Malcolm Ptolemy v Nestle Australia Limited

[2016] FWC 2364

[2016] FWC 2364

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Malcolm Ptolemy
v
Nestle Australia Limited
(U2015/10123)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 15 APRIL 2016

Application for relief from unfair dismissal.

Introduction

[1] On 19 August 2015 Malcolm Ptolemy (the Applicant) lodged with the Fair Work Commission (the Commission), pursuant to s.394 of the Fair Work Act 2009 (the Act) an application for a remedy for unfair dismissal against his former employer, Nestlé Australia Limited (the Respondent).

[2] The application was lodged by the Applicant’s union, the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU).

[3] The Applicant commenced employment with the Respondent on 7 January 1980. He was notified of his dismissal on 29 July 2015 and it took effect on that day.

[4] The Applicant was a maintenance tradesperson in the Respondent’s Smithtown plant. Smithtown is north of Port Macquarie. The plant principally produces Milo.

[5] The reason given for the dismissal was an alleged safety breach arising from an incident on 23 July 2015. The Applicant was working on a “keystone valve” without, it was alleged, isolating it. He therefore exposed the pneumatic valve while a live power source remained attached to it.

[6] The Respondent provided the Applicant with a letter confirming the termination on 3 August signed by Luke Fisher, the Factory Manager. It stated:

“As you are aware we reached the conclusion that you did not isolate the energy source while conducting work on the 23^rd of July 2015. This could have resulted in you severely injuring yourself or others causing a major incident. This is a breach of the isolation of plant and equipment policy and procedures, which you have been trained on and made aware of numerous times.

We acknowledge that you believe that you were approaching the task safely. However, we are deeply disappointed that you have made your own assessment of the risk and imposed your own judgement over the company’s isolation procedures.

As recently as May 2015 we issued you with a final written warning informing you that it was not open to you to apply your personal standards about what constitutes a safe situation but instead you were required to apply site safety policy and procedures at all times. We did so on that occasion because you had failed to apply our mandatory LOTO procedures. It could not have been clearer that short cuts would not be tolerated and that your continued employment hinged on your compliance with site policies and procedures.

We acknowledge that you have 35 years of service with us, and have therefore considered the extent to which we should make a different decision having regard to your employment history. Regrettably, this is not the first time that we have discussed your non-compliance with policies and procedures. Your performance history reveals a number of previous performance related concerns that we have raised with you, including a final warning issued only a couple of months . . .”

[7] The Applicant was paid five weeks’ pay in lieu of notice.

[8] The Applicant submits that the conduct of the Applicant is not capable of being a valid reason for dismissal and it is harsh.

[9] The Respondent relied on the matters in the termination letter, including the previous written warning. The Applicant was a representative on the site safety committee and had undertaken extensive safety training. The Respondent therefore took the view that his action was particularly serious.

Commission Proceedings

[10] The matter was conciliated on 11 September 2015 but did not settle.

[11] It was then listed in Coffs Harbour as part of the November 2015 roster.

[12] Submissions and witness statements were filed by the AMWU and the Respondent in November 2015 in accordance with the Commission’s directions.

[13] I conducted a telephone programming conference on 12 November 2015. Mr Lavelle-Wilson of the AMWU represented the Applicant. Mr Izzo of Australian Business Lawyers represented the Respondent.

[14] Because of the unavailability of the Respondent’s key two witnesses it was agreed that it could not proceed on the allocated days. It was agreed that the hearing would proceed at the end of January 2016 in Port Macquarie.

[15] The Commission was then advised of settlement discussions which appeared to have been successful. Ultimately, these discussions collapsed. Mr Lavelle-Wilson filed a Notice of Representative Ceasing to Act form (F54) on 22 December 2015. Thereafter, the Applicant represented himself.

[16] I conducted a further telephone mention on 7 January 2016.

[17] The matter was heard in Port Macquarie on 27 and 28 January. There was a further hearing in Sydney on 3 February 2016 for the evidence of Mr Matlock, one of the Respondent’s witnesses, who had moved to Switzerland. He gave evidence by telephone. Oral submissions were also made on that day.

[18] The Applicant relied on the written submissions and witness statement prepared when he was represented by the AMWU.

[19] The Respondent relied on written submissions and witness statements and oral evidence of:

● Luke Fisher, Factory Manager (Exhibit N20)
● Tony Silvia, Production Manager (Exhibit 19)
● Kris Matlock, Engineering Manager (Exhibit N21)

[20] The Respondent also tendered some ten witness statements from employees concerning the procedure that they would have used when working on the valve. Most of these were not the subject of cross-examination. Where I have relied on them I will refer to them specifically.

Protection from Unfair Dismissal

[21] An order for reinstatement or compensation may only be issued where I am satisfied the Applicant was protected from unfair dismissal at the time of the dismissal

[22] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[23] The Applicant was covered by an enterprise agreement, the Nestlé Australia Ltd (Smithtown Factory) Maintenance Employees Agreement 2013. In addition, his salary, at $1,438.65 per week, for ordinary hours, was well below the high income threshold. It was conceded, therefore, that he was a person protected from unfair dismissal in accordance with s.382.

[24] Section 396 provides that certain matters must be determined by the Commission before proceeding to deal with the merits of a matter. It provides:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;
(d) whether the dismissal was a case of genuine redundancy.”

[25] None of these matters were at issue in this case. The Respondent had some 4,000 employees at the time of the dismissal.

Was the dismissal unfair?

[26] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.”

[27] No issue was raised pursuant to s.385(a), (c) or (d).

Harsh, Unjust or Unreasonable

[28] I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person-whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

The Applicant’s Submissions

[29] The Applicant submitted that the Applicant’s dismissal was harsh, unjust or unreasonable because:

● The Applicant submitted that the Respondent had not properly identified how he breached its safety procedures. The valve had been opened for inspection but it had not been established that the Applicant performed work on it. The Applicant had not reached the stage of “work”:

● The Applicant had swung the valve out and observed that it was undamaged and therefore unlikely to need work. Therefore, there appeared to be no need to isolate the valve by kinking the compressed air hose.

● Mr Silvia had come upon the Applicant in the middle of this procedure. He told the Applicant that the valve should be isolated and then reported the matter to Mr Matlock. A counselling meeting on 28 July with Mr Matlock was followed by a meeting on 29 July with Mr Fischer and Mr Matlock at which the Applicant was terminated. The Applicant denies that the issues were fully put to him in these meetings.

● It was further submitted that even if there was a safety breach that does not automatically justify termination.

● The Applicant submits that his conduct was consistent with established work procedures. A petition signed by 11 other tradesmen was offered in support of the Applicant’s case.

● The petition included the following:

“The task performed by Malcolm, inspecting and testing a Keystone actuated valve which resulted in disciplinary action was conducted in a manner fitting with accepted practices and procedures used at Nestlé Smithtown. Compressed air, as supplied to the valve/actuator is regularly and routinely used to test the function of actuated valves.

At the time of the incident no documented work instruction or safe operating procedure existed for the task.

The task performed by Malcolm, inspecting and adjusting the band drive system in the “scott” plant which resulted in disciplinary action was performed whilst the drive system was isolated using methods of less intervention than what is considered normal practices by the scott plant operators whereby the operators remove drive pins from the energized, moving system. These practices continue unchanged without a work instruction or safe operating procedure, nor do they result in disciplinary action.”

● Given the Applicant’s 34 years’ service, with a comparatively clean record, dismissal was an overly harsh punishment.

● No harm to the Respondent or other employees resulted from the Applicant’s conduct.

● The Applicant acted openly and did not attempt to disguise what he had done.

● As a 63 year old employee, in a rural area, the Applicant would find it difficult to obtain comparable employment.

● The Applicant was an AMWU delegate and health and safety representative on the site. He sought to portray the dismissal as a response to his history of raising health and safety problems at the factory. He referred to issues with respect to confined spaces in 2013.

● On 1 May 2015, the Applicant received a final written warning for working on a “Scott Drier’s Band Drive system” without putting an isolation lock or danger tag on. The Applicant says that he arrived late on this job and other employees were not given warnings. The warning says, however, that the Applicant “had adjudged the situation to be safe and that therefore you chose not to apply LOTO (Lock-Out Tag Out)”. This warning referred to other past unspecified non-compliance with safety procedures.

● In his witness statement the Applicant described the procedure with respect to the valve as follows:

“33. The procedure for inspecting and testing a keystone actuated valve is to open the valve using compressed air, then kink the hose which supplies the air, unscrew the air line, tape the hose, and then tag it so that no one unkinks it.

34. This isolates the valve in the open position. There is no way to open the valve without using the air pressure. It needs to be opened and then isolated in order to inspect and fix any problems.

35. Nestlé has no procedure in place for opening the valve while isolated. The procedure which I intended to use is one which has been used throughout my time working at Nestlé.

. . .

38. I had just swung the valve out, but haven’t opened it, when I was approached by Tony Silvia, production supervisor. We had a conversation to the following effect:

Tony: What are you doing Mal?

Me: I have to check this Valve

39. I moved to activate the actuator to drive the valve to the open position, which I needed to do so that it could be isolated in the open position. As I did this, tony put his fingers on the valve rubber insert.

40. I said words to the following effect:

Me: Don’t touch that.

Tony: Why?

Me: It might open.

Tony: It should be isolated.

Me: By the look of that I won’t have to.

41. When I had swung the valve out, it was still held by the flanges. I looked at the blade in the liner – it looked clean and undamaged. This indicated to me that there was likely no problem with the valve, and there was a good chance I would shut it immediately after opening it.

42. As soon as a valve is open I can see and tell whether it needs to be fixed, in which case I would isolate it. If it doesn’t need any work, I would close it again.

43. Rod Sonogan approached us and Tony had a conversation with him. Rod then approached me and asked me to stop the job.

● While there were some changes in emphasis under cross-examination the above remained the central defence of the Applicant. He maintained that he was not at the stage where the valve could be isolated because it was not open yet.

● The Applicant originally sought reinstatement but by the time of the hearing the remedy sought was compensation.

[30] The Respondent submitted that the Applicant’s dismissal was not harsh, unjust or unreasonable because:

● The Respondent’s policy and procedure is very clear with respect to the need to isolate any machinery that is being worked on which has a potential power source. The policy is well documented and all employees, including the Applicant receive extensive training in it.

● In the incident on 23 July, the Applicant did not follow the LOTO procedure. He partially exposed the pneumatic valve with a live energy source and temporarily left the job.

● The Respondent also relies on the earlier warning in May 2015. In both cases, the Applicant applied his own judgement about what was safe rather than the Respondent’s policies.

● The Applicant admitted that he had not isolated the power and the procedure he adopted was not the standard one used by other employees.

● The Respondent carried out a thorough investigation, as a result of which the Applicant was well aware of the reason for his termination.

● Luke Fisher (Exhibit N20) referred to a previous instance of the Applicant’s alleged non-adherence to safety policies with respect to pedestrian walkways in April 2014. The Applicant was given a verbal warning and received counselling. In May 2014 the Applicant had received a written warning for “belittling a female employee”. He apologised for the remark that he made.

● Attached to Luke Fisher’s statement was a copy of the script he used for the meeting with the Applicant on 29 July. He emphasized that the Applicant was given an opportunity to respond to the allegations. The final decision to terminate was taken when the Applicant could provide no proper explanation, or show real contrition, for what he had done.

● Tony Silvia’s evidence (Exhibit N19) was that the valve had been loosened and exposed when he came across it. He also said that the Applicant had left it unattended. The Applicant had dismantled the valve without locking it out.

● Kris Matlock (Exhibit N21) was the Applicant’s immediate Manager at the time of the 23 July incident. He provided evidence of earlier warnings to the applicant. In 35 years’ service this is not unexpected. Those that are of relevance have already been referred to. It is apparent, however, that the Applicant had been a constant critic of the Respondent with respect to health and safety and there had been a number of disputes about various issues over the years.

● Mr Matlock gave extensive and detailed technical evidence about the operation of the valve. In my view, the essential point is the power should have been isolated and tagged before any work was done. The accepted method was to crimp the line. He did concede that isolation valves are now being installed in the plant.

● The evidence of employees as to the procedure to be adopted with these valves was consistent. They said that the first thing to be done should be to isolate and tag the airline. This would be done by kinking it over using a cable tie in circumstances where there is no isolation valve. (Garry Sutherland, Exhibit N13), (Mick Kelly, Exhibit N11), (Paul Hancock, N14), (Craig Sydenham, Exhibit N9), Richard William (Exhibit N15) and; (Shaun Kyle, Exhibit N10). All agreed that the work site should not be left, if at all possible and, in any event, the air and power supply would need to be isolated.

Approach of the Commission

[31] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

“... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[32] Vice President Ross, as he then was, in B Rose v Telstra Corporation Limited (1998) Q9292 (Rose) restated the above proposition and also stated:

“In my view whether there has been a `fair go all round’ is a matter which I think is relevant and hence I am to have regard to it determining whether the termination was harsh, unjust or unreasonable. It is not necessarily determinative but it is a factor to be taken into account.”

[33] Ultimately, there was not much dispute about what occurred on 23 July 2015. The Applicant’s account varied from the Respondent’s in some important respects but on the key issue of whether the line was isolated, it did not.

[34] The Applicant did not disagree essentially on the proper procedure to be adopted. The disagreement was about whether the Applicant’s conduct was justifiable on other grounds and whether the punishment of dismissal was too harsh.

Valid Reason - s.387(a)

[35] In Container Terminals Australia Limited v Toby [2000] Print S8434, a Full Bench said ‘In our view, the consideration of whether there was a valid reason for termination is a separate issue from the determination of whether a termination was harsh, unjust or unreasonable’.

[36] Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 said:

“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct, or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly ...”

[37] In Parmalat Food Products Pty Ltd v Wililo, [2011] FWAFB 1166, the Full Bench held:

“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open.”

[38] The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191 provides a useful summary of the approach to be taken by the Commission in weighing the factors to be considered under s.387:

“[20] Northrop J’s reasoning anticipated the reasoning of the High Court in Victoria v Commonwealth – that s.170DE(2) by its operation could render invalid a reason that would otherwise have been a valid reason. The fact that some dismissals are “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” means that the class of dismissals that are “harsh, unjust or unreasonable” is greater than the class of dismissals where there is no “valid reason” for the dismissal.

[21] Section 387 specifies a range of matters that must be considered in each case. Section 387(h) requires consideration of “any other matters that FWA considers relevant”. In any given case, there will be a range of matters, beyond those specified in s.387(a) to (g), that rationally bear upon whether the dismissal is “harsh, unjust or unreasonable” and thus are “relevant matters” that must be considered pursuant to s.387(h).

[22] Often it will not make any difference to the ultimate outcome whether a particular circumstance is considered pursuant to s.387(a) in determining whether there is a valid reason, or as a relevant matter pursuant to s.387(h), leading to the ultimate determination of whether the dismissal was “harsh, unjust or unreasonable”. However, in some cases it may matter greatly. That will tend to be so when the particular misconduct, shorn of the personal circumstances of the employee and the broader context beyond the particular acts or omissions that are said to constitute the misconduct, is clearly a matter that a reasonable employer is entitled to take seriously. This is such a case.

...

[34] In considering whether there was a valid reason for a dismissal under s.387(a), the reason(s) being considered are the employer’s reason(s). In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (eg. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1). “

[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.

[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal.
. . .

[58] Reaching an overall determination of whether a given dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” involves a weighing process. The Commission is required to consider all of the circumstances of the case, having particular regard to the matters specified in s.387, and then weigh:

(i) the gravity of the misconduct and other circumstances weighing in favour of the dismissal not being harsh, unjust or unreasonable;

against

(ii) the mitigating circumstances and other relevant matters that may properly be brought to account as weighing against a finding that dismissal was a fair and proportionate response to the particular misconduct.”

[39] I respectfully adopt this approach.

[40] I am satisfied that the Applicant committed a breach of the Respondent’s safety policies and procedures by working on the keystone valve without first isolating and tagging it. This represented a significant potential danger to the Applicant and other employees. The procedures were accepted by the Applicant, as I have set out on Page 7.

[41] The Applicant did not adopt the procedure that he, himself, says was the appropriate one. He says that he had not got up to the stage of doing the work – that is, to correct any fault. This was a rationalisation to explain the fact that he had taken a short cut. Under cross-examination the Applicant tended to resort to semantics to explain what he did:

“So you partially disassembled the equipment?---Well, you could say that, yes.

Well, I'm asking you, did you partially disassemble the equipment?---Well, it depends on your interpretations but you could say it partially disassembled the pipeline because I moved it, but I never really disassembled the valve.

Well, the equipment was no longer in its operating position, was it?  After you had swung it out, it's no longer in its operating position, was it?---The plant wasn't in an operating position in any case because the whole drive was down.

That's not my question, Mr Ptolemy?---And then there's a valve above that is – that isolates it from the vacuum line.  So once that vacuum line is shut it effectively can't work in any case.

But my question to you, Mr Ptolemy, is this.  You agreed earlier that this is a photo of the equipment in its normal operating position.  The question I put to you is that by unscrewing three of the bolts completely and unscrewing the other one a little bit, and then swinging the valve out, it is no longer in its normal operating position.  Do you agree with that?---Yes.  Yes.

And do you agree that by doing that you have disassembled or started the disassembly of the equipment pictured in that photo?---I don't know whether you would call it disassembly or not.  It's not in its assembled position but I don't know whether you would call it disassembled because it's still held by the flanges and - - -

Well, if it's not in its assembled position, you must accept that it's being disassembled?---Well, I could say it hasn't been disassembled because disassembled means completely pulled apart.  It's only partially swung out, so it hasn't been fully disassembled.

So it has been partially disassembled?---Well, you could say that but only minutely, in fact.”
(Transcript PN340 – 347)

[42] The Applicant clearly thought that the only really safe method was for there to be isolation valves, which are now being installed. However, that is no excuse for him not following the accepted procedure. In cross-examination, he had no explanation for not crimping the airline and tagging it:

“So Mr Ptolemy you knew in July 2015 at the time that you were working this actuator valve, that if you were working or in any way doing any disassembly you were required to isolate the equipment from its energy source.  You agree with that, don't you?---I knew it had to be isolated and I was in the process of isolating it so I could work on it.

But you were - when you say you were in the process of isolating it, you started the disassembly process before isolating the equipment, didn't you?---I moved - I moved - swung the valve out and from the statements given by some of the other persons that worked there, they say they disconnect the air, swing it out and put the air back on to test it.  Now I effectively reached the spot where I had swung it out and put the air back on to test it, so - - -

You did that without isolating it before you started the unbolting and disassembly process, yes?---Yes, I - - -

That's in breach of the procedure, isn't it?---It's in breach of the - Nestles are saying that's in breach of a procedure but I'm saying it's unfair because it is a bit ridiculous the fact that you've got to disconnect live air pressure lines for the sake of swinging a valve out, then connecting it back up again and dealing with air pressure by unbolting - unscrewing the high pressure air lines is in breach of safety regulations in regards to air pressure - - -

Mr Ptolemy, when you say it's ridiculous, you agree that you don't - Nestle doesn't permit you discretion to choose when you want to lock something out and when you don't.  The rule, you accept, is a blanket one which is you isolate before you disassemble.  You know that, don't you?---Yes, but we've got to - this has got to be treated fairly this.  It's got to be treated fairly and it's being a little bit unfair in my opinion to push a rule or regulation in a situation where you haven't got provisions to isolate.

But Mr Ptolemy you agree that there's more than one way to isolate the keystone valve.  It could be isolated on the day you were working on it, couldn't it?---Could have been isolated - - -

Yes?--- - - - by doing what?

By kinking the air hose?---That's not an isolation procedure.  That's - the disconnection of air, quite high pressured air without isolating.  Kinking is not a recognised - not a recognised provision for isolation.

The kinking of - by pulling the air out and kinking it, that would prevent any air going into the actuator, wouldn't it?---It prevents it going in - - -

Yes or not?---It prevents it going into the actuator but it may force air - - -

That was my question, Mr Ptolemy.  The second - - -

THE DEPUTY PRESIDENT:  Well I think in fairness he should be allowed to answer.

MR IZZO:  Yes, your Honour?---It may - the air may happen to go into a cut in your hand, in which case you could drop dead from an air bubble in your blood system.

If the air is cut off from the actuator, at that point the actuator is isolated isn't it?---The actuator is isolated but you're dealing with live air pressure to the actuator and you have to disconnect that with your bare hands, whereby you can't turn it off.  There's no isolation valve to turn - - -

But you can kink the hose which stops the air from going through, can't you?---And that's illegal too probably because you're not supposed to kink - - -

Well how is it illegal, Mr Ptolemy.  What law is it in breach of?---Well there's ways you're supposed to treat pressure lines in any case, that's within industry in general.  If you - it's classed as damage to pressure lines and - - -

I'm asking how is it illegal?---How is it illegal?

What law is it in breach of?---Well you're deliberately damaging pressure air lines.

There's a law that prevents you from doing that?---I don't know whether there's law but there's recommendations and instructions where you're dealing with pressure lines, where you get qualified to do certain work and during those courses you're taught not to do things like that because it damages the air line.

I put it to you that it's not illegal, Mr Ptolemy?---Well maybe you can't find anything illegal on it but it actually damages the hoses in any case.  And the other thing is you're exposing yourself to high pressure air which is dangerous in any case.  Nestles have other regulations there that tell you that you're not to muck around with air pressure.”
(Transcript PN509 – 528)

[43] The Applicant was also taken through his actions in respect of the incident that led to the warning he received in May 2015. Whilst it appears that the procedure he adopted was more common, he had put his hands behind the guard on the band drive whilst it had not been isolated and tagged. I accept that the Applicant had acted in breach of the Respondent’s policies and it was entitled to give him a warning.

[44] The Applicant’s final explanation for his actions, in answer to a question from me was:

“Again, I just want to be clear about what your evidence is.  I think you've said you understood what the procedure was for locking off the air, but you didn't do that because you hadn't got to the stage where that would be required.  Is that your evidence?  Have I correctly summarised that?---What you're saying is true.  I moved it out and I wanted to open the valve up to - and then isolate it in that position so I could actually clean it.  You have to stick your fingers through the hole where the valve is, so you disconnect the air from it so that it just can't move no matter what.  The electric plug on it doesn't matter then, but once the air is off and it's purged out of the system - purged out of the actuator - it just can't move.  It's very safe to work on.  So that's what I was aiming for, but the idea of taking the air off first, swinging it which only - because it was such a loose fit in the flanges after you undone it, it would only take half a second and you're actually moving it, so no-one is going to get caught up in it because you're actually moving it and then straightaway you go into the mode where you have to put the hose back on again, and then you have to open it up and then disconnect it again  I was just eliminating those first two connections with live air and that's what has caused the dismissal.  I think it's unfair.”
(Transcript PN918)

[45] The employee witnesses gave, I believe, honest and important evidence. Mick Kelly responded to my questions as follows:

“So how does that procedure, if at all, under your understanding differ with what Mr Ptolemy is alleged to have done?---How it differs is I believe that Malcolm was told or we were led to believe that Malcolm had gone away from the particular job.

That's one point.  What about the kinking of the - what about the disconnecting of the air in some form or other, would you do that the same?---Yes.  You're asking me, sir, would you do that in the same  - - -

Yes, based on Mr Ptolemy's statement and some of the other evidence, yes?---I'd say definitely he would - if he was in that position and he had to remove the air because there was no isolation valve, is that what you're asking?

Well you weren't there?---No.

So I'm not asking you to - I'm not asking you to - but you did sign the statement at the time?---Mm-hm.

So based upon your understanding of what had happened, did you have an understanding that the air was cut off in some form or other?---Yes, certainly.  I have worked with Mal over the years on similar valves albeit in different areas, especially in the malt extract plant where there is dozen of these valves, the same situation.  They're supplied through a conduit and then run to the valve.  There's no isolation valve between them and like I said earlier in the piece they're now working towards that, providing it.  Now I can honestly say I've worked with Mal before, he is not one to cut corners.  He's very good at what he does and I have seen him kink the hose and cable tie it off and tag it off in the same manner I've done myself, so I had no reason to believe that he wouldn't have done that.”
(Transcript PN1237 – 1242)

[46] Clearly he thought that the Applicant should have kinked and tagged the hose.

[47] I do not doubt that the Applicant had firm views about health and safety issues. He had pursued these issues as a union delegate and health and safety representative over the years. This had brought him into conflict with the Respondent’s various representatives. It also led to him acting in accordance with his own views rather than the Respondent’s policies and procedures.

[48] The Respondent has made some changes to the guards that led to the May warning to the Applicant and started to introduce isolation valves to deal with the July incident, (see Transcript PN1791 – PN1816) of Kris Matlock’s evidence. See also the following responses to my questions:

“Can I just ask one thing, Mr Matlock, before Mr Izzo has re-examination.  Am I right in the assumption that really the crux of your view about what happened in the particular incident is really at paragraphs 27 and 28 of your statement, particularly paragraph 27, where - I'll just put this to you, just assume that I've got this right, that really what should have happened was that the air line should have been crimped, and I think that's consistent with the evidence of the other people who are referred to in paragraph 27 and who also presented witness statements, and some of them presented oral evidence last week?  Is that the crux of what you say Mr Ptolemy didn't do in this instance and should have done?---So if Mal had isolated the valve he wouldn't have had any risks associated with the valve potentially actuating.  You know, in this case, you know, as I said he hadn't isolated before disassembly and he was working on the valve whilst it  wasn't isolated and it could have actually isolated at any point - actuated at any point.  So if he had crimped that air line that then would have been considered isolation and there would have been no energy available to actuate that valve.

Yes, I think Mr Ptolemy's evidence with respect to that, if I understand it correctly, is that he - well, I think his evidence is in two parts.  On the one hand he says, "Well, I was going to do that but I wasn't quite at that stage yet".  He also says that it really wasn't an adequate procedure in any event.  I think he says both of those things.  Do you want to comment on that?---So the removal of the valve out of process prior to isolation has already put himself and potentially others at risk.  The ability to isolate the air line through crimping as I've identified is not ideal in that we can improve that ability, and this is why we made the decision to install isolation valves as an alternative to crimping that air line.

Yes, but I think he says he intended to crimp the air line, he just had not - he needed to carry out some investigation work before he did that, I think is his evidence.  Do you want to comment on that?---So having removed that valve out of process is already exposing the dangerous bit, yes?  That valve is controlled from a control room with no visible line of sight and had it either operated automatically from the PLC or manually by somebody clicking on the screen on the scitech, Mal would have no way of knowing when the valve was to actuate and I guess that was the level of risk that Mal's taken by taking that valve out of process.  If Mal intended to do something else differently to that then he's got no safe work method statement or job safety analysis that describes how he might interact with the live energy to prevent him or others from being injured.

(Transcript PN1881 – PN1883)

[49] I was directed to the decision of Senior Deputy President Hamberger in Joss v Boral Bricks Pty Ltd [2012] FWA 8203. That case also involved the failure to isolate and tag out live machinery. The applicant breached policy despite previous warnings and undertaking training. The Senior Deputy President concluded:

“[53] I am satisfied that the applicant repeatedly and deliberately breached the respondent’s safety procedures. He did this after having received training about those procedures and a clear warning in the preceding 12 months about similar conduct, which included being put on notice that such behaviour could lead to the termination of his employment. This constitutes a valid reason for dismissal.”

[50] The importance of following safety policies was emphasized by Vice President Hatcher in Ning Hai Zhou v Weir Minerals Australia Ltd[2014] FWC 1531. It is clear that a breach of such policies can be a valid reason for dismissal:

“[27] I find that there was a valid reason for Mr Zhou’s dismissal. It is clear that the machine shop at Weir’s manufacturing establishment at Artarmon was a high risk working environment, and that consequently Weir placed a high priority on workplace safety. Having regard to this, as well as to Weir’s statutory workplace health and safety obligations, Weir was entitled to impose reasonable safety rules and directions upon its employees and to expect that they would be obeyed by those employees.”

[51] The action of the Applicant on 23 July 2015 did not cause harm to other employees or the Respondent’s property. However, it was a breach of the Respondent’s safety procedures which it needed to enforce. The Respondent was also entitled to rely on the warning for a similar breach in May. I find, therefore that there was a valid reason for dismissal.

Notification of a valid reason – s.387(b)

[52] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] in explicit terms, Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 and in plain and clear terms, Presvisic v Australian Quarantine Inspection Services Print Q3730. In Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.” Ibid at 151.

[53] I am satisfied that the Applicant was notified of the reason for dismissal in ample time before the final decision was taken. There were meetings on 28 and 29 July. The meeting was delayed to suit the AMWU official. Mr Fisher had decided that dismissal was likely but I am satisfied that the final decision was not taken until the Applicant was allowed to respond in the 29 July meeting.

Opportunity to respond s.387(c)

[54] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal way to ensure the employee relating to the conduct or capacity of the person. This criterion is to be applied in a common sense is treated fairly and should not be burdened with formality RMIT v Asher (2010) 194 IR 1, 14-15.

[55] It follows that the Applicant had an opportunity to respond.

Unreasonable refusal by the employer to allow a support person – s.387(d)

[56] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[57] The AMWU organiser was in attendance at the meetings.

Warnings regarding unsatisfactory performance – s.387(e)

[58] The Applicant had been given previous warnings about his performance so this provision is satisfied.

Impact of the size of the Respondent on procedures followed – s.387(f)

[59] The Respondent is a large multi-national business so this was not a factor.

Absence of dedicated human resources management specialist/expertise on procedures

followed - s.387(g)

[60] It follows that this was not a factor.

Any other matter that the FWC considers relevant

[61] Section 387(h) allows the Commission to consider any other matters it considers relevant. These must be considered in the context of the object of Part 3 - 2 of the Act contained in s.381(2) to “ensure that a ‘fair go all round’ is accorded to both the employer and the employee concerned”.

[62] Obviously the main additional matter to be weighted in the balance is the Applicant’s 35 years of service with the Respondent. It was not completely unblemished – reference was made to some warnings and counselling in relation to a number of issues prior to the two safety incidents in 2015. In such a lengthy period of service some “ups and downs” are to be expected. On the positive side, he was active in the workplace as union delegate and health and safety representative. All of the Respondent’s witnesses and the other employees appeared to like him and regard him as a good worker even if a bit difficult.

[63] In the circumstances, it would have been appropriate for the Respondent to implement a penalty lesser than dismissal.

[64] The Applicant continued to defend his actions but he showed a willingness to comply in the future.

[65] The Applicant made no attempt to cover up what had happened although he did attempt to rationalise it.

[66] Because of my finding as to valid reason I find that the dismissal was not unreasonable. I find nothing in the process adopted by the Respondent which makes it unjust. However, because of the factors I have considered pursuant to s.387(h) I find the dismissal to be harsh. Accordingly, I find that the dismissal was unfair within the terms of s.385.

Compensation

[67] Having found that the dismissal was unfair, I now turn to the appropriate remedy.

[68] Section 390 of the Act sets out the circumstances in which I may make an order for reinstatement or compensation:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.”

[69] The Applicant did not seek reinstatement and it would not be appropriate given the Applicant’s personal circumstances.

[70] Section 390(3)(b) provides that I may only issue an order for compensation to the Applicant if it is appropriate in all the circumstances.

[71] I have found that the applicant has been unfairly dismissed and that reinstatement is not appropriate in all the circumstances. I am satisfied that an order for compensation should be made.

[72] Section 392 of the Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered provides:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[73] The method for calculating compensation under s.392 of the Act was dealt with by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge,[2013] FWCFB 431 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket, (1998) 88 IR 21 and Ellawala v Australian Postal Corporation, Print S5109 (Ellawala). I have adopted the methodology utilised in Bowden in determining the amount of a payment of compensation.

[74] I will now consider each of the criteria in s.392 of the Act.

Remuneration that would have been received: s.392(2)(c)

[75] The Applicant earned $1,438.65 per week for ordinary hours. He is 63 years of age. His evidence was that he wanted to work another couple of years for the Respondent. I accept that this would have been likely without the dismissal. He conceded that he and his brother had a farm which would keep him occupied.

[76] I determine that the period of time the Applicant would have remained employed by the Respondent, or would have been likely to remain employed with the Respondent, had he not been dismissed, is two years. The remuneration he would have received is therefore approximately $150,000.

Remuneration earned s.392(e)

[77] The Applicant has not earned income, apart from the farm, since the dismissal, but he has not sought employment.

Income likely to be earned: - s.392(2)(f)

[78] This matter is not relevant.

Other matters: - s.392(2)(g)

[79] There are no other matters that I consider appropriate to consider.

Viability: - s.392(2)(a)

[80] This matter is not relevant.

Length of Service: - s.392(2)(b)

[81] I have taken the Applicant’s service into account.

Mitigating efforts: - s.392(2)(b)

[82] In considering whether the Applicant has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether the Applicant acted reasonably in the circumstances, (Ellawala).

[83] I consider that the Applicant has not taken steps to mitigate his loss by seeking comparable employment. The compensation will be reduced to $100,000 on this basis.

Misconduct: s.392(3)

[84] It is appropriate to adjust the compensation to take account of the fact that I have found that there is a valid reason for the dismissal. The compensation will be reduced to $30,000 on this ground.

Shock, Distress: s.392(4)

[85] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[86] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the Applicant, or to which the Applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or half the amount of the high income threshold immediately prior to the dismissal.

[87] The high income threshold component is $68,350.

[88] The amount of compensation I will order does not exceed the compensation cap.

[89] I will order the Respondent to pay to the Applicant an amount of $30,000.

Conclusion

[90] I am satisfied that the Applicant was protected from unfair dismissal, and that the dismissal was unfair and a remedy of compensation is appropriate. In accordance with s.381(2) of the Act, I am further satisfied that each party has been accorded a ‘fair go all round’.

[91] An Order (PR579169) will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

M. Ptolemy, Applicant;

L. Izzo, solicitor with J. De Celis for the Respondent.

Hearing details:

Telephone conferences:

2015

November 12.

2016

January 7.

Hearings:

Port Macquarie

January 27, 28.

Sydney

February 3.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR579063>