Kittel v Bunnings Forest Products Pty Ltd

[1996] IRCA 126

DECISION NO:  126/96

C A T C H W O R D S

INDUSTRIAL LAW -  TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - whether PROBATIONARY PERIOD reasonable - APPLICATION dismissed

INDUSTRIAL RELATIONS ACT 1988 Ss 170EA
INDUSTRIAL RELATIONS REGULATIONS, REG. 30B

The Association of Professional Engineers, Scientists and Managers Australia (APESMA) & Others v Skilled Engineering Pty Ltd & Others  (1994) 122 ALR 471
Siagian v Sanel Pty Ltd (1994) 122 ALR 333
Nicolson v Heaven & Earth Pty Limited (1994) I IRCR 199

JOSEF KITTEL  -v-  BUNNINGS FOREST PRODUCTS PTY LTD  -WI 95/2149

BEFORE:         BOON JR
PLACE:            PERTH
DATE:              21 MARCH 1996

IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/2149

BETWEEN:  JOSEF KITTEL
  -          Applicant

AND:  BUNNINGS FOREST PRODUCTS
  PTY LTD
  -          Respondent

MINUTE OF ORDERS

BEFORE:         BOON JR

PLACE:            PERTH

DATE:              21 MARCH 1996

THE COURT ORDERS THAT:

1. The application be dismissed

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  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/2149

BETWEEN:  JOSEF KITTEL
  -          Applicant

AND:  BUNNINGS FOREST PRODUCTS
  PTY LTD
  -          Respondent

BEFORE:                 PERTH

PLACE:  BOON JR

DATE:                     21 MARCH 1996

REASONS FOR JUDGMENT

This is an application under Section 170EA of the Industrial Relations Act 1988. The applicant, Josef Kittel, seeks reinstatement and compensation in relation to the alleged unlawful termination of his employment by the respondent.

The respondent, Bunnings Forest Products Pty Ltd, operates a woodchip mill known as the Diamond Mill, 12 kilometres out of Manjimup in the southwest of Western Australia.  Manjimup itself is a town of 12,000 people situated 300 kilometres south of Perth.  The Diamond Mill produces about 750,000 tonnes of woodchips per year, mainly for export to Japan.  The mill uses heavy machinery and employs about 30 people per shift per day.  There are two eight hour shifts per day, and the employees alternate between day shifts and night shifts on a three weekly basis. 

Some time ago Bunnings decided to employ some full time fitter/operators as part of its maintenance staff.  It is important for Bunnings to keep up its rate of production of woodchips.  It has to meet certain production targets in relation to its contracts with its overseas customers.  Further, there are deadlines involved in that the woodchips are transported by ship and need to be loaded according to shipping schedules.  For this reason, Bunnings operates a bonus incentive scheme for its employees, whereby if certain production targets are met, its employees receive a payment over and above their ordinary weekly wage.  In addition to this, Bunnings employs several maintenance people so that if an emergency arises, any shutdown of the mill's operation can be kept to a minimum because the full time maintenance staff rectify the problem without delay, as opposed to Bunnings calling in independent contractors.

Mr Kittel was employed as a full time fitter/operator as part of Bunnings' maintenance team.  The work of Mr Kittel varied.  There was evidence that Mr Kittel was required to engage in day to day maintenance on the Bunnings' site.  He also was required to do some jobs in the workshop.  Some of his work was somewhat routine as a result.  However, the nature of his work was inconsistent in that if a mechanical emergency arose, he was required to attend to this.  That type of work, by its nature, is unpredictable and has varying degrees of difficulty associated with it.  Bunnings also engages some contractors who are specialists in certain fields of maintenance.

It is the respondent's contention that Mr Kittel is excluded from the operation of the unlawful termination provisions of the Industrial Relations Act in that he was engaged initially for a three months' probationary period. Mr Kittel started work on 20 June 1995. His employment was terminated on 13 September 1995 and he finished work on that day. He was paid one week's wages in lieu of notice.

The applicant concedes that he was employed on a three month probationary period determined in advance.  It is argued on behalf of the applicant, however, that he was not excluded from the unlawful termination provisions of the Act for two reasons.  Firstly, it was said that the probationary period was not "reasonable" as required by Regulation 30B.  Secondly, it was said that the notice given on 13 September was not effective until the conclusion of the one week notice period and that the three month probationary period had expired by the time the termination took effect.  Counsel for applicant, in relation to the second part of the argument, referred to the decision of Gray J in The Association of Professional Engineers, Scientists and Managers Australia (APESMA) & Others v Skilled Engineering Pty Ltd & Others ( 1994) 122 ALR 471. This Court was referred to dicta by Gray J at page 484 in relation to Section 170EA, at which his Honour states as follows:

"Written notice might be for a long period.  It would be strange if an employee who had received written notice was expected to make an application within 14 days, when the notice had not expired, and could not be given a remedy at the time of commencement of the proceedings (or even at the time when the Court tries the proceedings), because the 'employment had not been terminated': S170EE(1).  If the giving of notice is regarded as the termination, and as giving rights immediately it occurs, the difficulty vanishes.  The giving of notice is the unilateral exercise of a right by a party to a contract.  A notice is not capable of being withdrawn by the party giving it, without the consent of the other party.  Such consent may create new contractual rights.  If the notice is not withdrawn by consent, it operates inexorably to bring the contract to an end, as long as it is notice in accordance with the contract and is not in contravention of any external provision with legislative force ... thus, in general, notice given by an employer will inevitably bring the contract of employment to an end at the expiry of the notice.  There is nothing more the employer can or needs to do to produce this result.  It is therefore appropriate to view the giving of notice as the 'termination' for the purposes of Sections 170EA and 170EE of the IR Act."

I do not consider that this passage assists the applicant in this case.  His Honour is clearly stating that the giving of notice is regarded as the "termination".  In this case, the employer made a payment in lieu of notice and Mr Kittel did not work out the notice period.  The termination clearly occurred within the three months' probationary period.  Further, in the case of Siagian v Sanel Pty Ltd (1994) 122 ALR 333, Wilcox CJ found that where payment in lieu of notice is made, in the absence of a contrary intention, it should be inferred that the employer intended the termination to take effect immediately. In this case, there was nothing to suggest that the respondent intended that its relationship with the applicant should continue until after the expiration of the probationary period.

The second part of the applicant's submission relates to the reasonableness of the three month probationary period.  In the case of Nicolson v Heaven & Earth Gallery Pty Limited (1994) 1 IRCR 199, Wilcox CJ said at page 208:

"Whether or not the stipulated period is reasonable, is a matter that has to be determined by the person hearing the case, as an exercise of judgment.  The judgment should be based on the proved objective facts, not on someone else's opinion.  Probably the most important consideration, in determining what is a reasonable period, will be the nature of the job.  In the case of a person employed to carry out repetitive duties under close supervision, a reasonable period may not extend beyond a week or two.  In the case of a person employed in a marketing or managerial position, working with little or no direct supervision and whose quality of performance cannot be immediately apparent, it may be reasonable for an employer to specify a probationary period measured in months.  Circumstances will vary from case to case; the size, location and mode of operation of the employer being relevant factors, along with the personal characteristics and circumstances of the employee.  The legislature has not prescribed the maximum extent of a reasonable period.  It is not for me to do so.  But I suspect that an employer will rarely be able to justify a period exceeding two or three months ..."

In relation to Mr Kittel, the Court heard evidence that he had been unemployed for about two years prior to his employment with the respondent.  The company had had a vacancy for a fitter for about six months prior to employing Mr Kittel.  Mr Kittel had not previously worked for Bunnings and it was argued by the respondent that this, combined with the fact that he had been unemployed for a considerable period, meant that a slightly longer probationary period than otherwise would be required was reasonable as a result.  Mr John May, the maintenance and plant supervisor at the mill, gave evidence that he was the person who employed Mr Kittel.  They had discussed the probation period and Mr May said that three months was the normal probationary period at the mill.  That period could be varied according to the circumstances of the job or employee involved.  The company decided on a three month probationary period for a variety of reasons.  In the first place, the job involved shift work.  A three month period meant that the employee would have been subjected to two cycles each of day shift and night shift.  As some people find it very hard to work on night shift, the company wanted a 12 week period at least in which to assess how a person performed under the different shift conditions. Secondly, Mr May said that the mill was isolated.  It was in the middle of the bush.  Some people found isolation hard to take and this affected their performance.  The location of the mill was taken into account in deciding on the three month probationary period.  It was felt that employees needed an extended period to see whether they could adjust to such an isolated environment.  Mr Kittel had moved to the mill site from the city of Fremantle. 

Next, the respondent pointed to the nature of the work itself.  Although much of the work was routine, Mr Kittel was employed as a mature tradesperson who was expected to work with minimal supervision.  He needed to undertake repairs on an urgent basis as emergencies arose.  As the timing of such emergencies was unpredictable, the company needed an extended period to gauge his performance in this respect.  Further, Mr Kittel was working as a member of a small team, with only one other fitter and an apprentice.  Harmony in the team was very important, partly because of the isolation and also because of the bonus system.  One of the reasons for the termination of Mr Kittel's employment was because it was alleged he was unable to fit in as a member of the team.  There was evidence that members of the team were unhappy with the pace at which Mr Kittel worked and it was felt that he precluded them from attaining the bonus offered for reaching a certain production target.

The respondent further pointed to an operational factor in setting the three month probationary period.  A number of people were absent during the course of Mr Kittel's employment with the company.  One of the fitters who would have worked closely with Mr Kittel was away for six weeks of that period.  Further, Mr May was away for a large part of August 1995.  In addition, the mill had a shutdown period of approximately three weeks during the initial part of Mr Kittel's employment.  This was an unusual situation in that it happened only twice a year.  The mill was shut down for regular maintenance.  Mr Kittel was not performing his normal duties during that time.

On behalf of the applicant it was submitted that none of the reasons given by the respondent for the three month probationary period were valid.  It was said that all of those reasons were dreamt up after the event and that the reasons given were outrageous.  It was submitted on behalf of the applicant that none of the reasons given by the respondent justified a three month probationary period. A large amount of the work Mr Kittel performed was repetitive and didn't require an experienced fitter.  It was submitted that the company would be able to assess Mr Kittel's ability well within the three month period.

I have carefully considered all of the factors put forward on behalf of both Mr Kittel and Bunnings. Although each of the factors put forward by the respondent in justifying a three month probationary period would by themselves perhaps not have justified such a lengthy period of probation, I consider that a combination of all of the circumstances, including Mr Kittel's personal characteristics, the uncertain nature of the work, the location of the mill, the necessity for shift work, and the operational requirements of the respondent, all taken together, mean that a three month probationary period is reasonable. Accordingly, I hold that Mr Kittel was an employee to whom Regulation 30B applied. It follows that he was excluded from the operation of subdivisions B and C of Part VIA of the Industrial Relations Act. The application is dismissed.

I certify that this and the preceding six pages are a true copy of the Reasons for Judgment of Judicial Registrar Boon

Associate

Date:

Counsel for the applicant:                  Mr N Marsh
Solicitors for the applicant:                Julienne Penny & Associates

Counsel for the respondent:               Mr J Uphill
Solicitors for the respondent:             Chamber of Commerce & Industry
  of Western Australia Inc.

Hearing date:            6 March 1996
Judgment date:         21 March 1995