Keith Lary v PPG Industries Australia Pty Limited

[2015] FWC 5041

[2015] FWC 5041

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Keith Lary
v
PPG Industries Australia Pty Limited
(U2015/492)

COMMISSIONER LEWIN MELBOURNE, 23 JULY 2015

Application for unfair dismissal remedy – operator failure – valid reason – notice – opportunity to respond – previous performance failure – no procedural unfairness – dismissal not harsh, unjust or unreasonable.

Introduction

[1] This decision concerns an application for an unfair dismissal remedy made by Mr Keith Lary under section 394 of the Fair Work Act 2009 (Cth) (the Act).

[2] Mr Lary was dismissed from his employment with PPG Industries Australia Pty Ltd (PPG) on 16 January 2015. PPG is engaged in the production of chemical compounds. Mr Lary was employed by PPG as a process operator and had been employed by PPG and its predecessor, Dulux, since 1994.

[3] There is no dispute that Mr Lary was a person protected from unfair dismissal at the date when the employment was terminated.

[4] The reason for the termination of Mr Lary’s employment arose from an incident in the production of a resin compound on the production line Mr Lary was operating, on 5 January 2015, which resulted in a catastrophic failure of a particular batch of resin with significant consequential risks and damage to a reactor plant.

[5] The resin production facility of PPG has inherent safety hazards. The process of producing resin involves volatile chemical reactions with potential for fire or explosion.

[6] On 5 and 6 January 2015, PPG was faced with an “out of control” reaction in a reactor plant, which it ultimately concluded was caused by negligent operating procedures by Mr Lary.

[7] Mr Lary disclaimed responsibility for the cause of the out of control reaction.

[8] PPG investigated the reaction and concluded that two actions of Mr Lary were the root causes of the reaction. The first was Mr Lary adding an overweight quantity of a chemical component to the reactor. The second was a failure to respond appropriately to and resetting an “out of tolerance” alarm, which meant that the reactor continued to contain the “out of control” reaction.

[9] The incident lead to the management of PPG commencing disciplinary action against Mr Lary. A meeting took place on 15 January 2015. Notes of that meeting were taken. Information of the investigation of the incident was provided to Mr Lary.

[10] Mr Lary either denied or lacked recollection of adding an overweight amount of the relevant chemical ingredient and resetting the out of tolerance alarm.

[11] A second meeting took place on 16 January 2015, at which PPG ultimately advised Mr Lary it had concluded he was negligent in adding too much of a chemical component to the batch which comprised the relevant incident and had acknowledged the “out of tolerance” alarm without responding and allowing the out of specification batch to continue the reaction. Other matters were discussed including Mr Lary’s employment history, previous incidents, including an expired “Final Written Warning” for failing to safely earth material in 2013 and counselling for adding wrong materials to a resin batch in 2014.

[12] Mr Lary was dismissed at the conclusion of this process. A letter of termination was issued which cited “gross negligence and serious misconduct.”  1 It stated that “the circumstances of the matter have been discussed with you in detail.” 2

[13] Mr Lary was paid five weeks pay in lieu of notice and all outstanding entitlements.

[14] The matter was heard at Melbourne on 20 and 21 May 2015.

[15] The following persons filed witness statements and gave evidence:

• Mr Keith Lary (Applicant)



• Mr Cameron King (Production Worker)



• Mr Glenn Michael (Team Leader – Raw Material Store)



• Mr Gary Bonici (Team Leader – Resin Plant)



• Mr Douglas Melville (Human Resources Manager)



• Mr Thomas Buck (Resin Production Worker)



• Mr Robert Stephen Corera (Quality Manager)



• Ms Gabriella Donaldson (Manufacturing Manager)

Statutory provisions

[16] When considering Mr Lary’s application, the Fair Work Commission (the Commission) is subject to the following statutory provisions:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

[17] I will address the matters to be taken into account in order.

Valid reason

[18] On the evidence before me, I consider that the combination of several considerations leads to a conclusion that there was a valid reason for the termination of Mr Lary’s employment. They are: two instances of negligent operation of a highly valuable chemical reactor plant, which posed serious risks to the plant, which caused significant damage to the plant and an emergency situation; avoidance of responsibility and an attempt to lay the blame for the negligent failure to respond to the out of tolerance alarm and the consequential damage to the reactor upon another employee.

[19] The evidence for PPG establishes that the batch weight of “the out of control” reaction was significantly out of specification. In my view, the evidence establishes that there is no doubt that Mr Lary loaded the reactor with the chemical components of the out of specification batch. The amounts of the various components to be loaded are well known and specified as part of standard operating procedures. Only lack of due and conscientious attention by the operator can be accepted as the reason for the batch having been so out of weight specification as revealed by the evidence.

[20] Mr Lary would have me accept that when the reactor operational monitoring system detected the reaction being out of specification and in need of remedial attention, another employee, Mr Buck, acknowledged the alarm and did not inform him.

[21] There is conflict in the evidence of Mr Lary and Mr Buck. I prefer the evidence of Mr Buck. Mr Buck categorically denies that he acknowledged and reset the alarm. Mr Buck was responsible for another production line at the relevant time. That he would have unilaterally taken responsibility for Mr Lary’s line and acted without informing him is inherently improbable. I accept that during the investigation of the relevant incident, Mr Lary said to PPG that he had “no recollection” of acknowledging and resetting the alarm. The combination of Mr Buck’s categorical direct testimony, the inherent improbability of Mr Buck assuming responsibility for Mr Lary’s production line and failing to inform him and Mr Lary’s obvious uncertainty (by lack of recollection shortly after the incident), causes me to prefer Mr Buck’s evidence.

[22] Accordingly, I find that Mr Lary loaded an overweight chemical component to the reactor, acknowledged an alarm indicating that the chemical reactor was out of specification and by failing to take action when the chemical reactions in the reactor was out of control, caused an emergency response and significant damage to the reactor with attendant safety hazards.

[23] On the evidence before me, I find that during the disciplinary process following the incident, Mr Lary sought to avoid responsibility for the incident, in particular seeking to create doubt about whether the overweight loading of the reactor was his responsibility on the basis of a lack of recollection and treating any error as regrettable, but not critical and diverting responsibility for ignoring the out of tolerance alarm toward Mr Buck.

[24] The incident was a major failure of the performance of the responsibilities of a production worker in the resin plant. The nature of the failure was negligent lack of attention in two critical instances to the safety of the chemical reaction.

[25] Mr Lary should have been much more diligent in the relevant circumstances. Not the least because he had been subject to two previous actions of a disciplinary nature concerning the performance of his duties. These two events were likewise failures of adequate attention to the requirements of his role, with safety implications. The potential consequences of Mr Lary’s negligence on 5 and 6 January 2015 for PPG and other employees were significant and could possibly have resulted in a reactor fire or explosion but for the intervention of PPG’s more senior personnel who brought the plant under control.

[26] I find there was a valid reason for the termination of Mr Lary’s employment accordingly.

Notice

[27] On the evidence before me, I am satisfied that on the 15^th and 16^th of January 2015, Mr Lary was well aware of PPG’s investigation, its findings and their view that Mr Lary had added an overweight component and that Mr Buck had not been the person responsible for resetting the “out of tolerance” alarm and that Mr Lary had done so. This was the reason for the termination of Mr Lary’s employment, he was aware that the matter was being taken seriously accordingly.

Opportunity to respond

[28] I find that at the two meetings mentioned above, Mr Lary had opportunities to respond to these matters.

Support person

[29] There was no refusal of a support person on the evidence before me.

Performance and Warning

[30] In my view, the proper characterisation of Mr Lary’s performance failure is of the responsible performance of the duties of a production worker in the resin plant in a grossly negligent manner. I will judge the matter accordingly.

[31] Mr Lary had been once warned about performance failure, or unsatisfactory performance, and once counselled. There is some tension, if not conflict, in the evidence about this.

[32] Mr Lary gave evidence about this as follows in a supplementary witness statement:

“3. On 26 September 2013 I was issued with a “Final Written Warning”. This document is attached to this statement and marked “KL1”.

4. This warning relates to failing to attach an earth lead when pumping liquid from a drum into another vessel.

5. An earth lead must be attached when doing this to prevent a static charge being created. If a static charge is created then there is the potential for a fire to start because at PPG we work with highly flammable materials.

6. This warning was not related to any alleged failure to add certain amounts of material to certain products being produced.

7. The warning said it would be removed from my file after twelve months. This gave me an understanding that the warning would not be relied upon by PPG after twelve months had past.

8. I have not received any other warnings.”  3

[33] This evidence was in response to that of Mr Melville, as follows, which refers to consideration by PPG (Ms Donaldson and Mr Melville) between the meetings of 15 and 16 January 2015:

“13. In the interim, Gaby Donaldson and I reviewed Keith’s history. He had received a Final Written Warning in late September 2013 for failure to bond, which is a serious safety issue on the Clayton Site that can result in termination. He had also been formally counseled [sic] in June 2014 for adding the wrong raw materials to a resin batch. I noted to Gaby at that time that the Final Warning for termination in relation to the failure to bond had expired but demonstrated a pattern of deteriorating attention to mandatory safety and operational procedures.”  4

[34] Ms Donaldson had raised such matters on 15 January and refers to these matters in her witness statement as follows:

“18. I then raised some previous instances of Keith’s failure to follow correct procedures.

19. In September 2013 Keith had been issued with a Final Written Warning for failure to apply safe and proper bonding practices, which are mandatory for the prevention of electrostatic charge in a highly volatile facility. This was a breach of PPG Life Critical Rules which as a matter of policy, may attract termination of employment. On a site where volatile chemicals are in constant use, the avoidance of static charges is fundamental to safety.

20. Bonding and grounding are considered by all employees on the site to be a ‘bread and butter’ procedure and after 20 years of experience on the site, this was a significant failure in his application of critical safety processes. It was acknowledged in the meeting on the 15^th of January that this warning had expired and the incident was raised only to demonstrate a pattern of deteriorating safety behavior.

21. In June 2014, Keith was formally counseled [sic] for adding the incorrect materials to a batch of resin. At the time, the Company made a decision to deal with this matter as a quality issue rather than as the clearly unsafe practice that it was. In hindsight, this may have been a poor decision, but it was made out of respect for his 20 plus years of service and the fact that he was on a Final Warning for a breach of Safety at the time.

22. At the meeting of 15 January Keith, in regard to the incident related to addition of an incorrect material being added to a reaction, volunteered that ‘the bags looked the same so I added them’. From an operator with 20 years of experience and with knowledge of the inherent dangers involved in unpredictable chemical reactions, this was an astounding admission and one that gave me cause for concern in relation to that previous decision.”  5

[35] Overall, the evidence of the witnesses is not fundamentally in conflict if the counselling in 2014 is not characterised as a warning.

[36] I find that there had been a previous warning for unsafe practice (“expired”) and counselling for poor performance comprised of negligent attention to loading batch materials.

[37] It is appropriate to note that the disciplinary procedure prescribed by the relevant agreement, PPG Clayton Site Enterprise Agreement 2014 – 16 (the Agreement),  6 does refer to a first warning having maximum duration of six months,7 but will remain on file as “archived history.” 8

[38] Moreover, PPG considered Mr Lary’s neglect of his duty as ground for summary dismissal. The relevant clause of the Agreement, 38.3.6, is in the following terms:

“Summary Dismissal

When the Company deems summary dismissal appropriate, the Disciplinary Procedure will be waived. An employee may be dismissed without notice for neglect of duty or misconduct. Reasons for summary dismissal include but are not limited to:

• Smoking on site



• Consumption of alcohol on site



• Violence



• Abandonment of employment – (Absence from work of two (2) days or more, without reasonable notification)



• Unauthorised possession of Company property



• Wilful damage



• Falsifying documents



• Misuse of Company property”

Size of employer

[39] I find that PPG is a medium sized employer and that this resulted in a thorough investigation and diligent disciplinary procedures being adopted which effected the termination of Mr Lary’s employment.

Human Resource Management

[40] Mr Melville is a dedicated Human Resource Management specialist. This lead to the procedures adopted to effect the termination of Mr Lary’s employment being professional, thorough, providing notice of the reasons for the termination of Mr Lary’s employment and an opportunity for Mr Lary to respond thereto before the decision to terminate the employment was made.

Other matters

[41] I find the significant risks caused by Mr Lary’s negligence to be relevant.

[42] I find the significant emergency caused by Mr Lary’s negligence to be relevant.

[43] I find the damage to the reactor ($150,000) to be relevant.

[44] I find that the length of Mr Lary’s service to be relevant and the effects on Mr Lary’s personal economic circumstances to be relevant.

Harsh, unjust or unreasonable

[45] The leading authority on what is to be understood by the meaning of the words harsh, unjust or unreasonable for my purposes, is the decision of the High Court of Australia in Byrne v Australian Airlines Ltd:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”  9

[46] In this matter, I have found that the evidence establishes Mr Lary’s culpability for the “out of control” chemical reaction on 5 and 6 January 2015 at PPG’s resin plant. Moreover, Mr Lary has been the subject of disciplinary action in relation to previous incidents of performance failure with concomitant safety risks, there is a sound basis for reaching the conclusion that Mr Lary’s repeated negligence presented a risk to the safe operation of the resin plant.

[47] I consider that Mr Lary was put on notice of the facts concerning the incident which lead to the termination of his employment and offered no reasonable exculpation. Rather, in my view, Mr Lary sought to avoid responsibility for the incident.

[48] I consider that Mr Lary was given fair notice and a reasonable opportunity to respond to the reasons for the termination of his employment.

[49] I see no unreasonableness arising in the facts of this case or the procedures adopted effecting the dismissal.

[50] However, I am troubled by the fact that expired disciplinary action was and is relied upon by PPG in relation to the decision to terminate Mr Lary’s employment. It is self-evident that a policy of expiry is intended to void such disciplinary action having further efficacy or potency in relation to an employees’ continued employment. Although, the relevant provisions of the Agreement are somewhat ambiguous, in respect of the retention of a warning as an “archive history,” which may represent a basis for potential future reference.

[51] I have considered the archival evidence of the warning and counselling in light of the necessity to be fully appraised of Mr Lary’s employment history and the risks posed by his actions in relation to the incident of 5 January 2015 and the need for PPG to discharge its responsibility for safe operation of the plant.

[52] I have approached my consideration such that I should judge the strength of the validity of the reason for the termination of Mr Lary’s employment independently of the expired disciplinary action. I conclude that the performance failures of Mr Lary in relation to the incident of 5 and 6 January 2015 were sufficiently significant, of themselves, notwithstanding Mr Lary’s lengthy service, to satisfy me of the validity of the reason for the termination of Mr Lary’s employment.

[53] Moreover, I have decided that it was not harsh to terminate Mr Lary’s employment in the circumstances, for the reason of that incident alone.

[54] I have found that the risks, hazards and damage caused by Mr Lary’s negligent performance are relevant as is the length of Mr Lary’s service. There is a reflexive element to those considerations. While the length of Mr Lary’s service is to his credit, that lengthy experience should also be the foundation for due diligence and responsible performance of the tasks of a production worker.

[55] I have considered the effect of the dismissal upon Mr Lary’s personal economic circumstances and I accept his evidence that they have been and will be significant. However, the profoundly negligent nature of the relevant performance failures on the part of such an experienced employee are so significant for PPG and the safety of other persons that I am not persuaded that it was harsh to terminate Mr Lary’s employment because the termination of the employment was disproportionate to the gravity of the performance failures, notwithstanding the significant effects on Mr Lary’s personal economic circumstances. In this respect, I also note that Mr Lary was paid five weeks pay in lieu of notice.

[56] For all of these reasons, I am not satisfied that the termination of Mr Lary’s employment was harsh, unjust or unreasonable. An order dismissing the application will issue.

COMMISSIONER

Appearances:

Mr A Sands and Mr S Kempii for the Applicant

Mr D Melville for the Respondent.

Hearing details:

2015.

Melbourne:

May 20, 21.

Final written submissions:

9 June 2015.

 1   Exhibit A2, “KL1.”

 2   Ibid.

 3   Exhibit A2.

 4   Exhibit R1.

 5   Exhibit R4.

 6   [2014] FWCA 3841.

 7   Ibid, clause 38.3.2.

 8   Ibid.

 9   Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 465.

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