Lance Hamilton, Brennan a Stanwix, Dale Anthony Archer and Leigh Jackson Henderson v Australian Guarantee Corporation Ltd
[1995] IRCA 383
•18 August 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
TI 1037 of 1995
B E T W E E N
LANCE HAMILTON
Applicant
A N D
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
__________________________________________________________
TI 1038 of 1995
B E T W E E N
BRENNAN A STANWIX
Applicant
A N D
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
__________________________________________________________
TI 1041 of 1995
B E T W E E N
DALE ANTHONY ARCHER
Applicant
A N D
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
__________________________________________________________
TI 1042 of 1995
B E T W E E N
LEIGH JACKSON HENDERSON
Applicant
A N D
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
Before: Judicial Registrar Chancellor
Place: Hobart
Date: 18 August 1995
REASONS FOR DECISION
These are applications pursuant to s.170EA of the Industrial Relations Act with respect to the termination of the employment of each of the Applicants by Australian Guarantee Corporation Limited (“AGC”) in February 1995.
AGC is a finance company which operates Australia wide and has a large number of employees. Further, it is part of the Westpac group of companies and Westpac itself is a very large employer. All of the Applicants in this case were employees of AGC within its Tasmanian operation.
Both AGC and Westpac had quite significant financial difficulties in the late 80’s and early 90’s which over time led to considerable restructuring and a large number of retrenchments. AGC introduced what it called a Best Business Program (“BBP”) in early 1993. This was a re-engineering program which aimed to bring greater efficiencies into the operation of the company. It was largely implemented through 1993 and 1994. During that period of time there were large numbers of retrenchments from mainland offices of AGC. However, although the BBP was also introduced into Tasmania during that period there were only two retrenchments, one being a woman who reported direct to Victoria and the second being an older woman who worked in northern Tasmania. Although the mainland sections of AGC had suffered considerable losses during the late 80’s and early 90’s, in particular due to exposure to commercial property and joint ventures, the Tasmanian operation, which was more conservative in nature, remained profitable.
Given that the BBP had been largely implemented into Tasmania by November 1994, given that there had been a couple of retrenchments within Tasmania during that period of time, and given that Tasmania had remained a profitable operation, the view of each of the Applicants seemed to be that a large scale restructure with resultant retrenchments was fairly unlikely.
However, despite it’s ongoing profitability, the senior management of AGC were of the view that the Tasmanian operation was not cost effective and that its profits and operations could be significantly improved by restructuring the operation. The Tasmanian state manager, Mr David Evans gave evidence that in late October or early November 1994 he became aware that head office wished to look at a restructure of the Tasmanian operation. Mr Evans gave evidence that although profitable, the Tasmanian operation suffered in terms of both the expenses to income ratio and also in terms of the staff costs to expenses ratio. This indicated that the Tasmanian operation was quite significantly over staffed.
Discussions between senior management took place in relation to the restructure and by the week before Christmas 1994 Mr Evans was largely aware of the full nature and extent of the proposed restructure. The indications were that total staff numbers would be reduced from 57 down to 42.
Despite being aware some time in November that there would be significant staff reductions, perhaps approximately 25% of staff, and despite being aware of the almost exact nature of the staff reduction and restructure before Christmas 1994, Mr Evans chose not to inform his existing staff of the matter. His view was that it would be destabilising and demoralising for the existing staff if there was a period of time within which they were continuing to work while having real concerns over their future employment.
It appears that the first notification that the restructure was to take place occurred on the afternoon of Friday, 3 February 1995 when a member of AGC head office spoke to a member of the Australian Services Union National Office in Victoria. A letter was subsequently faxed later in the day from AGC to the ASU indicating a reduction of approximately 13 staff, that AGC would look into redeployment but if this was unsuccessful that regrettably retrenchment would occur. The letter requested that the advice be maintained on a confidential basis until the Tasmanian state manager addressed the staff on Monday, 6 February.
It appears that three of the four Applicants were members of the Finance Sector Union but as AGC was not a Respondent to an award of which the FSU was a party, and further because AGC was only aware that perhaps two of its employees in Tasmania were members of the FSU, no attempt was made to contact that Union.
Given the late notification to the ASU there was obviously no real chance to discuss the impending restructure and redundancies prior to the announcement on 6 February and accordingly none of the staff were aware of the impending changes prior to the staff meeting. Although there had been general discussions between the ASU and AGC on an ongoing basis over the mainland redundancies there is no evidence that there were any specific discussions concerning Tasmania prior to 3 February 1995.
Mr Evans announced the restructure to a staff meeting on the morning of Monday, 6 February. The three major changes were that the collections division was to move into Victoria, that most of the human resources and administrative aspects were to move to Victoria and that the commercial and dealer new business divisions were to be combined. Apart from that there were to be a number of changes in the general reporting structure and the number of employees in each remaining section. At the end of his statement Mr Evans indicated that as always he had an open door policy and encouraged any staff member to come and speak to him about what was to occur. Mr Evans had indicated to the meeting that there would be a spill of all positions i.e. all staff members would no longer hold their particular position and that appointments would be made to each of the new positions from amongst the existing staff. At the end of the meeting Mr Evans asked if there were any questions. A number of the witnesses called gave evidence as to what questions were asked at the staff meeting. On balance it appears likely that a question was asked if there would be any applications accepted for voluntary redundancies to which a negative reply was received. A further question was asked that if a retrenchment was necessary what would the package be and the general reply was that it would be in line with company policy but no specific information was provided. Another question was asked as to whether persons could apply for positions after the spill and what criteria should be applied and the answers being that there would be no applications and senior management would decide.
After the meetings and resultant spill of positions it appears that Mr Evans forwarded the files of those current employees, including himself, who he felt would be appropriate for the four senior management positions which were in the new restructure to head office. Mr Evans made recommendations to head office and the four appointments were made. The management appointments were announced to the staff on Thursday, 9 February.
The senior management staff then began the task of making appointments to each of the remaining positions within the new Tasmanian structure. The remaining staff were not given the opportunity to apply for one or even several of the remaining positions. Once one position had been filled the remaining staff were not asked if they wished to apply for the remaining positions.
Mr Evans, who had been reappointed to the position of state manager, Ditmar Shaft who had been appointed to the position of senior account manager, and Peter Weir who had been appointed to the position of area manager-dealer, each gave evidence as to how the appointments were made. Both Mr Shaft and Mr Weir indicated that at the selection meeting they were not provided with the staff files nor the staff profiles of each of the staff members, and nor were they provided with any checklist or specific criteria to be followed when making each of the appointments. It appears that each of the line managers had greater input into the selection of persons who were to be within their particular area. It seems that in the end it came down to selection being on the basis of the line managers view, after consultation with others including the state manager as to who would be the best person for the job and the person who offered the most to the future of the company.
On Friday, 10 February Messrs Hamilton Stanwix & Archer were advised that they had been unsuccessful in obtaining positions and that they would be placed into a redeployment pool. Mr Henderson was advised on Monday, 13 February that there was no position for him in Hobart and that he would be placed in redeployment.
In an effort to find suitable employment for the redundant Applicants the Tasmanian state manager, David Evans directed Ditmar Shaft to contact Westpac Tasmania to see if any jobs were available within the broader Westpac group. Peter Fenton, an organiser with the FSU Tasmanian branch gave evidence that he telephoned Scott Wade, the Westpac Tasmanian Human Resources Manager, some time after 8 February and at that stage Mr Wade was unaware of any changes in the Tasmanian AGC operation. Mr Shaft gave evidence that he contacted Scott Wade at some time between 7 February and 9 February. Mr Wade gave evidence that he recalled receiving a telephone call from Mr Shaft some time in February when Mr Shaft asked what were the redeployment prospects within Westpac Tasmania for people at a senior level, i.e. at a salary level of approximately $26,000 or above. It seems likely that the first specific knowledge that Westpac Tasmania had of a down-sizing of staff in AGC Tasmania was on or about 9 February. Mr Wade indicated that Westpac Tasmania had about six managers in their own redeployment pool and that most of them were unable to be placed.
The four Applicants were in the redeployment pool for a very short period of time. Mr Hamilton and Mr Stanwix were both retrenched on 15 February. Remembering that 14 February was a public holiday in Tasmania, this was only two working days after the announcement that they were in the redeployment pool. Mr Archer and Mr Henderson were both terminated on 28 February. All of the Applicants were provided with a support kit upon termination and were offered the opportunity to contact a counselling and out placement service.
Mr Evans gave evidence that of the 15 positions which were lost as a result of the restructure, that 6 persons, including the 4 Applicants, were retrenched, 5 persons were redeployed interstate - 3 to Queensland, 1 to Sydney, although this had occurred prior to the announcement of the restructure, and 1 to Melbourne. Four other positions were cleared by way of natural attrition.
I will now deal with the particular circumstances of each of the Applicants.
LANCE HAMILTON
Mr Hamilton was employed by AGC from 17 April 1979 to 15 February 1995, a period of more than 15 years. He is 41 years old. He worked in a wide range of areas including collections, accounts officer, wholesale officer, sales representative in the credit line and consumer personal loans, customer finance officer and more recently as a key operator which involved him in relieving in a number of officer roles. As a key operator, Mr Hamilton was earning $36,216 per annum and had the benefit of a reduced housing loan bringing his salary to somewhere in the vicinity of $37,000. From December 1989, he had been a new business manager for dealers in both northern and southern Tasmania. In October 1991, he was a credit supervisor and, in November 1992, a credit
analyst-dealers before returning to his role as a key operator.
In cross-examination, Mr Hamilton agreed that the knew that there had been large scale rationalisation and redundancies in the mainland offices of AGC. However, it was his belief that, as Tasmania had remained a profitable operation, that there was no indication that similar redundancies would occur in that State. His evidence was that the first indication of any possible redundancies was at the meeting of 6 February. His recollection of the meeting was that the executives hoped that there would be no retrenchments but said that, if there was a failure to redeploy, that retrenchment would be the only option.
In the new structure, the position of 3 key operator officers was to be reduced down to one position. The other key operators were Leigh Henderson, another of the Applicants, and Glen Hancock. Glen Hancock retained his position after the spill but both Mr Hamilton and Mr Henderson were unsuccessful. Mr Hamilton was shocked that he did not succeed in obtaining the position as he had more experience with AGC in a wide range of areas and he was confident that on objective grounds that he would retain the position. Mr Evans conceded that Glen Hancock had only had 3 years experience as a key operator in his time at AGC and that Mr Hamilton had greater experience. However, on the grounds of competency and future potential, Mr Hancock was selected. On 10 February, Mr Hamilton challenged Mr Evans about the decision and effectively indicated that he should have obtained the position. He was told that the decision had been made and would not be subject to change On 10 February, Mr Hamilton asked about his chances of gaining employment with Westpac and was told by Mr Evans that they were still working on it.
Mr Evans gave evidence that Mr Hamilton indicated to him that he would be happy to take a package. Mr Hamilton disputed this evidence but indicated that he was not opposed in principle to taking a package if it was of sufficient sum. However, he was not aware of the size or amount of the package and denied that he said he would be happy to accept a retrenchment. Mr Hamilton’s evidence was that he preferred redeployment to a position at Westpac and, if no positions were available, then he may have accepted a retrenchment if the sum was appropriate.
On 15 February, Mr Evans and Mr John Glenn, the senior human resources manager AGC Victoria & Tasmania, advised Mr Hamilton that his services had been terminated. They said that they had been unable to find a position at Wespac. Mr Hamilton received a retrenchment package with 33.83 weeks severance pay together with 4 weeks pay in lieu of notice. His housing loan benefit was to run to the end of September. He was advised of his right to use a counselling service and he used it on about 3 occasions in particular to draw up a detailed resume’. He complained that the retrenchment package was not in line with the Westpac package which would have paid approximately an extra 13 weeks due to his length of service.
From 16 February to 15 June, Mr Hamilton grossed approximately $1,333 as a casual employee with a party hire firm. He has obtained employment since 16 June 1995 as an independent dealer-home security adviser selling FAI security products on commission. He commenced with 3 weeks unpaid training and, for his first week at work, grossed $525. His future earning capacity is largely unknown but is likely to be less than that which he received at AGC in the foreseeable future.
BRENNAN STANWIX
Mr Stanwix is aged 32 and is a married man. He worked with AGC or its predecessors from 31 November 1981 to 15 February 1995, a period of over 13 years. He also worked in a wide range of areas within AGC - collections, new business, customer finance, manager of a suburban branch which involved sales and supervision, sales executive in dealer division, new business in dealer division, inward collections, general credit analysis and, at the time of his retrenchment, was a sales executive. At the time of his termination he was earning $34,643 together with benefit of a discounted home loan mortgage. I estimate his total remuneration package which involved the use of a car during daylight hours in the vicinity of $36,000.
Like the other Applicants, although Mr Stanwix was aware of redundancies and a reorganisation Australia-wide, he believed that Tasmania was operating with suitable staff levels and felt that, prior to 6 February, there was no suggestion of a review of staff size. He was somewhat taken aback by the announcement on 6 February. After the meeting, and it seems in a somewhat shocked condition, Mr Stanwix approached David Evans asking him how the new positions would be selected. Although there is some dispute about the specifics of the conversation, it is likely that Mr Evans indicated that the staff files with respect to the senior appointments would be forwarded to Melbourne and, once the senior managers had been appointed, that they would get together and select the best people for the company. Mr Stanwix indicated that he had a record with good sales experience and knowledge and that he wished to continue with the sales executive position. He said that he did not get to fully put his case and both men agreed that the interview only took 5 or 10 minutes to complete. Mr Stanwix was also concerned that his staff file was incomplete and that there may have been a personality clash with his superior which may have affected his chances of getting a position. On 9 February, once the senior managers had been named, Mr Stanwix approached Peter Weir to again indicate his interest in the sales executive position. His evidence was that the obvious thing was to express interest in his own position and that it would have been counter productive to have indicated an interest in any other positions at that stage. I agree entirely with that proposition. Mr Stanwix was confident that, with his knowledge and experience, he would retain one of the sales executive positions.
Unfortunately, he was unsuccessful and he was advised of this by Peter Weir on the following day. He was not given any indication as to the selection criteria and was told that he would be unable to challenge the decision. He requested a meeting with David Evans and saw him straight away. Mr Stanwix was quite shocked and hoped to obtain a position in Launceston or on the mainland. Again, there is quite significant dispute as to what was said in the conversation on 10 February. However, it is clear that Mr Stanwix pointed out to David Evans that his pregnant wife was due to be induced on 17 February and that he would be unavailable to move interstate for some period after the birth. He said that he would have to discuss with his wife the possibility of an interstate move. Mr Stanwix said that Mr Evans asked him whether he would consider 3 to 4 months in Hobart after the birth and then move to the mainland. He discussed the matter with his wife and on the Monday indicated that there would be “no problems.” Mr Evans denied using the period of 3 to 4 months and said that he was only thinking of a move immediately after the birth, meaning something within one month. It seems likely that both men felt that Mr Stanwix would be able to move shortly after the birth, but Mr Stanwix felt that “shortly” meant within a few months whilst Mr Evans seems to have interpreted that as meaning within a few weeks. On 15 February, Mr Stanwix was interviewed by John Glenn and David Evans. John Glenn told him that there was a collection position available in Melbourne, but Mr Stanwix said that obviously he could not go straight away. He was then told that there were no positions in Tasmania and given his retrenchment package. Mr Stanwix was quite amazed and stunned by the action of Mr Glenn and Mr Evans, particularly following the discussions he had had concerning his wife’s imminent birth and their ability to move some months after the birth. Mr Stanwix was also made aware of the availability of counselling. On retrenchment, he was paid 4 weeks in lieu of notice together with 28.5 weeks severance pay. He subsequently obtained some casual work, finance broking for motor car dealers and earned approximately $2,100 gross. Mr Stanwix commenced full time employment on 25 July with Performance Automobiles as a car salesman with $22,000 retainer plus commission. He is on a 3 months trial basis. Some of the cars are at the very top end of the market and obviously there is potential for substantial commissions to be earned, but at this stage his remuneration is considerably below that which he earned at AGC.
DALE ARCHER
Mr Archer is aged 35. He was employed by AGC from 30 November 1979 to 28 February 1995, a period of over 15 years. He had also worked in a wide range of roles including sales, finance manager, account manager - consumer division, multi-product account manager and, at the time of his termination, account manager consumer. He was paid a salary of $43,042 plus a car, plus a mobile phone, plus a 6% mortgage rate on his home loan. I find that this is equivalent to a remuneration package of approximately $56,000.
Mr Archer was also aware that there had been a number of mainland redundancies but he felt that Tasmania was relatively stable, not having the structural problems of the mainland branches and maintaining fairly efficient staff levels. He conceded that a restructure within Tasmania was a possibility but certainly not an inevitable matter. Like the other Applicants, he had no notice prior to the meeting on 6 February of any proposed restructure of the Tasmanian branch. On the day following the announcement, Mr Archer spoke to Mr Evans indicating that he expected to be considered for the position of senior account manager - consumer. Mr Archer outlined his sales experience, broad knowledge of AGC’s operations, his network of merchants and good relationship with them and stressed his ability to get the job done. At that stage, he did not say that he was interested in any other jobs or, indeed, his current position which involved him in a sales function in the southern Tasmanian region. Mr Archer’s papers were subsequently forwarded to Melbourne for consideration for the position of senior account manager - consumer. Mr Evans did not recommend Mr Archer for the position and Ditmar Shaft was subsequently appointed. Mr Archer was never told what selection criteria would be applied when making the appointment and he was not given the opportunity to provide any written application or indeed to appear before those persons who were making the appointment decision.
Mr Archer became aware on Friday, 10 February, that he had been unsuccessful in obtaining one of the other positions. Mr Evans gave evidence that Mr Archer had not been considered by the senior managers for the position of account manager which was based in Launceston. This was similar to the position which Mr Archer had held prior to the spill of positions but in the northern part Tasmania. Mr Evans said that he had the distinct impression that Mr Archer did not want to move from Hobart and, therefore, he was not considered for the Launceston position because of his perceived lack of mobility. Mr Archer was not told that he was not to be considered for the Launceston position nor was he given an opportunity to say whether or not he would be prepared to move to Launceston, a posting that he had held at an earlier time with AGC.
On 10 February, when he became aware that he had not been appointed to one of the new positions, Mr Archer approached David Evans. He conceded to Mr Evans that it was unlikely that AGC would put him a lesser position and that he was unlikely to find a position within Westpac, Tasmania. David Evans put it to Mr Archer that he did not want to leave Hobart, to which Mr Archer replied “I’d prefer not to.” Mr Archer was about to commence his holidays and asked Mr Evans to indicate whether or not he would be made redundant. He was told by Mr Evans to take his 2 weeks holiday and that the position would be considered during that time. Mr Archer did not receive any contact from Mr Evans or Mr Glenn during his 2 week holiday period. On Friday, 24 February, he range David Evans and the indication was that it was likely that he would be retrenched. He was not offered a transfer or a chance of redeployment. On 28 February, he was retrenched. The first knowledge that he had of the retrenchment package was at the interview conducted by David Evans and John Glenn. Mr Archer received 4 weeks pay in lieu of notice, 32.67 weeks severance pay, the continued use of his company motor vehicle for one month, his discounted mortgage rate to 30 September 1995 and Mastercard repayments at a lower interest rate until 28 December 1995. He was made aware of the availability of counselling but did not use it.
To Mr Archer’s credit, he very quickly obtained alternative employment commencing on 10 February 1995 with Independent Finance Co. Ltd. as a finance broker. He was only off work for some 6 weeks. His salary is $36,000 per annum plus fuel for his vehicle. However, he had to purchase his own car for use in the business. His overall salary package is substantially less than that which he received at AGC.
LEIGH HENDERSON
Mr Henderson was employed by AGC from 16 November 1991 to 28 February 1995, a period of just over 3 years. He had at least 13 years prior experience in the finance sector and also prior experience in property management. Unfortunately, he had experienced two previous redundancies in 1989 from Natwest Finance and 1990 from Colliers Property.
During his time at AGC, Mr Henderson was employed as a collection officer, accounts officer in Human Resources/Administration and, at the time of his termination, was employed as a key operator relieving in the dealer and consumer new business departments. He was employed on a salary of $29,753 plus a discount on his bank card interest if required. However, this was rarely, if ever, used.
Mr Henderson said that, although he was aware of restructure and retrenchments on the mainland, that it came as some surprise to him that there was to be a restructure of AGC Tasmania. He had not been notified or warned in relation to any proposed restructure prior to 6 February 1995. At that time, Mr Henderson was on holiday and he was telephoned by David Evans. He was advised of the restructure and the significant decrease in staff. He was told that there would be a general spill of positions but that he would not be able to apply. He was not given any indication of the selection criteria. Mr Evans indicated to him that he hoped there would be no redundancies and that every effort would be made to redeploy unsuccessful applicants in either AGC or Westpac. However, Mr Evans did not say that there would be no redundancies.
On 13 February, Mr Henderson was advised by Mr Evans that there was no job for him in Hobart and that he was in a redeployment pool. Mr Henderson indicated that he would consider redeployment and wished to discuss the matter with his family. Given the fact that he had been subject to two previous redundancies, Mr Henderson was particularly keen to maintain his current employment.
On his own initiative Mr Henderson checked the AGC internal bulletins and found a vacancy for a position in the Gold Coast office of AGC. When he mentioned the possibility of the position to David Evans, he felt that Mr Evans’ response was quite negative although it seems to me that it was very proper to point out the potential costs and disruption of moving house, family, school, furniture, etc. Neither Mr Evans or Mr Glenn had been aware of the Gold Coast position. It is both very strange and very disappointing that those responsible for redeployment were not aware of every possible position in AGC and Westpac Australia-wide at that particular time. Mr Henderson indicated to Mr Glenn that he felt the position should be kept open for AGC Hobart staff but he was told that there would be no preference given.
Although he did not know it at the time, Mr Evans supported Mr Henderson’s application and he arranged for it to be faxed to the Gold Coast. On 23 February, Mr Henderson had a lengthy telephone interview with Ken Brown, the Gold Coast manager. Mr Brown had not been aware of the Tasmanian situation with redundancies. Unfortunately, Mr Henderson was second in line for the position and missed out. He was asked if he would consider a job in Brisbane, but specifically ruled that out. On 24 February, Mr Henderson was offered the position of collection officer in Melbourne. There was no defined position or salary indicated nor was any specific indication given concerning transfer assistance. Mr Henderson said that he was frustrated by the vague nature of the offer but agreed in cross-examination that he understood the role of collection officer and knew that if he did not take the position, there was a likelihood of retrenchment. Mr Henderson felt that the collection position would be an effective demotion and declined the general offer.
On 28 February, Mr Henderson attended a retrenchment interview with David Evans and John Glenn. He received 4 weeks pay in lieu of notice together with 8.5 weeks severance pay. He was offered counselling and given a support kit. He availed himself of the counselling with Bowden, Gilmore and Hunn, attending at least 2 sessions and obtaining assistance with a number of job applications.
Mr Henderson was effectively out of work from 1 March to 12 June 1995. He had continued assisting his son with a part-time casual cleaning contract but that had been a fairly long-term contract and did not involve the receipt of any income for Mr Henderson. He obtained full-time employment from 13 June 1995 with L.J. Hooker in the property rental division. His income of $27,500 plus a $2,000 car allowance meant that his salary was nearly equivalent to that which he earned with AGC.
WAS THERE A VALID REASON FOR THE TERMINATION?
After hearing all of the evidence, the Applicants’ counsel quite correctly effectively conceded that there was a valid reason for the termination.
The general question of a valid reason in redundancy type cases was considered in some detail by Justice Beazley in the matter of Quality Bakers of Australia Limited v John Golding and Bob Wickham, a decision of 23 June 1995. Justice Beazley said in part:
“An employer might decide to make certain positions redundant with the sole intention of increasing the profitability of an already profitable business. Such a decision would relate as much to the operational requirements of the business as would a decision as to redundancies taken in the case of a business which was in a parlous financial condition or when a certain type of work was no longer undertaken by the business.”
Although the Tasmanian branch of AGC was clearly profitable, the evidence indicates that with restructure and efficiencies, that its profitability could be substantially increased by way of reduction in costs and expenses. I find that this was a bona fide decision of AGC and that a valid reason exists for the redundancies of the four Applicants.
WERE THE TERMINATIONS HARSH, UNJUST OR UNREASONABLE?
The Quality Bakers case confirms the proposition that even in the case of a genuine redundancy, the termination of employment of a particular employee may be harsh, unjust or unreasonable. Justice Beazley cited with approval the comments of Stanley J. in Corkery v General Motors-Holden’s Limited (1986) 53 SAIR 531 at 538 where Stanley J. stated that in the case of a redundancy:
“(a) The employer (should) give as much warning as possible of impending redundancies so as to enable the union and the employees who may be affected to take early steps to inform themselves of the facts, to consider possible alternative solutions and if necessary to find alternative employment either with the employer or elsewhere.
(b) The employer (should) consult with the union (or employees) to seek to establish the criteria to be applied in selecting the employees to be made redundant.
(c) In attempting to decide the criteria to be applied attention should be paid to such matters as length of service, efficiency, experience and attendance records where such matters can be objectively checked, and do not depend solely on the opinion of the person making the selection.
(d) The employer (should) then seek to see that the selection is made fairly in accordance with the established criteria and will consider any representations that may be made in respect of the selection.
(e) The employer (should) seek to see whether instead of dismissal the employee can be offered alternative employment.”
It would therefore appear that matters such as notice, warning, consultation, selection criteria and efforts to provide or assist in finding alternative employment are all matters to be taken into account in considering the question of whether or not the redundancy was harsh, unjust or unreasonable.
I will deal with each of these matters in general terms before dealing with each of the Applicants specifically.
Unfortunately, this was a case where there was effectively no notice or warning given to any of the employees who may have been affected by potential redundancies. Although Mr Evans was aware of the fairly specific nature of the restructure in the week prior to Christmas 1994 and of the general nature of the reduction in staff about one month earlier, there was absolutely no notice or warning given to the relevant employees. Indeed, the human resources manager at the time, Ditmar Shaft, had no inkling that any restructure or redundancies were to take place. Further, contacting the head office of one of the relevant unions on the afternoon of the working day prior to the announcement of the restructure could hardly be said to be adequate consultation.
The failure to give adequate notice or warning and to consult meant that there were many matters that were not considered with the employees. The employees were denied the opportunity to look for alternate employment in approximately the two month period prior to the announcement of the restructure. Further, it appears that AGC and Westpac Australia-wide were not warned in advance of the likelihood of impending redundancies so that potential jobs might be held available for those persons who might be affected. The timing of counselling and out-placement services was not discussed and perhaps these services could have been introduced much earlier whilst the Applicants were still employed by AGC. There is no doubt that many workers would prefer to be seeking alternate employment whilst still employed as this may improve their re-employment prospects. The possibility of voluntary redundancies was not discussed. Although this appeared to be against company policy, presumably policy is something that can be altered if consultation and discussion indicates that it would be appropriate in the circumstances.
There was no consultation as to the selection criteria to be adopted nor as to the manner of vacating present jobs and carrying out the restructure. The employees were presented with a fait accompli - there will be a spill of positions and subsequently persons will be appointed to the new positions. If there was to be a spill of positions there was no real thought given as to the manner in which the employees would be able to apply for the new positions within the structure. Further, there was no consultation about the timing and amount of retrenchment packages if they should become necessary, nor was there any real consultation over the manner in which and the length of time over which redeployment within the AGC and Westpac groups would be considered.
In relation to the question of selection criteria, it would appear that there was no detailed objective selection criteria established. The criteria was not disclosed to the Applicants or any other employees prior to the appointment of persons to positions within the new structure. On the basis of the evidence of Mr Evans, Mr Shaft and Mr Weir, it would appear that the main criteria were more subjective than objective in nature. In my opinion, the whole manner in which the appointments were made left a lot to be desired. The Applicants and other employees were prevented from making application for one or more positions and did not even know whether they were being considered for positions in which they may have had a genuine interest.
In relation to the questions of redeployment or re-employment, there was no counselling or out-placement service provided prior to termination. It would appear that the first enquiries were not made within the AGC and Westpac Group, until after the restructure had been announced and the positions filled. It would appear that many weeks which might have been available to find alternate employment were wasted. Further, the four Applicants were placed in the redeployment pool for a remarkably short period of time. In my opinion, Mr Glenn, rather than prepare for a retrenchment interview, should have been preparing for a redeployment and re-employment interview in order to consult with the four Applicants as to their future employment prospects. Mr Glenn received an indication from Mr Evans that none of the four Applicants were “mobile”, i.e. that they were unable to move interstate at least in the short term. The question of the Applicants’ “mobility” was never specifically put to them. It would seem that it would have been preferable for Mr Glenn to have spoken to each of the Applicants outlining precisely what attempts had been made to find employment within the AGC and Westpac Group, seeking any further suggestions from the Applicants and asking them specifically, given the situation that there were no jobs available in Tasmania, whether or not as a last resort they would be prepared to move to the mainland. This was never done.
In my opinion, the failure to give any notice or warning, the failure to consult in relation to a wide variety of matters, the failure to identify objective selection criteria and the very short term efforts at seeking redeployment all combined to make the termination of the Applicants harsh, unjust or unreasonable.
I will now deal briefly with each of the Applicants.
Mr Hamilton was retrenched on 15 February, some three working days after he found out that he had not been appointed to one of the new positions. The Respondent argued that Mr Hamilton had given an indication that he would be happy to accept a redundancy package, however, given that he was unaware of the nature and extent of the package and given that Mr Glenn did not confirm with him his inability to move elsewhere, it seems that AGC acted with remarkable haste in retrenching Mr Hamilton. I therefore find that, taking into account both the general and specific matters, that the termination of Mr Hamilton was harsh, unjust or unreasonable and in breach of s170DE of the Act.
In my opinion, the termination of Mr Stanwix’s employment was particularly harsh. His wife was due to have a baby on 17 February. I find that he and Mr Evans discussed the question of Mr Stanwix moving interstate after the birth. It appears that Mr Evans took the view that, if Mr Stanwix could not move interstate within one month at the longest, then he was effectively not “mobile”. Given the very lengthy period of employment of Mr Stanwix with AGC and his good service over that time and given his particular circumstances of the impending birth of his child, it seems unduly unreasonable and harsh not to have extended Mr Stanwix’s time in redeployment. In any case, this is a matter that clearly should have been discussed by Mr Glenn so that the positions of both Mr Stanwix and AGC were entirely clear.
Taking into account both the general circumstances and the specific circumstances of Mr Stanwix, I find that his termination was harsh, unjust or unreasonable in breach of s170DE of the Act.
In relation to Mr Archer, it seems that he was not even considered for a position in Launceston on the basis of Mr Evans’ assumption that he would not be interested in such a position. This failure to consult with Mr Archer in relation to that matter clearly prejudiced his ability to obtain a position within the new structure. Again, although Mr Archer indicated to Mr Evans on 10 February that he would prefer not to leave Hobart, that was not put as his final position. Indeed, it was understandable that a person in Mr Archer’s position would initially seek to obtain the highest position possible within the new structure, would then seek, if at all possible, to remain in Hobart, and perhaps, if there was no other alternative, might consider a move interstate. Again, the fact that the interstate option was the only remaining option was not put to Mr Archer by Mr Glenn prior to the decision to retrench him. Although his retrenchment took place on 28 February, it seems that the extended time merely related to the fact that he was on holidays and not to any special effort to redeploy him.
Given both the general circumstances and the specific circumstances of Mr Archer, I find his termination was harsh, unjust or unreasonable and in breach of s170DE of the Act.
In the case of Mr Henderson, at least some efforts were made with respect to his redeployment. He was supported in his application for a position on the Gold Coast, although I note that he had to find the position himself when it seems that, if AGC was properly prepared for the redundancy, that it would have been aware of all available positions, and, indeed, kept the positions open over the previous two months so that the affected employees had the best chance of redeployment. Further, although it supported his application, there was no positive discrimination in Mr Henderson’s favour to assist him in getting the job. Although I agree that the question of merit is always uppermost, given that Mr Henderson was an excellent applicant, it would seem that some thought should have been given to giving him the position in preference to another employee of AGC who would otherwise have still remained within the organisation.
Further, Mr Henderson was offered a Collections Officer position in Melbourne. Although this was not put in specific terms, it seems to me that Mr Henderson was generally aware of the terms and conditions but he chose to reject the offer He was obviously frustrated by the lack of consultation and, again, the failure of Mr Glenn to sit down with him and conduct a detailed interview meant that his position was never fully clarified.
Taking into account both the general circumstances and the specific circumstances of Mr Henderson, I find that his termination was harsh, unjust or unreasonable and in breach of s170DE of the Act.
REMEDY
None of the Applicants sought reinstatement and each of the Applicants argued that reinstatement was impracticable. To the great credit of each of the Applicants, they had all obtained alternate employment prior to the date of the hearing. Given the efforts that they had expended in obtaining this employment, they wished to remain with their new employers and this is quite understandable. Further, each of the Applicants expressed some lack of confidence in the AGC management given the way that they had been treated during the course of their retrenchment.
The Respondent also argued that reinstatement was impracticable given that each of the positions within the new structure at AGC had been filled and that there were no available positions. Although this of itself is not a sufficient reason to say that reinstatement is impracticable, given the views expressed by the Applicants, I find that in all the circumstances reinstatement is impracticable in the case of each of the Applicants.
Each of the Applicants sought compensation and I will deal with them in turn. The question of compensation is a difficult one as three of the Applicants, Messrs Hamilton, Stanwix and Archer, received substantial retrenchment packages. Justice Beazley in the Quality Bakers case said at page 27:
“Of course, if the court was of the opinion that reinstatement was impracticable, the amount of payment made to the dismissed employee would be relevant to the order which the court might make.”
In Liddell v Lembke (1994) 127 ALR 342, 368 Gray J. said on the question of compensation:
“The court is required to order the employer to compensate the employee as far as possible, up to the limit specified, in respect of any loss which the employee has suffered by reason of the termination. It is to be noted that the limit specified is a limit on what the court can order by way of compensation, not a limit on what the employee can receive from the employer. Thus, even if an employer has already paid a sum of money designed to compensate the employee for dismissal, if the employee is entitled to greater compensation, the court must award it up to the limit specified. (emphasis added)”
I also take into account that I find that there was a significant and substantial breach of the Act in the case of each applicant.
LANCE HAMILTON:
In Mr Hamilton’s case, I find that given his length of service and experience, if objective selection criteria had been applied and if he had been allowed to apply for the new key operator’s position and other positions in a formal manner that he may have well have remained in employment with AGC. Although he has been re-employed, Mr Hamilton was effectively unemployed for over four months and is suffering quite a significant on-going loss of income at present and into the foreseeable future. On the other hand, Mr Hamilton did express some interest in the redundancy package and indeed received a substantial package being 33.83 weeks.
In all the circumstances, I propose to award him compensation in the sum of $7,500.
BRENNAN STANWIX:
In the case of Mr Stanwix I take into account the particular circumstances of his wife’s pregnancy and his indication that he would be prepared to move interstate some time after the birth. Given his length of service, it only seems reasonable that his request in that regard should have been met. In my opinion, if Mr Stanwix had been fairly treated, there was a very good chance that he would have remained in employment with AGC and continued to develop his career with an increasing income. Mr Stanwix was unemployed for over five months. His current employment on a retainer and commission means that it is difficult to estimate his future income. He did receive a retrenchment package of some 28.5 weeks but it can be fairly anticipated that he will suffer an on-going loss as a result of his current employment.
Taking into account all the circumstances, I intend to award Mr Stanwix the sum of $10,250 by way of compensation.
DALE ARCHER:
Mr Archer was in receipt of a large salary package with AGC. Due to the failure to consult with him, he was not even considered for a position in Launceston and, if there had been adequate consultation, he may have very well have continued in his employment with the company. On the other hand, Mr Archer obtained new employment within a very short period of time, approximately 6 weeks. However, his employment package at the present time is something in the vicinity of $20,000 less per annum than he was earning with AGC. Mr Archer received a considerable termination package being 32.67 weeks pay but this does not effectively compensate him for his on-going loss.
Taking into account all the circumstances, I believe it is appropriate to award Mr Archer compensation in the sum of $10,500.
LEIGH HENDERSON:
In Mr Henderson’s case there were more efforts made in an attempt to find him redeployment. Further, given his relatively short period of employment with AGC, it was always the case that Mr Henderson was more likely to be made redundant than each of the other Applicants. Mr Henderson has obtained alternate employment at effectively the same salary that he was receiving with AGC. He was out of work for some 15 weeks but received a severance payment of some 8.5 weeks pay.
Taking into account all the circumstances, I award Mr Henderson compensation in the sum of $4,000.
MINUTES OF ORDERS
THE COURT ORDERS:
That the Respondent pay the Applicant Lance Hamilton compensation in the sum of $7,500.
That the Respondent pay the Applicant Brennan Stanwix compensation in the sum of $10,250.
That the Respondent pay the Applicant Dale Archer compensation in the sum of $10,500.
That the Respondent pay the Applicant Leigh Henderson compensation in the sum of $4,000.
I certify that this and the preceding thirty-one (31) pages are a true copy of the reasons for judgment of Judicial Registrar Chancellor.
Associate:
Dated: 18 August 1995
Solicitors for the Applicant: Maurice Blackburn & Co.
Counsel for the Applicant: Mr N. Kenyon
Solicitors for the Respondent: Mr S. Cooper
Counsel for the Respondent: Ogilvie McKenna
Date of hearing: 24, 25, 26, 27 & 28 July 1995
Date of judgment: 18 August 1995
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - REDUNDANCY - VALID REASON - HARSH, UNJUST OR UNREASONABLE - COMPENSATION
Industrial Relations Act 1988 s170EA, s170DE, s170EE
CASES: Quality Bakers of Australia Ltd v Golding & Wickham,
Beazley J, 23 June 1995
Corkery v General Motors-Holden’s Limited (1986)
53 SAIR 531
Liddell v Lembke (1994) 127 ALR 342
Lance Hamilton v Australian Guarantee Corporation Ltd
No. TI 1037 of 1995
AND
Brennan A Stanwix v Australian Guarantee Corporation Ltd
No. TI 1038 of 1995
AND
Dale Anthony Archer v Australian Guarantee Corporation Ltd
No. TI 1041 of 1995
AND
Leigh Jackson Henderson v Australian Guarantee Corporation Ltd
No. TI 1042 of 1995
Before: Judicial Registrar Chancellor
Place: Hobart
Date: 18 August 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
TI 1037 of 1995
B E T W E E N :
LANCE HAMILTON
Applicant
AND
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Chancellor 18 August 1995
THE COURT ORDERS:
That the Respondent pay the Applicant compensation in the sum of $7,500.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
TI 1038 of 1995
B E T W E E N :
BRENNAN A STANWIX
Applicant
AND
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Chancellor 18 August 1995
THE COURT ORDERS:
That the Respondent pay the Applicant compensation in the sum of $10,250.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
TI 1041 of 1995
B E T W E E N :
DALE ANTHONY ARCHER
Applicant
AND
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Chancellor 18 August 1995
THE COURT ORDERS:
That the Respondent pay the Applicant compensation in the sum of $10,500.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
TI 1042 of 1995
B E T W E E N :
LEIGH JACKSON HENDERSON
Applicant
AND
AUSTRALIAN GUARANTEE CORPORATION LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Chancellor 18 August 1995
THE COURT ORDERS:
That the Respondent pay the Applicant compensation in the sum of $4,000.
0
1
0