Karen Lorraine Pritchard v Standard Charter Bank of Australia Ltd

[1996] IRCA 11

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - PHYSICAL DISABILITY - VALID REASON - UNJUST - There is no rigid rule that a failure to give a warning that an employee’s job is in jeopardy is “unjust”, rather, all the circumstances must be taken into account.

Industrial Relations Act 1988 ss 170DE, 170DF, 170EA, 170EDA,

Byrne and Frew v. Australian Airlines Limited, 131 ALR 422

KAREN LORRAINE PRITCHARD -v- STANDARD CHARTERED BANK OF AUSTRALIA LTD

No. NI 3089 of 1995

COURT:       PATCH JR
PLACE:       SYDNEY
DATE:          2 FEBRUARY 1996

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY

No. 3089 of 1995

BETWEEN:

Karen Lorraine PRITCHARD
Applicant

AND:

STANDARD CHARTERED
 BANK OF AUSTRALIA LTD
Respondent

REASONS FOR JUDGMENT

2 February 1996  PATCH JR

This is an application under section 170EA of the Industrial Relations Act 1988 ("the Act").

BACKGROUND FACTS

The applicant was first employed by the respondent as an executive secretary on 19 September 1990.  At the time of the termination of her employment her annual gross earnings were $32,705.00 (exhibit 6).

It is agreed that the applicant was told on 18 July 1995 that her employment was to be terminated, by Mr Chris Harrison, the Chief Executive Officer of the respondent. 

The applicant was given one month’s notice and her last day at work for the respondent was 18 August 1995. 

In addition to one week’s actual notice the applicant was given a further five weeks pay in lieu of notice which ran from 18 August 1995.

For the purpose of calculating the payments to be made to the applicant upon the termination of her employment, the respondent deemed the last day of her employment to be 17 September 1995.  As the applicant had commenced employment with the respondent on 17 September 1990, this resulted in the applicant being deemed to be eligible for long service leave, as her period of service was deemed to be five years.

The applicant was paid all accrued annual leave due to her upon the termination of her employment.

The applicant worked in the Corporate Banking Group of the respondent.  Up to a time shortly prior to the termination of the applicant's employment, there were three "teams" in the Corporate Banking Group, each headed by a Senior Account Relationship Manager.  Each of those teams had a permanent secretary.  According to the respondent's organisational chart (exhibit 11) the applicant was responsible to Mr John Love, who headed one of the teams.  It is common ground that exhibit 11 sets out the chain of responsibility, and did not represent a strict delineation of who actually did work for whom.  For example, it is common ground that all of the secretaries in the Corporate Banking Group, from time to time, did work for the other Senior Account Relationship Managers, to whom they were not primarily responsible in the "chain of command" set out in exhibit 11.  There was some dispute between the parties as to the degree to which the applicant did work for Mr Love, as opposed to doing work for the other Senior Account Relationship Managers within the Corporate Banking Group, Mr Michael Dowling and Mr Glen Smith.  The other secretaries in the Corporate Banking Group would also, on an ad hoc basis, do work, as necessary, for Senior Account Relationship Managers to whom they were not directly responsible in that "chain of command". 

The applicant suffers from an hereditary disease known as Stargardzt’s syndrome or Stargardzt’s disease.  This is an eye disorder, of a degenerative nature.  The applicant first saw a specialist about this on 1 March 1991, having experienced blurred vision in the months leading up to that appointment.  It is common ground that the applicant was not aware that she had any eye problems when she first commenced employment with the respondent.  The effect of the disease on the applicant increased fairly rapidly over time, and her vision now is severely affected.  She has been, and still is, able to work as a secretary, with the assistance of special computer programs which enlarge the images on the computer screen.

The applicant, therefore, suffers from a "physical disability" within the meaning of section 170DF(1)(f) of the Act.

ISSUES

1. Did the respondent terminate the applicant's employment for reason of, or for reasons including, her physical disability?

1. Was there a valid reason for the termination of the applicant's employment?

1. If there was, prima facie, a valid reason for the termination of the applicant's employment, was that termination "harsh" or "unjust" or "unreasonable"?

1. If the termination of the applicant's employment was unlawful, what is the remedy?

Did the respondent terminate the applicant's employment for reason of, or for reasons including, her physical disability?

Section 170DF(1)(f) of the Act prohibits an employer from terminating an employee’s employment for reason of that employee's physical disability, or for reasons including the employee’s physical disability unless, by virtue of section 170DF(2), that physical disability has resulted in the employee being unable to perform an inherent requirement of the employee’s particular position.

Subsection 170DF(2) has no relevance in the particular circumstances of this case, as the respondent conceded that the applicant was well able to do her job.

The applicant, through her legal representatives, asserted that the applicant’s physical disability must have been a factor in the termination of her employment (but not necessarily the sole reason) because of the following circumstances:

(a)the applicant was the longest serving of the three secretaries in the Corporate Banking Group, yet it was her employment which was terminated.

(b)A casual temporary secretary, from an employment agency, was engaged to perform the job of one of the other permanent secretaries in the Corporate Banking Group, who is on maternity leave, until that secretary returns to work.  In particular, the applicant was not given the opportunity, at least in the short term until that secretary’s return, to do that job.

(c)The secretaries in the Corporate Banking Group whose employment was not terminated do not suffer from a physical disability.

By virtue of section 170EDA(2) of the Act the termination of the applicant’s employment is to be taken to have contravened section 170DF(1) unless the respondent proves that the applicant’s employment was not terminated by reason of her physical disability, or for reasons which included her physical disability.

Mr Harrison, the Chief Executive Officer of the respondent, denied in his evidence that the applicant’s employment was terminated by reason of her physical disability, or for anything to do with her physical disability.  He asserted that the applicant had always performed her job satisfactorily, and that her physical disability (although, of course, known to the respondent) had nothing whatsoever to do with the decision to terminate her employment.

Mr Harrison gave evidence that the reason why the applicant was chosen was because of what might be called the “domino effect”.  That is to say, her job was to go, because her immediate superior’s position was to be made redundant.  It was, therefore, Mr Harrison said, unfair to dismiss another secretary in the Corporate Banking Group if the applicant’s job was the one which had gone.

I accept Mr Harrison’s denial that the physical disability of the applicant was a factor in the decision to terminate her employment..

It follows that the applicant’s employment was not terminated in breach of section 170DF of the Act.

Was there a valid reason for the termination of the applicant's employment?

By virtue of section 170EDA(1) the onus is on the employer to prove that there was a valid reason, or valid reasons, connected with the employee’s capacity or conduct or based on the operational requirements of the undertaking establishment or service of the respondent, for the termination of the applicant’s employment.

The respondent asserts that the termination of the applicant’s employment was due to its operational requirements.  That is, that the respondent was undergoing a genuine “downsizing”, as a result of which a significant number of employees were made redundant.

It is clear that the respondent was undergoing such a “downsizing”, or, to put it another way, the operations of the respondent were restructured so that a significant number of employees, both at managerial and lower levels, were made redundant.

I accept that the respondent had made a genuine decision, for commercial reasons, to reduce the size of its workforce.

I also accept that Mr Harrison, in deciding that it was the applicant’s employment which was to be terminated, rather than that of one of the other two secretaries in the Corporate Banking Group, adopted one of a number of reasonable approaches.

The principal criterion by which the applicant was selected for redundancy was that the position of the person for whom she was working had been made redundant.  The number of secretaries in the Corporate Banking Group simply had to be reduced in accordance with the restructuring upon which the respondent had decided to embark.

It is not for the Court to make the decision as to whose employment, in circumstances like these, should be terminated.  Even if it were the case that there were other, reasonable, approaches which could have been adopted by which the applicant’s employment with the respondent could have been preserved, so long as the decision by which the applicant’s employment was terminated was based on reasonable, and fair, criteria, the termination of the applicant’s employment was for a valid reason.

Mr Harrison also gave evidence that, in deciding to terminate the applicant’s employment, he took into account the fact that one of the other two secretaries was on maternity leave, and that it, in his opinion, would have been unfair (and possibly illegal) to terminate her employment in such circumstances.  Even putting aside his fears as to the possible illegality, I accept that it was reasonable and fair for him to approach the matter in that way.

In my opinion, therefore, the decision to terminate the applicant’s employment was based on reasonable criteria, and was for a valid reason.

If there was, prima facie, a valid reason for the termination of the applicant's employment, was that termination "harsh" or "unjust" or "unreasonable"?

Section 170 DE(2) of the Act, by virtue of recent amendments which took effect on 15 January 1996, now reads:

"A reason is not valid if, having regard to all of the circumstances of the case, including the employee's capacity and conduct and those operational requirements, the termination is harsh, unjust or unreasonable.  This subsection does not limit the cases where a reason may be taken not to be valid."

Counsel for the applicant argued that the termination of her employment was “unjust” within the meaning of section 170DE(2) because she was given no warning that her job was in jeopardy. He argued that an opportunity should be given to an employee to make submissions to the employer regarding alternatives to dismissal, and that to deny an employee such an opportunity is “unjust” within the meaning of the Act.

Although the applicant was aware that the respondent was undergoing a restructuring, she was never told that her own job was in jeopardy. 

Indeed, she had discussed her position with Mr Dowling a few weeks before she was told that her employment was being terminated, and he did not suggest to her that her employment was in jeopardy. 

When Mr Harrison informed her, on 18 July 1995, that her employment was to be terminated, it came as a surprise to her.  She was, as her Counsel said, presented with a “fait accompli”  without any real opportunity to influence the decision. 

On one point Mr Harrison and Mr Dowling gave conflicting evidence.  Mr Dowling gave evidence that  Mr Harrison had told him, in early July, that the applicant’s employment was to be terminated.  If that were the case, it would follow that the decision to terminate the applicant’s employment, had been made by Mr Harrison (whose decision it was), prior to that discussion.

Mr Harrison, on the other hand, gave evidence that he had not made the decision by that time. 

On balance, I accept Mr Dowling’s version of the evidence.  This is not to say that Mr Harrison has been untruthful, it simply means that Mr Dowling, being able to recall a specific conversation with Mr Harrison, is more likely to have the accurate memory on that particular aspect of the matter.

Not only was the applicant told that her employment was to be terminated without warning, but that the decision to terminate her employment had been made without consultation with her on that question - consultation which, given the time involved, could have occurred.

This case raises, therefore, in a direct way, the question as to whether a failure to give an employee a warning that her employment is to be terminated for reason of redundancy must, in all such cases, be held to be “unjust” within the meaning of section 170DE(2) of the Act.

In my opinion that cannot be the case.  Speaking hypothetically, there must be redundancy situations which come to the notice of an employer without warning, which require immediate and prompt action to safeguard the financial interest of the employer, and in which the immediate termination of an employee’s employment is imperative.  In such an extreme situation, the termination of that employee’s employment would not be “unjust”.

On the other hand, it is necessary , in the light of the recent amendments to the Act, to take into account all of the circumstances of the termination of the employee’s employment in order to determine whether or not that termination of employment is “unjust” within the meaning of section 170DE(2) of the Act. It may well be the case that that particular amendment to the Act merely put into “black and white” statutory law what was in fact already the situation (see Byrne and Frew v. Australian Airlines Limited, 131 ALR 422, per McHugh and Gummow JJ. at 463.31.

In my opinion, it would be incorrect to adopt a rigid rule, as submitted by counsel for the applicant.

There were a number of significant circumstances, which, in my opinion, resulted in the termination of the applicant’s employment not being “unjust” within the meaning of section 170DE(2) of the Act. They are :

1.        Not only was the applicant given one month’s actual notice of the termination of her employment (she worked for a further month after 18 July 1995), she was given a further five weeks pay which was said to be pay in lieu of notice.

2.        The applicant was given seventeen weeks severance pay, as a redundancy payment, which was well in excess of the requirements under the relevant Award, which required a redundancy package of two weeks notice and eight weeks severance pay. 

3.        The applicant was deemed to have worked up until 17 September 1995,  (even though her last day at work was 18 August 1995).  The effect of this, and the intention, was so that the applicant’s period of service would be five years, so that she could qualify for long service leave.  Accordingly, she was paid long service leave, even though, technically, she was not entitled to it.  This was an act of generosity on the part of her employer (as well as good and sensible industrial
relations in the circumstances).

4.        The applicant was not dismissed for anything to do with her conduct, performance, or capacity.  She was dismissed for the valid reasons set out above. There were, therefore, no questions surrounding her conduct, performance, or capacity to which she could reasonably be expected to respond. 

5.        The only alternative to the termination of her employment put forward by Counsel for the applicant would have been for her, on a temporary basis, to take over the job of the secretary who was on maternity leave.  This would have been, in many ways, an unsatisfactory position for the applicant.  She would have known that her job was to come to an end when that other secretary returned to work.  She would have had no security of employment.

6.        In my opinion, even if the applicant had been given the opportunity to have her say about the intention to terminate her employment, as the only alternative which she could have put forward would be to take, on a temporary basis, the job of the secretary on maternity leave, and as that was an alternative which the Bank reasonably decided not to adopt, the applicant’s employment would have been terminated anyway. 

It would have been unsatisfactory from the Bank’s point of view.  Firstly, the Bank would have regarded it as unfair to dismiss her from one position, in effect, and re-employ her in what was stated to be a strictly temporary position.  Secondly, as a matter of sensible management, the Bank regarded it as undesirable to change the applicant’s role from a permanent position to a temporary position.

Despite the failure of the respondent to give the applicant a say in what was to happen to net, on balance, in my opinion, the termination of the applicant’s employment was not “unjust” within the meaning of section 170DE(2) of the Act.

Counsel for the respondent also argued that the termination of the applicant’s employment was “unreasonable” because the applicant was not given the job of the secretary who was on maternity leave, at least until that secretary returned to work.

In my opinion, for the reasons set out above, it was not unreasonable for the respondent to decide not to do that. 

Conclusion

It follows from the above reasoning that the termination of the applicant’s employment was not unlawful.

The application is therefore dismissed.

I certify that this and the preceding twelve (12) pages are a true copy of the reasons for judgement of Judicial Registrar Patch.

Associate:      C Sternberg

Dated :          2 February 1996      

Solicitors for the Applicant :         Mr C McArdle, Phillips Fox

Counsel for the Respondent :        Mr P Kite

Solicitor for the Respondent:        Mr M Bastik, Freehills Hollingdale & Page

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES REGISTRY

No. 3089 of 1995

BETWEEN:

Karen Lorraine PRITCHARD
Applicant

AND:

STANDARD CHARTERED
 BANK OF AUSTRALIA LTD
Respondent

BEFORE:PATCH JR

PLACE:SYDNEY

DATE:2 FEBRUARY

MINUTES OF ORDER

THE COURT ORDERS :

1. That the application be dismissed.

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