Kiselis v ACI Operations Pty Ltd
[1996] IRCA 522
•25 October 1996
DECISION NO:522/96
CATCHWORDS
INDUSTRIAL LAW - UNLAWFUL TERMINATION - VALID REASON - CONDUCT AND PERFORMANCE - OPPORTUNITY TO RESPOND - REMEDY
Industrial Relations Act 1988 (Cth) s170DEKerr v Jaroma Pty Limited (unreported, IRCA, Marshall J, 7 October 1996);
Nettlefold v Kim Smoker (unreported, IRCA, Lee J, 4 October 1996);
Byrne v Australian Airlines (1995) 131 ALR 422;
Nicolson v Heaven & Earth Galleries Pty Ltd (1994) 57 IR 50.
KISELIS v ACI OPERATIONS PTY LTD (T/A ACI GLASS PACKAGING)
VI96/1690
Before: MURPHY JR
Place: MELBOURNE
Dates of Hearing: 23 & 24 OCTOBER 1996
Date of Judgment: 25 OCTOBER 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI96/1690
BETWEEN:
MICHAEL JOHN KISELIS
Applicant
AND
ACI OPERATIONS PTY LTD (T/A ACI GLASS PACKAGING)
Respondent
BEFORE: MURPHY JR
PLACE: MELBOURNE
DATE: 25 OCTOBER 1996
MINUTES OF ORDERS
THE COURT ORDERS AND DECLARES THAT:
The respondent has breached s170DE(1) of the Act;
The respondent reinstate the applicant by reappointing him to the position he held prior to 30 April;
The respondent pay to the applicant remuneration lost by the applicant because of the termination, taking into account the applicant’s earnings since 30 April.
The period since 30 April be treated by the respondent as continuous service by the applicant.
Liberty to apply in relation to the issue of remuneration lost.
Note: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI96/1690
BETWEEN:
MICHAEL JOHN KISELIS
Applicant
AND
ACI OPERATIONS PTY LTD (T/A ACI GLASS PACKAGING)
Respondent
BEFORE: MURPHY JR
PLACE: MELBOURNE
DATE: 25 OCTOBER 1996
REASONS FOR DECISION
Delivered ex tempore - revised from the transcript
The central issue in this proceeding is whether the respondent has discharged its onus of proof that it had a valid reason to terminate the applicant's employment. The applicant has been paymaster at the respondent since June 1986. At least until recently he was the subject of annual appraisal. An appraisal carried out in December 1994 gave the applicant the second highest assessment as “superior”. He was awarded a four per cent pay rise from January 1, 1995, and gave evidence that he received a pay rise in January this year.
The respondent relied on six grounds for its reason to terminate the applicant, and it is appropriate to consider each in turn.
The Horsborough overpayment.
In early January 1996 an employee, Mr Horsborough, advised the applicant that he wished to alter the bank account that he was being paid into. He advised the applicant that he intended to close one Advance Bank account and open a NAB account. Shortly thereafter the employee complained that his pay had not been deposited into his new account.
The applicant did not check whether the pay had been deposited to the old account, and raised a manual pay for the wages due. It transpired that the wages had actually been deposited to the first account and thus the employee had been paid twice. The applicant raised the fact that there had been an overpayment with Ms DeZilva, the Personnel Manager. She directed that a letter (Exhibit R1 Document 3) be sent to the employee requesting repayment. This was done and two instalments of the repayment were made. As at April, some $170 remained outstanding. Ms DeZilva said that it was very significant that the delay had occurred in the matter. She said, however, that she had no reason to give emphasis to the matter, and said, "Yes, it could be a minor problem".
Wages - short payment.
The second ground relied upon by the respondent was that the applicant as paymaster had been responsible for overseeing a system where wages employees who were paid in cash were short-paid on about four occasions over the period September 1995 to March 1996. A particular incident related to a Mr Allen on 2 January. The applicant had been present in the pay office when the cashier had made up a couple of pays. They had been counted and the envelopes signed and sealed. The applicant had then taken them to the security office where the employees collected the pays. One employee, Mr Allen, when he collected his pay, found it was $50 short. The circumstances of the incident were recorded in an incident report from the security service (Exhibit R1 Document 4), and in a memorandum signed by Gloria Greave (Exhibit R1 Document 6).
As a result of this incident, it was arranged that the applicant would henceforth be involved in actually distributing the pay envelopes. Ms DeZilva gave evidence that after the ongoing shortfalls, the applicant was told to take responsibility for paying the employees. The solution was to ensure that the applicant was present to hand the pays over, so there would be no discrepancy.
Waiting time incident.
These short payment incidents led to a third matter on which the respondent relied. It can be described as the waiting time incident. On 27 March the applicant was not at work at 6.45 am when employees who were to be paid in cash enquired whether their pays were ready. The applicant arrived shortly thereafter at about 6.58 am. A telephone call was made to the relevant section advising the employees that they could come and collect their pays.
They did not attend for some minutes, apparently because they did not get the message. At 7.15 am the applicant contacted the relevant section and the pays were collected by the men. The men put in the claim for waiting time. The respondent was forced to pay waiting time of one half hour to each of the employees. Mr Bridgeman, the Financial Controller, said the incident was caused by a communication breakdown between the various parties, but that the applicant had responsibility to ensure that the wages were available before 7 am.
The Botica allowances.
The next incident relied on by the respondent was the payment of an educational allowance to Mr Botica. The allowance was paid by the applicant without approval from the Personnel Department and was incorporated into the hourly rate, rather than being paid on a stand-alone basis. Shortly after this, the relevant union served a log of claims on the respondent seeking to have all allowances paid on the same basis as that to Mr Botica.
The union was advised a number of times that the method of payment to Mr Botica was a mistake and that it had been wrongly processed. This fell on deaf ears. The unions sought in the discussions in the log of claims that they served at that time to rationalise these allowances. The evidence of Ms DeZilva was that the unions imposed bans and limitations and that this was a “ramification” of the payment made at the applicant's instigation to Mr Botica. The applicant's actions caused an industrial campaign that included the imposition of bans and limitations, including a black ban on a particular tank that was undergoing refurbishment at the time. Eventually the bans were lifted after the matter had been before the Australian Industrial Relations Commission (“the Commission”) on three occasions.
The applicant had been asked about the matter and said that it was an oversight. Ms DeZilva said in cross-examination the applicant's actions on Botica were not a minor part of the log of claims raised by the unions. She said they did cause considerable discussion in negotiations with the unions in the context of the log of claims negotiations. The log of claims negotiations were part of the lead-up to enterprise bargaining negotiations related to a new enterprise agreement due 30 June. Ms DeZilva's evidence was that the bans and limitations were directly involved in the actions that the unions took seeking to have the respondent incorporate and rationalise a number of allowances.
The applicant's account was that he did process an allowance claim for Mr Botica. Contrary to procedure, the advice was not signed off by the Personnel Department. He was subsequently “grilled” by Ms DeZilva, who told him it should not have been processed without Personnel Department authorisation. She told him that Mr Botica was not entitled to the allowance and the matter was reversed.
The Stanjo matters.
The straw that broke the camel's back, as far as the respondent was concerned, were two incidents involving Mr Stanjo. In March, while he was on holidays, he called the applicant and sought to change his account details for his pay. Although it was contrary to procedures, the applicant, as a favour to him, accepted the details of the changes over the phone. He then transferred the details to a form for transmission to a computer payroll bureau. He made a clerical error which meant that for the next two weeks Mr Stanjo’s pay was not credited to his account and went to an account apparently in the Wimmera area.
On 9 April, Easter Tuesday, Mr Stanjo contacted the pay office and queried the applicant as to why he had not been paid for the preceding two weeks. The applicant was very busy and fobbed him off. Mr Stanjo then attended the office a short time later with another employee. The applicant then looked into the matter and arranged to raise a manual pay entry and to give the cash to Mr Stanjo. Meanwhile, Mr Stanjo had returned to the electrical shop and a stop-work meeting occurred. The men did not return to work until the wages were paid. The stop-work meeting apparently went for approximately three-quarters of an hour. Later that day, Ms DeZilva discussed the matter with the applicant. In that meeting the applicant had admitted that the matter had not been correctly handled by him in accepting the changed details over the phone, and not acting immediately when the matter was raised on that date.
The applicant said that it was impossible from the records that were returned from the computer bureau to identify if there had been a short payment. In evidence, the applicant admitted that Ms DeZilva had rebuked him for doing a favour for Mr Stanjo. There was a further failure to pay Mr Stanjo the next day when a faxed message containing the bank account details to the bureau did not go through. The applicant's evidence was that he was not rebuked about that.
The missing records.
The final matter relied on by the respondent were some missing records from the pay office. Ms DeZilva said that the applicant had admitted to her that some records had gone missing. The applicant said he told her of the matter at the time, but she denied ever being told. The applicant's evidence was that the data was very old and not currently being used. Ms DeZilva said she did not know the nature of the data that had disappeared.
The meeting of 29 March.
On 29 March Mr Bridgeman held a meeting with the applicant. This meeting took place before the Stanjo incident. He was instructed by the plant manager to take appropriate action to resolve problems that were manifesting themselves at the plant. Mr Bridgeman said he handed the applicant at the meeting a memorandum (Exhibit R1 Document 2) addressing a number of issues, and discussed them with him. He said he was able to relate each of the incidents he discussed to an incident in the previous three months.
The memorandum of 29 March sets out to clarify a number of issues relating to the applicant's duties, and liaison with the Personnel Department and staff at the plant. It also addresses a number of payroll security issues. Mr Bridgeman said it was a co-operative meeting. He did not use the word "warning" and it was not in his mind to terminate the applicant on that date. He was, however, laying out the requirements of the applicant's duties.
The applicant disputes that he was given a document at that meeting. In the meeting, Mr Bridgeman had said that the plant manager had queried, "What the hell was going on". He said he was not rebuked by Mr Bridgeman in that meeting. He said that he laid out his grievances about the Personnel Department to Mr Bridgeman and some of them are recorded in the memorandum.
On the issue of whether the applicant was handed the memorandum on 29 March, I prefer to accept his evidence over that of Mr Bridgeman. The contents of the memorandum appear to reflect a synthesis of a detailed conversation between the applicant and Mr Bridgeman, and some conclusions drawn by Mr Bridgeman to address the issues. In that sense, the memorandum reads as though it has been prepared after a meeting rather than to be the basis of a discussion at a meeting. I therefore accept the applicant's evidence that he never received that document.
The decision to dismiss.
At some stage in mid-April the respondent took the decision to terminate the applicant's employment. There were discussions between Mr Sawatzki, the Plant Manager, Ms DeZilva and Mr Gugliamo. There was also a discussion with Mr Brightman about the meeting of 29 March. Ms DeZilva's evidence was when the Botica matter, the Stanjo matters and the other matters were discussed, "there was a very lax attitude". She was instructed to proceed to terminate the applicant. A cheque for the applicant's entitlements was raised on about 23 April. Mr Bridgeman, the applicant's direct supervisor, was not involved in the decision to terminate him.
The meeting of 30 April.
On 30 April the applicant was called to a meeting with Ms DeZilva and Mr Bridgeman. The minutes of the meeting (Exhibit A4) show that a number of matters were raised with the applicant, including the Stanjo matters, the Botica matter, security of records and information, and taking confidential information over the phone contrary to procedure. The applicant acknowledged his errors and responsibility. He was advised that the respondent had lost confidence in him and in his ability to discharge his duties in the very difficult industrial situation the respondent faced. He was dismissed and paid one month's pay and two months of his long-service leave.
Did the respondent have a valid reason to dismiss the applicant?
What is a valid reason for a termination related to an employee's conduct or performance must be determined within the context of the particular work-place and contractual arrangement between the parties. The term "valid" may be said to refer to a sound, defensible or a well-founded reason. It has also been said by Marshall J in a recent case, Kerr v Jaroma Pty Limited (unreported, IRCA, Marshall J, 7 October 1996), to refer to a justified reason. What the Act requires is for the Court to focus on the evidence before the employer and make a determination as to whether the reason can objectively be said to be defensible, soundly based, well-founded or justified.
In Nettlefold v Kim Smoker (unreported, IRCA, Lee J, 4 October 1996), Lee J said:
“By giving effect to the Convention the Act seeks to establish a balance between the right of an employer to duly manage an enterprise in which labour is employed and the right of an employee, and of the community, not to have the asset represented by the capacity of employees who provide such labour, whether skilled or unskilled, depreciated by incompetent or capricious management of labour by an employer.”
In the present case, the two key decision-makers who made the decision to dismiss the applicant were not called to give evidence. Next, there was no satisfactory explanation why the respondent's own personnel manual (Exhibit A1) was not followed in relation to this matter. The applicant was terminated on notice. The manual sets out practices that the respondent presumably follows in relation to non-summary dismissals. Ms DeZilva said the manual was not always followed, and used only as a guide. She said that the matter had, "gone too far". The contents of the manual are relevant because it sets out "procedures for dismissal".
I do not accept the submission that the decision in Byrne v Australian Airlines (1995) 131 ALR 422 is relevant on this point. If an employer has a manual relating to a process for dismissals, compliance with that manual is relevant to the question whether or not the conclusions reached can be properly characterised as valid. Further, it must be recalled that the applicant was an employee with an exemplary employment record. His last performance appraisal was that his performance was “superior”. He had been employed there nearly ten years and was a trustee of the employee superannuation fund. This background material is relevant when characterising the matters relied on by the respondent and determining whether ultimately its reason can be said to be valid.
It should be said at once that the Horsborough matter, the short payment of wages matter and the waiting time incident do not appear to have been raised in the final interview on 30 April. The Horsborough incident, and indeed all the incidents, was not characterised by the respondent as a sackable offence. I am satisfied that it was not treated other than as a minor administrative matter when it arose. Similarly the waiting time incident. On the respondent's own material, the applicant was on site at 7 am. There was a communications breakdown that caused the waiting time claim. The applicant's culpability was minimal, and he gave a reasonable excuse for being late.
Similarly the short payment matters. It was not suggested that the applicant was personally culpable for the short payments. It was a management issue that, by at least late March, had been addressed by new procedures as set out in the memorandum of 29 March.
The Botica matter must also be seen within the context of the tinder-dry industrial situation at the plant. It was accepted by the respondent's witnesses that the explanation that the payment of the allowance was a mistake fell on deaf ears. The applicant's action in processing the advice when it was not properly authorised was contrary to policy, but his lapse must be characterised as minor. It find it difficult to accept the evidence of Ms DeZilva of any direct causal relationship between the actions of the applicant and the imposition of bans and the log of claims.
It is significant that the Botica matter is addressed by Mr Brightman in paragraph 2 of his memorandum of 29 March by laying down a protocol for making allowance payments.
The unions may, in an opportunistic fashion, have sought to use the Botica payment in support of their enterprise bargaining log of claims, but I am unable to accept that it played anything other than a minor part in the bans and limitations imposed. Even if it did, the applicant's explanation is relevant. He maintained, and I accept, that he thought, on the basis of two comparable employees, that Botica was entitled to be paid the way he was. It is also significant that Mr Brightman said that he did not believe that, "we told him he was responsible for the ban". The notes of the meeting of 30 April do not refer to the ban being the result of the Botica matter.
The Stanjo matters are said to have resulted in a stop-work meeting. Again, the applicant's culpability in the context of his long service was minor. He was busy that Easter Tuesday. He did make a clerical error. Mr Stanjo and the electricians took industrial action, but there was a reasonable argument that their actions were disproportionate to what the applicant had done.
The final matter was the payroll records. The respondent's evidence on this matter was unsatisfactory. The issue of security of the pay office is addressed in the 29 March memorandum. It was also referred to in the meeting of 30 April. The applicant's culpability seems to be put as one of a general failure of management supervision. Counsel for the respondent put to him that, "The buck stops with him". The applicant agreed but that does not end the matter. It was only in the meeting of 30 April, after the decision to terminate had been well and truly taken, was it raised with the applicant that his performance deficiencies in relation to the security of records was such that his employment should be terminated.
The respondent's ultimate reason for the termination of the applicant was that it had lost confidence in his ability to discharge his duties in a difficult industrial environment. It sought to rely on matters that, at the time they occurred, it had not made a major issue of. I refer here to the Horsborough matter, the short payment matter, and the waiting time matter. It also sought to revisit matters that it had addressed in the meeting of 29 March. It is important to note that the only incident relied on that occurred after that meeting was the Stanjo matter. The matter had its genesis in a telephone conversation some time earlier in March. That led to non-payment of wages, as raised with the applicant on 9 April. By that date the Botica matter, while still the subject of a ban, was addressed by the memorandum of 29 March.
The applicant's responsibility for the Stanjo matter is said to tip the scales. I find this hard to accept. I am unable to accept that a bloody-minded stop-work meeting for 45 minutes, over a matter that was the result of a clerical error by a long-serving employee, is enough to allow the respondent to revisit all the preceding matters and then rely on all the events to terminate his employment. The matter becomes even less defensible when the applicant is not invited to present his side of events in the context of the respondent's deliberations about his termination.
He was never told his job was on the line; he was never given a warning. He was never the subject of a performance appraisal where these matters could be put in context and he be given an opportunity to improve in a structured manner. He was not accorded the rights set out in the respondent's own personnel manual.
Much was made of a diary note by the applicant to the effect that he felt that management had "lost total confidence in all his work performance". That is his subjective view. It does not go to the reasoning process of the respondent that is under scrutiny here.
On the material before the Court I am not satisfied that the respondent has discharged its onus of proof that it had a valid reason to terminate the applicant's employment. The matters on which it relies are of themselves insufficiently serious to justify termination of a loyal employee. The reasoning process was flawed because it failed to seek the applicant's version. It failed to put him on notice in relation to the matters, and sought to rely on matters that had been addressed earlier. The respondent has failed to explain why it did not comply with its own procedures manual when the issues involved fell squarely within that manual. There will be a declaration that the respondent has breached s170DE(1).
Remedy.
The applicant sought reinstatement to his position. The respondent submits that it could not have confidence in the applicant to discharge his duties in the event of an order for reinstatement. It has put in place Mr Demica, who, under difficult circumstances, has discharged the duties well. The respondent does not wish to jeopardise the industrial situation with a reinstatement order.
While giving due consideration to the matters raised by the respondent I am not satisfied that the reinstatement of the applicant to his previous position is impracticable in the sense that the term has been used in Nicolson v Heaven & Earth Galleries Pty Ltd (1994) 57 IR 50. The respondent is a large public company in which the Court could infer that professional management will prevail. There is no suggestion that relations have broken down between the applicant and other employees in his immediate circle such as Mr Brightman, Ms DeZilva and Mr Demica. The industrial troubles appear to have abated, and I am unable to see any substantial reason why the applicant will not be able to resume the duties that he has discharged for nearly a decade. In reaching this conclusion I have applied reasoning similar to whether the respondent has discharged its onus of proof as having a valid reason to terminate. Just as I have found that it is inappropriate to characterise the reason for termination as valid, I am not satisfied there are sound reasons why reinstatement is impracticable, and I propose to order that the applicant be reinstated to his position.
The orders of the Court will be as follows:
A declaration that the respondent has breached s170DE(1) of the Act.
An order that the respondent reinstate the applicant by reappointing him to the position he held prior to 30 April.
An order that the respondent pay to the applicant remuneration lost by the applicant because of the termination, taking into account the applicant's earnings since 30 April.
An order that the period since 30 April be treated by the respondent as continuous service by the applicant.
Liberty to apply in relation to the issue of remuneration lost.
I certify that this and the preceding thirteen (13) pages
are a true copy of the reasons for decision of
Judicial Registrar Murphy as recorded in the transcript
and revised by the Judicial Registrar.
Associate: KAREN HALSE
Dated: 25 October 1996
APPEARANCES
Counsel appearing for the applicant: MR D MARTIN Solicitors for the applicant: TESTART ROBINSON & PITTS Counsel appearing for the respondent: MR T GINNANE Solicitors for the respondent: CLAYTON UTZ Dates of Hearing: 23 & 24 OCTOBER 1996 Date of Judgment: 25 OCTOBER 1996
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