James v P J and L J Fink

[1996] IRCA 196

DECISION NO:  196/96

C A T C H W O R D S

INDUSTRIAL LAW - UNLAWFUL TERMINATION - VALID REASON - OPERATIONAL REQUIREMENTS - one person business in building industry retrenching employee due to downturn in work - failure to explore lesser alternatives - whether HARSH, UNJUST OR UNREASONABLE TERMINATION.

Industrial Relations Act 1988 ss.170DE, 170DF, 170EA, 170EDA
Industrial Relations Regulations - r 30BC

CASES:Johns v Gunns Limited (1995) 60 IR 258

MARK JAMES -v- P J & L J FINK

No. VI 5657 of 1995

Before:  Judicial Registrar Murphy
Place:  Melbourne
Date:  10 May 1996

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY

VI 5657 of 1995

B E T W E E N :

MARK JAMES
Applicant

AND

P J & L J FINK
Respondent

MINUTES OF ORDERS

Judicial Registrar Murphy  10 May 1996

THE COURT ORDERS:

1. That 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 5657 of 1995

B E T W E E N :

MARK JAMES
Applicant

AND

P J & L K FINK
Respondent

Before:           Judicial Registrar Murphy
Place:              Melbourne
Date:              10 May 1996

EX-TEMPORE  REASONS FOR JUDGMENT

The applicant seeks a remedy under s170EA of the Industrial Relations Act 1988. The respondent is a husband and wife partnership in the building industry. Its areas of activity are re-blocking, extensions and renovations. In May 1995 the business of the respondent was good. It had an order book of about four weeks work. The principal of the business, Mr Phillip Fink, was minded to expand the business by employing extra labour. The only employee of the business at that stage was Mr Peter Kelly, an apprentice carpenter, in his last year of indenture.

Mr Fink's idea was to employ two labourers so the business could operate two teams of two individuals each, one doing re-blocking work and the other extensions and renovations.  The respondent employed the applicant only and as a labourer.  From that time the respondent increased its advertising seeking to increase its workload.  The respondent had good months in terms of revenue in August, September and October 1995.  Around September and October however, the business of the respondent slowed.   It was unable to secure extension work which was to be the foundation for its increased work-force.  Further, the number of quotes being given for re-blocking had fallen significantly.  An extension that the respondent was working on was almost complete in October and there was only a week or a week and a half's work ahead of the respondent. 

In August the applicant hurt his back and had a couple of days off work.  In late September the applicant hurt his back again and had to go off work.  He saw a chiropractor and then a doctor.

On about 10 October Mrs Fink rang the applicant and queried why he was not back at work.  She said that the respondent did not intend to pay the applicant any Work Cover payments.  The applicant advised her that he was still not fit for work and was waiting for medical reports.  At some stage the applicant obtained a certificate that he was unfit for work until 23 October. 

On Friday 19 October, the applicant contacted Mr Fink and advised him that he would be fit to resume work the following Monday.  Mr Fink advised him that he was not sure whether he would have any work for him.  Mr Fink then chased up on two quotes for extensions that were outstanding and was advised that the respondent had been unsuccessful.  In the period that the applicant had been absent from work Mr Fink and Mr Kelly had carried on with the work available.  Mr Fink said that he had a feel for the amount of work that was likely to be available in the future.  At that time he was not optimistic.  His finances were such that he could not afford to continue to employ the applicant. 

On Sunday evening, 22 October, there was a phone call between the applicant and Mr Fink.  Mr Fink advised the applicant that he did not have any work available and that he would have to let him go.  The applicant was subsequently paid his outstanding holiday pay and one week's pay in lieu of notice. 

What was the reason for the termination? 

Under s170EDA(1) of the Act the respondent carries the onus of proof that it had a valid reason based on its operational requirements to terminate the applicant's services. Here the respondent alleges that its reasons were its operational requirements, namely that it had run out of work and it had no work for the applicant. The evidence of both Mr Fink and Mr Kelly supports this. The gross revenue figures for the business (Exhibit R1), show that in November and December 1995 and January 1996 revenue was down substantially from the previous three months. Mr Fink gave evidence that he and Mr Kelly had been able to perform the available work and that nobody had been employed to replace the applicant. Further, since October the respondent has been unable to secure any extension jobs and has been confined to re-blocking and minor renovations.

I am satisfied that the reason for the dismissal was truly stated by Mr Fink when he said "it was a financial thing, we had no work coming up to maintain the three of us;  I had the money there." Subsequent events have confirmed Mr Fink's expectation at the time. The respondent has therefore satisfied me that it had a valid reason in the sense of a sound defensible reason based on its operational requirements to terminate the applicant's services. There was no breach of s170DE(1) of the Act.

The applicant also relied on s170DF(1)(a) of the Act to allege that the respondent's reason for termination included the applicants "temporary absence from work because of illness or injury". Because of the operation of s170EDA(2) of the Act the respondent carries the onus of proof to exclude this reason from its reasons for termination, see Johns v Gunns Limited (1995) 60 IR 258. At 268 Northrop J said:

“The respondent has to establish a negative, namely that the reasons for dismissal did not include the reason that Mr Johns was temporarily absent from work because of injury.  A mere denial may not be sufficient.  All the facts and circumstances of the case have to be considered.”

Here the Court heard from Mr Fink.  He flatly denied that the applicant's absence from work on WorkCover was a reason for his dismissal.  He said that it had nothing to do with it and it was not in his mind.  He said that if he had not been off work he may have been terminated earlier.  The only evidence that would support the suggestion that the applicant's temporary absence from work because of injury was a factor, was the telephone call from Mrs Fink to him wherein she said that the doctor had said there was nothing wrong with the applicant.

This evidence does not take the matter very far given Mr Fink's evidence that his view was that whether the applicant's WorkCover claim was accepted or not was a matter for the WorkCover authorities. In the face of a direct denial by Mr Fink, the evidence of the fall-off in work load, and the lack of any express dissatisfaction with the applicant's performance, I am satisfied that the applicant's temporary absence from work due to injury was not a reason for his termination. The respondent has discharged its onus of proof under s170EDA(2) and has not breached s170DF(1)(a) of the Act.

Harsh, unjust or unreasonable?
The applicant carries the onus of proof that his termination was harsh, unjust or unreasonable (ss170EDA(1) and 170DE(2) of the Act).  The principal matters argued by counsel for the applicant under this heading were the failure of the respondent to explore lesser alternatives to dismissal, such as taking annual leave, casual work, or keeping the applicant on for a period to see if things picked up.  It was further argued that the respondent took no action to cushion the blow by some earlier forewarning or consultation.  Essentially it was said that the termination was procedurally unfair.

In response to this counsel for the respondent pointed to the notoriously fluctuating nature of the building industry and the fact that the Federal Building Industry Award and Industrial Relations Regulation 30BC(1) refers to daily hire employees in the building industry. 

The provisions of the Act must be applied in a practical way and in an industrial environment.  Here the respondent is effectively the smallest business unit in the economy.  At the time of these events there were only two employees, one an indentured apprentice. 

The requirements for consultation that have been imposed by industrial tribunals in larger work places in more stable building environments are not appropriate here.  Efforts to defer the inevitable by directing the applicant to take annual leave or work on the respondents’ own house are artificial, given the evidence about the finances of the respondent.  The applicant has been paid a weeks wages in lieu of notice. 

It was reasonable that his services were terminated given the evidence of Mr Fink of the work load that he expected in the future. The manner in which it was done was not, in the context of this small business, such that it is to be characterised as harsh, unjust or unreasonable. The applicant has not discharged his onus of proof. The termination did not infringe s170DE(2) of the Act. The application must be dismissed.

MINUTES OF ORDERS

THE COURT ORDERS:

1. That the application is dismissed.

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

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy.

Associate:                   
Dated:  10 May 1996

Solicitors for the Applicant:               Ryan Carlisle Thomas
Counsel for the Applicant:                 Mr N Kenyon

Solicitors for the Respondent:  Gabriel & Co
Counsel for the Respondent:             Mr B Shaw

Date of hearing:  10 May 1996
Date of judgment:  10 May 1996