Jennifer Kent and the Australian Nursing Federation v Wangaratta Private Hospital
[1996] IRCA 44
•19 Feb 1996
DECISION NO: 44/96
C A T C H W O R D S
INDUSTRIAL LAW - Termination of Employment - claim of unlawful termination - operational requirements - redundancy - whether harsh, unjust and unreasonable.
Industrial Relations Act 1988, S170CA, S170DE, S170EE, Schedule 11
CASES:
Jones v Department of Energy and Minerals (1995) 60 I.R. 304
Selvachandran v Peteron Plastics Pty Ltd, 7 July 1995 (unreported).
Kenefick v Australian Submarine Corporation Pty Ltd (1995) 131 ALR 197
Association of Professional Engineers, Scientists and Managers Australia on Behalf of Philip Edward Cross v Deniliquin Council (unreported) 14 December 1995
JENNIFER KENT AND THE AUSTRALIAN NURSING FEDERATION -v- WANGARATTA PRIVATE HOSPITAL
No. VI-3004 of 1995
Before: Judicial Registrar Ryan
Place: Melbourne
Date: 19 February 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI-3004 of 1995
B E T W E E N :
JENNIFER KENT & THE AUSTRALIAN NURSING FEDERATION
Applicant
AND
WANGARATTA PRIVATE HOSPITAL
Respondent
MINUTES OF ORDERS
Judicial Registrar Ryan 19 February 1996
THE COURT ORDERS:
That the application be 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-3004 of 1995
B E T W E E N :
JENNIFER KENT & THE AUSTRALIAN NURSING FEDERATION
Applicant
AND
WANGARATTA PRIVATE HOSPITAL
Respondent
Before: Judicial Registrar Ryan
Place: Melbourne
Date: 19 February 1996
REASONS FOR JUDGMENT
CLAIM OF UNLAWFUL TERMINATION OF EMPLOYMENT
Strictly speaking this is an application by the Australian Nursing Federation on behalf of Mrs Jennifer Kent. However in the judgment Mrs Kent is referred to as the “applicant” and the Federation as the “union”. All statutory references are to the Industrial Relations Act 1988.
THE EMPLOYMENT
On 23 September 1994 the applicant applied in writing for the Senior Nursing position of Unit Manager, Grade 4 at the Wangaratta Private Hospital. She had spent the previous four years in a Grade 5 position as the Assistant Director of Nursing at the Mitcham Private Hospital. She states that she was attracted to the Wangaratta position because of the country location, the opportunity to be involved in the commissioning of a new private hospital and the possibility of working normal hours with weekends off.
On 3 October 1994 she was interviewed at the Wangaratta Private Hospital by the General Manager, Mr Allan Boston and the Director of Nursing, Mrs Ann Cassidy.
On 7 October 1994 the applicant faxed a letter to Mrs Cassidy in which she stated:
“I accept your verbal offer of the position of Unit Manager/Co-ordinator, Obstetric and Gynaecology Services, made to me during our telephone conversation on Tuesday 4 October 1994 at 7:45 pm.”
The applicant stated in the letter that her acceptance of the position was subject to certain conditions including:
initial accommodation costs
travelling costs
extended hours 3 days per week to facilitate the organisation and relocation of her family from Melbourne to Wangaratta by mid to late November
amended job title and job description
agreement on a wage package prior to 17 October 1994
On 10 October 1994 Mrs Cassidy wrote to the applicant as follows:
“Following our recent discussions, I wish to formally offer you the position of the Unit Manager/Nursing Services at Wangaratta Private Hospital.
Conditions of employment are outlined below:
1. Registered Nurse Grade 5A (13-50 beds)
2. 76 hours per fortnight
3. five (5) weeks annual leave
4. not required to work public holidays
5. as per Federal Nurses (Victorian Health Services) Award 1992
Mrs Cassidy also confirmed in her letter that the initial conditions in respect of accommodation, travel and working hours were acceptable and that the position title would be Unit Manager/Nursing Services “or other title reflective of your combined position descriptions as deemed appropriate by yourself”. An amended position description was enclosed with the letter and the reference to “combined position descriptions” was a reference to an agreement reached between the applicant and her employer that she was to be paid at Grade 5A because she was to co-ordinate obstetric and gynaecology services as well as act as the Unit Manager.
At this stage the hospital had not opened and the original intention had been three Unit Managers all at Grade 4 level, one to manage theatre, one to manage patient services in general and one to co-ordinate obstetrics. Following the negotiations with the applicant, the structure was changed to provide for two Grade 5A Unit Managers, one for theatre and the other for patient services including birthing unit staff, ward staff and obstetrics. Later, as a result of a restructure which led to the termination of the applicant on 2 June 1995 the structure was changed again to provide for one Unit Manager, Grade 5A, with an Associate Charge Nurse, Grade 3A, in charge of theatre and an Associate Charge Nurse, Grade 3A, in charge of patient services.
The applicant began part-time on 24 October and full-time on 7 November. The hospital opened on 21 November and patients were admitted on 22 November.
On 25 November the applicant and Mr Boston signed a document (Exhibit R11) which was stated to be a contract of employment and contained the following statements described as “conditions”.
Status: Unit Manager
Award: Health Services Award
Department: Medical Surgical/Obstetrics
Classification: Grade 5A (13-50 beds)
Standard hours per fortnight: 76 hours
Commencement date: 24/10/94
Permanent from: 7/11/94
OPERATIONAL REQUIREMENTS - OCCUPANCY
The viability of a private hospital depends on patients in beds (occupancy) and turn around of patients (especially surgical patients) in and out of beds (throughput).
In the twelve months from the opening of the hospital (November 1994) to this hearing (November 1995) the hospital rarely met the estimated occupancy on which the budget was predicated. Once in December 1994 and three times in January 1995 actual weekly occupancy exceeded the estimated target occupancy but, apart from those four occasions, the hospital was always well below target. The respondent budgeted for an occupancy of 70% or more from February 1995 but in the period February to May 1995 the occupancy only reached 40% once and rarely exceeded 30% (Exhibit R3).
There were several contributing factors including a dispute involving the Transport Accident Commission but the primary reason for the low occupancy was and remains the low referral rate by medical practitioners. This is always a commercial risk for a private hospital operating in any country area with well established public hospitals.
The applicant and other senior staff were aware from regular management meetings of the low occupancy and the respondent concedes that the applicant was active in promoting the hospital and suggesting methods of improved marketing. However, while the applicant was aware of the occupancy problems, there is no evidence to suggest that she was warned or counselled about the possible redundancy of her position until 5 May 1995.
DECEMBER 1994 - EMERGING TENSION
The evidence of the applicant and Mrs Cassidy has led the Court to conclude that as early as December 1994 some tension was developing between the applicant as Manager of Nursing Services and Mrs Cassidy as Director of Nursing. The tension related to the rostering and allocation of nursing resources.
The applicant was responsible in at least “the first four weeks of operation” (late November to late December 1994) for the rostering of nursing staff. Indeed, her extraordinarily broad position description (Exhibit A3) required her to report to and be responsible to the Director of Nursing but the function of her position is described in the position description as follows:
“The Unit Manager is primarily responsible for the direct management and supervision of all nursing functions in the patient care areas/delivery suite, by effective utilisation of all resources (human and technical) available, in a cost effective manner.”
The position description requires the applicant to be “directly responsible to the Director of Nursing for achieving satisfactory performance in”
(a)planning, directing and monitoring all nursing services (under direction of the Director of Nursing
(b)optimum utilisation of nursing resources to meet the requirements of the unit on a daily basis recognising nursing staff competencies
(c)nursing policies and procedures
(d)quality improvement...for the nursing division
(e)medical and administrative records
(f)staff development
(g)other administrative duties
The responsibilities detailed in the position description are remarkably comprehensive and include patient care, personnel, equipment, supplies, record keeping, interpersonal relationships, financial management, waste management, occupational health and safety, continuous quality improvement and personal and professional development.
In terms of the tension which quickly developed between the applicant and her supervisor, Mrs Cassidy, the key responsibilities which contributed to this emerging tension were those categorised in the position description as:
“co-ordination and supervision of nursing resources...and...overall allocation of nursing resources on a shift by shift basis, based on activity of the unit and nursing skill level required.”
Mrs Cassidy and the applicant each gave evidence for a considerable period of time. Both displayed strong, determined, assertive characteristics. Both presented as experienced nurses with a healthy expression of confidence in their own ability as health professionals. The Court accepts that both are well qualified and competent nurses. While Mrs Cassidy denies any real conflict between them in a professional sense and in the sense often described as a “personality clash”, the Court is of the view that they did clash and conflict especially over the development and operation of self rostering and probably over the degree of and increase in clinical work each was expected to perform because of the failure of the hospital to attract doctors and patients and meet the original estimates and targets.
Mrs Cassidy gave evidence of her expectation that the applicant develop and implement what she described as “self rostering”. As explained by Mrs Cassidy this seemed to be a form of rostering in which nursing staff were expected to nominate themselves for all nursing shifts including night, weekend and public holiday shifts. It was never explained in evidence how the unpopular shifts were effectively filled by a self rostering system. It was implied that a motivated workforce would agree among themselves to take a fair share of the unpopular shifts and that, by and large, self rostering was effective when the staff had a loose corporate agreement to share and negotiate all shifts.
Mrs Cassidy as Director of Nursing approved final rosters but the applicant was expected to ensure the rosters were filled through the self rostering system and then submit the rosters for final approval. In response to questions from the Court, Mrs Cassidy gave the impression that the final responsibility for the rosters remained with her and that if there were gaps in a roster she, as Director of Nursing, was responsible for filling those gaps. She did not explain how that was done. Clearly it could only be done by re-allocating shifts filled at the preliminary stage by self rostering and/or by directing staff who had not nominated themselves for the requisite number of shifts.
The applicant gave evidence that she had no experience of the concept of self rostering before coming to Wangaratta Private Hospital. The Court has been unable to escape the impression that the Director of Nursing expected the applicant to negotiate out and resolve any of the problems inherent in self rostering.
Both Mrs Cassidy and the applicant gave evidence of the former drawing to the attention of the latter a vacant senior nursing position in the respondent’s hospital in Mildura. Both agree that this occurred in December 1994. The applicant had only recently relocated with her husband and four children to Wangaratta and she interpreted the referral of the vacancy to her as an expression by the Director of Nursing of a lack of confidence in her as Unit Manager/Nursing Services and indeed as an indication from the Director of Nursing that she wanted the applicant to leave the Wangaratta Private Hospital. Mrs Cassidy firmly rejected the applicant’s interpretation of the referral of the Mildura vacancy. She stated that it was company policy to circulate vacancies in the respondent’s various hospitals and that the General Manager, Mr Boston, had asked her to draw the Mildura vacancy to the attention of the applicant.
The Court accepts that it is a reasonable personnel policy to draw vacancies to the attention of appropriate staff and that this may have been the reason why the Mildura vacancy was brought to the attention of the applicant. Having said that, it seems a little curious that such a vacancy would have been brought to the attention of the applicant so soon after she had relocated at considerable effort and expense from Melbourne unless, of course, the referral to the vacancy had been couched in terms which were qualified and which acknowledged the recent relocation. There was no evidence from the applicant or from Mrs Cassidy which would suggest that the referral of the vacancy was in terms which took account of the recent relocation. Even if the referral of the vacancy to the applicant was no more than a genuine, if clumsy, application of company policy, the applicant’s reaction is itself indicative of some early breakdown in her relationship with the Director of Nursing.
JANUARY 1995 - INCREASING TENSION
While the Director of Nursing and other senior staff were on leave in early January 1995 the applicant acted as Director of Nursing. She claims that she was accorded no additional remuneration for acting in this capacity and she implied that she was not in any way given the status of acting Director of Nursing during this period. This seemed to rankle with her and she states that “in the first two weeks of January” she was “on call 24 hours a day 7 days a week” and was “called in out of hours several times”.
The applicant was herself on leave without pay for 2 weeks from 13 January 1995. She claimed that prior to going on leave she asked Mr Boston as General Manager to set up what she described as “problem solving sessions” because “the staff were being frustrated at demands placed on everyone”. These “demands” need to be seen in the context of the view expressed by the applicant of excessive workload on nursing staff in December and early January.
At this stage, the hospital was adjusting to a patient workload and it is noted that in early December and in the first two weeks of January the occupancy was in excess of estimated targets and close to estimated occupancy right through from 22 November 1994 to 30 January 1995. It was from February 1995, when target occupancy was radically increased from 30% to 70%, that the hospital fell behind in terms of occupancy and in terms of financial viability.
FEBRUARY 1995 - DIRECTOR OF NURSING IN CHARGE OF ROSTERS
The applicant claims that when she returned to work in February Mrs Cassidy:
had set up planning sessions which negated the need for the “problem solving sessions” she had “set up” after her discussion with the General Manager in early January
twice reprimanded the applicant for employing casual staff which was a practice which “would not be tolerated”
took over the responsibility for the rostering of nursing staff
The applicant stated that she “felt uncomfortable with the way these things were presented to me” and that “the relationship (with Mrs Cassidy) was reasonably intense mid to late February”.
Mrs Cassidy did not concede any particular change in the relationship and she could not recall reprimanding the applicant about the engagement of casual staff. Her evidence on this and a number of other issues was imprecise and at times evasive and the Court accepts that the applicant was reprimanded for employing staff thought to be casual even if they were part-time staff approved to work at the hospital on a casual basis. The Court also accepts that it may have been reasonable to reprimand the applicant for employing staff on casual rates given the low occupancy in February compared to the increased targets.
The applicant stated that about this time (presumably in late February) she arranged a meeting with Mrs Cassidy after a telephone conversation with a representative of the Union. At the meeting the applicant appears to have expressed the view that the nursing staff were destabilised and confused and did not know whether they were required to report to the Director of Nursing or to the applicant. General rostering of staff and the rostering of midwives on call and on each shift were also discussed and the applicant described the conversation as “amicable” and that the Director of Nursing apologised for “consistent interference and not enabling me to manage the unit as a manager”.
Mrs Cassidy’s evidence in respect of this meeting was less precise but she did concede that she told the applicant that she did not wish as Director of Nursing to interfere unduly in the operation of the unit.
MARCH 1995 - MANAGEMENT DISCUSSIONS OF LOW OCCUPANCY
The applicant concedes that:
she attended almost all the regular weekly management meetings usually held on Wednesday
in early March or late February discussions began about the fact that the hospital “was not achieving what it was expected to achieve”
marketing strategies to attract doctors and increase local awareness for the hospital were considered
she (the applicant) suggested use of the local media including advertisements in the Wangaratta Chronicle
The applicant states, and Mr Boston confirmed in his evidence, that no mention was made in the management meetings or elsewhere of redundancies or “depressing” staff hours and that “it did not enter my mind at that time” (i.e. redundancy).
Mr Boston, in his evidence, confirmed that:
the main problem was that the increased occupancy anticipated “beyond February” did not occur
the failure of the hospital to reach even 50% of the occupancy targets from February related to the lack of anticipated support from the local medical community including -
(a) low ENT and urology referrals from Albury specialists
(b)a Transport Accident Commission Work Cover dispute which resulted in anaesthetists refusing to undertake certain work in private hospitals
(c)the delay in a 15/20 bed rehabilitation proposal involving “the government and the respondent” and a withdrawal of involvement in the proposal by the Wangaratta Base Hospital
(d)a general “under performance of doctors in surgical and obstetrical areas”
senior staff were involved in “a revamp of marketing“ and the applicant “showed good skills in marketing”
Mr Boston admitted that at this stage (March 1995) there was “no discussion of redundancy” at the hospital or “in the company at my level”.
APRIL 1995 - FIRST DISCUSSION OF REDUNDANCY
Mr Boston gave evidence of a conversation he had in late April with the then Managing Director of the respondent company, Dr Geoffrey Dreher. The Court calculates that this conversation probably took place about Friday 21 April because Mr Boston described it as occurring “about 2 weeks before” a discussion with the applicant on 5 May.
Dr Dreher told Mr Boston that he considered Wangaratta Private Hospital overstaffed especially in nursing given an average of 10 patients a day in a 40 bed hospital.
Dr Dreher apparently expressed the view that “the Director of Nursing should roll up her sleeves and get involved in hands on clinical nursing”. Mr Boston has stated that he took this as guidance from the Managing Director that a ”downgrade” was necessitated in the management structure at the hospital. He spoke to the Director of Nursing and asked her whether she was prepared to accept some clinical responsibility. He states that Mrs Cassidy indicated that she was prepared to do this although it was not a role she had envisaged for herself.
Mr Boston expressed the view to Mrs Cassidy that two unit managers could not be justified in the circumstances and that the Unit Manager (Theatre), Mrs Cathy Duncombe, needed to take a broader role and the Director of Nursing also needed to assume a direct role in wards.
Mr Boston stated in evidence that the Director of Nursing “thought about (his proposal) for about 4 days” and then agreed with the proposal because she “could not offer an alternative structure to bring about savings”. The Court has concluded after an assessment of the evidence of Mr Boston and Mrs Cassidy that the agreement of the latter was a reluctant but genuine agreement to co-operate with a restructure which required the Director of Nursing, at least in the short term, to play a more active role in “hands on nursing”.
The Court has assumed from the general tenure of the evidence of both Mr Boston and Mrs Cassidy that the two of them had reached somewhat reluctant agreement to pursue a restructure involving the removal and redundancy of the applicant’s position and that they had reached this agreement by very late April or early May.
Mr Boston described the decision as “part of an overall review” which also included:
multi skilling in the office
combination of orderly and storeman roles into one position
a reduction in hours in the reception area
a purchasing review
a fixed cost review with the power supplier Eastern Energy
The evidence of Mrs Cassidy in respect of the restructure includes the following:
she accepted that there was some degree of overstaffing from February because of the low occupancy
she was nevertheless quite surprised at the redundancy proposal outlined by Mr Boston and described the proposal as “never my idea” and she stated that she had “negligible input into the decision”
she describes her role as to “provide...a structure for the future” ....and “information to Mr Boston to make the decision between the two unit managers” i.e. Mrs Duncombe in theatre and the applicant in patient services.
5 MAY 1995 - APPLICANT’S POSITION DECLARED REDUNDANT
The Applicant’s Evidence
The applicant states that she spoke to Mrs Cassidy about noon on 5 May because another midwife had been employed and she had not been involved in the decision and she considered that unusual. Mrs Cassidy asked her to see Mr Boston at 2:30 pm to discuss staff structure. Mrs Cassidy was present at the 2:30 pm meeting. Mr Boston commenced the meeting with words to the effect that “there is no easy way to do this...due to low patient occupancy your position has been made redundant....we cannot afford your salary or the salary you have been used to for the last 3 years”.
The applicant asked when the decision was effective and Mr Boston replied:
“It is up to you”
and he offered her a clinical nurse specialist position in obstetrics or the alternative of staying for an unspecified but presumably short period while she sought other employment. The applicant requested time off on Monday 7 May to discuss matters with her husband and she gave evidence that there was at that time a clinical nurse specialist position in obstetrics advertised internally within the hospital on the hospital notice board but that she believed it was at Grade 2 level and that she was not able to accept that position because it would have involved shift work and her husband, a police officer at Wangaratta, was already involved in shift work and, in any event, she considered the acceptance of such a position would have been “a retrograde step” which would “do nothing to enhance her career”. At that stage, on Friday 5 May, the applicant did not respond in respect of the offer of employment in the clinical nurse specialist position.
The General Manager’s Evidence
Mr Boston gave evidence of the meeting on 5 May which was generally consistent with the description of events given by the applicant. He described the meeting as “difficult”. He said that the best he was able to offer the applicant was a clinical nurse specialist position and that he told her that he “could understand if she did not want to continue”. He conceded that the applicant was very shocked and distressed and upset when he told her that her position had become redundant. He confirmed that he was very happy to give the applicant some time off to consider her position. In fact, he indicated that he was, at that stage, prepared to give the applicant at least a month to consider her position and that he was prepared to give her as much support as possible and to provide a positive reference for her.
The Evidence of the Director of Nursing
Mrs Cassidy confirmed the evidence of the applicant and Mr Boston that the issue of redundancy had not been discussed with the applicant prior to 5 May. She also confirmed that Mr Boston had commenced by stating that there was no easy way to deal with the matter and that he got straight to the point and indicated that the applicant’s position had become redundant because of the low occupancy at the hospital and because the hospital could no longer to afford two Grade 5A positions. She indicated that Mr Boston advised the applicant that she (Mrs Cassidy) would be taking over in the shortterm as Unit Manager and that the applicant was offered the options of accepting employment as a Clinical Nurse Specialist or “staying on for a little bit to look for another position” (i.e. another position outside the hospital). Mrs Cassidy also confirmed that while Mr Boston suggested that a date be set that he nevertheless left that issue up to the applicant (i.e. the time at which the applicant was to leave the hospital if she was not to accept the position of Clinical Nurse Specialist).
MONDAY 8 MAY TO FRIDAY 19 MAY - NEGOTIATIONS AND DISCUSSIONS WITH THE APPLICANT AND THE UNION; CONFIRMATION OF REDUNDANCY
The applicant was on leave with pay on 8 and 9 May and spoke to Mr Boston by telephone. Mr Boston also had a number of telephone conversations with a officer, Ms Susan Craven. These conversations took place between 9 and 18 May. Mr Boston gave evidence of suggestions by Ms Craven that the proposed termination of employment was not on grounds of redundancy but was “a personality issue” between the applicant and the Director of Nursing.
Mr Boston’s position was that he was not aware of a “personality issue” but that he relied on advice from Mrs Cassidy to the effect that there was no “personality issue of any real significance”. Mr Boston did concede that he was aware of concerns expressed by the Director of Nursing about difficulties in the implementation of self rostering and he categorised the relationship between the applicant and the Director of Nursing as “a minor settling of things which occurred...and...a clarification of expectations”.
He also stated that he told Ms Craven that he “had investigated the changes in conjunction with head office and a personality issue was irrelevant”.
On Tuesday 16 May the applicant, the General Manager and the Director of Nursing met. Mr Boston confirmed that the restructure was proceeding and the applicant indicated that she was not prepared to accept the offer of employment as a Clinical Nurse Specialist. Mr Boston indicated that he wanted to settle a date of departure and that he proposed to give the applicant two weeks notice to run from Friday 19 May with final termination on Friday 2 June. The applicant did not accept the termination but did indicate an intention to keep working.
Correspondence between the Union and the General Manager and the applicant and the General Manager set out what then followed.
On 17 May Ms Craven wrote to Mr Boston as follows:
“Following our recent telephone conversation, I wish to confirm that the ANF believes the loss of the Grade 5 position at Wangaratta Private Hospital will lead to a breach of the Nurses (Victorian Health Services) Award 1992, as there are no Charge Nurses in the Hospital.
Should you proceed with the redundancy, the ANF will seek on behalf of Ms Kent, a redundancy payment sufficient to cover the costs of her move to Wangaratta to take up the position in September 1994, as well as allowing time for her to find a new position.
I understand that Ms Kent has been advised that her position will finish on 2 June 1995, so I would request an early indication from you of your willingness to reconsider your decision to dismiss Ms Kent or to negotiate a suitable redundancy package.”
On 17 May Mr Boston wrote to the applicant as follows:
“Further to our discussion on May 5th and 16th, it is regret that I must now formally notify you that the position you occupy as Unit Manager (Grade 5A) of the Ward Area is no longer required within the organisational structure.
This decision is based upon the current activity levels being experienced by the Hospital.
In accordance with the provisions of the Nurses (Victorian Health Services) Award, you are entitled to 2 weeks notice or payment in lieu of notice. your cessation date will therefore be Friday 2nd June 1995. I have no requirement for you to remain at work until that date and your decision on this matter will not effect your termination payment.
In recognition of the service given to the hospital over the past eight months, your severance payment will include an additional payment of 4 weeks salary. This is in line with the Award provisions for employees with a minimum of 1 years continuous service.
I once again thank you for your efforts and professionalism during your time with the Hospital, and wish you well with your future career.”
APPLICATION FOR REINSTATEMENT AND COMPENSATION
On 24 May Ms Craven lodged a claim of unlawful termination of employment and sought on behalf of the applicant reinstatement and compensation and such other order or orders as would put the employee in the same position (as nearly as can be done) as if the employment of the employee by the respondent had not been terminated.
17 JULY 1995 - APPLICANT APPLIES FOR A SENIOR NURSING POSITION AT WANGARATTA PRIVATE HOSPITAL
On 7 August 1995 the Australian Industrial Relations Commission issued a Certificate under S170ED(2) certifying that it had been unable to settle the matter of Jennifer Kent and ANF and Healthscope Limited. Normally, this Court does not concern itself with any aspect of a conciliation especially where the conciliation has not resolved the claim of unlawful termination of employment. However, in this case, first the respondent and then the applicant led evidence of discussions, and indeed negotiations, leading up to a written application by the applicant for a “senior nursing position advertised in the Wangaratta Chronicle on Friday 9 June 1995 and again on Wednesday 28 June 1995”.
Such evidence is only relevant to the extent that it casts light on the validity or invalidity of the termination or impacts on remedy in the event that the termination is found to be unlawful.
The respondent tendered a statement made by the Australian Industrial Relations Commission on 5 July 1995. The applicant did not object to the evidence and indeed challenged the bona fides of the respondent in rejecting the applicant’s application for re-employment.
The statement is Exhibit R27 and reads as follows:
“AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
Industrial Relations Act 1988
s.170EA Application to Court in respect of termination of employment
s.170EC Reference by Court to Commission for conciliation
Jennifer Kent & Australian Nursing Federation
and
Healthscope Limited
(U No. 31988 of 1995)
(Court reference VI3004 of 1995)
DEPUTY INDUSTRIAL REGISTRAR MELBOURNE, 5 JULY 1995
STATEMENT
This matter came before the Commission on Monday, 3 July 1995 at the Magistrate’s Court, Albury.
After conferring with the parties separately and collectively the following statement was read into the record:
“It is open to Mrs Kent to apply for the 3 positions.
Selection will be based on merit.
If Mrs Kent is successful the parties will confer regarding the terms and conditions of her employment.
The Court file will remain open pending advice from the parties.”
The foregoing require no elaboration given the issues canvassed in conference.
M.J. Boland
DEPUTY INDUSTRIAL REGISTRAR”
The “three positions” referred to in the Statement appear to be two senior nursing positions advertised as “senior nursing positions Surgical/Medical” and a position of Clinical Nurse Specialist first advertised internally in the hospital while the applicant was still in employment and presumably later advertised externally. This appears to be the position offered to the applicant on 5 May and rejected by her on 16 May.
Mr Boston gave evidence that he had expected the applicant to apply quickly for consideration for appointment to one of these three positions after the conciliation conference in Albury on 3 July. He conceded that the applicant had advised him on 3 July that she would be away from Wangaratta “for a short, unspecified period”. In cross-examination, he did not agree that the applicant had told him that she would be away from Wangaratta for “at least a week”. His position was that he did not recall any specific time put on the applicant’s absence from Wangaratta. The applicant’s position is that she told Mr Boston that she would be away for “at least a week” and she claimed that “he understood I could not put in my application ‘that week’”. The Court has assumed that the applicant is referring to an understanding on the part of Mr Boston that the applicant would not make her application for re-employment in the week Monday 3 July to Sunday 9 July.
Mr Boston claims that one of the positions was finalised with the acceptance of an offer on 17 July and that the other two positions were finalised on 18 July the day on which the applicant’s application of 17 July was received at the hospital.
In her application of 17 July the applicant states:
“this application is as a result of our meeting with Deputy Industrial Registrar Boland on Monday 3 July 1995 in an effort to reach a fair and reasonable outcome for both parties to my alleged unfair dismissal.
As was discussed on the 3 July 1995 at conciliation; the issue of the hours that would be involved in these positions and limitations that had been imposed on me in relation to this, and also the issue of wage maintenance for a limited period of time need to be considered with this application.
I am aware that this application is being submitted after the initial closing dates. This issue was also discussed at conciliation and it was my understanding that my application will be processed in the normal way along with the other applications.”
The Court notes that the applicant refers to “my understanding”. She does not refer to a specific understanding or agreement with Mr Boston.
Mr Boston replied on 21 July 1995 as follows:
“Thank you for your letter of application dated 17th July 1995 in relation to a Senior Nursing Position as advertised.
Your application, unfortunately, arrived too long after the closing date for these positions to be considered without prejudicing the position of the other applicants.
Following the conference before Mr Martin Boland on Monday 3rd July 1995, I had expected to receive your application as a matter of some urgency. Having not received any notice from you by Tuesday 11th July 1995, I again contacted Mr Boland for advice, as other applicants were questioning the outcome of their applications. Following that discussion it was determined to proceed with interviews and appointments. Appropriate arrangements were made with the other applicants.
A number of appointments and offers have now been made and I see no acceptable reason to overturn these.
As indicated at the conciliation conference in early July, the responsibility of seeking one of these positions was left with you. Without any communication for over two weeks, I could only assume you have decided not to proceed.”
FINAL SUBMISSIONS BY THE UNION ON BEHALF OF THE APPLICANT
In her final address Counsel for the union and the applicant did not submit that the conflict over self rostering or the “personality issue” with the Director of Nursing was the reason for termination. Indeed, she conceded that the General Manager had acted in good faith in initiating the nursing management restructure and the program of cost savings and that he had “taken his line” from the Managing Director of the respondent company. However, her submission was that:
there was no valid reason for the employer to terminate the applicant’s employment, that is no valid reason connected with the employee’s capacity or conduct or based on the operational requirements of the respondent’s undertaking, establishment or service
the low occupancy rates at the hospital were not a “sound, defensible or well founded reason” for terminating the applicant
there was no “sound, defensible or well founded reason” for selecting the applicant’s position of Unit Manager Nursing Services for abolition in response to the low occupancy of the hospital
while there was evidence the respondent considered other options for cost savings there was no “clear evidence” that the respondent considered other options for restructure of the nursing management structure
even if the termination is held to be for valid reason under S170DE(1) the termination was harsh, unjust and unreasonable pursuant to S170DE(2)
In asserting that the termination was harsh, unjust and unreasonable Counsel placed considerable emphasis on articles 19 to 21 of the International Labour Organisation Recommendation concerning Termination of Employment at the Initiative of the Employer (Recommendation 166).
S170CA(1) of Division 3 of Part VIA of the Act states:
The object of this Division is to give effect, or give further effect to:
(a) the Termination of Employment Convention; and
(b)the Termination of Employment Recommendation, 1982, which the General Conference of the International Labour Organisation adopted on 22 June 1982 and is also known as Recommendation No 166, and a copy of the English text of which is set out in Schedule 11.
Articles 19 to 21 of Recommendation 166 are as follows:
19(1)All parties concerned should seek to avert or minimise as far as possible termination of employment for reasons of an economic, technological, structural or similar nature, without prejudice to the efficient operation of the undertaking, establishment or service, and to mitigate the adverse effects of any termination of employment for these reasons on the worker or workers concerned.
19(2)Where appropriate, the competent authority should assist the parties in seeking solutions to the problems raised by the terminations contemplated.
20(1)When the employer contemplates the introduction of major changes in production, programme, organisation, structure or technology that are likely to entail terminations, the employer should consult the workers’ representatives concerned as early as possible on, inter alia, the introduction of such changes, the effects they are likely to have and the measures for averting or mitigating the adverse effects of such changes.
20(2)To enable the workers’ representatives concerned to participate effectively in the consultations referred to in subparagraph (1) of this Paragraph, the employer should supply them in good time with all relevant information on the major changes contemplated and the effects they are likely to have.
20(3)For the purposes of this Paragraph the term “the workers’ representatives concerned” means the workers’ representatives recognised as such by national law or practice, in conformity with the Workers’ Representatives Convention, 1971.
The measures which should be considered with a view to averting or minimising terminations of employment for reasons of an economic, technological, structural or similar nature might include, inter alia, restriction of hiring, spreading the workforce reduction over a certain period of time to permit natural reduction of the workforce, internal transfers, training and retraining, voluntary early retirement with appropriate income protection, restriction of overtime and reduction of normal hours of work.
Counsel for the union and the applicant submitted that:
there was no consultation with the respondent or the union prior to the decision to make the applicant’s position redundant and that there was no consultation by the General Manager with any other person in management at the hospital other than the Director of Nursing
there was no notice of “what was to happen” until the applicant was told of the decision
the applicant was not told of any particular criteria on which her position was selected for redundancy
the applicant was not contacted or interviewed in respect of the two Associate Charge Nurse positions advertised on 9 and 26 June and the arrangement at the Conciliation Conference on 3 July whereby “it was open” to the applicant to apply for those two positions and the Clinical Nurse Specialist position and “if successful confer regarding the terms and conditions of her employment” did not remove from the respondent the obligation to contact the applicant and offer her an interview for the two Associate Charge Nurse positions.
FINDINGS
Valid Reason
The Court finds that the termination of the employment of the applicant by the respondent was for a valid reason connected with the operational requirements of the respondent’s undertaking as a major operator of private hospitals and specifically as the operator of the Wangaratta Private Hospital.
There was considerable evidence tendered which demonstrated that the Wangaratta Private Hospital was operating with an occupancy well below budget estimates, and for a variety of reasons, most associated with insufficient referral of patients by medical practitioners. This evidence was not contested. Indeed, Counsel for the union and the applicant conceded that the low occupancy justified restructure but contested the selection of the applicant’s position for redundancy. While Counsel conceded that other options were considered, it was suggested that there was “no clear evidence” of consideration of other options for restructure of nursing management other than abolition of the applicant’s position.
Firstly, the Court does not accept this assertion. The General Manager and the Director of Nursing both gave evidence that the former asked the latter to consider other options and such options are unlikely to have excluded other nursing management options, if such existed.
Secondly, there really were no other broad nursing management options. At that stage only the Director of Nursing and the applicant were involved to any significant degree in nursing management. Mrs Duncombe as the Unit Manager (Theatre) had a specialised nursing management role linked to a substantial clinical role.
Thirdly, if there had been other broader, nursing management options which the respondent failed to consider, the Court would not, on that account, have concluded that the selection of the applicant’s position was an invalid, unsound, indefensible, unfounded reason for termination.
The provisions of Division 3 of Part VIA of the Act have often been considered in the context of a position or positions abolished on the grounds of operational requirements and the following statement by Ryan J in Jones v Department of Energy and Minerals (1995) 60 I.R. 304 at 308 is often cited:
“It is within the employer’s prerogative to rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. It is inappropriate now to attempt an exhaustive description of the methods by which a reorganisation of that kind may be achieved. One illustration of it occurs when the duties of a single, full-time, employee are redistributed to several part-time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant in the sense in which the word was used in the Adelaide Milk Co-operative case.” (that is R V Industrial Commission of South Australia; Ex parte Adelaide Milk Co-operative Ltd (1977) 44 SAIR 1202 at 1205).
The applicant’s position became redundant in the sense in which the word was used by Ryan J in Jones and Bray CJ in Adelaide Milk. The reason for termination was valid in terms of operational requirements. It was sound, defensible and well-founded as described by Northrop J in Selvachandran v Peteron Plastics Pty Ltd, 7 July 1995 (unreported).
The reason was genuine as described by Wilcox CJ in Kenefick v Australian Submarine Corporation Pty Ltd (1995) 131 ALR 197 at 208 in that there was:
“a causal relationship between the reason and the termination and...the termination (was) a logical response to the...employer’s operational requirements”
In Kenefick at 208 the Chief Justice said:
“Of course, there is often more than one logical way of dealing with a problem. While the subsection requires the employer to establish that the termination was a logical way of dealing with the problem of employee capacity or conduct, or operational requirements, that gave rise to it, it does not require proof that this was the only logical course. The subsection was designed to inhibit capricious terminations, not to put the court in the employer’s managerial chair.”
In this case I doubt that there was another logical course but that is of no import. The restructure was a logical way of dealing with the respondent’s problem of low occupancy. The restructure is not likely of itself to overcome or counteract the viability problem associated with low occupancy but it is a logical step in reducing excessive resources devoted to nursing management and to that extent no doubt assists viability.
Fairness
If the selection of the applicant for redundancy was unfair that is a matter to be considered under S170DE(2).
The Court finds no unfairness in the respondent selecting Mrs Duncombe to occupy the one remaining restructured position of Unit Manager. Both Mrs Duncombe and the applicant had broad and varied experience in nursing and management. Both had their strengths. The respondent is entitled to conclude that the former was the most suitable person for the restructured position of Unit Manager.
In respect of Articles 19 to 21 of Recommendation 166 the Court does not accept that those provisions are entirely applicable in this case or that they must be rigidly applied to the extent that they are applicable.
Article 19 enjoins parties to seek to avert or minimise as far as possible termination of employment for economic, technological or structural reasons but this is to be in the context of avoiding prejudice to the efficient operation of the undertaking. In this case the efficient operation for the Wangaratta Private Hospital was undeniably prejudiced by the excessive resources devoted to nursing management in a period of low occupancy.
Article 19 also enjoins all parties to mitigate the adverse effects of termination. The respondent sought to do that by offering the applicant a Clinical Nurse Specialist position and by offering the applicant time and support in seeking another position. The applicant, by declining the Clinical Nurse Specialist position, and by bringing the foreshadowed termination to a head on 16 July, did not mitigate the adverse effects.
Article 20 appears to be designed for major changes likely to entail a number of terminations and refers to consultation with workers’ representatives in those circumstances. It is not, in my view, applicable to the circumstances in this case. However, it is noted that the union was consulted between 7 and 17 May albeit after the decision to restructure was relayed to the applicant. In that respect I shall later refer to the relevant award which requires consultation at soon as practicable after the decision but (in my view, for eminently practical reasons) does not require consultation before decisions to restructure are made on the basis of operational requirements.
Article 21 includes certain measures designed to minimise termination of employment in circumstances of redundancy. There are measures which are not identified in Article 21. In this case the respondent offered time and an alternative position.
It is fair to say that the alternative position of Clinical Nurse Specialist was in no way comparable with the position for which the applicant had given up her position of Assistant Director of Nursing at the Mitcham Private Hospital but there was scope for negotiation on terms and conditions. Such negotiations were referred to in the union correspondence (Exhibit R13), in the Industrial Relations Commission Statement of 5 July (Exhibit R17) and in the applicant’s late application for the three senior nursing positions on 17 July (Exhibit R18).
In this case Clause 37 of the Nurses (Victorian Health Services) Award 1992 (Exhibit A1) is of more significance than Recommendation No 166. The letter of appointment (Exhibit R10) referred to this Award. The contract of employment (Exhibit R11) referred to this Award.
Clause 37(a) of the Award reads as follows:
Where an employer has made a definite decision that the employer no longer wishes the job the employee has been doing done by anyone and this is not due to the ordinary and customary turnover of labour and that decision may lead to termination of employment, the employer shall hold discussions with the employees directly affected and with their union or unions.
The discussions shall take place as soon as is practicable after the employer has made a definite decision which will invoke the provision of paragraph 37(a)(i) and shall cover, inter alia, any reasons for the proposed terminations, measures to avoid or minimise the terminations and measures to mitigate any adverse effects of any terminations on the employees concerned.
For the purposes of the discussion the employer shall, as soon as practicable, provide in writing to the employees concerned and their union or unions, all relevant information about the proposed terminations including the reasons for the proposed terminations, the number and categories of employees likely to be affected, and the number of workers normally employed and the period over which the terminations are likely to be carried out. Provided that any employer shall not be required to disclose confidential information the disclosure of which would be inimical to the employer’s interests.
Discussions were held with the union and those discussions began on 7 May, the respondent having made a definite decision on redundancy on or about 5 May. The respondent did provide the applicant the reason for the proposed termination in writing, albeit only on 17 May, but the reasons were discussed with the applicant as early as 5 May and with the union from 7 May.
The applicant was provided with the formal notice of two weeks provided in the award and effectively with four weeks notice. S170DB only requires one week. The applicant was provided with a severance payment of four weeks in circumstances in which the award provided for no payment for employees with less than 12 months service.
The circumstances in which the applicant found herself were unpleasant and unfortunate. There is no doubt that she and her family suffered in economic and emotional terms but I do not find that the act of the respondent as employer in terminating the employment was harsh, unjust or unreasonable within the terms of S170DE(2). The applicant was an experienced nurse in the private hospital environment. She well understood that environment and the circumstances which govern private hospital viability. She conceded in evidence that while she hoped and expected to enjoy a long term appointment at Wangaratta Private Hospital no commitment of that nature was made to her and she was familiar with the Nurses Award and accepted employment under it and signed a contract of employment subject to the Award. Unfortunately, there are real risks and economic imperatives associated with the conduct of private for profit hospitals and certain risks associated with employment in them. The applicant must be taken to have understood and accepted those risks.
I will conclude by referring to a recent case in this Court decided on 14 December 1995. It is the case of Association of Professional Engineers, Scientists and Managers Australia on Behalf of Philip Edward Cross v Deniliquin Council (unreported) 14 December 1995. In Cross Moore J was not satisfied that there was a valid reason based on operational requirements for termination and ordered steps to be taken to ensure reinstatement. There are a number of similarities between this case and Cross including:
an employee with professional qualifications relocating with family to pursue a career appointment
abolition of position justified by restructure
application filed by a union on behalf of a redundant employee
a reluctant application after the termination - in Cross at the suggestion of a Judicial Registrar and in this case at the suggestion of or certainly as a result of a statement recorded by a Deputy Industrial Registrar
reference to Recommendation No 166 and especially Articles 19 and 21
In Cross at 38 Moore J considered Recommendation No 166 and circumstances bearing some similarity to this case. He said:
“Thus a feature of the Recommendation is that an employer should avoid terminating an employee’s employment as a result of a restructuring if it is possible to place the employee in another position with the employer’s organisation. It cannot be assumed that S170DE(1) operates to treat a termination as having been for a valid reason if the employee occupying a position which is abolished as the result of a restructuring might be placed in another position created by that restructuring. It is inappropriate to suggest some comprehensive formulation of how S170DE(1) might operate in circumstances such as the present. In this case, however, a position was due to be created for which Mr Cross was not manifestly unsuited. That was to occur shortly after the abolition of Mr Cross’s position and there is nothing in the evidence to suggest that the time taken thereafter to create and fill the position viz March/April 1994 to October 1994, could not have been shorter had Mr Cross remained an employee of the Council. It may be accepted that had Mr Cross’s employment not been terminated in April 1994, then upon the creation and filling of the position of Manager Engineering, the employment of at least Mr Cross or the other engineer then employed by Council may have been terminated consistent with the provisions of S170DE(1). However it is not a termination in those circumstances that I am considering.”
A fundamental difference between Cross and this case is that the applicant here declined the one position clearly available at the time of termination and her later application for that position and two other positions was received after the respondent had committed itself to other appointments.
Furthermore, it cannot be said that any of the three positions were in any way equivalent to her redundant management position.
Finally, the most important distinction between the circumstances in Cross and this case is that the restructure that led to the abolition of the position occupied by Mr Cross was different in scope and nature and was a restructure intended to occur progressively with the abolition of the position occupied by Mr Cross and other positions being the first step in what was intended to be a more extensive review of administrative structure. In the case of Mrs Kent it was a restructure which led to a single redundancy, the abolition of one of two Unit Manager positions. It is possible to say in the case of Mrs Kent as it was in the case of Mr Jones (Jones v Department of Energy and Minerals) that after the reorganisation there were not any functions or duties to be performed by the applicant.
The application is dismissed.
MINUTES OF ORDERS
THE COURT ORDERS:
That the application be 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 23 pages are a true copy of the reasons for judgment of Judicial Registrar Ryan.
Associate:
Dated: 19 February 1996
Solicitors for the Applicant: Ryan Carlisle
Counsel for the Applicant: Ms Jane Patrick
Solicitors for the Respondent: Abbott Stillman and Wilson
Counsel for the Respondent: Mr A Robinson
Date of hearing: 15, 16 and 17 November 1995
Date of judgment: 19 February 1996
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