Lorraine Sheather-Smith v NIB Health Funds Limited

[1995] IRCA 541

CATCHWORDS

INDUSTRIAL LAW - UNLAWFUL TERMINATION - No VALID REASON - Probation period

Industrial Relations Act 1988 ss 170DC, 170DE, 170EA

LORRAINE SHEATHER-SMITH -v- NIB HEALTH FUNDS LIMITED

No. NI 1229 of 1995

COURT:       MCILWAINE JR
PLACE:       PERTH (HEARD IN SYDNEY)
DATE:          29 SEPTEMBER 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES  DISTRICT REGISTRY

No. NI 94/1229

BETWEEN:

LORRAINE SHEATHER-SMITH
Applicant

AND:

NIB HEALTH FUNDS LIMITED
Respondent

BEFORE:       McILWAINE JR
PLACE:         SYDNEY
DATE:            29 SEPTEMBER 1995

REASONS FOR JUDGMENT

This is an application under Division 3 of Part VIA of the Industrial Relations Act 1988 claiming unlawful termination of employment by Lorraine Sheather-Smith of the ACT. The application is supported by her union, the Australian Services Union, and at the hearing Mr George Maniatis of that union appeared on her behalf. Mr McIlroy, an officer of the Employer Organisation of which the respondent is a member, appeared on its behalf. The remedy sought in her application was that of reinstatement and compensation.

A certificate has been received from the Australian Industrial Relations Commission signed by Vice President, A.W.D. McIntyre, that the Commission certifies that it has been unable to settle this matter by conciliation.  I am therefore satisfied it is properly before me. 

There is no dispute between the parties that her employment was terminated on the initiative of the employer on 15 November 1994. Her application to the Court was signed by the applicant on 28 November 1994 and the then union secretary endorsed it on 2 December 1994. It appears to have been entered on the Court's computer on that date, although another stamp indicates it was filed in the Registry on 5 December 1994. In any event, the respondent issued a letter dated 28 November 1994 which the applicant asserts was not received by her until 6 December 1994. Having considered that letter I am satisfied that it is a written notice of termination within the meaning of Section 170EA(3) and that therefore there is no difficulty in terms of the time limit in the legislation.

The applicant gave evidence of the commencement of her employment with NIB Health Funds Limited on 25 July 1994 as a sales representative in the Canberra region.  The salary for the position was $28,000.  Exhibit 2 is the original letter dated 25 July 1994 which was sent to her by Mr Marcus E Horne, Human Resources Manager, of the Fund congratulating her on her appointment and outlining the various details about the conditions of her employment.

I note in particular that there is written in the applicant's handwriting alongside the salary "3 mth review".  The applicant was of the view that this was a review to be undertaken of her salary whilst it was suggested on behalf of the respondent that it was a probationary period.  Another important matter is that included in that letter is the suggestion that the applicant is to report directly to the Sales Manager, Mr Jim Glenday.  In her affidavit which was read to the Court the applicant conceded "The position was on a trial basis for a period of three months from the date of commencement of employment (25 July 1994).  At no time did NIB Health Fund Limited communicate to me that the trial period had been extended beyond the three month time frame.  At no time did I agree to extend the three month trial period.  I was of the view that the three month trial period had ended on 25 October 1994." 

The applicant went on to describe the main duties of the position as being involved in informing prospective members of the benefits of NIB products. The applicant carried out this task at corporate level with public and private sector institutions and with individuals in the Canberra area, working out of the Belconnen branch of the respondent.  Initially the applicant received training consisting of one week reading through NIB literature, sales manuals, policy manuals and product information together with two days spent accompanying other NIB sales representatives attending their areas in Sydney.  It was suggested by the applicant that no other structured training was provided, either on or off the job.

The applicant further testified that sales representatives were given a sales budget or target for the area, however, her evidence was that "you were never informed at any time that failure to achieve the target would lead to the termination of my employment, either verbally or in writing".  There was a dispute in the evidence between the applicant and the Sales Manager, Mr Glenday, as to just exactly what counselling was undertaken in relation to her sales figures. 

The applicant testified that Canberra was a difficult area in that most of the buildings are security controlled and it is not a simple matter to obtain access to these buildings and meet the employees with a view to signing them up in a health fund.  That seems to me to accord with the practice of major institutions that "cold calling" or canvassing of employees during working hours is not encouraged by the employer.  I accept that there is some merit in the applicant's claim in this regard.

At one stage between 22 August 1994 and 27 September 1994 a serious breakdown in the working relationship between Mr Glenday and the applicant took place.  There was no longer any trust between them.

Another issue that became apparent was the suggestion of a meeting between the applicant and Mr Glenday which was scheduled for 7 November 1994 to carry out a review of her three month trial period which ended on 25 October 1994.  Mr Glenday was unsure as to when he made the agreement with the applicant to carry out the review at the Canberra Expo.  He first suggested:  "23rd I think it was.  It was on her anniversary date".  That evidence is clearly wrong as 23 October 1994 was a Sunday and the anniversary date was 25 October 1994.  On balance, I accept the applicant's evidence that she did not consent to the extension of the review period.  The review period therefore finished on 25 October 1994.

Moreover, a visit to the Canberra Expo seems to me to be an unlikely place at which a review of somebody's performance would be carried out when the object of being at that function would be for both parties to concentrate on selling the organisation which they were representing to whoever was at the Expo.

On the evidence before me it is not clear just exactly what sales results Mr Glenday expected the applicant to achieve. It is essential for sales managers to put clearly to the sales persons under their control the results which they want the representative to achieve and that failure to achieve those results will mean dismissal. Preferably, but not essentially, this should be done in writing. I am not satisfied on the evidence before me that either was properly done in this case. The time for Mr Glenday to do this, as I find it was not done before then, was at the meeting of 15 November 1994. Instead, the applicant was dismissed. I find the respondent to have contravened Section 170DC of the Industrial Relations Act 1988.

I find that Mr Glenday acted in the manner in which he did in the mistaken belief that the probation period had been extended by agreement.

I am not satisfied that the respondent has established a valid reason for the termination of the employment of the applicant. It has contravened Section 170DE(1) of the Industrial Relations Act 1988. Reinstatement is impracticable based on my assessment of the two main witnesses' attitudes and views about each other.

At the date of hearing the applicant testified that she had been unable to obtain alternative employment and had been forced to transfer her house.  Whilst I accept all of these difficulties, on the other hand it does seem to me that the applicant was not as successful as she could have been in selling the company's products.  Whether this came about from her inability to develop a proper working relationship with her Sales Manager, I am unable to say.  It may well have occurred, if the respondent had acted appropriately, that within a relatively short period of time the applicant might have been properly dismissed.  I think that a period of about a further two months would have been sufficient to enable her to demonstrate her capabilities in achieving the desired level of sales.  I would be prepared to allow up to 15 February 1995 given the difficulties I would imagine of contacting people in Canberra during the Christmas/New Year/January holiday period. 

In the light of that analysis of the situation I consider that at the meeting on 15 November 1994 Mr Glenday could have given her a proper warning and stressed that her employment would be terminated if her sales figures had not reached the set levels by the middle of February 1995.  If those results were not obtained the applicant could have then been properly dismissed.

The weekly equivalent of the $28,000 annual salary is $538.46.  In all those circumstances I consider that the amount of compensation that is appropriate to be paid in this matter is $6,461.52.  I award that amount to the applicant to be paid within fourteen days.

I certify that this and the preceding five pages are a true copy of the Reasons for Judgment of Judicial Registrar McIlwaine.

Associate

Date:

Representative for the applicant:     Mr G Maniatis
   Australian Services Union

Representative for the respondent:   Mr A McIlroy
   Chamber of Manufacturers of NSW     

Hearing date:      26 April & 31 May 1995          

Judgment date:        29 September 1995

INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES  DISTRICT REGISTRY

No. NI 94/1229

BETWEEN:

LORRAINE SHEATHER-SMITH
Applicant

AND:

NIB HEALTH FUNDS LIMITED
Respondent

BEFORE:       McILWAINE JR
PLACE:         PERTH (HEARD IN SYDNEY)
DATE:            29 SEPTEMBER 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The respondent pay the applicant the sum of $6,461.52 as compensation    within fourteen days of today.