said :-

"It should be remembered, however, that it is undesirable that an employer should be encouraged to act on the basis that if he fails to obey an award the employee may not take action against him, and that if he does, he, the employer, will probably suffer no more than if he had obeyed the award."

I agree with their Honour's view that it is important that employers should not be under any misapprehension as to what is likely to happen if proceedings are taken in respect of a breach of the award.

In all the circumstances including the fact that the two breaches arise out of the one dismissal, I consider that it is appropriate to impose a penalty of $600-00 on the respondent in respect of the breach of clause 6 (d)(i) of the award, which I treat as the more substantial breach, and a penalty of $300-00 in respect of the breach of sub-clause 27 (1)(i).

The applicant Bureau has sought: "An order pursuant to s.120 of the Act that so much of the amount of any penalties imposed under paragraphs 1 and 2 hereof as does not exceed the amounts of unpaid wages referred to in those paragraphs be paid to the employee and that the balance of those penalties be paid into the Consolidated Revenue Fund."

Mr. Neil Young on behalf of the Bureau, stated that such an application was made because of the doubt as to whether an employee who is not a member of an organization of employees bound by the award is "an employee entitled under an award" within the meaning of s.119(3) of the Act. (See Leontiades v F.T. Manfield Pty. Ltd. (1980) 43 F.L.R. 193 at pages 194 to 199 as to the words, "entitled to the benefit of . . . an award" appearing in s.5 of the Act.)

The amount of wages and proportionate annual leave which the employer was under an obligation to pay to Ms. Johnston total $372-10. She has had to have recourse to the Industrial Relations Bureau and has had to attend before this court as a witness in these proceedings in order to obtain that which should have been accorded her under the award. In addition, she has been denied the benefit of the money withheld for a period of one year.

In those circumstances, I consider that the amount to be paid to her should be higher than the amount suggested by the applicant Bureau. Accordingly, I order that $450-00 of the penalty of $600-00 imposed in respect of the breach of clause 6 (d)(i) of the award be paid to Ann Denise Johnston and that the balance of that penalty and the whole of the penalty of $300-00 imposed in respect of the breach of sub-clause 27 (1)(i) of the award be paid into the Consolidated Revenue Fund. Orders accordingly.