Lynne-Esther Kenney v P M Loveland

DECISION NO: 26/96

C A T C H W O R D S

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - whether employee or sub-contractor - whether RESIGNATION or termination at the initiative of the employer - whether VALID REASON for termination - HARSH, UNJUST OR UNREASONABLE - claim for superannuation entitlements - COMPENSATION

INDUSTRIAL RELATIONS ACT 1988 Ss 170CB, 170DB, 170DC, 170DE, 170EA, 170EDA, 170EE
TERMINATION OF EMPLOYMENT CONVENTION, 1982, Article 3
SUPERANNUATION GUARANTEE (ADMINISTRATION) ACT 1992 (CWLTH)
SUPERANNUATION GUARANTEE CHARGE ACT 1992 (CWLTH)
THE INDUSTRIAL RELATIONS AND OTHER LEGISLATION AMENDMENT ACT 1995, SCHEDULE 2, ITEM 14(2)(b)(ii)

Re Porter; Re TWU (1989) 34 IR 179
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
Fitt and HSUA v Department of Health and Community Services, unreported, IRCA No. 613/95, Murphy JR, 17 November 1995
Purvis v Chiefton Management Pty Ltd, unreported, IRCA No. 527/95, Marshall J, 29 September 1995
Garth v Innerspace Wardrobes, unreported, IRCA No. 495/95, Murphy JR, 22 September 1995
Wong -v- Hodes and Kok-Loong, unreported, IRCA No. 56/94, Tomlinson JR, 26 September 1994
B Cartmel -v- Skilled Engineering Pty Ltd, (1995) 37 AILR 3‑115
APESMA -v- Skilled Engineering Pty Ltd (1994), IRCR 106
Qui -v- Steyi Nursing Home (1993) 35 AILR, No 24, Case 382
Mohazab v Dick Smith Electronics Pty Ltd, unreported, IRCA No. 625/95, Lee, Moore and Marshall JJ, 28 November 1995
Grout v Gunnedah Shire Council (1994) 125 ALR 355
APESMA v David Graphics Pty Ltd, unreported, IRCA No. 410/95, Wilcox CJ, 12 July 1995
Rodley v Capricornia Pty Ltd, unreported, IRCA No. 130/95, Murphy JR, 30 March 1995
May v Lilyvale Hotel Pty Ltd, unreported, IRCA No. 628/95, Wilcox CJ, 1 December 1995
Aitken v CMETSWUA - WA Branch, unreported, IRCA No. 352/95, Lee J, 7 August 1995
Bean v Milstern Retirement Services Pty Ltd, unreported, IRCA No. 248/95, Moore J, 2 June 1995

LYNNE-ESTHER KENNEY -v- P M LOVELAND - WI 95/2058

BEFORE:        RITTER JR
PLACE:           PERTH
DATE:             30 JANUARY 1996

IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/2058

BETWEEN: LYNNE-ESTHER KENNEY
- Applicant

AND: P M LOVELAND
- Respondent

MINUTE OF ORDERS

BEFORE: RITTER JR

PLACE: PERTH

DATE: 30 JANUARY 1995

THE COURT ORDERS AND DECLARES THAT:

The respondent terminated the employment of the applicant in contravention of Sections 170DB, 170DC and 170DE of the Industrial Relations Act, 1988.

The respondent pay to the applicant $692.31 in damages pursuant to Section 170EE(5) of the Industrial Relations Act, 1988.

The respondent pay to the applicant $15,000 in compensation pursuant to Section 170EE(2) of the Industrial Relations Act, 1988.

The applicant's claims for damages for non payment for and loss of babysitting are dismissed.

The applicant's claim for statutory superannuation entitlements is dismissed.

The amounts to be paid to the applicant by the respondent be paid within 21 days of the date of this order.

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 95/2058

BETWEEN: LYNNE-ESTHER KENNEY
- Applicant

AND: P M LOVELAND
- Respondent

BEFORE: RITTER JR

PLACE: PERTH

DATE: 30 JANUARY 1996

REASONS FOR JUDGMENT

This is primarily an application under Section 170EA of the Industrial Relations Act 1988 ("the Act") arising out of the alleged termination of employment of the applicant, by the respondent, in contravention of Division 3 of Part VIA of the Act. At the commencement of the trial, the applicant sought reinstatement. However, in his closing submissions, Mr Cole for the applicant conceded that reinstatement was impracticable. Therefore, compensation was sought pursuant to Section 170EE(2) of the Act. In addition, there were some claims for damages which are set out later in these reasons.

In respect of the unlawful termination claim, the respondent submitted that:

The applicant conducted herself in a way which amounted to a resignation of her position and accordingly the court had no jurisdiction to order any remedy.

If there was a termination, the respondent had a valid reason for termination related to the capacity or conduct of the applicant.

Alternatively, the applicant was an independent contractor engaged by the respondent and not an employee.

If there was a termination of employment in breach of the Act, reinstatement was impracticable.

The compensation to be awarded to the applicant if there was a breach of the Act was very limited.

BACKGROUND

The applicant gave evidence on her own behalf. She did not call any witnesses. Evidence for the respondent was given by Mr Phillip Loveland, Mrs Angelina Loveland, Mrs Suria Fernandez and Ms Deborah Chan.

The respondent conducts an accountancy practice and registered tax agency. The structure of the accountancy practice is that, by oral agreement, the respondent provides his accountancy services to the Maple Investment Trust. This trust provides the personnel and materials necessary for the conduct of the accountancy practice. In July 1995 those working at the practice were Mr and Mrs Loveland, the applicant, Ms Chan and Mrs Fernandez.

The applicant commenced work with the accountancy practice on about 17 April 1995. Essentially the applicant was engaged to work as an accountant for the respondent. However, it was envisaged by both Mr Loveland and the applicant that the applicant would do some work for Mr Loveland in relation to commercial projects he was hoping to be involved with.

Mrs Angelina Loveland (Mr Loveland's wife) worked as an administrator in the office of the respondent. Mrs Fernandez was from 29 June 1995 the receptionist who worked at the practice of P M Loveland. Ms Chan is an accountant who commenced working at the practice of P M Loveland on 3 July 1995. Ms Chan was formerly the "best friend" of the applicant. However, this relationship has ceased due to matters associated with these proceedings.

There was general agreement between the parties about the chronology of relevant events, although there was disagreement surrounding what occurred at such events and the legal position in relation to the same. The relevant chronology is as follows:

12 April 1995 - the applicant is engaged to work for the accountancy practice of the respondent and commences on about 17 April 1995.

29 June 1995 - Mrs Fernandez commences as the receptionist at the practice of the respondent.

1 July 1995 - there was a possible change in the nature of the business relationship between the applicant and respondent.

3 July 1995 - Ms Chan commences as an accountant in the office of the respondent.

About 12 July 1995 - a problem develops with the applicant's failure to provide Mrs Loveland with completed Work In Progress time sheets ("WIP sheets"). Discussions about this take place between the applicant and Mrs Loveland.

13 July 1995 - the applicant has a 20 minute discussion with Mr Loveland about matters relating to the administration of the office of the respondent.

14 July 1995 - Mr Loveland gives to the applicant a statement of revised duties.

17 July 1995 - the applicant does not attend for work at the office of the respondent.

18 July 1995 - the applicant travels to Sydney to take part in a seminar and workshop. This is arranged prior to her commencement with the respondent and is attended with the agreement of Mr Loveland. The applicant is to return to work at the practice of the respondent on 24 or 25 July 1995.

20 July 1995 - the applicant has a telephone conversation with Mrs Loveland. According to the applicant, her employment with the respondent is terminated during this conversation. This is denied by Mrs Loveland.

21 July 1995 - the applicant gives to her hotel in Sydney a note to send by facsimile to the respondent concerning the termination of her employment. There is disagreement as to when the facsimile was received at the office of the respondent.

21 July 1995 - the applicant and Ms Chan have a brief telephone conversation about the situation between the applicant and the respondent.

24 - 29 July 1995 - as foreshadowed in the facsimile sent by the applicant to the respondent, the applicant remains in the eastern states. The applicant returns to Western Australia on 29 July 1995.

31 July 1995 - the applicant does not attend for work at the office of the respondent.

1 August 1995 - the respondent sends to the applicant a letter which, at least, confirms the termination of the business relationship between the applicant and the respondent (Exhibit 8).

1 August 1995 - the applicant has a lengthy discussion with Mr Loveland at the offices of the respondent. The meeting lasts at least three hours. The applicant states that at the conclusion of the meeting the respondent indicated that it was considering renewing the business relationship with the applicant. The respondent denies this and says that Mr Loveland merely indicated to the applicant that he was to discuss with Mrs Loveland whether there could be some further personal relationship with the applicant.

2 August 1995 - the applicant delivers flowers and chocolates and an apology note to Mr and Mrs Loveland at the office of the respondent (Exhibit 9).

20 August 1995 - the applicant sends a facsimile letter to the respondent suggesting that she has been the subject of unfair dismissal (Exhibit 10).

23 August 1995 - after receiving a telephone call from the solicitor for the respondent, in response to the applicant's letter dated 20 August 1995, the applicant sends a further letter to the respondent (Exhibit 11).

The above is a very brief outline of relevant events. These will be considered in more detail later in these reasons.

THE RELATIONSHIP BETWEEN THE APPLICANT AND THE RESPONDENT

As stated above, the respondent contended that the applicant was a sub-contractor of the respondent and not an employee. It is appropriate to deal with this argument first. It is fair to say that this alternative argument was not pressed with the same force by the respondent as other aspects of its defence.

The respondent's argument largely centred on the form of the relationship between the applicant and the respondent. It seems to be accepted by the respondent that the applicant was an employee up to 30 June 1995. The form of the relationship between the respondent and the applicant and Ms Chan after 3 July 1995 was suggested by Mr Loveland. Two discretionary trusts were created called the Synergy Trust of which the applicant was the trustee and the Ficciflora Trust of which Ms Chan was the trustee. The Synergy and Ficciflora Trusts entered a partnership from 1 July 1995. The partnership was to enter into a contract with the Maple Investment Trust. Under this, in return for the provision of accountancy services, the partnership would receive annual compensation of $87,500 from the Maple Investment Trust. The partnership would pay rent for office space to the Maple Investment Trust. The rental would be $15,000 per annum.

The applicant gave evidence that the arrangement between herself and the respondent was in this form so that the respondent could avoid making superannuation contributions for the applicant as an employee. The applicant said that Mr Loveland was opposed to making payments to superannuation funds. Ms Chan's evidence was in support of the applicant. Mr Loveland did not give any evidence as to the superannuation aspect of the arrangement. He said that he wanted the applicant and Ms Chan,

"to provide me with an overall package of services along the lines of what I just discussed, where there would be a certain number of chargeable hours provided to me on an annual basis. I wasn't overly concerned about precisely what times of the day they performed these functions or in what manner they performed them, so long as it was - obviously, ultimately to my satisfaction, but effectively I wished them to have some concept of being self employed so that they would be self motivated, self driven, able to not have, you know, my total - my direction, and to also take advantage of future plans we had - any fees being generated by contact with Ms Kenney or Ms Chan (sic) was to form the basis of what's referred to in the diagram as the sub-practice".

The diagram referred to by Mr Loveland is Exhibit 2, which was a schematic representation of the form of relationship between the respondent and Ms Chan and the applicant. The applicant and Ms Chan were paid monthly from 1 July 1995. The respondent made no deductions of PAYE income tax and did not make any superannuation contributions. There was no evidence about whether Ms Chan was paid personally each month or whether the money was paid to the Ficciflora trust. However, the applicant said that the final cheque she received with the letter of 1 August 1995 was made out to her personally.

Whilst lack of deduction of income tax and the form of the relationship between the applicant and the respondent may point to a subcontractor relationship, I am firmly of the view that the true relationship between the applicant and the respondent was one of employer and employee. Although Mr Loveland may have, in name, called the applicant a subcontractor, "the parties cannot create something which has every feature of a rooster, but call it a duck and insist that everyone else recognise it as a duck". (RePorter; re TWU (1989) 34 IR 179 per Gray J, page 184). I also note the applicant's evidence that she understood that she was still an employee.

The High Court decision of Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 sets out the method for a Court to follow in determining the question of whether an individual is a contractor or an employee. The proper approach is to consider and weigh the relevant indicia to decide the true nature of the relationship; see for example Mason J at page 24 and Wilson and Dawson JJ at pages 36-37.

As the High Court indicated, one prominent factor in determining the nature of the relationship is the degree of control which can be exercised over the putative employee. In this case, Mr Loveland had much actual or potential control over the applicant. He determined her hours of work as being essentially from 9.00 am to 5.00 pm. Whilst there was some suggestion of flexibility of hours, it became clear during the evidence of Mr Loveland and Ms Chan that such flexibility would only apply if the "employee" had already worked in excess of a target number of chargeable hours set by Mr Loveland. The fact that he did set targets of chargeable hours is also an indication that the applicant was an employee. For example, Mr Loveland gave to the applicant a document (Exhibit 5) on 14 July 1995 which set out the nature of the duties that the applicant was to perform and the targets which she ought to achieve. As was clear from the evidence, Mr Loveland had authority to chastise or discipline the applicant if the targets of chargeable billing hours were not met.

The way in which the applicant performed her work for the respondent also indicated that the respondent had a large degree of potential control over the applicant. With respect to her accounting work, the work procedure was as follows. Mr Loveland would almost exclusively see clients when they came to the practice for an interview. He would determine what work needed to be done and the date by which the work needed to be completed. This work was then placed into a filing cabinet. The drawers of the filing cabinet were separated by folders indicating the date when various work was to be completed. The applicant and Ms Chan would go to the filing cabinet to obtain accountancy work. They would take and do the next accountancy work which was to be completed. They would try and do such work ahead of the due date ascribed by Mr Loveland. After the work was completed, Mr Loveland would review the work before it was finalised for the client.

The method and purpose of recording work in progress also indicates the respondent exercised a large amount of control over the applicant.

The applicant also did some administrative work in the office of the respondent. Again, this work was at least subject to the latent control of Mr Loveland. The applicant's administrative work included doing work on things noted by Mr Loveland and placed by him in a "To Do" file.

It was also anticipated that later in the year or the following year, the applicant would work on various commercial projects for Mr Loveland. Again, this work was to be delegated to the applicant by Mr Loveland and overseen by him. Whilst the applicant was able to pursue other consultancies, it was clear that this was not to derogate from her capacity to provide the work required of her by Mr Loveland.

Another important indicia of being a subcontractor/employee is what is known as the "organisation" test. In this case, it is clear that the applicant was integrated within the practice of the respondent. The applicant was not in any real sense carrying on a business on her own account; see Fitt and HSUA v Department of Health and Community Services, unreported, IRCA No. 613/95, Murphy JR, 17 November 1995 at page 14.

Proofs of business cards that were prepared (Exhibit 3) described the applicant as "Administrator, Projects Manager", with PM Loveland CPA typed in large print on the card.

Another indication that the applicant was an employee was the fact that she was to receive paid sick leave and holidays. This was a matter which was raised by Ms Chan prior to her commencement with the respondent. As a result of this, it was confirmed that both the applicant and Ms Chan would be receiving these paid benefits normally received by employees. This tends to counterbalance the way in which the applicant was going to be paid as a factor in favour of the conclusion that the applicant was a subcontractor.

In relation to the applicant's trip to Sydney, Mr Loveland's permission needed to be obtained so that she could attend the seminar and workshop.

The applicant was essentially paid a salary, although there may have been some potential to increase her income if commercial projects for Mr Loveland were finalised or the applicant achieved a certain level of billing for the respondent. However this was also dependent upon the respondent's practice achieving a certain level of billing.

The letter of Mr Loveland to the applicant dated 1 August 1995 also indicates that the applicant was an employee. The tone of the letter is certainly one of employer to employee. The complaint about the applicant's work performance as contained in the letter is consistent with this. The letter also contains a reference to changing "the previous arrangement of salary (with present targets) to subcontract 'employment' where you could/would be paid a flat rate for chargeable hours actually performed". The fact that Mr Loveland asserts that he has the authority to change the nature of the relationship pointed towards the fact that he considered himself an employer.

The letter also states, "the commercial reality is that any employee must produce acceptable levels of measurable productivity to justify employment"; and, "I sincerely hope that you understand that as much as I like you as a person it cannot be permitted to cloud my judgment as an employer". These sentences come close to an admission of the true nature of the relationship.

In considering all the relevant indicia, I am of the firm view that the applicant was the employee of the respondent. This is reinforced by my clear impression of the nature of the relationship. The importance of "a matter of impression" was referred to in Re Porter by Gray J at page 184. See also Purvis v Chiefton Management Pty Ltd, unreported, IRCA No. 527/95, Marshall J, 29 September 1995 at page 10 and Garth v Innerspace Wardrobes, unreported, IRCA No. 495/95, Murphy JR, 22 September 1995 at page 7.

My conclusion on this point is that the applicant was in an employment relationship with the respondent and that therefore the Court has jurisdiction under Section 170EA of the Act to determine this matter.

TERMINATION OF EMPLOYMENT?

As stated above, the primary argument of the respondent was that there was no termination of employment by the respondent. Whilst the applicant asserted that there was, Mr Cole in his closing submissions was somewhat vague about when the termination was effected. The applicant's position seemed to be that the termination was either effected during the conversation between the applicant and Mrs Loveland on 20 July 1995 or by the letter from Mr Loveland to the applicant dated 1 August 1995. I will first consider the possible termination of employment in the conversation between the applicant and Mrs Loveland on 20 July 1995. To properly understand this conversation, it is necessary to refer to the background to it.

As stated above, the applicant commenced employment with the respondent on about 17 April 1995. The applicant had previously known Mr and Mrs Loveland as the applicant had been married to the best friend of Mr Loveland. The applicant was employed by the Australian Taxation Office. In early April 1995 she attended with her mother to see the respondent. The purpose of this consultation was to obtain financial advice for the applicant's mother and herself. At the first consultation, only her mother's situation was discussed. Therefore, a second appointment was made. At the second appointment the discussion between the applicant and Mr Loveland turned to the issue of the applicant coming to work for Mr Loveland as an accountant. The applicant explained that she had no accountancy qualifications but Mr Loveland said this did not matter for the work she would do. It was subsequently agreed that the applicant would work for the respondent. Her commencement date was on about 17 April 1995. The applicant did not resign from the Australian Taxation Office but merely went on leave. This was authorised by the Australian Taxation Office, which was aware that the applicant was to work for the respondent.

One of the matters which the applicant originally wanted to see Mr Loveland about was the possibility of a partnership with a man in the eastern states who wanted to form a human resources consultancy partnership with the applicant. The mooted partnership would largely be involved in training, seminars and workshops in relationship to workplace harassment. Prior to her consultations with Mr Loveland, the applicant had arranged to co-present a seminar and workshop with her prospective partner, Mr Gerry Mithen, in Sydney in July. Prior to her employment with Mr Loveland, Mr Loveland agreed that the applicant could proceed with this. At no relevant time, however, was the partnership with Mr Mithen formalised. There was some discussion, however, between the applicant and Mr Loveland about Mr Loveland becoming a partner with the applicant and Mr Mithen if the partnership proceeded.

In the initial discussions between the applicant and Mr Loveland, there was also discussion about commercial projects which the respondent wanted to be involved in and put together for clients. It was discussed that the applicant would have some involvement in this, particularly in the future.

During the early employment of the applicant with the respondent, her duties were almost exclusively accountancy duties. In June 1995, Mr and Mrs Loveland took a few days' holiday. Whilst on leave, Mr Loveland decided to employ another accountant so that he would be able to take life a "bit easier" including taking a proper holiday each year. On his return from his holiday he discussed this with the applicant. The applicant had a friend, Ms Chan, whom the applicant knew to be unhappy at the place where she was working as an accountant. Ms Chan was a qualified accountant. Mr Loveland met with Ms Chan and Ms Chan commenced employment with the applicant on 3 July 1995.

Mr Loveland had calculated that the practice could occupy the time of 2.7 accountants. This work was to be done by himself, Ms Chan and the applicant. Ms Chan was to do the work of one full accountant with the applicant and Mr Loveland making up the balance. Some of the applicant's time was to be taken up with administrative work and work on projects. It was also envisaged that some of Mr Loveland's time would be released to work on projects.

As stated above, Mrs Loveland worked in the office of the respondent as an administrative officer. She performed such duties as recording the information on WIP sheets into a computer, billing clients, preparing the wages or salaries for staff, occasional answering of the telephone and other clerical duties. Another reason for Mrs Loveland working in the office of the respondent was to try and ensure that Mr Loveland did not overwork. She did this by trying to some extent to monitor and limit his appointments. Mr Loveland had, the previous year, been hospitalised due to what was described as a "stress attack". It was agreed that the practice of the respondent becomes extremely busy from the commencement of July until about November each year. This is because the respondent's clients are required to file their taxation returns during this time. The respondent himself is extremely busy during this period. It was described in evidence that Mr Loveland would have back to back appointments on the hour, every hour, much of the time during this period. As stated earlier, the respondent would see clients and the resulting accountancy work would be performed by the applicant and Ms Chan.

In her evidence, the applicant said that after the decision was made to employ Ms Chan, Mr Loveland explained to her that her role in the office was going to change. Instead of doing almost entirely accountancy work, she would do some accountancy work, some work on projects and administrative work. She said that it was explained to her that Mrs Loveland wanted to ease out of working at the practice and therefore it was envisaged that the applicant would take over Mrs Loveland's role. This was to some extent disputed by Mr Loveland. He said that whilst there was an intention for Mrs Loveland to cease working at the practice, this would not happen until after the busy tax season for 1995. Further, it was unlikely that work on projects would be engaged in during this busy time. Therefore, the applicant was to remain primarily an accountant until a much later time. Mr Loveland's evidence is consistent with the busy state of the practice during the relevant period. However, consistent with the applicant's evidence were some proofs of a business card that was prepared for her which described her as, "Administrator, Projects Manager" (Exhibit 3). I accept that the applicant at least became confused over what her role in the practice was. This occurred when her understanding as to the change of her role did not seem to be materialising during the first part of July 1995.

As set out in the chronology of events, Mrs Fernandez commenced with the respondent as a receptionist on 29 June 1995. When interviewed for the position of receptionist, it was explained to Mrs Fernandez that she would be required to perform basic receptionist duties and if this proceeded satisfactorily then she would perform duties of greater responsibility including the inputting of billing details into the computer. During the early part of her employment with the respondent, Mrs Fernandez was dissatisfied. She confided her dissatisfaction to the applicant. She complained that she was not receiving work of sufficient responsibility.

Another problem that developed at the office concerned the applicant and her WIP sheets. It was necessary for the applicant to record the work that she had done for individual clients on a time sheet. This was known as the WIP sheet. At the end of each day the WIP sheet was to be placed in a filing cabinet. It was then Mrs Loveland's role to input the information from the WIP sheet into the computer. Mr Loveland would later settle the amount of the bill and Mrs Loveland would forward this to clients.

For the first couple of weeks in July, Mrs Loveland was busy with other activities and unable to input the WIP sheets into the computer system. She said that she then went to do this and discovered that there were no WIP sheets of the applicant in the filing cabinet. She approached the applicant about this. She claimed that the applicant said that she had some half completed sheets that she would finish and get to Mrs Loveland as soon as she could. Mrs Loveland said that she told Mr Loveland that the applicant's time sheets were a bit behind. She did not explain the full extent of how far they were behind because she knew that would upset him. She said that she would sort it out and he was not to worry. Mrs Loveland said that she raised the matter again with the applicant who said that she would get the time sheets to her. Ultimately the WIP sheets were produced for all days with the exception of 6 July 1995.

The applicant's evidence was that the only WIP sheet she did not complete was 3 July 1995. This was because she had spent the whole day in orientation with Ms Chan and did not think she had to record time which could not be billed. It was explained to her by Mrs Loveland that she should have recorded this. She then recorded on a WIP sheet dated 3 July, "Working with Deb". With respect to the other days, she said that she had completed WIP sheets, was asked for them and got them out of the filing cabinet and put them on her desk ready to give to Mrs Loveland. When Mrs Loveland then came to ask about the WIP sheets again in the second week of July, they were missing. The applicant said that most of them were ultimately located except the 6th and 7th of July 1995. The applicant was able to reconstruct a time sheet for the 7th but not the 6th of July 1995. Therefore, there remained no WIP sheet for 6 July 1995. The applicant said that with the exception of 3 July, as referred to above, she had completed a WIP sheet every day, with the individual time entries written roughly contemporaneously with the work done and described.

As stated above, the applicant had some confusion with her role in the practice. She understood that she was to become the administrator yet Mrs Loveland was continuing to work at the practice as the administrator. There was also no project work to do at that time.

On 13 July 1995, the applicant decided that she would speak to Mr Loveland about the situation concerning herself and Mrs Fernandez. She went to see the respondent when he had 20 minutes between appointments. She discussed with him the problems with Mrs Fernandez. She also raised with him the issue as to whether Mrs Loveland really did want to cease working at the practice because there was no indication of her doing this. Part way through the discussion with Mr Loveland, Mr Loveland's next client arrived. Therefore the applicant did not get the opportunity to discuss with him her problems at the office. She also said that Mr Loveland's attitude was that if Mrs Fernandez wanted to resign then that was her business. Mr Loveland, in his evidence, confirmed that it was his view.

Mr Loveland's evidence was also that he considered the applicant's approach to him on 13 July 1995 to be deceptive. This was because he considered that the main problem at the office was the applicant not having completed her WIP sheets. He thought it was deceptive of her to raise other issues as being the cause of office tension when this was the real issue. However, he did not raise this with the applicant. He also did not discuss with her the WIP sheets at this meeting.

That evening he had a further discussion about the applicant and her WIP sheets with Mrs Loveland. The applicant was going to babysit the Loveland's children when they went out on the evening of Friday 14 July 1995. However, the Lovelands decided that they would tell the applicant that they did not require her as a babysitter the following evening. Given the situation of tension in the office they decided that they did not wish to go out and did not want to have any risk, however slight, that the difficulties the applicant was having with the Lovelands would be taken out on their children. Mrs Loveland informed the applicant of this the following day.

Mr Loveland said that he considered the respective roles that each of his employees was to have in the office on the evening of 13 July 1995, and prepared a duty sheet for the applicant and Ms Chan. Ms Chan's duty sheet simply reflected the fact that she was going to do 100% accounting work. The applicant's duty sheet, which was tendered as Exhibit 5, showed that the applicant was to do 75% accounting work over the entire year. Mr Loveland gave this document to the applicant the following day. However, there was no significant discussion between the applicant and Mr Loveland about the document.

With respect to the WIP sheets, it is agreed that as at 14 July 1995 there was only a WIP sheet for 6 July 1995 that had not been completed. Mr Loveland, in his evidence, said that in his opinion the WIP sheets did not go missing but were not contemporaneously completed. He admitted, however, that in looking at the WIP sheets for the period 3‑14 July 1995 (Exhibit A), he could not tell that they were not completed contemporaneously. He also accepted that there was a lot of detail on these WIP sheets and that it would be a lot of detail to include upon a reconstructed WIP sheet.

It was also the evidence of Mr and Mrs Loveland that there was no problem with the applicant completing WIP sheets up to 3 July 1995. I accept the evidence of the applicant as to those WIP sheets that she said she completed contemporaneously. I also accept her evidence that Mrs Loveland asked for the WIP sheets and the applicant removed them from the folder in the filing cabinet and placed them on her desk. I find that it was after this that Mrs Loveland looked for the applicant's WIP sheets in the drop folder and was unable to find them. When Mrs Loveland then approached the applicant about the WIP sheets they had gone missing from her desk for an unexplained reason.

On 18 July 1995 the applicant was to travel to Sydney for the seminar and workshop with Mr Mithen as referred to earlier. After the seminar and workshop in Sydney, Mr Mithen was to do further consultancy work in Canberra. This was to take about three days. The issue was raised in the evidence as to whether the applicant was aware of this prior to her travelling to Sydney and whether she wished to go with Mr Mithen to Canberra. The applicant's evidence was unclear about this. Ms Chan, however, could recall a conversation with the applicant in which she advised that she would like to go to Canberra with Mr Mithen, if she was getting on well with him. In this regard, it should be noted that the applicant did not know Mr Mithen very well. When the applicant discussed this with Ms Chan, Ms Chan said that the applicant should raise this with Mr Loveland. The applicant indicated that she would do so at the appropriate time. The applicant did not raise this issue with Mr or Mrs Loveland prior to her trip to Sydney. I accept the evidence of Ms Chan about this conversation. However, I find that the applicant had no preconceived idea that she definitely wanted to stay on in Canberra with Mr Mithen for the extra three days. I think it likely that she would have waited until she had presented the seminar and workshop with Mr Mithen and then contacted her employer to see whether an extension of her trip was possible.

There was also a suggestion in the evidence that the conduct of the applicant whilst she was in Sydney was orchestrated so that she could get the extra three days in Canberra. I do not accept this.

On Monday 17 July 1995, the applicant did not attend at the workplace. She was having some business cards printed for her prior to travelling to Sydney. She attended at the printer first thing in the morning to collect the business cards. However, the cards had not been printed properly. She telephoned the respondent's office at 8.30 am but there was nobody present. She left a message on the answering machine. By this time there was a problem with the artwork and the stock that the applicant ordered to have the business cards printed on wasn't at the printer's premises. The applicant's message on the office answering machine was that she hoped to be in by 11.00 am. The problems with the printer compounded during the day. As the day wore on it became clear to the applicant that she was going to be unable to attend work that day. Apart from the problem with the printer, she was also having difficulty with a dressmaker about some alterations to clothes that the applicant wanted to take to Sydney. During the day the applicant spoke to both Ms Chan and Mrs Fernandez. She initially told one of them that she would try to get in at 11.00 am. This was then changed to 2.00 pm by a subsequent telephone call and then by a further call trying to get into the office at the end of the day to speak to Mr Loveland. However, this did not eventuate. Whilst Ms Chan advised Mrs Loveland of the applicant's position, it seems that nobody advised Mr Loveland.

Mrs Fernandez said that although the applicant telephoned and spoke to her and advised her of the problems she was having at the printer and that she would try to get in later to see Mr Loveland, she did not pass this message on to Mr Loveland. She said that this was because she was not specifically told to do so. One can well understand that the applicant anticipated that Mrs Fernandez would have passed the message on without being specifically told to do so. However, Mrs Fernandez had not worked as a receptionist before and said that she only passed on messages when specifically asked to do so. Mr Loveland said that he was quite angry that the applicant did not attend for work on 17 July 1995. However it seems that he made no enquiry to find out why she was not at work.

The applicant left for Sydney on 18 July 1995. There was no contact between the applicant and the respondent until 20 July 1995. On this date in the late afternoon (Western Standard Time) the applicant telephoned and spoke to Mrs Loveland.

The applicant said that she wanted to speak to Mrs Loveland because Mrs Loveland had acted in a cool manner towards her when they last saw each other on 14 July 1995. The applicant said that she thought there was a problem and reasoned that Mr Loveland had spoken to Mrs Loveland about the conversation between the applicant and Mr Loveland on 13 July 1995. The applicant said that she wanted to speak to Mrs Loveland to, "explain where I was at and where I was coming from and that I didn't really have a problem with her".

The applicant said that when she telephoned Mrs Loveland, Mrs Loveland expressed her disappointment about the WIP sheets and that Mr Loveland was very disappointed with her about the WIP sheets. She said that Mrs Loveland said that it was obvious that she didn't enjoy the work that she was being asked to do. The applicant said Mrs Loveland said that she was "stressing Phil out" and that she should have known that at that time of the year she shouldn't be doing that. Part way through the telephone call the applicant's mobile telephone battery ran out. The applicant then grabbed another battery and inserted it into the telephone and telephoned Mrs Loveland again. The second battery was also not properly charged so that the telephone call again terminated prematurely. The applicant explained that she did not telephone by using the telephone in her apartment in Sydney because this was being used by Mr Mithen. The applicant said in the telephone call that she understood the WIP sheets were important and that any missing WIP sheets would turn up. She also said that she did enjoy working with the respondent. The applicant said that the conversation returned to these themes more than once. The applicant said that she was upset because she had not heard previously that Mr Loveland was unhappy with her because he had always told her that she was doing well. The applicant said that she wanted to bring Mrs Loveland "back on track" so that she said to her, "So, what are you saying to me here? Are you saying that you want me to bring the keys back and go back to the Tax Office?". The applicant said that Mrs Loveland's response was, "Yes. We think that would be best." The applicant said that as Mrs Loveland used the word "we", it sounded like she had already spoken to Mr Loveland about it. The applicant said that she was pretty upset after that. There was further discussion but this didn't resolve anything. The applicant was just saying that she thought that they needed to talk about it. The applicant's second battery on the mobile telephone then ran out.

The applicant said that she then dissolved into tears. She said that she hadn't been sacked before so she was really shocked. She said that she started to write a facsimile because although Mrs Loveland was saying "we" she wanted to get something through to Mr Loveland. She wanted confirmation that her employment was being terminated. She wanted to talk about the matter further. However, she said that she was too upset to complete the facsimile. The facsimile was completed the next day.

Mrs Loveland's version of this conversation was somewhat different. She agreed that the telephone call took place in the afternoon of 20 July 1995. She said that the applicant, "came on the phone very strongly. I was surprised.". She said that the applicant said something to the effect that she knew that there was tension on Friday when she left the office and wanted to talk to Mrs Loveland about it. The applicant also said she had believed there had been some discussion in the office. Whilst it appears the applicant was talking about discussions between Mr and Mrs Loveland on the evening of 13 July 1995, Mrs Loveland took this to refer to a discussion she had had with Ms Chan concerning the applicant. Therefore, Mrs Loveland replied that the only discussions she had had with Ms Chan was to ask whether the applicant had "possibly wanted out because the work wasn't what you wanted because the last two weeks there was no WIP sheets or anything like that". Mrs Loveland said that she told the applicant she was upset because Mr Loveland was upset about the WIP sheets not being in on time. Mrs Loveland said that she discussed the applicant's performance with her and that the applicant offered the excuses that she had offered previously about the missing WIP sheets. Mrs Loveland confirmed that the conversation was terminated twice by the battery on the mobile telephone running out. Mrs Loveland said that the applicant asked, "Do you want me to send my keys back?". Mrs Loveland said that she didn't answer because she didn't know what to say. Mrs Loveland said the applicant later repeated her question and Mrs Loveland said to the applicant that she did not know what she should do. Mrs Loveland said that the applicant asked her words to the effect: "where are we going to go from here" and that Mrs Loveland said that she did not know and that "All I know is Phil is upset about the WIP sheets not being up to date". Mrs Loveland said that the applicant had said that it was hard to take being sacked 3,000 miles from home. Mrs Loveland said to her that she didn't say anything about being sacked but that the applicant had asked Mrs Loveland to be honest about what was happening.

Mrs Loveland said that she was very careful when the applicant touched on the issue of being sacked because she had some previous experience of having to terminate the employment of an employee and made contact with the Industrial Relations Commission to find out the appropriate procedure to effect this.

Mrs Loveland said that she did not say to the applicant that "We think it would be best" if she returned to the Tax Office because Mrs Loveland did not know what was going to happen.

I find it difficult to determine whether the applicant's evidence or Mrs Loveland's evidence about the conversation on 20 July 1995 is correct. There was nothing about the way in which either the applicant or Mrs Loveland gave their evidence which would lead me to prefer the evidence of one as against the other. Further, there was nothing improbable about either person's version of events.

However, the facsimile which the applicant completed on 21 July 1995 included the following:-

"I've never been sacked before. I was devastated to be told in such a way when I'm 3,000 miles away.

Anyway, I have the workshop today so if I get out early enough I'll call to arrange the return of your keys. I'd still like to talk to you if I can when I get back - if you're in agreeance. I don't want us to end this way. Anyhow, I've cancelled my standby 'cause I guess there's no rush to get back now."
(Exhibit 6A and 6B)

I accept that the contents of the facsimile represent a genuine statement of the applicant's state of mind at the time. That is, that she genuinely believed that her employment had been terminated. There are two possible reasons for this. One is that her evidence about the contents of the conversation with Mrs Loveland is correct. The second is that she either misheard or misunderstood what Mrs Loveland said.

The latter is a real possibility. The applicant admitted that she asked Mrs Loveland whether she should return her keys and go back to the Tax Office in an attempt to get the conversation back on track as she saw it. She did not expect to receive an affirmative answer to her question. Therefore if, as Mrs Loveland states, she did not answer this question or said something to the effect that she did not know what was going to happen, this could have been heard or interpreted by the applicant as meaning, in effect, "we think it's best". That would be because the applicant received other than the anticipated negative response to the question which she asked.

The other possible reason for the applicant's state of mind as reflected in the facsimile dated 21 July 1995 is that the applicant's version of the conversation is correct. That was that Mrs Loveland did say that she and Mr Loveland believed it would be best if the applicant returned to the Tax Office. If Mrs Loveland did say this, it could reflect a conversation that she had had with Mr Loveland, or an understanding that she had gleaned from a conversation with Mr Loveland or it could be that Mrs Loveland had said this without reference to Mr Loveland. With respect to the first two possibilities, there is something in the letter that Mr Loveland sent to the applicant dated 1 August 1995 (Exhibit 8) which is consistent with this.

The letter refers to Mr Loveland's disappointment about the low recorded work in progress of the applicant since 1 July 1995. The letter then goes on to state:-

"Angie and I had effectively been prepared to put these events behind us and had decided that if you put in a productive Monday (17 July) then all would be forgotten and we would 'start again'.
However, when you did not turn up on the Monday my disappointment dropped to a new all time low and I then felt it impossible to resurrect any confidence that you would be able to achieve the daily targets, let alone catch up on the current shortfall.
It is primarily for this reason that I believe it would be appropriate for our 'business' relationship to be at an end.

I'm extremely sorry that this has caused you distress, as it was not my intention to do so."

These paragraphs are consistent with the applicant and Mrs Loveland having discussed the applicant's performance prior to 20 July 1995 and having made a decision that it would be appropriate for the business relationship to be at an end. However, Mr Loveland was not asked about these paragraphs either in examination in chief or in cross examination. Furthermore, the letter then states:

"When you did not turn up on Monday (17 July) I had decided that when you returned on the following Monday (24 July) I would change the previous arrangement of salary (with pre-set targets) to a contract 'employment' where you could/would be paid a flat rate for chargeable hours actually performed".

This sentence, in apparent contradiction with the paragraphs quoted above, nevertheless supports the view that Mr Loveland had not made a decision to terminate the business relationship with the applicant prior to 20 July 1995. Also supporting this view is what Mr and Mrs Loveland subsequently said to Ms Chan (see below) and the fact that the applicant's desk remained in tact to 1 August 1995.

As stated above, another possibility is that Mrs Loveland did say to the applicant that she and Mr Loveland thought it would be best if she returned to the Tax Office even though such a discussion had not been had between her and Mr Loveland. There is a basis in the evidence for thinking that this may have occurred. Mrs Loveland was, understandably, concerned about her husband's health given that he had been hospitalised the previous year for his "stress attack". For example, one of the main reasons why she was working at her husband's practice was so that she could monitor his workload. Mrs Loveland knew that Mr Loveland was very distressed about the applicant's low recording of work in progress hours since 1 July 1995. Indeed, when she first discovered that some of the WIP sheets were missing, she said that she had not disclosed to Mr Loveland how many were missing because she "knew that would upset him". By 20 July 1995, Mrs Loveland was aware that Mr Loveland had become distressed and was aware that the source of the distress was the applicant. There is then the real possibility that Mrs Loveland formed the view that it would be "best" for the applicant to return to the Tax Office so as to avoid the applicant being the source of further distress for Mr Loveland. Therefore Mrs Loveland may have taken it upon herself to speak to the applicant in the manner the applicant suggested in her evidence in the telephone call of 20 July 1995. After the telephone call, Mrs Loveland would have had an incentive in not disclosing to Mr Loveland what she had said to the applicant during the telephone conversation. This is because she knew that effectively terminating the applicant's employment in the conversation may cause problems for the practice because certain procedures had to be undergone before terminating employment.

However, whilst this possibility has some basis in the evidence, Mrs Loveland was not asked about it in either examination in chief or cross examination. Due to that, I do not consider it would be fair to make any finding against Mrs Loveland with respect to such matters.

Furthermore, it can also be argued, with some justification, that Mrs Loveland with her knowledge of the procedures that needed to be gone through before employment can be terminated, simply would not have said anything to the applicant which could be taken as effecting a dismissal during the conversation on 20 July 1995.

As the applicant seeks to rely on the contents of the telephone conversation as effecting her termination of employment, it is for the applicant to prove that the contents of the telephone conversation had this effect. After careful consideration of the matter, I cannot find, on balance, that the applicant has discharged this onus. At the end of the day I am unable to find that the applicant's evidence of the contents of the telephone conversation is to be preferred to that of Mrs Loveland. I am left in the position that I am unable to prefer one witness's evidence over the other on this issue.

Due to this I do not have to consider a further potential issue, that of Mrs Loveland's authority to terminate the employment relationship.

I next consider whether there was a termination of employment at the initiative of the respondent subsequent to 20 July 1995.

As stated above, I accept that the contents of the facsimile dated 21 July 1995 genuinely reflected the applicant's belief that her employment had been terminated. Therefore, at least from the time when the facsimile was received, the respondent knew that the applicant was under such a belief.

There was a dispute about when the facsimile was received by the respondent. The applicant's evidence was that she completed the document on the morning of 21 July 1995. She gave it to her hotel with the instruction to send the document by facsimile to the respondent. She gave this instruction to the hotel in the morning. The following morning when she left the hotel for the last time, at about 11.00 am, she was billed for the sending of the facsimile.

The facsimile document which was received at the office of the respondent bore a time imprint of July 22 1995 at 5.55 pm. It was agreed that the 5.55 pm referred to the time that the document was sent from Sydney, not the time that it was received in Perth. 22 July 1995 was a Saturday.

Mr Loveland's evidence, based on the time imprint at the top of the facsimile document, was that he became aware of the facsimile on Monday 24 July 1995. However, he did not have any independent recollection of the time when the facsimile first came to his attention.

Upon request during cross examination, Mr Loveland produced a printout generated by the facsimile machine at the office of the respondent, which shows the time of all facsimiles sent and received by the machine. This document indicated that no facsimiles were sent or received by the facsimile machine at the office of the respondent on 22 July 1995. However, it indicated that on 21 July 1995 a one page document was received at 3.54 pm. The facsimile sent by the applicant was one page. On being shown this document, Mr Loveland agreed it was possible that the facsimile arrived at his office on 21 July 1995. On balance, I find that, in light of the document indicating that a facsimile was received at 3.54 pm on 21 July 1995, the facsimile which the applicant caused to be sent was received by the office of the respondent at that time.

Therefore, even if the applicant had misheard or misunderstood what Mrs Loveland had said during the conversation on 20 July 1995, from the time the respondent read the facsimile, he was in possession of a document which indicated the applicant's belief that she had been sacked.

Mr Loveland's evidence was that when he saw the facsimile he thought "this was her way of resigning". In cross examination he said that, "It was seen by me as a resignation and a way of getting an extra couple of days in the eastern states, then she'd waltz in at the end of that time and sort the matter out". I cannot see that the contents of the facsimile dated 21 July 1995 gave any reasonable basis for Mr Loveland to think that the applicant had resigned. The document clearly referred to the applicant as having been "sacked" and that she was "devastated to be told in such a way when I'm 3,000 miles away".

I find that when Mr Loveland became aware of the contents of the facsimile he knew that the applicant had the belief that her employment had been terminated. Further, I find that on balance Mr Loveland became aware of the contents of the facsimile on the afternoon of 21 July 1995. After he became aware of the contents of the facsimile, Mr Loveland did not himself take any steps to contact the applicant. Nor did he instruct his wife to do so. There was, however, a conversation between Mr and Mrs Loveland and Ms Chan concerning the applicant's position.

The applicant gave evidence that after the telephone conversation with Mrs Loveland on 20 July 1995, she telephoned her then boyfriend "Barry" and explained to him what had happened. Ms Chan gave evidence that Barry rang her that evening to advise her of what the applicant had said occurred. Ms Chan then spoke to Mr and Mrs Loveland the following day. Her evidence was that she spoke to them at lunch time of the following day.

Ms Chan said that she asked Mr and Mrs Loveland whether the applicant had been "sacked" and that she was advised that she wasn't. Ms Chan also gave evidence that she asked whether she could telephone Ms Kenney and advise her that she had not been "sacked" and she was advised that she could. Ms Chan then gave evidence that she telephoned the applicant on the applicant's mobile telephone. Ms Chan was aware of the number of the mobile telephone. Exhibit B is a telephone account statement issued to Mr Loveland and dated 17 August 1995. This records that on 21 July at 5.40 pm, someone telephoned the applicant's mobile telephone number. This would have been Ms Chan. The time recorded as the time of the call accords with both the evidence of the applicant and Ms Chan. The evidence of the applicant and Ms Chan concerning the substance of the telephone conversation was not in conflict. They both agreed that Ms Chan commenced the conversation by calling the applicant a "silly girl" for having, as Ms Chang believed, got it wrong that the applicant's employment had been terminated. The applicant said that she had reacted angrily to being called a "silly girl". She then told Ms Chan what she understood that Mrs Loveland had said to her. Ms Chan then agreed that if such words were said, the applicant was not in error in thinking that her employment had been terminated. The applicant took the telephone call whilst she was at a dinner with other people. Accordingly, she did not wish to discuss the matter at any length or in any great detail. The telephone conversation was therefore of short duration. The telephone account records that it lasted 3 minutes 36 seconds.

Ms Chan did not given any evidence about whether she told Mr or Mrs Loveland of what the applicant had said to her in the telephone conversation. However, I find that it is likely that she would have told either Mr or Mrs Loveland.

Mrs Loveland said, "I can't remember, no, whether I followed up or - I just can't remember what happened.". Mr Loveland said that he could not recall whether there was any feedback from Ms Chan. However, he did agree that it sounded "vaguely familiar" that he heard that the applicant was waiting to hear from him or wanted him to call her.

However, as stated above, I find it likely that Ms Chan would have conveyed the applicant's position, as stated in the conversation with Ms Chan on 21 July 1995, to either Mr Loveland or Mrs Loveland. If it was Mrs Loveland that received this information I think it likely, particularly given Mr Loveland's evidence, that she would have conveyed it to Mr Loveland.

Therefore, by the end of Friday 21 July 1995, or at the very latest on 24 July 1995, the respondent was aware of the applicant's belief that her employment had been terminated, through the facsimile and the information that would have been received from Ms Chan. Given this, I consider that the respondent should have clarified the position. If the applicant's employment had indeed not been terminated, she should have been advised of this forthwith. I accept that Mr Loveland was an extremely busy accountant during this time. However, it would have taken him little time to have contacted the applicant and advised her that her employment had not been terminated and that they could otherwise discuss matters when she returned. The employment of the applicant, or any other employee, of the respondent was a matter of sufficient importance to warrant Mr Loveland spending the few minutes to make the telephone call suggested above. It was not adequate for Mr Loveland to have informed Ms Chan, an employee of the respondent and the then best friend of the applicant, to call the applicant on Mr Loveland's behalf to advise her that her employment had not been terminated. Mr Loveland himself should have made the call. This is particularly so given the applicant reiterated to Ms Chan her belief that her employment had been terminated in the conversation on 21 July 1995.

In their evidence, Mr and Mrs Loveland made much of the fact that they did not know how to contact the applicant whilst she was away. However, the applicant had a mobile telephone. Further, Ms Chan knew the telephone number. Further still, Ms Chan gave evidence that she advised both Mr and Mrs Loveland of the fact that she knew of the applicant's mobile telephone number. Ms Chan said that she informed Mr and Mrs Loveland that "I've got her mobile number if your want it.". Ms Chan said that this could have been at the lunch time meeting with Mr and Mrs Loveland on 21 July 1995, but she was not sure. She said that the response of Mr and Mrs Loveland was that, "They weren't going to enter into a long protracted conversation over the phone, paying - you know, paying mobile rates, so they were going to wait until she got back to the office."

Mr Loveland did not recall this. Mrs Loveland said that she did not remember, "saying about we didn't want to spend the money" on an STD bill. However, I was impressed with Ms Chan as a witness and accept her evidence on this point.

Therefore the situation was, as I find it, that Mr Loveland should have clarified the applicant's position and was able to make contact with her prior to her return to Perth.

Prior to the telephone conversation with Mrs Loveland on 20 July 1995, the applicant was booked to return to Perth on the morning of Tuesday 25 July 1995. However, she had informed the airline of her desire to return to Perth prior to that. The airline had indicated that she could attend at Sydney Airport on Sunday 22 July or Monday 23 July 1995 to see if a seat became available. The applicant said that prior to her telephone conversation with Mrs Loveland on 20 July, she intended to do this. However, after the telephone conversation she decided that there was little point trying to get back to Perth early. She indicated in the facsimile dated 21 July 1995 that "I've cancelled my standby cause I guess there's no rush to get back now".

The applicant said that she decided to go with Mr Mithen to Canberra for further work involved in the possible partnership with Mr Mithen. She said that these matters were now more important for her because of the termination of her employment. The applicant relayed to Ms Chan that she was going to Canberra and Ms Chan relayed this in turn to Mr and Mrs Loveland. The applicant then remained in the eastern states until Saturday 29 July 1995. I consider that her explanation for staying in the eastern states until that date was understandable and reasonable. Although she had heard from Ms Chan that her employment had not been terminated, she had not heard this from her employer directly. It was not unreasonable for her to expect this to be confirmed by her employer if it was true. Further, the information that Ms Chan gave her was countered by her explanation to Ms Chan of what she understood Mrs Loveland had said to her. Whilst I accept that the applicant was exhibiting some stubbornness in herself not telephoning Mr Loveland to try and clarify the position, I do not regard this as unreasonable in all of the circumstances.

The applicant did not attend at the office of the respondent on the morning of Monday 31 July 1995. Again, this is entirely understandable given her genuine belief that her employment had been terminated and the failure of the respondent to clarify this after receipt of the facsimile from the applicant. She did speak to Ms Chan on that day. Ms Chan suggested the applicant simply come into the office. The applicant thought that there would be no point in doing this as she needed to speak to Mr Loveland and he had back to back appointments that day. I accept the applicant's explanation for non-attendance at work on this day.

On 1 August 1995 the applicant received by courier the letter from the respondent of the same date. Parts of this letter have been referred to earlier in these reasons. The letter commences with Mr Loveland saying that, "I am too tense to telephone you at the moment regarding the 'situation' ". Mr Cole suggested that this was an acknowledgment that Mr Loveland was aware that he was supposed to call the applicant or the applicant was expecting him to telephone her. I do not regard this as necessarily the case. The words used could equally mean that ordinarily Mr Loveland would have telephoned the applicant about the situation but at the moment he was too tense. The letter sets out Mr and Mrs Loveland's summary of events to date. The letter then refers to the missing WIP sheets and Mr Loveland's concern about the recorded work in progress since 1 July 1995. He states that he became "extremely upset" when he became aware of this. There is then that part of the letter quoted above which refers to the non attendance for work of the applicant on 17 July 1995. Following this are Mr Loveland's comments about the employee producing acceptable levels of productivity, also quoted above. This is followed by the reference to the suggested change of the relationship to "subcontract employment". After this paragraph, the letter states:

"When you did not turn up before close of business on Friday 28 July, 1995 I concluded it would be best to let the matter lie".

The final page of the letter refers to the fact that Mr Loveland did not want any of this to happen, the enclosure of a cheque for three weeks' pay from 3 July 1995 to 21 July 1995 and mention of the way in which the applicant's personal effects could be received by her. The final paragraph of the letter also reiterated Mr Loveland's sorrow that events resulted in "this unpleasant outcome".

It is clear that this letter records the termination of what Mr Loveland described as the business relationship between himself and the applicant. As I have found that she was an employee of the respondent, the letter records the termination of the employment relationship. Curiously, the letter makes no mention of the conversation between the applicant and Mrs Loveland on 20 July, the facsimile sent by the applicant or any information that Mr Loveland received from Ms Chan as to the state of mind of the applicant.

After the applicant received the letter dated 1 August 1995, she decided to attend at the office of the respondent that evening to see Mr Loveland. She waited outside the offices until the last of Mr Loveland's evening appointments and then went in to see him. Both the applicant and Mr Loveland agreed that this was a long meeting, in excess of three hours' duration. It ended after midnight. It was agreed that the applicant was emotional and in tears during part of the meeting. The meeting did not alter the fact, however, that the applicant's employment was terminated. The applicant stated that she believed that there was some possibility of her employment being resurrected after the meeting. She said that she understood that Mr Loveland was going to discuss the matter further with Mrs Loveland and that if Mrs Loveland was agreeable, there was a possibility of her again being employed by the respondent. Mr Loveland disagreed with this. He said that the only matter left open at the end of the meeting was whether Mrs Loveland would resume a personal relationship with the applicant. Little turns on this as it is clear on either version that the employment relationship was not recommenced as a result of this meeting or thereafter.

I also accept, however, that the applicant thought that there was still a chance of a resurrection of the employment relationship. The following day she delivered flowers and chocolates to the office of the respondent together with a note addressed to Mr and Mrs Loveland (Exhibit 9). The flowers and chocolates were for Mrs Loveland because she had recently had her birthday. The applicant characterised the note as an attempt to try to "slime" Mrs Loveland. She then said that "ingratiate" was probably a better word.

The applicant received no communication from Mr and Mrs Loveland either in response to the meeting on 1 August 1995 or the note dated 2 August 1995. On 20 August 1995 she sent by facsimile a further letter to Mr and Mrs Loveland (Exhibit 10). This letter commenced by stating that as she had not heard back from Mr or Mrs Loveland since her discussion with Mr Loveland, she assumed that their working relationship was ended. Her letter then went on to refer to the "commercial decision" by Mr Loveland to end her employment. The applicant compared her position to that of a receptionist who had been dismissed and concluded that the applicant was the subject of a "clear case of unfair dismissal". The letter stated that she would appreciate Mr or Mrs Loveland contacting her "as soon as is practical within the next ten days so that we can discuss and hopefully resolve this matter fully and to our mutual satisfaction". The applicant's evidence revealed that in sending this letter she was still hopeful of obtaining her employment back.

Within a day or two after sending this letter, the applicant received a telephone call from the respondent's solicitors about the matter. The solicitor indicated that he wanted to try and resolve the matter, but the applicant replied that it would be foolish of her to speak to him without having consulted a lawyer herself.

On 23 August 1995, the applicant sent a final letter to Mr and Mrs Loveland about the telephone call from the solicitor (Exhibit 11). The letter indicated that the applicant was disappointed that lawyers had to be involved. Nevertheless, the letter indicated that she had consulted her lawyer and further correspondence would probably be from the firm representing her.

This concludes the chronological summary of facts.

TERMINATION OF EMPLOYMENT

As stated earlier, the preliminary defence of the respondent was that the respondent had not terminated the employment of the applicant and thus Section 170EA of the Act did not apply.

For relevant purposes, the Act does not define "termination of employment". However, Section 170CB of the Act states that an expression has the same meaning in Division 3 of Part VIA of the Act as in the Termination of Employment Convention, 1982. In Article 3 of the Convention, the terms "termination" and "termination of employment" are stated to mean "termination of employment at the initiative of the employer".

The respondent argued that the applicant's non-attendance at work from 24 - 31 July 1995 was conduct constituting a repudiation of the contract of employment or, alternatively, a resignation, which the employer was entitled to and did accept. The respondent submitted that the applicant in effect resigned of her own accord and the respondent did not terminate the employment. I do not accept that this is the proper legal analysis of the facts. I say this having regard to each of the authorities referred to by the respondent, being; Wong -v- Hodes and Kok-Loong, unreported, IRCA No. 56/94, Tomlinson JR; AUEU -v- The ANZ Banking Group Limited, (as quoted at page 6 of the Wong case); B Cartmel -v- Skilled Engineering Pty Ltd, (1995) 37 AILR 3‑115; APESMA -v- Skilled Engineering Pty Ltd (1994), IRCR 106 at pages 115 and 116; and Qui -v- Steyi Nursing Home (1993) 35 AILR, No 24, Case 382. The factual situation in the majority of these cases was quite different to that before me.

The Full Court of the Industrial Relations Court has recently had occasion to review the expression, "termination of employment at the initiative of the employer" in Mohazab v Dick Smith Electronics Pty Ltd, unreported, IRCA No. 625/95, 28 November 1995. In the joint judgment of Lee, Moore and Marshall JJ at page 11, their Honours said that:

"A termination at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship."

At the same page, their Honours quoted with approval a passage of the judgment of Moore J in Grout v Gunnedah Shire Council (1994) 125 ALR 355, at 372, where his Honour said that:

"A principal purpose, if not the sole purpose, of Division 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination ... however, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer".

Their Honours also referred to the important feature:

"that the Act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship."

The Court also referred to the judgment of Wilcox CJ in APESMA v David Graphics Pty Ltd, unreported, IRCA No. 410/95, 12 July 1995, where his Honour said at page 5: "It is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment."

Applying these principles to the facts of this case, I am of the opinion that the letter from Mr Loveland to the applicant dated 1 August 1995 was the "critical action" that constituted a termination of the employment. This was the principal contributing factor which led to the termination of the employment relationship. The applicant did not voluntarily leave the employment of the respondent. Whilst she did not attend for work from 24 - 31 July 1995, this was entirely understandable and reasonable given that she held a genuine belief that her employment had been terminated, and that this was not clarified by Mr or Mrs Loveland.

Accordingly, I find that the applicant's employment was terminated at the initiative of the respondent, her employer.

BREACH OF THE ACT?

The applicant alleged that the termination of employment was in breach of Section 170DB and 170DE of the Act.

Section 170DB(1) provides that an employer must not terminate an employee's employment unless they have been given either the period of notice required by subsection (2) or compensation instead of notice. Section 170DB(2) states that the required period of notice for an employee of not more than one year is at least one week. Section 170DB(4) states that the amount of compensation instead of notice must equal or exceed the total of all amounts that, if the employee's employment had continued until the end of the required period of notice, the employer would have become liable to pay to the employee because of the employment continuing during that period. Under Section 170DB(2), this period is one week in this case.

The respondent did not either give the applicant the period of notice or the compensation required by Section 170DB. This is made clear by the letter dated 1 August 1995 which only enclosed a cheque up until 21 July 1995. Therefore, there has been a breach of Section 170DB of the Act.

Section 170EDA of the Act states that if an application under Section 170EA alleges that a termination of employment of an employee contravenes subsection 170DE(1), the termination is taken to have contravened subsection 170DE(1) unless the employer proves that, apart from subsection 170DE(2), there was a valid reason or valid reasons of the kind referred to in subsection 170DE(1).

Section 170DE(1) provides, for relevant purposes, that an employer must not terminate an employee's employment unless there is a valid reason or reasons connected with the employee's capacity or conduct. This subsection demands that one consider the reason or reasons why the employment has been terminated. In undertaking this exercise, the Court is not restricted to a consideration of the professed reasons of the employer for terminating the employment but is entitled to consider, if there be any difference, the actual reasons for termination.

Upon a consideration of all of the evidence in this case, I am of the view that the reasons why the respondent terminated the employment of the applicant were as follows:

The low amount of work in progress recorded by the applicant since 1 July 1995.

The failure of the applicant to attend for work on 17 July 1995.

The failure of the applicant to attend for work between 24 and 31 July 1995 inclusive.

In the circumstances of this case, I do not consider that any of these reasons were valid reasons for termination of employment.

With respect to the first reason, I can well understand the respondent's concern at the low amount of recorded work in progress by the applicant for the period between 1 and 14 July 1995. The respondent was entitled to be concerned about the loss of the WIP sheets and the quantity of time recorded on the WIP sheets. I have looked at the available WIP sheets for the period 3 - 14 July 1995 (Exhibit A). I note that there appears to be no WIP sheet for 11 July 1995 as part of Exhibit A. However, the respondent did not allege that the applicant did not complete such a WIP sheet. The evidence of Mrs Loveland was that it was only the WIP sheet for 6 July that could not be either found or reconstructed. However, having read the available WIP sheets I can understand the respondent's concern at the lack of productive work being recorded by the applicant. Not only were the hours of work recorded on the WIP sheets relatively low but much of the time recorded relates to the prospective partnership between the applicant and Mr Mithen which, although encouraged by Mr Loveland, would not have generated in the short term at least any fees for the respondent's practice. Of all the time recorded by the applicant from 1 until 14 July 1995, Mrs Loveland said that more than 50% could not be billed to clients.

However, I think there are a number of reasons why the respondent could not validly terminate the employment of the applicant because of the low recorded work in progress. Firstly, I accept that the applicant had some genuine confusion about her "new" role in the office after the commencement of Ms Chan. Secondly, at no time was the applicant counselled by Mr Loveland about her low recording of work in progress or warned that this could lead to a termination of her employment. Thirdly, Mr Loveland accepted that the applicant's recording of work in progress was adequate to 3 July 1995. It was only not adequate for the two weeks after that. Therefore, the applicant's performance, in terms of recording work in progress, had been adequate for 2½ months and only unacceptable for half a month. I am of the view that it would be at least harsh, unjust or unreasonable to have terminated the applicant's employment for the low recording of work in progress. Therefore, this was not a valid reason for termination of employment under Section 170DE(2).

I should also mention that the respondent in its written outline of closing submissions referred to a WIP sheet entry which was "shown to be less than accurate and honest". Mr Touz in his closing address, stated that this referred to an entry on a WIP sheet on 14 July 1995. This was a 45 minute entry regarding "Mithen Lynk" (the proposed partnership with Mr Mithen). The applicant initially said in her evidence that she thought this entry reflected a telephone call with Mr Mithen. However, the Telstra account of the respondent showed only about 9 minutes of telephone calls to a telephone number in Albury (where Mr Mithen lived and worked) on this date. I am not satisfied this shows the applicant's WIP sheet entry to be "less than accurate and honest". This is because the "details" section of the WIP sheet has written in it about this item, "to arrange for receipt of fax of seminar programme - detailed notes on presentation discourse". As the applicant subsequently adverted to, this description suggests that the total of 45 minutes recorded did not all relate to a telephone call. Another alternative is that Mr Mithen telephoned the applicant - so that the amount of time of the call would not be included in the Telstra account of the respondent.

With respect to the failure to attend at work on 17 July 1995 (reason 2 above), this was explicable. The applicant needed to have her business cards sorted out prior to her attendance at the workshop and seminar in Sydney. The respondent was aware of the workshop and seminar in Sydney and permitted the applicant to attend at it. Indeed, Mr Loveland was hopeful that he could also be involved in the prospective partnership with Mr Mithen. Further, it is not the case that the applicant simply did not attend for work. She telephoned Ms Chan and Mrs Fernandez to explain to them what was happening. The applicant had every reason to believe that Ms Chan and Mrs Fernandez would acquaint Mr or Mrs Loveland with the reasons why the applicant could not attend for work.

In his closing submissions, Mr Touz invited me to not accept the applicant's explanation for her absence from work on 17 July 1995 because of her failure to call evidence corroborating her whereabouts, presumably from the printer and dressmaker. I do not draw such an inference. It was not put to the applicant in cross examination that she had not attended at the printer's offices and at the dressmaker that day. I accept the evidence of the applicant as to her movements on 17 July 1995.

Whilst absence from employment may well provide a valid reason for termination of employment, the failure to attend at work on 17 July 1995 was not such a case.

I make the same finding with respect to reason 3 above, the failure to attend for work between 24 - 31 July 1995 inclusive. Again, the applicant's reason for not attending at work was explicable, understandable and not unreasonable. On 21 July 1995 she held the genuine belief that her employment had been terminated by the respondent. As a result of this she changed her travel plans so that she would not return to Western Australia until 29 July 1995. She sent a facsimile to the respondent which confirmed her belief that her employment had been terminated. She also informed another employee, Ms Chan, of this belief and I find that Ms Chan passed this information on to Mr or Mrs Loveland.

Despite the receipt of this information, the respondent took no adequate steps to advise the applicant that her employment had not been terminated. Simply telling Ms Chan, another employee, that she could inform the applicant that her employment was not terminated was not adequate. This was particularly so given that in the very same conversation the applicant reiterated her view to Ms Chan that her employment had indeed been terminated. Mr Loveland had the ability to personally advise the applicant that her employment had not been terminated but for his own reasons chose not to do so. Given this, the respondent can hardly complain that the applicant remained under the belief that her employment had been terminated and therefore did not attend for work at any time up until a decision was made to terminate her employment on 1 August 1995.

I find that there has been a breach of Section 170DE of the Act.

Further, whilst it was not specifically referred to by the applicant, there was a clear breach of Section 170DC of the Act. This section provides that an employer must not terminate an employee's employment for reasons related to the employee's conduct or performance unless they have been given the opportunity to defend themselves against the allegations made. The respondent did not avail the applicant of this opportunity prior to the termination of employment on 1 August 1995.

BABYSITTING CLAIM

The applicant made a claim for the babysitting of the children of Mr and Mrs Loveland. The applicant claimed 26.5 hours at $10 per hour for babysitting plus $17 being taxi fares. She also claimed an estimated loss of 25 babysitting hours at $10 per hour. The claim for babysitting actually performed relates to two occasions on which the applicant did babysitting for Mr and Mrs Loveland. The loss of babysitting hours relates to the babysitting which the applicant was going to do on Friday 14 July 1995 and other babysitting which the applicant was scheduled to do.

Having carefully considered all of the evidence in respect of the babysitting claim, I am satisfied that there was no agreement between the applicant and Mr or Mrs Loveland which could be legally enforced. The applicant's evidence was not that there was any agreed amount to be paid to her for her babysitting. Indeed, she said that when Mrs Loveland raised the issue of paying her for babysitting she specifically refused to be paid. As a compromise, Mrs Loveland suggested that she would buy something for the applicant's flat at a later stage, in recognition of the babysitting that the applicant would have then done for Mr and Mrs Loveland. To the extent that such an arrangement could constitute an agreement, I am satisfied that there was no intention to create legal relations and that as such there was no legally enforceable agreement. The applicant's claims for remuneration for babysitting and loss of babysitting hours are dismissed.

SUPERANNUATION ENTITLEMENTS

The applicant's statement of facts includes a claim for "statutory superannuation entitlements from 17 April 1995". The basis and substance of this claim were not clearly set out by the applicant. However, as I understand it, the applicant claims that the respondent should pay to her the amount which he ought to have contributed to a superannuation scheme on her behalf pursuant to the statutory obligation to do so. The statutory obligations are created by the Superannuation Guarantee (Administration) Act 1992 (Cwlth). This Act applies to most employers, who are required to provide a specified minimum level of superannuation for all of their employees. Employers who do not provide superannuation support at or above the prescribed level are subject to a superannuation charge to be paid to the Australian Taxation Office: Superannuation Guarantee Charge Act 1992 (Cwlth). The effect of the legislation is that where an employer does not provide the required level of superannuation, the shortfall becomes a superannuation charge payable to the Australian Taxation Office.

However, the legislation does not give the employee any entitlement to receive the amount of the contribution which the employer ought to have, but did not pay, to a superannuation scheme. The legislation simply provides that the Commissioner of Taxation is required to deal with the shortfall component of a payment of superannuation guarantee charge by paying the amount of the component, for the benefit of the individual employee, to a complying superannuation fund nominated by the employee: Section 65 of the Superannuation Guarantee (Administration) Act 1992.

Accordingly, I do not think that there is any basis for the applicant to be paid the amount which the respondent ought to have contributed on her behalf to a superannuation scheme. As Murphy JR said in another context in Rodley -v- Capricornia Pty Ltd, unreported, IRCA No. 130/95, 30 March 1995:

"There is no suggestion that the employee was entitled to receive the superannuation contributions in cash as they became due." (page 2).

This part of the applicant's claim is dismissed. If the applicant wishes to pursue her statutory superannuation entitlements, she can take this up with the relevant section of the Australian Taxation Office.

REMEDY

Section 170EE(5) states that in respect of a contravention of Section 170DB constituted by the termination of employment of an employee, the Court may make an order requiring the employer to pay to the employee an amount of damages equal to the amount of the compensation which, if it had been given by the employer to the employee when the employment was terminated, would have resulted in the employer not contravening that section. As set out above, the required period of notice in this case is one week. The applicant's gross salary at the time her employment was terminated was $36,000. One week's gross salary is $692.31. I will therefore make an order that the respondent pay to the applicant the sum of $692.31 by way of damages pursuant to Section 170EE(5) of the Act.

The primary remedy available under Section 170EE of the Act, for an unlawful termination of employment, is reinstatement. Whilst the applicant originally sought reinstatement, Mr Cole, in his closing submissions, conceded that reinstatement was impracticable. I think this concession was rightly made. The respondent operates a small accountancy practice which currently involves Mr and Mrs Loveland, Ms Chan and Mrs Fernandez. Given the breakdown in the relationship between the applicant and at least Mr and Mrs Loveland and Ms Chan, I think that it would seriously affect the harmony and possibly the productivity of the respondent if reinstatement was ordered. As the applicant herself said, in the context of the then proposed employment of Ms Chan, "It is such a small practice. If you didn't get on it would be disastrous. If you don't get on in a small practice and you can't work together it wrecks the whole thing.".

Pursuant to Section 170EE(2) of the Act, compensation can be awarded where reinstatement is impracticable. This section states, in summary, that if the Court thinks that reinstatement of the employee is impracticable, the Court may make an order requiring the employer to pay to the employee compensation of such amount as the Court thinks appropriate. Since my decision was reserved, The Industrial Relations and Other Legislation Amendment Act 1995 has been passed. Schedule 2, which contains amendments to the Industrial Relations Act, was proclaimed to commence on 15 January 1996. Item 10 of the schedule contains an amendment to Section 170EE(2), which applies to all applications before the Court upon which final judgment has not been pronounced: see Item 14(2)(b)(ii) of Schedule 2. The effect of the amendment is to make it clear that the Court should only award compensation if it considers it appropriate in all the circumstances of the case to do so. In this case I am satisfied that it is appropriate to make an order for compensation.

Section 170EE(3) states that in working out the amount of the compensation, the Court is to have regard to the remuneration that the employee would have received, or would have been likely to have received, if the employer had not terminated the employment. However, Section 170EE(3) states that the amount of the compensation must not exceed the amount of remuneration that would have been received by the employee in respect of the period of six months that immediately followed the day on which the termination took effect if the employer had not terminated the employment and the employee had continued to receive remuneration in respect of the employment at the rate at which he or she received remuneration immediately before the termination took effect.

This subsection refers to the amount of remuneration that the employee "would have received" in respect of the period of six months following termination. In this case, I find that amount to be $18,000. This was half the applicant's gross annual salary at the time of termination. Whilst there was the possibility that the applicant may in the future receive bonuses for the completion of commercial projects and incentive payments if the amount billed by the practice and the applicant exceeded certain amounts by the end of 30 June 1996, I find that these amounts are not amounts that "would have been received" by the applicant within six months of 1 August 1995.

Therefore, the maximum compensation payable to the applicant is $18,000.

The proper approach in assessing the compensation is to first assess the appropriate amount of compensation in the light of all relevant circumstances; second, to consider whether that amount exceeds the permissible maximum award; and, if so, third, to reduce the assessed amount accordingly; May -v- Lilyvale Hotel Pty Ltd, unreported, IRCA No. 628/95, Wilcox CJ, 1 December 1995 at page 14.

In Aitken v CMETSWUA - WA Branch, unreported, IRCA No. 352/95, 7 August 1995, Lee J said:-

"In assessing the compensation that is appropriate the Court will have regard to what is reasonable in the circumstances and look at what would have been likely to occur had the Act not been contravened ... the Court will consider the detriment occasioned to the employee by the employer's contravention of the Act, and the extent to which it is reasonable to compensate the employee for such consequences." (page 20)

In this case, I find that but for the respondent's contravention of the Act, the applicant would have remained in employment with the respondent. Whilst there was some justifiable dissatisfaction with her work, I think that if the applicant was properly counselled about this she would have been able to rectify the situation. There does remain the possibility, however, that the applicant could have been lawfully terminated by the respondent in the medium term. I note, for example, that Ms Chan said that in reviewing the files that the applicant had worked on prior to her departure, Ms Chan noted that the applicant had made conceptual errors in some of the work that she had done. This was not put to the applicant, however, so I place limited weight on this.

After her termination of employment, the applicant returned to work at the Australian Taxation Office on 5 September 1995. By that time she had not received any remuneration for the period 21 July 1995 to 5 September 1995. This was a period of 45 days. I think it reasonable that the applicant be compensated by the respondent for her loss of income during this period. It is appropriate for the quantum of compensation to be based on the gross annual salary of $36,000. The relevant amount is therefore $4,438.35. I deduct from this amount, the amount of $692.31 which has been awarded to the applicant by way of damages pursuant to the breach of Section 170DB of the Act. Therefore, the amount of compensation for loss of earnings to 5 September 1995 will be $3,746.04.

The applicant recommenced at the Taxation Office as a Level ASO Class 3. Prior to leaving the Tax Office to join the respondent, the applicant was an Acting ASO Class 4. The applicant's current salary is $31,712. This amount is $4,288 per annum less than the $36,000 gross salary that she was receiving from the respondent.

In addition to the higher salary that the applicant would have earned with the respondent, there is the prospect that in the future she could have earned the amount of $2,000 per completed commercial project and incentive payments if the practice and the applicant reached certain billing levels. Ms Chan, in her evidence, stated that she expected to earn an extra $3,000 over and above her salary, by way of incentive payments for the 1996 financial year. In relation to projects, Ms Chan stated that she did not expect to earn any money for projects for the 1996 financial year. Since the applicant left the employment of the respondent, Ms Chan's effective salary has been increased to $45,000. However, I do not think it reasonable to find that if the applicant had still been employed by the respondent her salary would also have been increased to this level. Ms Chan's current salary could well reflect that there is now only Mr Loveland and her to do the accountancy work and there is an increased workload that Ms Chan has to bear.

However, I do consider that there was the potential for the applicant to earn in excess of $36,000 per year by way of the incentive payments and bonus payments referred to above. There was a spreadsheet prepared by the respondent which set out bonus payments that could have been received by the applicant (Exhibit 14). However, I do not think this document carries any weight. The document was prepared prior to Ms Chan's commencement and it was agreed by all that Mr Loveland would have to re-work the spreadsheet in light of that. Mr Loveland did not do this prior to the termination of the applicant's employment.

I also need to consider that there is the possibility of the applicant being promoted in the Australian Taxation Office. It seems that she is well regarded by her employers as she was an Acting ASO Class 4 prior to her work with the respondent. She was the number one ranked person who applied for the position of the Acting ASO Class 4. Whilst the applicant was working with the respondent, a substantive ASO Class 4 position was awarded. This position was awarded to a person who was ranked beneath the applicant at the time of the Acting ASO Class 4 appointment. The applicant suggested that there was an ASO Class 4 appointment made about once a year. Therefore there is the realistic possibility that the applicant will be promoted to a Level ASO Class 4 within the next few years if she remains in the employment of the Australian Taxation Office. The applicant's salary when she was in the Acting ASO Class 4 position was $32,105. The salary of an ASO Class 4 would now be in excess of this amount as there have been some across the board salary increases.

However, the applicant would continue to have an ongoing loss of income even if she was promoted to a Level ASO Class 4.

I refer to the following additional matters in considering the amount of compensation to be awarded:

The applicant gave evidence that after the termination of her employment, she again went to the eastern states to try and obtain some income from the proposed partnership with Mr Mithen. However, she was unable to obtain any income through this source. I do not think it unreasonable of her to have explored this avenue before return to the Taxation Office. In her trip to the eastern states the applicant incurred air fares of $320.00. This amount should be taken into account in assessing compensation.

The applicant also submitted that I should take into account her mobile telephone expenses whilst in the eastern states with Mr Mithen from 21 July 1995 to 27 July 1995. This amount totalled $97.87. As these expenses were incurred during a time when I have found that the applicant was still employed by the respondent, I do not think I should have regard to these expenses in assessing compensation.

Prior to her employment with the respondent, the applicant was studying for a Bachelor of Business degree, majoring in accounting at the Edith Cowan University campus at Churchlands. After the commencement of her employment with the respondent, the applicant withdrew from her studies because she was unable to combine her work for the respondent with her required attendance at the university. Although the applicant submitted that I should have regard to this in assessing compensation, I do not believe that it is appropriate to do so. The decision to withdraw from her study cannot be linked to the respondent's termination of the applicant's employment in breach of the Act. Further, since leaving the employment of the respondent, the applicant intends to continue her studies.

The applicant gave evidence about the distress she suffered as a result of the termination of her employment. I accept this evidence of the applicant. However, the distress was not such that it caused any medical or psychological illness or prevented the applicant from pursuing the other career options that she had after the termination of her employment. I consider it appropriate to take into account the distress the applicant suffered (Aitken, page 20) but in the circumstances of this case I think that only a limited amount could be taken into account. I believe that an amount of $500 would be appropriate.

It should be recognised that the determination of an appropriate amount of compensation is not an exact science: Bean v Milstern Retirements Services Pty Ltd, unreported, IRCA No. 248/95, Moore J, 2 June 1995 at page 24. In this case, having regard to all of the facts and circumstances as set out above, I am of the opinion that the appropriate amount of compensation to be awarded, for the breach of Sections 170DC and 170DE is $15,000. This includes the amounts referred to above for loss of income to 5 September 1995 and the distress the applicant suffered.

I will make an order that the amounts to be paid to the applicant by the respondent be paid to her within 21 days of the date of this order.

I certify that this and the preceding 47 pages are a true copy of the Reasons for Judgment of Judicial Registrar Ritter.

Associate

Date:

Counsel for the applicant: Mr M Cole
Solicitors for the applicant: L Musca & Co

Counsel for the respondent: M C Touyz
Solicitors for the respondent: Hammond King Touyz

Hearing date: 15, 16, 17, 20 and 27 November 1995
Judgment date: 30 January 1996

[1996] IRCA 26

30 Jan 1996