Jay Francis Palmos v Condor Marine Pty Limited
[1995] IRCA 532
•29 September 1995
CATCHWORDS
INDUSTRIAL LAW - UNLAWFUL TERMINATION - HARSH UNJUST OR UNREASONABLE - PROCEDURAL FAIRNESS - UNJUST - No VALID REASON - REINSTATEMENT Impracticable - COMPENSATION - OPPORTUNITY TO RESPOND - Opportunity to improve - Employee or Independent Contractor - WAGES IN LIEU OF NOTICE
Industrial Relations Act 1988 ss 170CB, 170DB, 170 DC, 170DD, 170DE, 170EA, 170EDA, 170EE, Regulation 30B
Stevens -v- Brodribb Sawmilling Company Proprietary Limited (1985-1986) 160 CLR 16
Humberstone -v- Northern Timber Mills (1949) 79 CLR 389
Narich Proprietary Limited -v- Commissioner of Payroll Tax 50 ALR 417
Massey -v- Crown Life Insurance Company (1978) 1 WLR 676
Jason Scott Johns -v- Gunns Limited (TI 148R of 1994 - unreported, Northrop J, 18 May 1995)
Ian Samuel McGregor Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233
Graham Foxcroft v The Ink Group Pty Ltd (1994) 57 IR 65
James Lewis Aitken -v- The Construction, Mining, Timberyards, Sawmills & Woodworkers Union of Aust - WA Branch (WI 328 of 1995 - unreported, Lee J, 7 August 1995)
Vabu Pty Ltd -v- Commissioner of Taxation 30 ATR 303JAY FRANCIS PALMOS -v- CONDOR MARINE PTY LIMITED
No. WI 1225 of 1995
COURT: PATCH JR
PLACE: SYDNEY (HEARD IN PERTH)DATE: 29 SEPTEMBER 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRYNo. WI 1225 OF 1995
BETWEEN:
Jay Francis PALMOS
ApplicantAND:
CONDOR MARINE PTY LTD
RespondentREASONS FOR JUDGMENT
29 SEPTEMBER 1995 PATCH JR
This is an application under section 170EA of the Industrial Relations Act ("the Act"). The applicant, Mr Jay Palmos, filed an application in the Court on 3 March 1995. In that application, he sought reinstatement, compensation, and "recovery of salary withheld by employer".
WAS THE APPLICANT AN "EMPLOYEE" OF THE RESPONDENT OR WAS HE AN "INDEPENDENT CONTRACTOR"?
Section 170CB of the Act is as follows:
"An expression has the same meaning in this Division as in the Termination of Employment Convention."
However, the Convention does not refer to "employees", referring instead to "workers" - and does not define that term.
Section 4(1) of the Act commences with the words "In this Act, unless the contrary intention appears:", and then goes onto define "employee" as follows:
"'Employee' includes any person whose usual occupation is that of employee."
The terms "independent contractor" or "subcontractor" are nowhere defined in the Act.
It is therefore necessary to examine the common law in order to determine whether or not the applicant was an "employee" (as he claims) or a "subcontractor" or "independent contractor" (as the respondent claims).
In Stevens -v- Brodribb Sawmilling Company Proprietary Limited (1985-1986) 160 CLR 16, Mason J (as he then was) (with whom Brennan and Deane JJ agreed), in respect of the question of whether the relationship between the plaintiffs and the defendant was one of employer and employee or one of principal and independent contractor said, at page 24:
"A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it."
His Honour cited the judgment of Dixon J in Humberstone -v- Northern Timber Mills (1949) 79 CLR 389, at page 404, as follows:
"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions."
Mason J then went on to say:
"But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in determination of that question....... Other relevant matters, include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee."
In the same case, their Honours Wilson and Dawson JJ said, at page 35:
"The classic test for determining whether the relationship of master and servant exists has been one of control, the answer depending upon whether the engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it."
Their Honours went on to say:
"The modern approach is, however, to have regard to a variety of criteria. This approach is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances."
At page 36, their Honours said:
"In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing."
That passage of their Honours' judgment has particular relevance in this case, because the work to be performed by the applicant was one involving a high degree of skill, as a naval architect, the qualifications for which (apart from experience) included a university degree.
Their Honours went on to say, at pages 36 and 37:
"The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance. Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which do not always have the same significance."
In the case of Re Porter: Re Transport Workers Union of Australia (1989) 34 IR 179, his Honour, Gray J, said at page 184:
"A court determining whether a particular relationship is that of employment or of some other kind can therefore only resort to the process of balancing all of the factors, or as they are called in Stevens and other cases, the 'indicia'."
He went on to say:
"A Court will always look at all of the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it. As Mr Black put it in the present case, the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck."
This last mentioned passage has some significance in this case because it is common ground that, during the initial conversations between the applicant and Mr Macintosh (the General Manager of the respondent) the phrase "subcontractor" was used to describe the relationship which was being established by the engagement of the applicant.
In this respect, in a judgment of the Privy Council in Narich Proprietary Limited -v- Commissioner of Payroll Tax 50 ALR 417, Lord Brandon of Oakbrook, at page 421, cited Lord Denning MR in Massey -v- Crown Life Insurance Company (1978) 1 WLR 676 as follows:
"The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it..... On the other hand, if their relationship is ambiguous and is capable of being one or the other (ie either service or agency), then the parties can remove that ambiguity, by the very agreement itself which they make with one another."
What, then, are the particular circumstances of this case?
The respondent's control (or lack thereof) over the work of the applicant.
Counsel for the respondent, submitted that the respondent had no right of control over the manner of the performance of the applicant's work.
The applicant's work was, to a significant degree, performed on a computer, using a program for drawing designs on the computer screen called "AUTOCAD."
When pressed, counsel for the respondent focussed his submission, saying that there was no right of control by the respondent because Mr Albert Li (another employee of the respondent) did not tell the applicant how to use the AUTOCAD. This was, however, a matter in respect of which the evidence differed and I do not accept that Mr Li did not tell the applicant how to use the AUTOCAD - at least in some respects (see below).
In my opinion, this submission did not assist the respondent, even if the facts were as counsel asserted, because, in the case of persons performing skilled tasks, the scope for control over the manner of the performance of his or her work would be very limited, or even non-existent. (See Stevens -v- Brodribb Sawmilling, at page 36). It is the right to control which is important.
Nonetheless, significant aspects of the applicant's work were, in fact, controlled by the respondent. These included:
(a) Where the applicant was to sit in the workplace.
(b) The type of AUTOCAD program which he was to use.
(c)The applicant received his tasks from Mr Li or from Mr Clifford, the General Manager of the respondent. In particular, when the applicant was asked to do drawings of boats which the respondent intended to market, there was a particular system by which the applicant would receive his instructions, and furnish the finished work back to the respondent.
That system placed him, the applicant, at the bottom of a hierarchy, which is more suggestive of an employer/employee relationship than that of a relationship of principal and independent contractor.
That system was as follows:
1.Mr Grainger would give Mr Li a hard copy of a drawing that had already been done, clearly specifying on it where additions or changes were to be made.
2.Mr Li, if he was unable (due to other work) to do that work himself, would give it to the applicant, who would perform the work.
3.The applicant would give back the work to Mr Li.
4.Mr Li would check it to see if it was correct.
5.Mr Li would then either pass it on to Mr Grainger, or pass it back to the applicant to "fix it up" if necessary.
(d)The applicant sat next to Mr Li in the respondent's premises. I accept the applicant's evidence that Mr Li was teaching him some aspects of the job. I accept that Mr Li described to the applicant what his (Mr Li's) job involved, and that this was because it was intended by the respondent that the applicant take over (some parts of) Mr Li's job.
Mr Macintosh, the principal of the respondent company, said directly that that was the case - but qualified his remarks by saying that the applicant was "engaged" to do so, rather than "employed". In my opinion, that semantic distinction does not assist the respondent's case.
I also accept the applicant's evidence when he said that he was supervised and assisted by Mr Macintosh and Mr Grainger.
Mr Clifford, the manager of the respondent, also exercised a significant degree of supervision over the detail of the applicant's work - in particular, in respect of one of the tasks that the applicant was required to perform (a weight study in respect of a slipway), Mr Clifford had a considerable degree of control over the way the applicant performed his work.
Even though, consistently with the applicant performing a skilled task, there was not, on a minute by minute basis, active supervision of the applicant in the minutiae of his work, there was a considerable degree of both supervision and control of the work of the applicant by several persons who were superior to him in the hierarchy of the respondent.
This is strongly suggestive of an employer/employee relationship.
(e)The applicant gave evidence that he was expected to start work at 8.30, that he was expected to take a regular lunch break, and that he was expected to work to at least until about 5.00 in the afternoon. He gave evidence that he worked longer hours, but this was the minimum requirement.
I accept his evidence that that was required of him, in part because that is the fact of the matter as to what occurred. True it is that he worked longer hours sometimes, and that his total hours varied. But there was a regular pattern in his hours of work, which is indicative of an employer/employee relationship rather than of the applicant being an independent contractor.
As Ireland J said in Vabo Pty Limited -v- Commissioner of Taxation 30 ATR 303, at 308, the fact of regular working hours is:
"......contrary to the notion of flexibility which is at the heart of a relationship of independent contractor. The reality of the relationship is that there is nothing in terms of hours or days worked that would distinguished (sic) (the applicant) from the ordinary employee."
The relative inexperience of the applicant
Independent contractors (at least those who work in the professions) are, by their very nature, professionally responsible for the tasks which they perform. They have an increased degree of liability for negligence, for example.
The applicant gave evidence that he would never have consented to being called an "independent contractor" in either of the jobs that he had had in the ship building industry (his previous job with an organisation called Austel, and the job with the respondent) if had known of this possibility for legal liability.
Mr Charles Waterton was called as a witness by the applicant. He is the deputy chairman of the Civil College of the Institute of Engineers, which is a national body. He is the immediate past president of the Western Australia Division of the Institute and, generally speaking, is a very experienced engineer. The Institute is the accrediting body for university courses and sets the standards for membership of the various grades of the National Professional Engineers Register. There are three grades of membership - student member, graduate member, and corporate member.
He said that independent contractors are nearly always corporate members because they have to be very experienced - and that, if they are not, strictly speaking, a "corporate member", they would almost always be qualified to become one.
A graduate member, on the other hand, merely requires an appropriate university degree and does not need any experience.
By way of explanation, Mr Waterton gave evidence that "naval architects" are really engineers, and the terminology is a hangover from earlier times.
He gave evidence that the rate of pay that the applicant says he agreed to receive from the respondent ($18.50 per hour) would be an appropriate level of pay for a graduate member only, and would be low for an independent contractor.
His evidence supports the applicant's version - namely, that the applicant was employed as a relatively inexperienced in-house naval architect, and was not engaged as an independent contractor, as he did not have sufficient experience so to be.
The mode of the applicant's remuneration
The applicant was paid at an hourly rate, dependent on the number of hours that he worked. He was required to put in what the respondent called an "invoice" setting out the number of hours that he had worked the tasks he had performed, and the names of the clients in respect of whom he had worked. This was by way of a time sheet, which the applicant was required to present with his "invoice". It follows that there was no set wage and that the applicant's remuneration depended entirely on the number of hours that he worked.
Mr Smetana, counsel for the respondent, submitted that this was more indicative of the applicant being an independent contractor, and Mr Kane, from the applicant's union, the Association of Professional Engineers, Scientists and Managers, Australia, who appeared for the applicant, submitted that this factor was equally consistent with the applicant being either an employee or an independent contractor. He pointed out that many employees are paid by the hour.
Furthermore, as Mr Kane again pointed out, the evidence established that, at least sometimes, naval architects engaged as independent contractors in the boat building industry in Western Australia, are paid by the task, rather than by the hour. Mr Macintosh gave evidence to this effect.
Therefore, on balance, I agree with the submissions of Mr Kane, that the fact that the applicant was paid by the hour is as consistent with him being an employee as it is with him being an independent contractor.
The fact that the applicant was required, in his "invoices" to list the tasks which he had performed and the clients, was simply a commonsense administrative requirement, so that those clients could, in fact, be billed for the work done by the applicant. It does not necessarily point to the fact that he was an independent contractor.
The fact that the applicant was paid by cheque to a trading name "Jay Palmos Engineering"
The applicant was paid by cheques, payable to "Jay Palmos Engineering". When he was first engaged by the respondent, he was asked if he had a trading name, and he supplied that name. This was the name that he had used in his previous employment/engagement, with another boat building company in Perth call Austral Marine.
"Jay Palmos Engineering" is not a corporation - it is simply the trading name of the applicant. Thus, he was paid as an individual.
Mr Smetana submitted that employees are paid in their own names. I agree with this. The fact that the applicant was paid by cheques made payable to "Jay Palmos Engineering" is, indicative of him being an independent contractor, rather than an employee.
The use of the words "subcontractor" and "independent contractor" to describe the relationship of the applicant to the respondent.
Both Mr Macintosh and the applicant gave evidence that, when Mr Macintosh spoke to the applicant in the initial job interviews, prior to the commencement of the applicant's employment, the words "subcontractor" were used. It was also common ground that, at various times following that interview, the phrase "independent contractor" was used to describe the nature of the relationship between the applicant and the respondent.
The applicant did not take issue with the terminology used by the respondent, simply because he was not aware that there was any significance to it. He regarded himself as an employee, and regarded the use of terminology such as "independent contractor" as equally suitable for his part time job (since the alleged termination of his employment) at an Italian restaurant - a place at which he is undoubtedly an employee, and certainly an "independent contractor". Until he consulted the union following the alleged termination of his employment, he was unaware of the difference between "subcontractor" or "independent contractor" and "employee".
The use of terminology is not sufficient to determine the nature of a relationship. As Gray J said in Re Porter (supra) "the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody recognise it as a duck".
The use of the phrase "subcontractor" or "independent contractor" by the respondent was not to "remove an ambiguity", to use the phrase in Narich Pty Ltd (supra) - but for other purposes - namely, to make it possible (or so the respondent thought) for the respondent to terminate the services of persons engaged by it at will, or whim, and to avoid other obligations which arise in an employer/employee relationship. Nor was it terminology understood by the applicant - thus, it cannot be said that the applicant used the words with the intention of making clear that the true nature of the relationship was that the applicant had been engaged as an independent contractor.
Furthermore, the terminology used by Mr Macintosh, even on his evidence, in the initial job interviews, was, in some respects, inconsistent with the applicant being engaged as an independent contractor. Mr Macintosh said the following things:
- That the respondent wanted its own in-house naval architect.
- That he wanted somebody to take responsibility from Albert (Li) for doing particular types of drawings.
- He said that he did tell Mr Palmos that the respondent wanted him to take over that part of Albert's job. He said that respondent wanted someone to take over the concept design and concept drawing part of Albert's job.
When, in examination-in-chief, the applicant's evidence to the effect that the applicant had said that "you'd employed him to take over Albert Li's job" was referred to, Mr Macintosh responded by saying "we engaged him - we didn't employ him. Albert is not a naval architect. It was taking up to much of my time. We needed someone to take over his job in entirety." (My emphasis).
He went on to say that Mr Palmos was nonetheless, a contractor.
I accept the applicant's evidence that he was told by Mr Macintosh that he was to, in time, "take over" Mr Li's job. The use of that terminology is inconsistent with him being an independent contractor, and consistent with him being an employee.
To put it another way, apart from the use of the terminology "subcontractor" or "independent contractor", in the initial job interviews with Mr Macintosh, the substance and terminology of the conversation was much more consistent with the applicant being an employee, than it was with him being an independent contractor.
The equipment used by the applicant in the performance of his tasks.
All of the equipment used by the applicant was supplied by the respondent. He did not have his own computer, and used the respondent's computer. He did not have his own software, and used the respondent's software. He was required to use a particular type of program. He was required to do the work at the respondent's premises.
These facts suggest that it was more likely than not that the applicant was an employee and not an independent contractor.
Taxation and holiday pay.
When the applicant received his first pay cheque, he realised that taxation had not been deducted by the respondent. This was the first time that he had became aware that that was to be the case.
Mr Macintosh agrees that taxation was not discussed with the applicant prior to the commencement of the applicant's work with the respondent.
Nor was holiday pay discussed.
In my opinion, as there was simply no discussion about these matters, and as the respondent's requirements were simply foisted upon the applicant without his agreement, they are neutral facts on the question of whether or not the applicant was an employee or an independent contractor.
The right (or not) to delegate.
It was the applicant, and only the applicant, who could do the work requested of him by the respondent. There was no suggestion that the applicant had the right to get someone else to do the work requested of him by the respondent.
Not only was there no suggestion that the applicant had that right, it would have been inconsistent with the system of work set up in the respondent's business, whereby the applicant was at the bottom of a hierarchy.
The lack of a right to delegate suggests that the applicant was an employee and not an independent contractor.
ConclusionThe matters to which I have referred do not constitute an exhaustive list of all the circumstances relating to the relationship between the applicant and the respondent.
They do, however, give a flavour of what the nature of the relationship was.
As Gray J said in Porter, (supra) at page 184, the decision of a Court in respect of the nature of the relationship between the parties "may be a matter of impression."
In particular, the significant degree of control exercised by the respondent over the day to day working of the applicant, the relative inexperience of the applicant, the fact that the applicant was to "take over" Mr Li's job, and the lack of flexibility with which the applicant had to work, are strongly suggestive of an employer/employee relationship.
Taking into account the evidence as a whole, including the particular matters to which I have made reference, and balancing all of the "indicia" as required by Stevens, in my opinion the relationship between the applicant and the respondent was one of employer and employee.
WAS THE APPLICANT A CASUAL EMPLOYEE?
In my opinion, the applicant was not a casual employee. He was employed to "take over" Albert Li's job - this was, in terms, not a casual job. The effect of what he was told by Mr Macintosh was that it was a long-term position.
The applicant is not, therefore, excluded from the operation of the Act by virtue of the operation of section 170CC and Regulation 30B.
WAS THE TERMINATION OF THE APPLICANT'S EMPLOYMENT UNLAWFUL?
Was there a "valid reason" for the termination of the applicant's employment?
Section 170EDA(1) of the Act is as follows:
ONUS OF PROOF
[Termination contravenes subsec 170DE(1)] If an application under section 170EA alleges that a termination of employment of an employee contravened subsection 170DE(1):(a)the termination is taken to have contravened subsection 170DE(1) unless the employer proves that, apart from subsection 170DE(2), there was a valid reason, or valid reasons, of a kind referred to in subsection 170DE(1); and
(b)if the employer so proves, the termination is nevertheless taken to have contravened subsection 170DE(1) if the applicant proves that, because of subsection 170DE(2), the reason or reasons proved by the employer were not valid.
Put shortly, the respondent employer bears the onus to prove there was a valid reason, or valid reasons, for the termination of the applicant's employment.
The reasons put forward by the respondent for the termination of the applicant's employment are closely related ones. They are:
1. That the application was too inexperienced for the job; and
2. That the applicant was not competent enough for the job.
In my opinion, the respondent has not proven either of these matters.
The applicant only worked for the respondent for a short time. He informed Mr Macintosh, at the first employment interview, that his computer skills on the AUTOCAD were "rusty". It was to be expected that there would be some period during which the applicant would hone his skills to the required level. He was not allowed to have that period of time, even though he was permitted to take a computer home and practice before he commenced employment.
True it is that the applicant did make some, relatively minor, mistakes in the work which he performed but, in my opinion, the respondent has not established that the minor errors which the applicant made were of such a nature that it could be said that he was either too incompetent or too inexperienced for the job.
The job was, in my opinion, principally one in which he was to gradually take over the tasks performed by Mr Li. Thus, the position did not require him to be able to immediately do everything that Mr Li was doing prior to the commencement of the applicant's employment.
Furthermore, the respondent was not always clear, or efficient, in the way it communicated to the applicant the nature of the tasks which the applicant was to perform. For example, rather than Mr Grainger speaking directly to the applicant, Mr Grainger would speak first to Mr Li and Mr Li would then pass the task on to the applicant. This hierarchal, and indirect, way of communicating was a system which, to speak colloquially, was a misunderstanding or a mistake waiting to happen. That is exactly what occurred. The time wasted on the weight study was because of a failure of communication. The system which caused that failure was the respondent's - not the applicant's.
The respondent has not proven that the difficulties that the applicant experienced were the fault of the applicant, either in respect to competence or lack of experience.
I do not ignore the fact that the applicant was, in fact, relatively inexperienced. But Mr Macintosh knew that when he employed the applicant. I accept that the applicant gave the respondent a folder of documents which set out his curriculum vitae, and other relevant documents in relation to his experience and qualifications. The respondent got exactly what the applicant had said he was - namely a properly trained but relatively inexperienced naval architect.
In my opinion, given a little more time, the applicant could well have demonstrated that he was quite capable of performing the tasks which the respondent required of him. The respondent has not proved the contrary.
For the above reasons, the respondent has not proven that the termination of the applicant's employment was for "a valid reason" or "valid reasons". The termination of his employment was, therefore, a breach of section 170DE(1) of the Act and unlawful.
Was the termination of the applicant's employment "harsh, unjust or unreasonable" within the meaning of section 170DE(2) of the Act?
Strictly speaking, it is not necessary to traverse this question, (as well as matters to do with section 170DC) as there was no valid reason for the termination of the applicant's employment. See Jason Scott Johns -v- Gunns Limited (TI 148R of 1994 - unreported, Northrop J, 18 May 1995).
However, as there has been considerable argument addressed to the matter, I will make some brief observations.
The applicant was summarily dismissed. He was never counselled, he was never told that his job was in jeopardy, and he was not informed of the reasons for which his employment was terminated prior to that occurring.
Some evidence was adduced from Mr Clifford to the effect that, after he had told the applicant that his employment was terminated, the applicant had the opportunity to respond to the criticisms that Mr Clifford had leveled at him.
But, in order for an employee to be given procedural fairness, it is necessary for him or her to be told, before the decision to terminate his or her employment, of what the criticisms are, in a way and in time for him or her to be able to respond to those criticisms.
That was not done in this case.
To use terminology with which all Australians would be familiar, the applicant was not "given a fair go". To use terminology with which lawyers are familiar, he was not given natural justice.
The termination of the applicant's employment was therefore "unjust" within the meaning of section 170DE(2) of the Act.
It follows that, even if there were to be a valid reason (which there is not) for the termination of his employment, the termination would be deemed to be not for a valid reason by virtue of the operation of section 170DE(2), and unlawful.
Was the termination of the applicant's employment a breach of 170DC of the Act?
For the same reasons that the termination of the applicant's employment was "unjust" within the meaning of section 170DE(2) of the Act, it was a breach of section 170DC of the Act.
In order for the "opportunity to defend" referred to in section 170DC to be a real one, it must be an opportunity given to an employee before the decision to terminate his or her employment is made.
In the circumstances of this case, not only was he not given such an opportunity before the decision to terminate his employment was made, the opportunity to defend himself was given to him after that termination of employment had actually occurred. It was, therefore not an "opportunity" within the meaning of section 170DC of the Act.
For that reasons also, the termination of the applicant's employment was unlawful.
REMEDIES
Is reinstatement impracticable?
Sections 170EE(1) and (2) of the Act are as follows:
170EE(1) [Orders]
“In respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, the Court may make the following orders:
A.an order requiring the employer to reinstate the employee by:
(i)reappointing the employee to the position in which the employee was employed immediately before the termination; or
(ii)appointing the employee to another position on terms and conditions no less favourable than those on which the employee was employed immediately before the termination; and.
B.If the Court makes an order under paragraph (a)
(i)any order that it thinks necessary to maintain the continuity of the employee’s employment; and
(ii)an order requiring the employer to pay to the employee the remuneration lost by the employee because of the termination.
170EE(2) [Reinstatement impractical]
If the Court thinks, in respect of a contravention of a provision of this Division (other than section 170DB or 170DD) constituted by the termination of employment of an employee, that the reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate.”
Section 170EE requires the Court to first consider whether reinstatement is “impracticable”.
There is a distinction between compensation in lieu of reinstatement, which may be awarded under sub-section (2) of section 170EE, and an order requiring the employer to pay to the employee remuneration lost by the employee because of the termination, which may be awarded under sub-section (1) of section 170EE.
Compensation under sub-section (2) may only be ordered if the Court finds that the reinstatement of the employee is impracticable.
In the case of Ian Samuel McGregor Nicolson v Heaven and Earth Gallery Pty Ltd (1994) 126 ALR 233 his Honour, Wilcox CJ said, at page 244:
“It is important to note that Parliament stopped short of requiring that, for general compensation to be available, reinstatement be impossible. The word “impracticable” requires and permits the Court to take into account all the circumstances of the case, relating to both the employer and employee, and to evaluate the practicability of a reinstatement order in a commonsense way. If a reinstatement order is likely to impose unacceptable problems or embarrassments, or seriously affect productivity, or harmony within the employer’s business, it may be “impracticable” to order reinstatement, notwithstanding that the job remains available.”
I approach the facts of this case bearing in mind what his Honour said in that case.
In Graham Foxcroft v The Ink Group Pty Ltd (1994) 57 IR 65, his Honour, Wilcox CJ, said, at page 67:
“Especially since the June 1994 amendments to Part VIA of the Act, which substituted a new s. 170EE, the legislative emphasis has been on reinstatement of unlawfully terminated employees.”
It follows that the primary remedy for an unlawful termination of employment is reinstatement, but that the Court should not order reinstatement if it is “impracticable”.
In my opinion, the reinstatement of the applicant is impracticable.
This is because the personal relationships between the applicant and the management of the respondent company have deteriorated to such an extent that, if the applicant were to be reinstated, it would "seriously effect productivity, or harmony within the employer's business". The ill feelings come principally from the respondent's "side", and, in my opinion, are based mainly on the ire with which the respondent's senior management have responded to the fact that the applicant has asserted his rights to challenge the termination of his employment - but, that said, they exist.
Compensation
The first question to be determined in respect of any order for compensation is the question of what was the rate of pay that the applicant should have been receiving.
In my opinion, the rate of pay that was agreed between the applicant and the respondent was $18.50 per hour.
This is for the following reasons:
1.The applicant said so in his evidence, and, generally speaking, I found the applicant to be a witness of truth, who did not attempt to exaggerate or distort his evidence in order to suit his case.
2.When he received his first pay cheque, together with a pay slip, setting out a rate of pay of $18.00 per hour, he immediately challenged that. He did that to Ms van Damm, who is a director of the respondent, and the de facto partner of Mr Macintosh. She is the person who looks after the clerical and administrative side of the respondent company.
The pay advice which the applicant challenged was the pay advice dated 10 February 1995 (part of exhibit 8). The reference on it, next to the entry "pay rate", is 18.00. That is clearly a reference to $18.00.
The applicant's evidence was that he told Ms van Damm that he should be receiving $18.50 per hour. Ms van Damm agreed that the applicant said that to her.
3.Ms van Damm gave evidence that when she spoke to Mr Macintosh about what the applicant's rate of pay should be, Mr Macintosh said that the applicant was "looking for $18.00".
4.This is in stark contrast to Mr Macintosh's evidence that, at the final pre-employment interview, the applicant said that he would be willing to work for $9.00 per hour. As Mr Macintosh's evidence cannot stand with that of Ms van Damm, and as Ms van Damm's evidence is more consistent with that of the applicant, in this respect I accept what the applicant says, and do not accept what Mr Macintosh said.
Section 170EE(3) of the Act is as follows:
[Calculation of compensation] In working out the amount of the compensation for the purposes of subsection (2), the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment, but the amount of compensation:
(a)must not exceed, in respect of any employee, the amount of the remuneration that would have been received by the employee in respect of the period of 6 months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect; and
(b)must not exceed, in respect of an employee who is not employed under award conditions, the applicable amount on the day on which the termination took effect.
The Court is, therefore, to have regard to "the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment" in assessing what amount of compensation is appropriate in the circumstances of any case.
The applicant commenced employment with the respondent on 6 February 1995, and his employment was terminated on 17 February 1995.
Although he worked, in some ways, regular hours, the total amount of hours varied. It is, therefore, difficult to project into the future in order to determine, in accordance with section 170EE(3), what he "would have been likely to have received" if his employment had not been terminated.
I will, therefore, err on the side of conservatism and make an estimation which is close to what is, in my opinion, the minimum amount of hours that the applicant would have been likely to work if he had remained in the employment of the respondent.
I accept that the "invoices" put in by the applicant were generally accurate. In the first "week" that the applicant worked for the respondent, he worked for three days only, from Wednesday to Friday. He worked a total of 18 hours during that week. In the second week the applicant worked a total of 54.75 hours. In the third week the applicant worked a total of 39.5 hours.
Although it is, as I have said, difficult to project forward from such an inadequate base, in my opinion a safe conservative projection for the average hours that the applicant would in likelihood, have worked if his employment had not terminated, is 40 per week.
In my opinion, (as I noted above) a great deal of the ill feeling which the respondent's managers (especially Mr Macintosh) hold in respect of the applicant has arisen because he has asserted his rights and has challenged his dismissal. If the applicant had been treated fairly (and lawfully) by the management of the respondent, it is probable, in my opinion, that these feelings of ill will would not have eventuated.
Nonetheless, the short period for which the applicant was employed is, in itself, a factor which I take into account to reduce the amount of compensation to be ordered. This is because it, by its very nature, "opens up" the range of possible developments that might have occurred. The applicant might have stayed at the respondent for a long time, or he might (for any number of reasons) not.
The applicant has been successful in obtaining some casual employment since the termination of his employment by the respondent. The last day upon which any evidence was taken was 31 July 1995, and up until that time the applicant had earnt about $500.00 as a waiter. It is likely that he has continued in some form of casual employment since that date. I will therefore reduce that amount of compensation which would otherwise be paid to the applicant by a round figure of $1,000.00.
In addition to direct economic loss, the applicant has also, to a limited but significant enough extent, suffered distress and hurt feelings as a result of the termination of his employment.
In James Lewis Aitken -v- The Construction, Mining, Timberyards, Sawmills & Woodworkers Union of Aust - WA Branch (WI 328 of 1995 - unreported, Lee J, 7 August 1995) his Honour said, at page 20:
"The Court will consider the detriment occasioned to the employee by employer's contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences. Division 3 of the Act provides the context in which s. 170EE is to be construed. It includes provisions intended to protect the dignity of an employee, in particular, s 170EA provides an employee with a right to seek redress in respect of a breach of the Act an s 170EE provides the entitlement to receive compensation as the remedy for such a breach, characteristics of a statutory tort. Therefore, in some cases principles relevant to the assessment of damages in tort may provide assistance in assessing the compensation to be paid under s 170EE(2). That is to say it may be appropriate to include in the measure of compensation to be paid pursuant to s 170EE(2) a sum sufficient to compensate an employee for mental distress or injured feelings caused by a harsh, unjust or unreasonable termination of employment (see: Whelan -v- Waitaki Meats Ltd [1991] 2 NZLR 74 at 90)."
I take that into account, and assess the amount of compensation which is appropriate to be ordered in respect of injured feelings and distress in the sum of $500.00.
In all the circumstances, in my opinion it is appropriate to order the respondent to pay, as compensation under section 170EE(2) the applicant a sum equal to ten weeks salary for lost remuneration, plus $500.00 for injured feelings and distress.
Ten weeks salary, calculated on the basis of a 40 hours weeks at $18.50 per hour, comes to $7,400.00.
I therefore order the respondent to pay the applicant compensation for the unlawful termination of his employment in the sum of $7,900.00 within 21 days of today.
Damages for unpaid pay in lieu of notice - section 170DB of the Act.
The applicant's employment was summarily terminated, and he was given no pay in lieu of notice.
Under section 170DB of the Act he is entitled to one week's pay in lieu of notice, and I will so order.
I assess one weeks pay on the basis of a 40 hour week at $18.50 per hour.
The respondent is therefore ordered to pay the applicant damages under section 170DB of the Act for unpaid pay in lieu of notice in the sum of $740.00, within 21 days of today.
Common law claim for unpaid wages - the associated jurisdiction of the Court.
The applicant claims the sum of $963.89 for wages earnt by him during the period of his employment, but not paid by the respondent.
That sum is calculated as follows:
- In the first week the applicant worked a total of 18 hours, but was paid by the respondent for only 16 hours, at the rate of $18.00 per hour.
- In the second week the applicant worked a total of 54.75 hours, but was paid for only 54 hours, at the rate of $12.00 per hour.
- In the third week the applicant worked a total of 39.5 hours, but was paid by the respondent for only 26.75 hours in the sum only of $202.66 (some wages were deducted for a supposed "overpayment" for the previous week).
The true value of the hours worked by the applicant at the agreed rate of $18.50 per hour, was $2,076.63.
The total wages paid to the applicant came to $1,112.74.
I accept the applicant's evidence about the number of hours that he worked. He invoiced the respondent promptly for the hours that he worked, and set out the tasks upon which he had been engaged. I regard his evidence as both truthful and reliable, backed up as it is by contemporaneous documents.
For the reasons that I have set out above, I accept the applicant's evidence as to the hourly rate to which he was entitled.
It follows that the failure of the respondent to pay the applicant for the full number of hours worked, at the agreed rate of $18.50 per hour, is a breach of the contract of employment between the respondent and the applicant.
I therefore order the respondent to pay the applicant the sum of $963.89, as common law damages for breach of the contract of employment between the respondent and the applicant, within 21 days of today.
Who was the employer of the applicant?
In my opinion, when Mr Macintosh spoke to the applicant at the two initial employment interviews, he was speaking on behalf of Condor Marine Pty Limited. All of the orders which I will make will therefore be orders to Condor Marine Pty Limited.
I certify that this and the proceeding thirty-three (33) pages are a true copy of the reasons for judgment of Judicial Registrar Patch.
Associate: Caroline SternbergDate: 29 September 1995
Appearances:
Advocate for applicant: Mr M Kane
Association of Professional Engineers, Scientist & Managers AustraliaCounsel for respondent: Mr A.J. Smetana
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA
DISTRICT REGISTRYNo. WI 1225 OF 1995
BETWEEN:
Jay Francis PALMOS
ApplicantAND:
CONDOR MARINE PTY LTD
RespondentMINUTES OF ORDER
THE COURT ORDERS THAT:
1.The respondent pay the applicant compensation for the unlawful termination of his employment in the sum of $7,900.00, within 21 days of today.
2.The respondent pay the applicant damages under section 170DB of the Act for unpaid wages in lieu of notice in the sum of $740.00, within 21 days of today
3.The respondent pay the applicant the sum of $963.89, as common law damages for breach of the contract of employment between the respondent and the applicant, within 21 days of today.
0
5
0