Jackson v Elmerside Pty Ltd

[1997] IRCA 27

DECISION NO:27/97

C A T C H W O R D S

INDUSTRIAL LAW -  TERMINATION OF EMPLOYMENT - Claim of UNLAWFUL TERMINATION - demotion - repudiation of CONTRACT - whether repudiatory breach of contract always constitutes a termination at the initiative of the employer - whether termination was the probable consequence of respondent’s action.

Workplace Relations Act 1996 (Cth) (formerly Industrial Relations Act 1988(Cth))Ss 170DE, 170EA, 170EE.

Beck v Darling Downs Institute of Advanced Education Supreme Court of Queensland, No. 3865 of 1988, Dowsett J, 20 April 1990, unreported.
Brackenridge v Toyota Motor Corporation Australia Limited IRCA No. 605 of 1996, Full Court, 13 December 1996, unreported.
Cowell v Irimond Pty Ltd IRCA No. 618 of 1996, Millane JR, 19 December 1996, unreported.
Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200.
Quinn v Jack Chia (Australia) Ltd (1992) 43 IR 91.
Rheinberger v Huxley Marketing Pty Ltd IRCA No. 138 of 1996, Moore J, 16 April 1996, unreported.
Strachan v Liquorland (Australia) Pty Ltd IRCA No. 48 of 1996, Moore J, 6 February 1996, unreported.
Westen v Union des Assurances de Paris IRCA No. 419 of 1996, Madgwick J, 28 August 1996, unreported.
The Law of Employment (3rd ed) (Law Book Company 1990).

Mark Berard JACKSON -v- ELMERSIDE PTY LTD
WI 2260 of 1995

BEFORE:        R. D. FARRELL JR
PLACE:           PERTH
DATE:              3 February 1997

IN THE INDUSTRIAL RELATIONS     )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          

No. WI 2260 of 1995

BETWEEN:  

Mark Bernard JACKSON
  Applicant

AND:  

ELMERSIDE PTY. LTD
  Respondent

MINUTE OF ORDERS

BEFORE:                 R. D. FARRELL JR

PLACE:  PERTH

DATE:  3 February 1997

THE COURT ORDERS THAT:

1.          The application is dismissed.

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

IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY

WI 2260 of 1995

BETWEEN:

Mark Bernard JACKSON
Applicant

AND:

ELMERSIDE PTY LTD
Respondent

REASONS FOR DECISION

3 February 1997  R. D. FARRELL JR

This is an application under Section 170EA of the then Industrial Relations Act 1988, now known as the Workplace Relations Act 1996 (“the Act”). The application is for compensation arising from the alleged unlawful termination of the employment of the applicant, Mr Mark Jackson (“Mr Jackson”), by the respondent, Elmerside Pty Ltd (“Elmerside”). Reinstatement was not sought and I accept that it was impracticable.

The parties led their evidence in the course of a two day hearing. At the conclusion of the evidence the parties made joint application that I should make preliminary findings of fact before they filed submissions as to the applicable law, in order to potentially save costs to the parties.

My findings of fact were set out in interim reasons for decision. The parties then filed written submissions on the law. For convenience, I will set out those findings in these reasons, in a somewhat abridged form.

Summary of Findings of Fact

Elmerside is a subsidiary of Sangora Holdings Pty Ltd (“Sangora Holdings”). Sangora Holdings is a Japanese-owned company based in Western Australia. Elmerside manages the Araluen Country Club (“Araluen”), which is owned by Sangora Holdings.

Mr Shozo Kawasaki (“Mr Kawasaki”) was the Managing Director of both Elmerside and Sangora Holdings. He spends half his time in Perth and half his time in Japan, usually on alternate months. He has a minimal understanding of the English language. He conducts all his meetings with English-speaking employees and associates through interpreters. Mr William Kalender (“Mr Kalender”), who was, at the relevant times, Executive General Manager of Sangora Holdings and a director of Elmerside, also gave evidence.

Mr Jackson was employed on 5 October 1993 by Elmerside as an “Executive Assistant Manager - Food and Beverage” as part of its “pre-opening team”. Elmerside was in the process of establishing the Araluen business, which started trading in January 1994. Mr Jackson was effectively the second-in-command and was directly responsible to the then General Manager. By October 1994, Mr Jackson’s salary package was $55,000 per annum inclusive of superannuation, plus a company car.

Mr Jackson was 35 years of age when he was employed by Elmerside. He held qualifications as a chef and had worked in the hospitality industry since 1977, most recently as Hotel Manager for two years of the Floreat Hotel in Perth, a suburban hotel which Mr Jackson described as a three star operation. Before that, he had a management role with the Mindarie Keys Resort, a “four and a half star” operation. He had applied for the position of General Manager with Elmerside, but was not successful. Mr Kawasaki says that Mr Jackson’s previous experience was not considered adequate for the position of General Manager of what was intended to be a 5-star, first class facility, and Mr Jackson concedes he was told that he didn’t have the appropriate experience for the position.

In early December 1994, the General Manager was requested by Mr Kalender to take leave, as a result of problems with staff morale at Araluen. Staff were advised by Mr Kalender that Mr Jackson was “Acting General Manager” until further notice.

Mr Kawasaki was in Japan at this time. He returned urgently to Perth before Christmas for four or five days to investigate the situation.

Having investigated the situation, Mr Kawasaki determined that the General Manager should leave Elmerside. On 30 December, 1994, the General Manager resigned and Mr Jackson assumed the position of “Manager, Araluen Country Club”.

The terms of Mr Jackson’s appointment were never committed to writing. Mr Kawasaki told Mr Jackson that Mr Jackson was to work closely with Mr Kalender, but that Mr Jackson would nevertheless be solely responsible for the performance of the business and was to report directly to Mr Kawasaki. Mr Jackson’s salary package was to be increased to $60,000 inclusive of superannuation and his company car was to be upgraded from a Ford Falcon GL to a Ford Fairmont, the previous General Manager’s car. The previous Manager’s salary had been $75,000. Mr Jackson was given the title of ”Manager”, not “General Manager”.

I accept that Mr Kawasaki intended only to make interim arrangements for the management of Araluen during his brief return visit to Western Australia in late December 1994. However, I am persuaded on balance that it is more probable than not that Mr Kawasaki did not effectively communicate to Mr Jackson his intention that Mr Jackson run Araluen only on an interim basis. Mr Jackson says he never viewed the Manager’s position as a temporary position, though he did view it as a temporary title.

While I am persuaded that Mr Kawasaki said nothing to Mr Jackson to indicate that that it was an interim arrangement, I am not persuaded that he positively said anything inconsistent with his intentions. I am not persuaded that Mr Kawasaki intended to deceive Mr Jackson.

Mr Jackson worked long hours following his appointment as Acting General Manager and later Manager of Araluen Country Club. I accept that he worked at least 6 and often 7 days per week and typically worked 12 hour days. It was conceded by Elmerside that he performed the role the General Manager had performed before his resignation. Mr Jackson’s former role was not filled and so he also retained those responsibilities, with some additional delegation.

Mr Kawasaki took immediate, though unsuccessful, steps upon his next return to Perth to find a new General Manager with more experience than Mr Jackson. Two candidates were identified, over a series of months, but both ultimately refused the position.

I accept that Mr Kawasaki was not planning to “get rid of” Mr Jackson once he had engaged a new General Manager, but rather to have him return to the “Second in Command” role he had filled under the previous General Manager, perhaps with a view to him ultimately becoming General Manager at some later time. I also find that, while it was not Mr Kawasaki’s expectation, he had not completely ruled out the possibility that Mr Jackson might so competently perform the job that he might ultimately prove the most appropriate candidate for the permanent role of General Manager when all steps had been taken to find the best candidate for that position. Mr Kawasaki concedes that he may have told Mr Jackson he had a chance to be General Manager, and I accept that he would have meant what he said.

On or about 14 August 1995, Mr Jackson says he received a telephone call from a former employer now based in Melbourne. Mr Jackson was told that the former employer had been called for a reference check on a candidate for Mr Jackson’s job. Mr Jackson was told he was “on the way out” and to “watch his back”. Mr Jackson then got some preliminary legal advice as to his position.

Mr Kawasaki met with Mr Yukihide Seta (“Mr Seta”) in mid-August at the Club. Mr Seta is a management consultant, and runs his own consultancy business. Mr Jackson did not attend the meeting and was not briefed on their discussions.

Mr Jackson was advised by Mr Fujita, Araluen’s Administration Manager, that Mr Jackson was to assist Mr Seta and give him information to enable him to assess the business and report back to Mr Kawasaki in a few days.

Mr Jackson, who was already concerned for his future, was further concerned by the arrival of Mr Seta. He feared that the involvement of a consultant would foreshadow a major restructure of the business.

Mr Seta says he was contracted for three months to go through all the records and analyse all the activities of the business to find out if there was any way to improve profitability.

Mr Jackson had a 20 minute meeting with Mr Seta and gave him a general overview of the property. The tone of the meeting was quite casual and friendly. While still apprehensive, Mr Jackson did not consider hindering Mr Seta in his task, and cooperated fully with him.

Mr Jackson received the following memorandum dated 25 August 1995 from Mr Kawasaki:

“Please be advised that Mr Seta, a management consultant, has been appointed to act on my behalf to ascertain areas in the operation of the Araluen Country Club which need rectifying. Based on his investigations, he will instruct you of necessary action that needs to be taken. Please be advised that you should work as directed by him.

I feel that his appointment will be of benefit to you as he has extensive experience in this field and I hope that you will learn from him.

His appointment is effective immediately and will be in place until further notice. He will be using the director’s room as his office.”

Mr Kawasaki says Mr Seta was engaged because sales had fallen at Araluen. He appointed Mr Seta because he wanted someone to investigate why.

Mr Seta began working at Araluen on Wednesday 30 August 1995. He worked from Mr Kawasaki’s office. After an initial meeting, following which Mr Seta mainly communicated with the department heads, such as the financial controller, the inventory controller or the restaurant manager, there was little contact between Mr Jackson and Mr Seta, other than courteous greetings in the corridors.

On Saturday, 7 October, 1995, Mr Seta asked for a meeting with Mr Jackson, which occurred immediately. Mr Jackson understood Mr Seta to say during that meeting that Mr Kawasaki had just informed Mr Seta that he’d been appointed Acting General Manager, and that Mr Kawasaki had agreed that it was okay for Mr Seta to advise Mr Jackson of the appointment.

Mr Jackson says that he was horrified but not shocked. He said nothing to Mr Seta. He did not want to argue with him about the appointment, but he wanted to talk to Mr Kawasaki about it.

According to Mr Jackson, Mr Seta advised Mr Jackson that the announcement of his appointment as Acting General Manager would be discussed at a meeting with Mr Kawasaki the following Monday, 9 October 1995.

I accept Mr Kawasaki’s evidence and that of Mr Seta that they had not discussed the possibility of appointing Mr Seta. Mr Seta was in fact unable to accept the General Manager’s position. It is understandable that Mr Jackson, who had been worrying about his position since mid-August, may have misconstrued his conversation with Mr Seta.

Mr Jackson again contacted his lawyers on Sunday 8 October 1995 and got further advice as to his position.

Monday, 9 October 1995, was the first working day after Mr Kawasaki’s most recent trip to Japan. A number of meetings were scheduled at Araluen.

Before the first meeting, Mr Jackson spoke to Mr Kawasaki. Mr Kawasaki’s personal assistant, Ms Christine Klemp, translated. Mr Jackson told Mr Kawasaki about the meeting on Saturday with Mr Seta, and that Mr Seta had said he had been appointed to the position of Acting General Manager.

Mr Kawasaki denied he had appointed Mr Seta. I am satisfied that he was only considering the possibility of appointing Mr Seta, and said so. I accept that this may have been translated by Ms Klemp as “planning” rather than “considering”. Even so, I accept that Mr Kawasaki’s position on that morning was that he had not yet appointed anyone to the General Manager’s position, and that this position was communicated to Mr Jackson.

Having sought legal advice, Mr Jackson had prepared for his confrontation with Mr Kawasaki. It seems he scripted in advance what it was he was going to say. Mr Jackson had a piece of paper with him during the meeting, and was referring to that paper and reading from it as he spoke to Mr Kawasaki. I am satisfied that, as their meeting progressed, Mr Kawasaki did not say the things Mr Jackson expected him to say.

Thus, despite Mr Kawasaki’s denial that he had appointed Mr Seta, Mr Jackson pressed on with his script, no doubt believing that “planning” to appoint a General Manager amounted to the same thing as actually having done so.

Mr Jackson told Mr Kawasaki that he had great concerns about and was very disappointed with Mr Seta’s appointment. He set out a contractual analysis which he believed, presumably on legal advice, to be applicable to the situation he had expected to be facing.

Mr Jackson said he believed that, by appointing Mr Seta to the position of General Manager, Mr Kawasaki had technically terminated Mr Jackson’s contract of employment as Manager of Araluen. He went on to say that he believed Mr Kawasaki was offering him a new position, which Mr Jackson did not want, and that he wished to discuss his termination package.

Mr Jackson said in evidence that he assumed the new position he was rejecting would have different responsibilities and different reporting procedures, and that in effect he was going back to the Executive Assistant role, and possibly an even more diminished role. He did not assume any changes in his salary package.

Mr Kawasaki could not grasp this analysis, which is not surprising, given that it involved the contractual doctrine of repudiation with which he was probably not familiar. Ms Klemp recalls Mr Kawasaki saying to her that he didn’t understand what Mr Jackson was getting at. She recalls confirming with him that it wasn’t a Japanese interpreting problem, as is her habit in important matters. Ms Klemp was bemused by what Mr Jackson was saying, because Mr Kawasaki had denied that Mr Seta had been appointed.

Mr Kawasaki responded saying that he would not terminate Mr Jackson, and went on to say that if Mr Jackson wished to resign, then he should resign. Ms Klemp confirms this, recalling that Mr Kawasaki said “No, no, no, you haven’t lost your job”, and “I am not firing you... If you want to go, you go”.

Mr Jackson again contended he was not resigning, but rather that Mr Seta’s appointment effected a termination of Mr Jackson’s employment contract. They continued to argue the position for some time. Finally Mr Jackson said that, if they could not negotiate a termination package, he was left with no alternative other than to leave the property and seek legal advice. Mr Jackson then left the premises, claiming that his contract as Manager had been terminated by Mr Kawasaki, relying upon his belief that Mr Kawasaki planned to appoint Mr Seta above Mr Jackson (while retaining Mr Jackson on his existing salary package) as an act terminating the contract of employment.

Whether There was a Termination at the Initiative of the Employer

It is well established that the unlawful termination provisions of the Act apply only where the employment relationship is terminated at the initiative of the employer: Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200.

The Respondent in defending this application contends that Mr Jackson resigned. The trigger for that “resignation” was the fact that Mr Jackson learned of Elmerside’s intention to recruit a General Manager. This recruitment would inevitably leave Mr Jackson with a job of lesser status and responsibility. He would be second in command at the Araluen Country Club rather than in charge. I accept that Mr Jackson was justified in regarding this intended change as a demotion.

Mr Jackson did not know when this demotion would occur. He had no reason to assume that it would result in any diminution of his salary or other entitlements.

Elmerside sought to rely on the fact that Mr Kawasaki told Mr Jackson only that he was considering or, as it may have been translated, “planning” to engage Mr Seta as General Manager. They contend it was not yet an actual demotion, and that Mr Jackson’s reaction was thus premature.

I am satisfied that it is more probable than not that, in the course of their exchange on 9 October 1995, Mr Kawasaki communicated to Mr Jackson that Elmerside intended to recruit a General Manager, and that it was planned that Mr Seta could fill that role. It was thus advice of an intention to demote; an anticipated rather than an actual demotion.

The Respondent contends that a demotion does not amount to a termination at the initiative of the employer as is required under Section 170EA of the Act, regardless of whether the employee remains in employment or leaves his employment.

Clearly had Mr Jackson remained with Elmerside, albeit demoted to the second in command position, then he could not have succeeded in an application under Section 170EA of the Act.

In Brackenridge v Toyota Motor Corporation Australia Limited (unreported, IRCA No. 605 of 1996, Full Court, 13 December 1996), the Full Court held that Ms Brackenridge’s demotion was a termination of her contract of employment, there being no term of the contract - express or implied - which authorised such a demotion.

However, because Ms Brackenridge remained in employment with Toyota, under a new contract of employment for the lesser position, there was no termination of the employment relationship between Ms Brackenridge and Toyota. The Full Court held, therefore, that there was no termination of employment for the purposes of the Act.

The Full Court’s decision is consistent with the decision of Moore J in Strachan v Liquorland (Australia) Pty Ltd (unreported, IRCA No. 48 of 1996, Moore J, 6 February 1996). That was another case where the employee remained employed by the same employer following the demotion.

Similarly in the present case there was no evidence of an express term in the employment contract authorising a demotion. Nor are there grounds to imply such a term.

The fact that there was no actual demotion in the present case, but only advice from Mr Kawasaki of an intention to demote, does not lessen the relevance of the decision in Brackenridge v Toyota Motor Corporation Australia Limited. An anticipatory breach can be relied upon to end a contract as readily as an actual breach.

The difference in this case is that Mr Jackson refused to remain employed when advised of Elmerside’s intention to give him a position of lesser status and responsibility. The applicant contends that his employment was therefore terminated at the initiative of the employer.

In Mohazab v Dick Smith Electronics Pty Ltd (No 2), the Full Court suggested that the expression “termination at the initiative of the employer” should be treated as a reference to a termination that is:

·   brought about by an employer, in that the action of the employer is the principal contributing factor which leads to the termination of the employment relationship and results directly or consequentially in the termination; and

·   not agreed to by the employee, so that the employment relationship is not voluntarily left by the employee.

Typically, the circumstances leading to a termination involve any number of “actions”. In deciding which of these actions is the “principal contributing factor which leads to termination”, the Court is effectively deciding who initiated the termination of employment.

Where there is summary dismissal for misconduct, for example, there might be an “action” by the employee, such as a refusal to obey a lawful and reasonable order. The action might be such that the employer is entitled to conclude that the employee no longer intends to be bound by the contract of employment. The employer must then react, either by electing to waive the breach and keeping the employment contract on foot, or by accepting the breach as a repudiation of the contract, bringing the contract and, usually, the employment relationship to an end.

Summary dismissals are usually held to be terminations at the initiative of the employer, albeit perhaps for a valid reason related to the employee’s conduct. The chief exception concerns cases where the employee’s repudiatory breach involves abandonment of employment, such that the employee could be said to have voluntarily left the employment relationship. It might seem therefore that this Court sometimes treats the employer’s “reaction” of accepting the employee’s repudiation and bringing the employment to an end as the principal contributing factor which leads to termination.

One might have thought, therefore, that where there is a repudiatory breach on the part of the employer, as there is where the employer demotes the employee and offers a new contract of employment, the Court would similarly regard the employee’s “reaction” of accepting the employer’s repudiation and refusing the new contract of employment as the principal contributing factor which leads to termination. It would follow that there was a termination at the initiative of the employee, rather than the employer.

Were that the correct analysis, however, employers could evade the jurisdiction of the Act by intentionally inducing resignations by means of unilateral reductions of terms and conditions of employment.

The correct approach is that propounded by Moore J in Rheinberger v Huxley Marketing Pty Ltd (unreported, IRCA No. 138 of 1996, 16 April 1996), where he says:

“...it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there has been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether or not a termination of an employment at the initiative of the employer requires the employer to intend by its actions that the employment will conclude. I am prepared to assume, for the present purposes, that there can be a termination at the initiative of the employer if the cessation of that employment relationship is the probable result of the employer’s conduct.”

In applying the Rheinberger approach to the examples considered above, the “principal contributing factor which leads to termination” is the action which would be described in contractual terms as the repudiatory breach, whether it be the refusal to obey the order, or the demotion.

The question to be determined is whether the action was intended to bring the employment relationship to an end or, perhaps, whether the action would probably have the effect of bringing the employment relationship to an end. That question is a factual question concerning the employment relationship, and in my view is not necessarily answered by merely characterising the action as a repudiatory breach of the employment contract. They are different issues.

Thus, while an act of misconduct on the part of an employee might clearly be a repudiatory breach of the employment contract justifying summary dismissal, if:

·   the employee in committing the breach did not intend to end his employment, and

·   it could not be said that the breach would probably result in the termination of his employment, rather than merely in a warning or even a demotion

then there is not a termination at the initiative of the employee; it is rather a termination at the initiative of the employer.

In the current case, I have found that Mr Kawasaki did not, by disclosing that Elmerside intended to recruit a General Manager and thus demote Mr Jackson, intend to end Mr Jackson’s employment; Elmerside intended to retain Mr Jackson on the same salary and entitlements as second in command. Further, I am satisfied that Mr Kawasaki expressly told Mr Jackson that he did not intend to end Mr Jackson’s employment.

In Rheinberger v Huxley Marketing Pty Ltd, Moore J suggested, without finally deciding, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer’s conduct. I accept that subjective intention on the part of the employer is not necessary.

Could it be said therefore that Mr Jackson’s departure was the probable result of Mr Kawasaki’s disclosure? This is a determination to be made on the particular circumstances of this case.

Mr Jackson had been in charge of Araluen for only eight months. He had never been given the title of General Manager. He was faced with a proposition of remaining with Elmerside in a position of less responsibility but with no diminution of salary or entitlements. To the extent that he might have been concerned that his loss of status could be interpreted as reflecting a failure on his part, it was also capable of being presented on the basis that his period in charge had always been intended to be temporary, as I have accepted was in fact Mr Kawasaki’s intention.

Finally, if Mr Jackson was nevertheless unhappy with the loss of status, one might still have expected that he would choose to remain in employment until such time as he found appropriate alternative employment. I raise this in the context of an assessment of the probable result of Mr Kawasaki’s actions, and not with regard to issues of mitigation of loss. 

Having considered the circumstances of this case, I find that Mr Jackson’s departure was not the probable result of Mr Kawasaki’s disclosure.

I turn now to consider two other decisions of this Court where demotions have caused employees to leave their employment.

In Westen v Union des Assurances de Paris, (unreported, IRCA No. 419 of 1996, Madgwick J, 28 August 1996), Mr Westen was New South Wales Claims Manager with an insurance company. He was manager of all claims in New South Wales with final decision over claims and with a final advisory role to national top-level management in relation to national claims. He had his own secretary and his own discrete staff, and reported directly to the State Manager.

After a reorganisation of work within the company from a departmental structure to a “team” structure, the company decided that Mr Westen should be senior claims employee within a team dealing with “specialist business” sourced from larger customers. The team would be led by another employee, Mr Cummins.

While Mr Westen retained his title, his office and his salary under the new structure, he was no longer to manage all claims in New South Wales, and would have final decision over only those claims delegated to him by Mr Cummins. He had no final advisory role to national top-level management in relation to national claims. He no longer had his own secretary nor, in any real sense, his own discrete staff. He now reported to Mr Cummins, who reported to the State Manager.

Madgwick J held as follows:

“The applicant perceived, and in my view correctly perceived, that there was a considerable change in the nature of the new position he was being offered. He was, in effect, to become a senior, specialist claims clerk, whose considerable experience and expertise might be available to other people, outside his team, dealing with claims, but it would be at the option of those other people to consult him or not. Continuing to call him a Claims Manager did not make him one.

He was thus offered new and different employment from what he had contracted for. He declined it, as was his contractual right. The respondent by its officers made clear that it would not continue to employ him to do his previously-contracted work. He was entitled to, and did, treat the contract of employment as breached in a fundamental way by the respondent and to regard it as terminated at the instance of the employer.

I agree, subject to a gloss, with the learned authors of The Law of Employment (3rd ed.) (Law Book Company 1990), Macken, McCarry and Sappideen:

“In the absence of a contract allowing it, the employer cannot force changes [of job or regrading] on an employee. An attempt to do so will involve the employer in breach of contract if the [employee] presses her or his requirements...” (p 188)

The gloss is that this must not be taken to propound undesirable inflexibility: there must be some reasonable give and take. In a rapidly changing world, it would be uncommon for the parties to a contract of employment to envisage no change in aspects of the job. But employers’ perceptions as to what are the important aspects of jobs they have promised employees and later wish to change may not coincide with the perceptions of the employees, nor of independent observers, such as courts to which the employees might, in due course repair. Serious, non-consensual intrusions upon the status or responsibilities, as well as upon the remuneration, attaching to a job may well be held to amount to a repudiation of the contract of employment, and their actuality will not be denied merely by the retention of the job’s title. That is the drift and the tenor of cases such as Beck v Darling Downs Institute of Advanced Education (Supreme Court of Queensland, No. 3865 of 1988, Dowsett J, 20 April 1990, unreported) and Quinn v Jack Chia (Australia) Ltd (1992) 43 IR 91.

So it is here. Mr Westen’s employment was terminated by the respondent’s having indicated that it would not continue to be bound by the contract it had with him as to his employment.”

His Honour then immediately proceeded to consider whether there had been a breach of Section 170DE of the Act. He did not expressly consider whether the company’s repudiatory breach had been intended by the company to end Mr Westen’s employment, or whether the termination of the employment relationship was a probable result of the breach. There is indeed no indication that Rheinberger v Huxley Marketing Pty Ltd had been cited to his Honour.

Cowell v Irlmond Pty Ltd (unreported, IRCA No. 618 of 1996, Millane JR, 19 December 1996) is another case where a demotion caused an employee to leave his employment.

Mr Cowell was Floor Manager of a car yard. His employer advised him that he was being stood down from that position while the employer considered other positions for him in retail or fleet sales. There was no formal offer of alternative employment, and the evidence at the hearing was that it was likely that there would be some reduction to his remuneration. The Judicial Registrar concluded that the proposed alteration to Mr Cowell’s position involved not only a loss of seniority and the performance of different duties, but also a potential loss of remuneration.

Millane JR observed that:

“[the employer’s conduct] was an act of repudiation and was accepted by the applicant as such. The repudiation of the contract of employment had the consequence, even though it may not have been an intended one, of initiating the termination of the applicant’s employment in the sense that the termination was a probable consequence of the respondent’s conduct...

Any act on the part of the applicant to leave his position was a response to the breach of his contract of employment and was a response he was entitled to make without that conduct being characterised as a resignation or abandonment of his employment...”

As is apparent, while deploying the language of contractual analysis, Millane JR also addresses the issues arising from the Rheinberger approach.

The result is consistent with the Rheinberger approach. Clearly, the greater the detriment to the employee flowing from the employer’s action, the more probable it is that the employer’s action will result in the ending of the employment relationship.

The decision in Westen v Union des Assurances de Paris, at first glance, is less readily reconciled with the Rheinberger approach. However, it may be that, on the particular facts in Westen v Union des Assurances de Paris, Mr Westen’s decision to leave his employment was a probable result of the company’s reorganisation. It seems that Madgwick J was not asked to address the question.

In considering all the facts of this case, I cannot find that Mr Jackson’s departure was the probable result of Elmerside’s conduct.

The application of an analysis in terms of “contractual entitlements” to the circumstances of a case is not necessarily sufficient where the Court is administering a statutory remedy attaching to the unlawful termination of employment relationships. This is particularly so where the Court is required by Section 170EE to do what is appropriate in all the circumstances of the case, and where in assessing compensation the Court is directed to have regard to the remuneration the employee would have received had the employment not been terminated.

In the present case, had Mr Jackson remained in employment and resumed the second in command position he would have suffered no loss of remuneration. It is true, given the Full Court’s decision in Brackenridge, that he would also have relinquished any entitlement to bring a claim under Section 170EA of the Act for reinstatement. However, there would have been no capacity under the Act, or indeed at common law, to recover compensation or damages greater than that which he would have earned had he remained in employment. He did not seek reinstatement in any event.

While Mr Jackson was contractually entitled to leave his employment rather than accept the lesser position, it is difficult to see how it could have been in his interests to do so, notwithstanding the loss of status involved. The Rheinberger approach, which considers the probable result of the employer’s action, incorporates the presumption that it is probable that an employee would act in their best interests.

Applying the Rheinberger approach to the present case, I find that there was not a termination at the initiative of the employer. Thus the Act has no application.

Conclusion

Accordingly, I will order that the application be dismissed.

I certify that this and the preceding 18 pages
are a true copy of the reasons for decision of
Judicial Registrar R.D. Farrell.

Associate:
Dated:  3 February 1997

APPEARANCES

Counsel appearing for the applicant:     Mr T. B. Lyons

Solicitors for the applicant:  Athol C. Gibson & Associates

Counsel appearing for the respondent:  Mr P. Burke              

Solicitors for the respondent:  Gibson & Gibson

Dates of Hearing:  26 & 27 February 1996

Written submissions complete:                15 August 1996

Date of Judgment:  3 February 1997