Kilpatrick v BIRKO Australia
[1996] IRCA 316
•12 July 1996
DECISION NO: 316/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - REDUNDANCY - VALID REASON for termination - failure to show need to reduce workforce and validity and proper application of selection criteria - HARSH, UNJUST OR UNREASONABLE - PROCEDURAL FAIRNESS - failure to consult with union and employees in contravention of award provisions - failure to take steps to minimise or avert consequences of redundancy - REINSTATEMENT - ONUS OF PROOF on employer to prove reinstatement impracticable - CONTRACT OF EMPLOYMENT - accrued jurisdiction claim - alleged failure to give reasonable notice
Industrial Relations Act 1988 ss.170DB, 170DC, 170DE(1), 170DE(2), 170EA(3), 170EDA(1), Schedule 11
Income Tax Assessment Act 1936
CASES: Byrne v Australian Airlines Limited and Frew v Australian Airlines
Limited (1995) 131 ALR 422
Kenefick & Ors v Australian Submarine Corporation Pty Ltd (unreported, Full Court, Nos. SI 94/290, 292, 293, 294, 295, 26 March 1996)
Sinclair v Anthony Smith & Associates Pty Ltd (unreported, von Doussa J, No. SI 1260 of 1995, 1 December 1995)
Anthony Smith & Associates Pty Ltd v Sinclair (unreported, Full Court, No. SI 1260 of 1995, 22 April 1996)
Mitchell-Collins v Latrobe Council (1995) 60 IR 480
Goss & Ors v Fluor Daniel Power & Maintenance Services Pty Ltd (unreported, Millane JR, Nos. VI95/2459, 2463, 2464, 2468, 2469 2470, 2474, 2478, 2536, 8 February 1996)
RORY JOHN KILPATRICK - v - BIRKO AUSTRALIA PTY LTD
No. VI 5669 of 1995
Before: Judicial Registrar Millane
Place: Melbourne
Date: 12 July 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 5669 of 1995
B E T W E E N :
RORY JOHN KILPATRICK
Applicant
AND
BIRKO AUSTRALIA PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Millane 12 July 1996
THE COURT DECLARES THAT:
In terminating the applicant’s employment on 6 October 1995 the respondent contravened Division III Part VIA of the Industrial Relations Act 1988.
AND THE COURT ORDERS THAT:
The time for making the application to this Court be extended to 9 November 1995.
The respondent reappoint Rory John Kilpatrick to the position in which he was employed immediately before his termination on 6 October 1995.
The employment of Rory John Kilpatrick be deemed to have been continuous for all purposes from 6 October 1995 to the date of reinstatement.
The respondent pay to Rory John Kilpatrick the remuneration lost by him because of the termination.
There be liberty to either party to apply to the Court on reasonable notice in respect to the calculation of the amount of the remuneration lost referred to in the preceding order.
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 5669 of 1995
B E T W E E N :
RORY JOHN KILPATRICK
Applicant
AND
BIRKO AUSTRALIA PTY LTD
Respondent
Before: Judicial Registrar Millane
Place: Melbourne
Date: 12 July 1996
REASONS FOR JUDGMENT
By an application made on 9 November 1995 the applicant alleges that his employment with the respondent as a maintenance/design worker was terminated in contravention of Division III Part VIA of the Industrial Relations Act 1988 (the Act). In addition to the claim made for reinstatement and compensation the applicant also pursues a claim in the accrued jurisdiction of the Court alleging an implied term in the contract of employment to the effect that the respondent would not terminate the applicant’s employment other than on the giving of reasonable notice. The notice period the applicant seeks to enforce, presumably only if the Court determines that reinstatement is impracticable, is a period of six months. In determining a reasonable period of notice the Court was asked to take into account the applicant’s earlier employment in a similar position with companies connected to the chief executive officer and owner of the respondent, Paul Anthony Holt (Holt) and the respondent; it being argued that this had bearing on the applicant’s seniority. The applicant conceded that so far as this earlier association with the respondent and Holt was concerned, the employment with the respondent in fact commenced on 16 July 1992 to October 1995. Because of this the relevance of any earlier association can only be considered in the context of substantive fairness issues under section 170DE(2) of the Act where it may be viewed as a relevant circumstance in determining whether the termination was harsh, unjust or unreasonable.
On its part the respondent defends the proceeding by alleging that the termination was brought about by the operational requirements of its manufacturing business; there being eight instances of redundancy in a factory of thirty employees on or about 6 October 1995. It also alleges that such termination as was implemented was not harsh, unjust or unreasonable in all the circumstances of the case.
At termination the applicant received his accrued entitlements as well as three weeks’ pay in lieu of notice and seven weeks’ severance pay. The notice period reflects the minimum period payable both under the applicable Metal Industry Award 1984 and the provisions of section 170DB of the Act. The severance pay paid is in keeping with the minimum provisions in the award. In articulating its defence to the applicant’s statement of claim and, in particular, his allegation that reasonable notice under the contract of employment amounts to six months’ notice, the respondent denies specifically this allegation and relies on a contrary allegation that the applicant was employed pursuant to the provisions of the Metal Industry Award 1984 and was thereby subject to the provisions for severance pay in the award. The difficulty with this lastmentioned allegation is that it fails to properly confront the issue of whether the redundancy provisions in the award were in some way incorporated in the contract of employment entered into with this employee on 16 July 1992. It is now a well established principle that award provisions, where they apply to an employee, are independently enforceable against an employer. However, the award provisions are not without more deemed to be terms of the contract of employment (see Byrne v Australian Airlines Limited and Frew v Australian Airlines Limited (1995) 131 ALR 422).
In defending the proceeding the respondent made it clear to the Court that there was no issue raised vis-a-vis the applicant’s conduct or performance during the currency of his employment. Its principle argument was that there was a lack of work available and the economic requirements of the business were such that it was obliged to dispense with the services of some eight employees. The selection of those to be made redundant was allegedly based on the amount of work available in particular departments of its manufacturing plant. It gave no evidence of the validity and application of the selection criteria applied other than saying that the applicant’s job was no longer one required to be performed and since the redundancy, has not been performed to the date of hearing. In truth the evidence called contradicts the lastmentioned point because it is clear that the applicant’s job and the various duties performed by him are now performed by at least some contractors and possibly the factory manager in conjunction with Holt.
Apart from its direct defences on the issues, the respondent also relied on the applicant’s failure to file and service his application within the fourteen days required after the receipt of written notice of termination in compliance with section 170EA(3)(a) of the Act. This preliminary matter was heard at the same time as the other issues before the Court. From the respondent’s point of view the only matter raised by it on the question of any prejudice suffered was that it did not receive notification of the claim until some four and a half weeks after the written notice of termination was given to the applicant on 6 October 1995. On the applicant’s side he told the Court that he completed the application on 8 October 1995, which is born out by the document filed with the Court, and signed it, however, he delayed filing the document until 9 November 1995 because initially he wanted to give Holt “the benefit of the doubt”. Following the termination the applicant remained in contact with another employee working with the respondent. It was as a result of this contact that he formed the view that “things” at the factory were better than Holt had suggested when terminating him. When he understood that there had been an improvement at the factory site and the respondent had not contacted him to offer him further work, as was promised in the letter of termination, he determined to proceed with his application for unlawful termination.
On observing the applicant and hearing his evidence I was impressed by him as a witness and have accepted the explanation for the delay as an honest explanation and a credible one also. Accordingly, I am satisfied that the time for bringing the claim should be extended to 9 November 1995 and I propose to make an order accordingly.
BACKGROUND
The respondent manufactures food and drink heating appliances at Abbotsford in Victoria. It takes its orders for production from agents and has twenty different countries overseas to whom it supplies on order.
The applicant does not have formal qualifications, however, he has an aptitude for maintaining and creating or designing the machinery used in the production of the appliances supplied by the respondent on order as well as the appliances themselves.
The applicant is 41 years of age and is married with a dependent wife and two children. From 1981 he commenced employment with a company, Specified Electrical Process Heating Co. (SEPHCO) as a process worker. That company manufactures similar items to those manufactured by the respondent; namely, appliances and heating elements for heating appliances.
Holt described himself as the respondent’s chief executive officer. At the relevant time he personally owned 51% of SEPHCO which performs its manufacturing tasks at Cheltenham in Victoria. He conceded that there was a small amount of inter-company turnover between SEPHCO and the respondent. Holt also told the Court that he owned the respondent company and the entity, Sarena Industries, which operates from Lilydale in Victoria and is a wholly owned subsidiary of the respondent.
The applicant worked as an employee for SEPHCO until about 1985 primarily as a process worker making electrical heating elements, at about which time Holt became involved as a proprietor of that business. In late 1989, as a result of a discussion with Holt, it is alleged by the applicant that he was encouraged to become an independent contractor performing work for SEPHCO, Sarena Industries and the respondent. This involved him doing the same work as that previously performed for SEPHCO at the same location and work bench but being paid as an independent contractor.
There was a dispute between the applicant and the respondent as to whether or not the applicant initiated the change to that of independent contractor or whether it came about as a result of Holt’s recommendation to do this to satisfy the applicant’s need to earn more money. What did happen is that the applicant formed a partnership with his wife and commenced work as a contractor working, he says, exclusively for the entities named above. The respondent tendered to the Court taxation deduction forms (Exhibit R1) which show payments by the respondent to R. & K. Kilpatrick, presumably the applicant’s partnership with his wife during 1990 to April 1991.
As a result of an eye injury suffered in September 1990, while working on a machine for the respondent, the applicant took a short time off work after which he returned to work still working as a contractor but wearing an eye patch until about April 1991. From April 1991 he was mainly unemployed until July 1992, other than doing some delivery truck work, when Holt offered him a full time position with the respondent allegedly performing similar duties to those performed whilst he was operating as a contractor for the respondent and its related entities.
Holt described the quality of the applicant’s work as excellent. However, he was reluctant to accede to a description of the applicant as a “boffin”. He understood the applicant to be a self trained fitter and turner and sheet metal worker who is good in a hands-on situation but does not have any formal engineering qualifications. Insofar as Holt conceded that the applicant did more than maintenance duties; that is to say he was instrumental in the development of machines to construct the appliances manufactured by the respondent and the appliances themselves, he did so by pointing out that he was the person with the general engineering qualification. Accordingly, any work performed on development and design of machinery, appliances and parts was done on the basis that the applicant assisted him. For instance, Holt told the Court that he performed the thermal engineering component of a design development and the applicant applied his practical skills to the making up of the models.
In his evidence the applicant put his role on a higher level than that acknowledged by Holt, pointing out that; for instance, he designed and built a welding machine for the plant and developed a method of rolling over the ends of urns. He also claims to have been instrumental in modifying the respondent’s existing machinery as well as performing maintenance duties to repair and replace parts.
Exhibit R2 is a letter dated 6 March 1996 from patent attorneys to the respondent confirming, amongst other things, the respondent’s claimed ownership of certain patents and trade marks. This letter refers to particular inventions currently the subject of testing for a patent in the respondent’s name. For the purpose of the proceeding what is relevant is that the patent application names both Holt and Kilpatrick as the inventors; noting that there have been assignments from both inventors to the respondent company. What the letter does is support a conclusion that the applicant during his employment played a significant role in inventing at least one patentable invention the respondent now seeks to profit from.
The applicant performed his duties with the respondent until he was allegedly made redundant in October 1995.
There are a number of important historical matters relevant to this claim. The first is that the eye injury suffered whilst the applicant was allegedly a contractor to the respondent and its other related business entities was the subject of a Workcover claim made against the respondent after the applicant commenced full time work with the respondent and fixed for hearing in about June 1995. Prior to the hearing of this claim there was a conversation between the two men where it is alleged by the applicant that Holt took the applicant into his office and indicated to the applicant that he was both upset about the forthcoming hearing and felt that it could affect the applicant’s work relationship. The applicant claims to have asked if Holt was going to fire him to which question Holt replied, “I can’t say”.
Whilst Holt was prepared to concede that prior to the Workcover case he had several discussions with the applicant about the case, none of which he elaborated on in his evidence or cross-examination, he denied any discussion to the effect alleged by the applicant. He did, however, agree that there was a dispute about the company’s involvement in the case because it was his view that as a contractor the applicant should have had his own insurance. This point was not taken up by the Workcover insurer who had the carriage of the Workcover action and settled the proceeding with the applicant prior to the hearing date. The impression Holt gave in the witness box was that he was certainly not happy about this claim against the company but, because the decision making process was out of his hands, a decision that appeared to suggest that the applicant was an employee at the relevant time was made by the Workcover insurer irrespective of Holt’s view of the relationship. So far as this proceeding is concerned there is insufficient evidence called to establish the precise nature of the relationship prior to 16 July 1992. The best that can be said is that prior to that date there was a longstanding work association which, as already noted, may have relevance to the question of whether the termination was a harsh or unreasonable one. It was the applicant’s evidence that subsequent to the Workcover claim being settled Holt had very little conversation with the applicant and treated him in a more distant manner. In other words, his perception was that the relationship had, indeed, suffered as a result of his persistence in prosecuting his Workcover claim.
The second matter is that in September 1995 after the resolution of the Workcover claim and about one month prior to the termination, the respondent gave the applicant a pay rise, which the applicant described as a modest one, giving a total package including the use of a motor vehicle of $41,800 per annum (see Exhibit A1). This increment to his salary package was relied on by the respondent to counter any suggestion that it intended to terminate the applicant’s employment by reason of his pursuit of his Workcover claim against the company in June 1995. Such an intention it was argued was inconsistent with the steps taken to improve his salary package.
THE REDUNDANCY
Holt told the Court that his company operates on the basis that he obtains orders for one to three months in advance and its production is geared towards these orders as well as some limited manufacture of stock pile.
In the two months preceding September 1995 he alleges there was virtually no work in the factory; although, against this claim the applicant states that there was no indication from where he worked that the company was doing badly.
Holt spent some two weeks in Asia canvassing the purchasers the company usually supplied, without success. This was allegedly because the Asian market had copied the respondent’s product and supplied it to the respondent’s overseas customers at a reduced price.
Holt returned to Australia in late September, on or about 30 September 1995, on which date he alleges he attended the factory and set about speaking to the employees, who then numbered some thirty people, telling them individually and in groups there was no work and that it would be necessary to remedy the situation with a possible restructuring of the company. I found Holt’s evidence on these alleged conversations one week before the termination to be vague and imprecise. He was certain he spoke to everyone including the applicant. However, in cross-examination he did concede that he only mentioned to the applicant that the company had no work. The applicant, in contrast, denies any conversation alerting him to a shortage of work and a possible retrenchment a week before or at any time before the termination.
Given the imprecise nature of the respondent’s evidence on the alleged discussions a week prior to the termination I am inclined to the view that the applicant’s evidence should be accepted on the matters to do with the alleged conversation preceding termination as well as the extent of the conversation engaged in with Holt at termination.
At hearing Holt was by then well acquainted with the award provisions which set out the procedure to be followed once a decision is made that an employee’s job is no longer to be performed. Clause 42(a) of the award provides (see Exhibit R5):
“(a)(i) 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.
(ii) The discussions shall take place as soon as is practicable after the employer has made a definite decision which will invoke the provisions of paragraph 42(a)(i) hereof and shall cover, inter alia, may (sic) 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.
(iii) 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.”
Holt conceded that the respondent did not consult the union in accordance with the requirements of that clause because he asserted he did not then realise he had to do this. As a result there were no discussions on minimisation or avoidance of the harsh consequences of any restructuring. Holt did attempt to rely on some alleged statement made to the applicant to the effect that if there was anything Holt could do he would do it to avoid retrenching employees. However this statement was supposedly made in the discussions on 30 September 1995 which discussions I am not satisfied included the applicant.
Inasmuch as Clause 42(a)(iii) requires a written statement setting out a number of matters for the benefit of the union and the employees this was not provided; although, Holt again tried to rely on the letter of termination provided to the applicant on 6 October which said (Exhibit R3):
“BIRKO AUSTRALIA PTY LTD has for some years now enjoyed good markets in South East Asia, especially Singapore and Malaysia where our goods are traded by these countries further a field into Asia. Now these markets are being eroded by competition (copies of our product) and future orders are in doubt.
We have had consistent business for the last three years in Australia but find it decreasing this half year.
It is time for us to re-structure the company to take account of lack of orders now and in the future. This re-structuring regrettably means reducing staff, we are sorry that we must take this action and terminate your employment with BIRKO AUSTRALIA PTY.LTD.
If in the future there is a turn-around of the current situation I would be pleased to contact you for further employment, if you have any constructive ideas as to how that may occur I would be happy to hear from you.
I take this opportunity to thank you for your support and contribution to this company and wish you all the best for the future.”
In making payments at termination to the applicant which accorded with the minimum requirements of clause 6 of the award, the respondent apparently acted in compliance with the award provisions. Notwithstanding its obvious knowledge of those requirements the respondent now asks the Court to accept that Holt was not aware of the provisions of clause 42 of the award at termination and he acted in ignorance of the obligations cast on the company at least by reason of that award provision. Even if I accept that ignorance is the proper explanation for the respondent’s failure to address the matters raised in clause 42 of the award, I find that it is more likely than not that that ignorance was more pervasive than Holt cares to admit and he in fact took no meaningful steps prior to 6 October 1995 to consult on or discuss with the applicant the proposed restructure and the means by which the harsh effects of any bona fide restructure could be avoided or minimised.
At the date of termination Holt alleges that the remaining employees had their hours reduced to a four day week. This condition of reduced hours persisted until approximately December 1995. No evidence was called by the respondent to explain how or when this arrangement for a shortened working week was developed with the remaining twenty two employees, even though Holt told the Court that when he had discussions with the employees on 30 September 1995 there was an indication from some employees that they could return to a two or three day working week. The failure to properly explore this possibility with the union and all the workers is of some concern to me because it may have led to the amelioration of the harsh effects of the termination on at least the applicant if other employees had been prepared to accept shorter working hours and a shorter working week. This view is reinforced by Holt’s evidence that since termination he has, in discussions with the applicant, attempted to resolve the dispute before this Court by offering the applicant two days’ work per week and the possibility of contracting work along the lines previously performed by the applicant with the respondent before the applicant undertook full time employment from 1992.
Holt conceded in cross-examination that since returning to the five day week some five to six weeks after the termination of the applicant’s employment, there was some overtime offered but only, according to Holt, to enable orders to be completed.
He also told the Court that there were two voluntary redundancies and there are now twenty one employees left with the company. In the same period, Holt told the Court one casual process worker has been engaged. I found Holt’s evidence on the number of employees terminated, the number of voluntary redundancies and the number of employees employed since the termination contradictory. At first he told the Court that there were seven to eight redundancies, the last being a voluntary redundancy, leaving twenty two employees as of the day before the hearing. In cross-examination he then said there were two voluntary redundancies since the termination and one process worker had been employed giving an employee workforce of twenty one. He then went on to contradict his earlier statement that only one process worker had been employed by telling the Court that two female process workers have been employed on a casual basis to finish current contracts.
It was not clear from the abovementioned evidence whether there were two or three voluntary redundancies since the termination on 6 October 1995, and what the critical base number of his staff was; not to mention the extent to which the respondent has engaged process workers since termination. Holt was also vague about the amount of work done since December 1995 and still being performed in accordance with the orders the company now has.
A further inconsistency in Holt’s evidence was that he informed the Court the company had survived since the recession took effect on a “hand to mouth” basis and this was particularly so since 1992 and the third quarter of 1995. For the financial years ending 1992 and 1993, Holt told the Court the company ran at a loss. The financial year ending 1994 did, however, show a profit of $100,000 with an increase in employee numbers to forty. In the subsequent year in 1995, the profit was reduced to $20,000 and for the financial year not completed at hearing Holt believed the company would “break even”. Holt was not asked why, in a time of loss, he engaged the services of the applicant on a full time basis in 1992 or why, when the profits of the company were substantially reduced in the 1994 to 1995 financial year, he increased the applicant’s salary package by some thousands of dollars. His only explanation for giving the pay rise was that he then anticipated that the applicant would continue in the respondent’s workforce. The answer begs the question asked.
The respondent’s reason given to the Court for terminating the applicant was that he was the only person in the maintenance department and there was then no work for him to continue with. Holt agreed that the company needed not only maintenance of its plant from time to time but also work on developing and designing its products, all work performed by the applicant until his termination. Since termination Holt has continued to work on the development of products in conjunction with the company’s factory manager who remained in the respondent’s employ and who apparently had some role in these matters prior to the applicant’s termination. Otherwise, according to Holt, he has engaged a contract industrial designer who has previously worked with the company. So far as maintenance of the plant is concerned, according to Holt that is dealt with by a contractor on a needs basis. Again, his evidence was vague as to the extent to which work was performed or required in the areas the applicant previously worked on a full time basis.
Holt conceded that the abovementioned work was not offered to or discussed with the applicant before or at termination other than at some time during the conciliation process in this proceeding. The two casual process workers engaged since the applicant was terminated have allegedly been engaged until the completion of the current orders. Clearly, Holt did not see fit to offer any new or short term position to the applicant once those positions became available, making the offer contained in the letter of termination an empty one.
The applicant’s recollection of the termination, which I have accepted, is that on 6 October 1995 all the factory staff were called to a meeting in front of the office where Holt told them he believed the company was “going bad”. He told them that as a result some staff would be made redundant, at the same time expressing regret that this was to happen. He provided no explanation about the company’s position and all the staff returned to their jobs. At 11.00am the applicant was called to the office and informed by Holt that he was to be made redundant. No explanation was given other than that provided by the letter dated 6 October 1995, the contents of which are already set out above, to which letter the applicant was directed by Holt for the reasons for making him redundant. The applicant was given a written reference which states the following (Exhibit R4):
“Rory Kilpatrick of ..., has been employed by BIRKO AUSTRALIA PTY LTD since July 1992.
During his time at BIRKO Rory has been proficient in his duties of factory maintenance and development of new products. His skills in fitting and turning and sheet metal work have been of a very high standard.
Rory is leaving BIRKO because we have lost overseas contracts and local markets have decreased and we have no option but to retrench him.
I have no hesitation in recommending Rory to any future employer.”
The applicant also completed taxation documents (Exhibit A3) and was given his termination pay and then left his employment, leaving behind the company motor vehicle and being driven home by another employee.
The applicant denied the respondent’s assertion that prior to termination there was any call for voluntary redundancies on 6 October 1995. Accepting as I have that there was no discussion with the applicant either before or at termination, it is unlikely that there was any call for voluntary redundancies if this call was not brought to the applicant’s attention.
In this case it is said by the respondent that it did not select the applicant by reason of any conduct or performance criteria. Because of this there is no issue pursuant to section 170DC of the Act. However, it is still incumbent on the respondent to establish that there was a valid reason for the termination of this particular employee based on the operational requirements of the respondent.
The respondent claims to have been confronted with a need to reduce its workforce because of the loss of orders for business and this claim was contested by the applicant who alleged that until the date of termination it was not evident to him that there was any downturn in the business. Concentrating on the inconsistencies in Holt’s evidence on a number of matters, I am not satisfied that the respondent has met the required standard of proof where it has the means of establishing that its decision to restructure was a bona fide one.
Putting to one side for the moment my concern about the contest on the issue of whether there was at 6 October 1995 a need to reduce the respondent’s workforce, there is still the question of whether the respondent has established that there was a valid reason for selecting the applicant for redundancy. In its decision in Kenefick & Ors v Australian Submarine Corporation Pty Ltd (unreported, Full Court, Nos. SI 94/290, 292, 293, 294, 295, 26 March 1996) the Full Court of the Industrial Relations Court of Australia considered the scheme of section 170DE(1) and section 170EDA(1) of the Act observing in its joint judgment at page 15:
“... The scheme of the sections provides for the employer to carry the onus on matters peculiarly within the knowledge of the employer, and for the employee to carry the onus on matters peculiarly within the knowledge of the employee. Thus, in the present case, the respondent made the decisions concerning the selection of each particular appellant, and determined the basis on which the selection was to be made. The respondent should justify those decisions. To cast on the employee the onus of showing that the basis of selection has been harsh, unjust or unreasonable would be inconsistent with the apparent intention that this legislation should accord an accessible and inexpensive means by which a dismissed employee can seek a remedy. That consideration derives particular force when it is remembered that often an individual employee will not know why he or she has been selected for retrenchment.”
It was said at hearing that the reason for terminating the applicant was that as he was the only person in his department, whatever that department was, and his job was one that was no longer required to be performed; not being performed since termination, he was selected for redundancy. I have already commented on the conflict between this assertion and the evidence which shows that the duties performed by the applicant, where it should be recalled that he started off as a process worker and performed maintenance and design duties along the way, were still being performed at least in part by possibly the factory manager and further by contractors engaged by the respondent. Relying on the inconsistencies in the evidence given by Holt and what amounted to vague explanations of the reason for selecting the applicant for redundancy I have concluded that the respondent has not met the standard of proof required to satisfy the Court that there was a valid reason for selecting this employee for redundancy.
If I am incorrect in finding as I have on the respondent’s discharge of its burden of proof pursuant to sections 170DE(1) and 170EDA(1) of the Act, I am further satisfied that the termination was in all the circumstances of the case harsh, unjust or unreasonable because there was a failure to follow appropriate procedures to bring about the termination.
Of particular significance is the respondent’s failure to observe the requirements of the award provisions already set out above. In dealing with very similar provisions in an award where there was an alleged redundancy Justice von Doussa made the following observation at page 6 et seq. in his decision in Sinclair v Anthony Smith & Associates Pty Ltd (unreported, No. SI 1260 of 1995, 1 December 1995, a decision subsequently upheld by the Full Court of the Industrial Relations Court of Australia in Anthony Smith & Associates Pty Ltd v Sinclair (unreported, No. SI 1260 of 1995, 22 April 1996)):
“The clause required consultation both with the employees and the union once a definite decision had been made that the respondent no longer wished the job of the employees to be performed. That definite decision was made at least some weeks in advance of the advice of the decision to the employees. Had advice been given to the persons concerned, in particular the three shift supervisors and the union, the opportunity would have arisen for discussion. Counsel for the applicant asserts that it should be concluded that had discussion occurred it would have been possible to reorganise the forming department in which the applicant worked so as to utilise the skills of the shift supervisors, who were the longest serving employees in that department, and, it may be inferred, who had substantial training and experience.
I do not think that conclusion can be drawn in such positive terms. On the other hand I do not think it can be concluded that the position would not have been any different had there been due consultation with everyone concerned. I think the evidence shows that the position may have been different had the Award provisions been followed, but it cannot be held that it was more probable than not that the applicant's employment would have continued.
The requirement for consultation is in the Award not only to permit the possibility of arriving at some rearrangement of the workplace which has lesser consequences than dismissal, but also to allow time for the employees to deal with the emotional, family and domestic stresses that are likely to descend upon them when their employment is brought to an end. The importance of those non-workplace personal factors cannot be underestimated, and finds expression in the reasons of various tribunals that have had to consider clauses of this type. To put it into colloquial terms, it is desirable, as the Award recognises, that employees whose security of employment is about to be shattered be let down gently. If they are forewarned and counselled they are more likely to be able to accommodate to their new situation, to adjust themselves to the search for other work, and the like. Moreover, it is generally recognised that if an employee is in work and is given time off to go and look for other work, the prospects of finding new employment are somewhat better than if the person concerned is required to seek work as an unemployed person on social security. The failure to consult is a significant matter in this case. In my view it was also significant that no forewarning was given, and significant also that no counselling was provided. Those are matters that should have been attended to, to render the dismissal in the circumstances of this case, reasonable and fair.”
In his decision in Mitchell-Collins v Latrobe Council (1995) 60 IR 480, Justice Spender also had occasion to deal with similar award provisions in the case of redundancy saying page 490 et seq. of that decision:
“There is, however, a need for consultation with employees, and in cases such as the present, with the employees’ union. So much is clear from the terms of the award to which I have previously referred. The reason for the need for such consultation is reflected in the observation concerning technological change made by the Full Bench of the Commonwealth Conciliation and Arbitration Commission (1968) 122 CAR 339 at 344-5 where it said:
“When employers are contemplating the introduction of computers and other automatic devices which may have serious effects on employees such as termination of employment or transfer interstate it is essential that both the employees and the union concerned should be informed of and involved in the planning as soon as possible. Many real human problems may be involved which may not be known to company executives and they, with the best will in the world, may take steps which do not help to solve them. It is our view that employees and their welfare are as important in the planning of a change of the kind we have had to consider as any other aspect of the change and that they, both individually and through their union, should be brought in at the planning stage. When brought into the planning both employees and the union should in their turn attempt to understand the problems which the employer faces and co-operate with him to try to find a reasonable solution.”
Wilson J referred to this passage approvingly in Federated Clerks Union v Victorian Employers’ Federation (1985) 54 ALR 489. He said at 511:
“Consultation between employers and employees, preceded by the distribution of adequate information is not only sensible but essential if commerce and industry are to meet the challenge of progress in a spirit of harmony and with some regard for human dignity.”
The principle of fairness which these passages highlight was considered in detail by Beazley J in the Quality Bakers case to which I have referred. Her Honour reviewed the authorities, including White v Douglass Diagnostic (1993) 60 SAIR 142, the well known observations by Stanley J in Corkrey v General Motors Holdens Limited (1986) 53 SAIR 531; Wynn’s Winegrowers Pty Ltd v Foster (1986) 16 IR 381 at 384; and Cheesman v Kinhill Engineers Pty Ltd (1992) 59 SAIR 168. In the latter case, Perry C said that the Corkrey guidelines were:
“Equally appropriate to redundancy arising in circumstances of economic stringency or restructuring.” ”
The abovementioned observations of both Justices von Doussa and Spender were relied upon by me in my decision in Goss & Ors v Fluor Daniel Power & Maintenance Services Pty Ltd (unreported, Nos. VI95/2459, 2463, 2464, 2468, 2469 2470, 2474, 2478, 2536, 8 February 1996) where, even though there was some semblance of forewarning to the union concerning the impending redundancy, which amounted to approximately 38% of the workforce, the failure to consult, amongst other things, led to a finding that the redundancies were procedurally unfair.
Apart from a failure to consult with the applicant or the union concerning the redundancy of 25% of its workforce, the respondent also failed on the evidence to take any meaningful steps to avert, minimise or mitigate the effects of the termination other than by paying the minimum amount of severance pay provided for by the award. Steps to ameliorate the harsh effects of a redundancy on a particular employee should not be confined to simply a payment of a sum of money on the date of termination; although the payment of severance pay and its inclusion in the award provision is clearly designed to cushion some of the harsh effects experienced by employees in a redundancy situation. The Recommendation Concerning Termination of Employment at the Initiative of the Employer (see Schedule 11 to the Act) and, in particular paragraph 19, contemplates matters such as priority in rehiring employees made redundant, seeking voluntary redundancies from the workforce before implementing compulsory redundancies, placing the employee in alternative employment, retraining and other like measures all of which may in the circumstances of a particular case be measures open to the employer to help soften the blow.
The evidence shows that the employer did little to mitigate or ameliorate the harsh effects of this termination both at termination and subsequently when it had the opportunity to offer the applicant alternative work, having represented to the applicant at termination that if there was a turnaround in the current situation faced by the respondent it would contact the applicant for further employment.
REMEDY
Following on from the decision of Justice von Doussa in Sinclair’s case, subsequently upheld by the Full Court, I am satisfied that the reinstatement as sought by the applicant is not impracticable. In this case the applicant’s job is still being performed and there is clearly other work available from time to time for which the applicant is qualified. The respondent carries the burden of showing that reinstatement is impracticable if it seeks to avoid this primary remedy. Taking into account all the circumstances I am not satisfied that it has discharged this burden of proof. Accordingly, the orders I propose to make include an order for reinstatement of the applicant to the position he was employed immediately before the termination. Further orders to be made include an order maintaining the continuity of the applicant’s employment and an order for the payment of remuneration lost by the applicant because of the termination.
In regard to the calculation of the lost remuneration I note that the applicant has remained unemployed since the date of termination. Therefore, his entitlement to lost remuneration should be calculated on the basis of an annual salary of $41,800 from 6 October 1995 to the date of reinstatement and from that amount an adjustment should be made for the severance payment and the payment made by way of compensation in lieu of notice, as well as any amount payable by the respondent and actually paid to the Commission of Taxation pursuant to the Income Tax Assessment Act 1936 on the gross figure for lost remuneration. On the evidence before the Court I am not in a position to quantify the amount of the lost remuneration, however, liberty is granted to the parties to apply to the Court on reasonable notice on the question of the calculation of the amount of lost remuneration should there be any difficulty in arriving at an appropriate sum.
Because of my findings on the principal claim and the remedy granted, it has not been necessary to address the question of reasonable notice under the contract of employment.
MINUTES OF ORDERS
THE COURT DECLARES THAT:
In terminating the applicant’s employment on 6 October 1995 the respondent contravened Division III Part VIA of the Industrial Relations Act 1988.
AND THE COURT ORDERS THAT:
The time for making the application to this Court be extended to 9 November 1995.
The respondent reappoint Rory John Kilpatrick to the position in which he was employed immediately before his termination on 6 October 1995.
The employment of Rory John Kilpatrick be deemed to have been continuous for all purposes from 6 October 1995 to the date of reinstatement.
The respondent pay to Rory John Kilpatrick the remuneration lost by him because of the termination.
There be liberty to either party to apply to the Court on reasonable notice in respect to the calculation of the amount of the remuneration lost referred to in the preceding order.
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 twenty-one (21) pages are a true copy of the reasons for judgment of Judicial Registrar Millane.
Associate:
Dated: 12 July 1996
Solicitors for the Applicant: Richmond & Bennison
Counsel for the Applicant: Mr A. Flower
Solicitors for the Respondent: Purves Clarke Richards
Counsel for the Respondent: Mr B. Shaw
Date of hearing: 21 May 1996
Date of judgment: 12 July 1996
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